Tag Archives: U.S. Copyright Law

5 Take-Aways From The Music Copyright Report

(Originally published February 16, 2015 in Nekst.biz)

In early 2013, the House Judiciary Committee of the U.S. Congress began a comprehensive review of the U.S. copyright laws to determine if the current laws are still relevant and working in the digital age. The results of the music copyright study are presented in the Office’s 245 page report which was published on Feb. 5.

One very profound, but not surprising, statement the Copyright Office made in the report is this. “The Office’s review of the issues has confirmed one overarching point: that our music licensing system is in need of repair.” I would add to that; great need of repair.

I’ve read the full report. While it was not a page turner like Dan Brown’s “The Da Vinci Code”, it held my interest. This is real life, current, and very relevant to all of us in the music industry. It will likely impact our livelihood, and the future of music in the U.S.

(You can read the entire article at http://nekst.biz/5-take-aways-music-copyright-report/)

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A New Music Theory

I’d like to propose a new music theory. But first, to set things up, see if any of the equations below look familiar from past school days.

E = mc²

Einstein’s famous equation says that energy (E), is equal to mass (m) multiplied with the square of the speed of light (c). Einstein came up with this in 1905. He wasn’t the first to propose a mass-energy relationship (Sir Isaac Newton did in 1717), but Einstein was the first to publish it in this equation.

π = c/d

This is the definition of Pi, calculated to be the ratio of the circumference of a circle (c) divided by its diameter (d), which is always 3.14159….. This is a mathematical constant, and was first “published” in a similar geometrical statement on a clay tablet in Babylon dating back to 1900-1600 B.C. The Greek letter “π” was added around the mid-18th century.

a² + b² = c²

This is called the Pythagorean Theorem, and states that, in a triangle with a right angle, the square of the length of the side opposite the right angle is equal to the sum of the squares of the other two sides. This formula is about 2,350 years old, and is used all over mathematics.

Each of these famous formulas existed and were practiced before they were formalized in the written form in which they now exist. They were complex theories, argued over a period of time, but ultimately accepted as simple calculations which show a mathematical constant.

Okay, here’s a formula that has been practiced for decades, but I can’t find where it has yet been published, nor has it reached its total acceptance in the music industry. At least…not yet.

© =

This simply says the song copyright © (Songwriters/Publishers), is of equal value to the sound recording (Artists/Record Companies). In other words, the “idea” has equal value to the “expression” of that idea.

Song copyright rates were initially set under the 1909 Copyright Act, when congress defined the “compulsory license” at the rate of 2 cents. Prices for products to play music, which at that time were piano rolls, record cylinders and record discs, were left up to “fair market”. The United States tax law defines fair market as “…the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” (United States v. Cartwright). There were no restrictions on the pricing of these recorded products.

Fast forward over 100 years, and the song copyright rates are still restricted (although they have been increased to 9.1 cents), yet recorded products continue to enjoy fair market, or “willing buyer/willing seller”, price freedom. However, in certain areas that fall outside of the compulsory license restrictions, song copyrights have been negotiated for decades at the same value as the sound recording, such as synchronized uses in film, television, and commercials. For decades, where there was no physical product involved, the industry seemed okay with the idea of  © = .

Then came digital. iTunes, and other digital downloads, continued along the physical product balance of 8 to 1 (99 cents, with record companies receiving approximately 70 cents, and paying 9.1 cents for the song copyright). However, when Apple and record companies raised prices on many single downloads to $1.29 (their right in the fair market), the song copyright remained restricted at 9.1 cents, and the resulting ratio is more like 10 to 1. Other widely publicized digital providers have any greater out of balance ratios, such as Pandora, at 14 to 1. Even though the song copyright is not restricted in the same way for streaming (Pandora) as it is in downloads, there are still restrictions with the license entities (PROs), not to mention the licenses for song copyrights and recordings were negotiated separately, and without any consideration as to a proper “ratio” between the two. The historic anomaly of imbalance between the two continues, even though there is no physical product involved.

To be fair, a more accurate way to state the formula should probably take into account that no physical product exists. Looking back at references, the symbol ∄ means “there does not exist”, and the symbol (m) means mass, or physical matter. Adding those to the end of the new formula, it now reads:

© = (∄m) – Song Copyright equals Sound Recording if there does not exist physical Matter (or product).

I like it. This is a new paradigm, or new way of thinking, for the future of music licensing. Now, I realize there are arguments that can be made against this, such as terrestrial radio currently paying 100% to song owners, and 0% to artists and record companies. And there is the statement made by various record people that they would be willing to negotiate a different balance if songwriters and publishers would be willing to take a more equal risk in getting the recordings to the marketplace. Good points. I plan to address those arguments in the coming blogs.

Bottom line, it is clear that no one knows all the right answers at this moment in time. But, until we change our paradigm related to the value of each part, we may never see a correction occur.

Let’s prove this formula correct.

© = (∄m)

John Barker
ClearBox Rights

“Almost every significant breakthrough in the field of scientific endeavor is first a break with tradition; with old ways of thinking, with old paradigms.” – Thomas Kuhn

 

© 2013 John Barker.  All rights reserved.  Information contained in this Blog is of a general nature and should not be considered or relied on as legal advice.  Any reader of this Blog who has legal matters related to information addressed in this Blog should consult with an experienced attorney. This Blog contains no warranties or representations that the information contained in it is true or accurate in all respects or that it is the most current or complete information on the subject matter covered. John Barker is President and CEO of ClearBox Rights, LLC.

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So You Think You Own This Copyright?

If you are a publisher, and a writer assigns one of their songs to you, you own it….or so you think. Unfortunately, the U.S. Copyright Law includes some language which may result in publishers discovering that they may not actually own the copyright after all.

A copyright normally becomes the property of the author immediately upon fixation of the song in any tangible form. Two exceptions are if the author has pre-assigned his new songs to a publisher “upon creation”, such as being under an exclusive songwriter agreement, or if the copyright is being created as a “work-for-hire”, at which point the employer owns the song. If there are multiple writers, each of the writers become equal co-owners of the copyright unless there is a written agreement to the contrary.

Once the copyright exists, the only ways it can be transferred to another owner is through a written transfer signed by the owner, or less often by “operation of law”, such as a will, or pass as personal property by applicable laws of intestate succession (which is upon death of the author where no will exists). Section 204(a) of the Copyright Law reads, “A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” (Underlining is mine). So the bottom line is, if the author is living, an assignment must be made in writing. (There is actually a recent case, Vergara Hermosilla v. Coca Cola Company, where the 11th Circuit Court found that an email exchange constituted an effective transfer of a copyright under Florida law, but the court did not actually address whether the email exchange constituted a “writing” as stated in Section 204 of the Copyright Act).

The Copyright Law later states that the written assignment “may be recorded in the Copyright Office” by following certain procedures. However, the recordation of the assignment is not mandatory, nor is it necessary for the validity of the agreement…..or is it?

In Section 205, the Act explains that if there are conflicting transfers of ownership, the earliest one does not necessarily prevail. Unless the first transfer was recorded in the Copyright Office within one month after its execution in the U.S., and in a manner required to give “constructive notice”, then a later assignment of that same copyright can override the earlier one. There are a lot of details involved in this, but it is quite possible that a writer can go around town and assign his song for monetary terms more than once, and the last publisher the song was assigned to could be found to be the ultimate owner if that last owner was the first one to properly record the transfer document with the Copyright Office.

So my question is, shouldn’t a private contract between two parties for the transfer of personal property be valid and undisputable without the need to publicly register the agreement with a government body? I don’t pretend to be an expert in the area of property transfers, but apparently we make similar private transactions all the time, which are valid without registering with the government, such as buying a car, purchasing an original painting, buying a smart phone, a computer, or a whole list of personal property items.

So what’s involved in properly registering an assignment? The cost of recording a document with the Copyright Office is currently $105.00 for the first song, and an additional $30.00 for each group of 10 songs also included on that initial document. And in order to qualify as “constructive notice”, the songs must also be separately registered as works in the Copyright Office, which is a fee of $35.00 to $65.00 per registration. And before anyone says you can save a lot of money by including multiple songs on each document, remember that a transfer is between one unique assignor party and one assignee. So a publisher receiving 10 songs from 10 different writers must make 10 unique assignments, and 10 unique copyright registrations. For those 10 songs, the total cost of all registrations is between $1,400.00 – $1,700.00 (depending on whether the copyright registrations are completed by paper or on line). And all of this has to be done within 30 days of the execution of the assignment in order to assure that the song cannot be “sold” again out from under you. (Which suggests it is not safe to collect a year’s worth of songs by one writer in order to register them all at once and save money).

Next, we wonder if others are doing this “by the book”. According to the “Annual Report of the Register of Copyrights” for the fiscal year ending September 30, 2010, the total number of copyright registration claims, or works registered, was 636,527. That would be at least one unique copyright per registration. So how many documents of transfers or other related documents were recorded during that same period? 8,985. That’s less than 1.5% of the number of new works registered that year. Now, granted, the documents in each category may contain multiple songs. But remember this; copyright registration claims are normally for new copyrights. A recordation of transfer document many times is for the sale of an existing group of copyrights to a new party many years after the copyrights had been originally registered. So of that number of 8,985 documents (which are not all documents of transfer), many of them will be for songs which existed years prior. In summation, it appears very few publishers actually “perfect” their copyright assignments under the definition of Section 205.

If a valid copyright is recognized, and protected, the moment the work is affixed in a tangible form, shouldn’t a written and executed assignment of ownership be recognized just as definitively? While I don’t disagree that there should be certain advantages in recording your transfer documents with the Copyright Office, I do disagree that the law allows a dishonest person to assign my copyright to another entity at a later date, and legally forfeit my rightful ownership in the work. The Copyright Law is a fluid set of regulations which is designed to serve the intellectual properties industry. I wonder if this is an instance where the current Copyright Law should be revisited, debated, and potentially updated to better support and reflect the common practices of the industry.

Do you agree? Am I missing something? I welcome your comments and opinions on this. Let’s kick this around a bit.

John Barker

ClearBox Rights, LLC

“One must not hold one’s self so divine as to be unwilling occasionally to make improvements in one’s creations.” – Ludwig van Beethoven

 © 2013 John Barker.  All rights reserved.  Information contained in this Blog is of a general nature and should not be considered or relied on as legal advice.  Any reader of this Blog who has legal matters related to information addressed in this Blog should consult with an experienced attorney. This Blog contains no warranties or representations that the information contained in it is true or accurate in all respects or that it is the most current or complete information on the subject matter covered. John Barker is President and CEO of ClearBox Rights, LLC.

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