News broke yesterday that the major labels have filed suit against leading Internet radio service Pandora for playing sound recordings made before February 15, 1972.

This follows a previous suit filed by the recording industry against satellite radio provider Sirius XM, also involving the performances of pre-‘72 recordings.

At FMC we’re all about artists getting paid for the use of their work, particulary when the music is used by large, publicly traded companies. But if the labels are so keen to make sure that performing artists (or their heirs) are being properly compensated, there’s a better way to do it.

Federalize pre-‘72 sound copyrights.

Many people are unaware that there wasn’t even a copyright for recordings until 1972. Actually, some sound recordings enjoy protections at the state level through a patchwork of statute and case law. (Note: the public performance of musical compositions came under federal law way back in 1897).

We’ve explained all this at some length before, but the upshot is that a loophole in current copyright law puts these older recordings (and the artists and heirs of those who made them) in a kind of legal limbo. It is a bit odd that Congress, when enacting laws in 1972 to protect sound recordings, chose not to apply retroactive protections. While it’s true that the 1972 federalization was a stopgap measure with a sunset provision—Congress was in the midst of hammering out the numerous stipulations that would become the 1976 Copyright Act—it seems logical that they’d address this exception when they hammered out the full ‘76 Act. Alas, they did not.

So you can expect a ton of legal hair-splitting here regarding state law protecting pre-‘72 sound recordings. Labels claim that Pandora isn’t paying for these performances; Pandora claims it’s just following the law. Obviously, the labels (and artists) whose music this is should be compensated. But it’s not entirely clear that a service like Pandora would even know which of the many recordings in their system are pre’72s; then there’s the small matter of knowing who to pay.

We think the smartest and easiest way for labels and performers to be paid for plays of these older records would be to place them under federal protection. The Copyright Office recently issued a major report on the subject with guidelines on how to approach federalization. But the big labels seem more interested in seeking huge damages than making the system more functional and simplifying how artists are compensated.

For post-‘72 recordings played by Internet or satellite radio, there’s a public performance right whereby the nonprofit SoundExchange collects and distributes money owed. The best part of this arrangement is that the artists are paid directly—45 percent goes to the featured performer, and 5 percent goes to musicians unions for distribution to backup musicians and singers. The labels get their half, but they also don’t get to pull any funny business with artist royalties. We think that’s pretty cool.

We also have to wonder if the labels win a big award from these suits, whether any of that money will go to the performers or heirs of these older songs. We haven’t seen any evidence that prior successes against numerous filesharing sites resulted in any payouts to creators. Just something to consider.

Another reason the labels are likely keen to press their case is that if they can get a favorable ruling establishing liability around pre-’72s, this precedent might be extended to the “safe harbors” governing other internet service providers, like search engines and user-upload sites.

Again, we think there is a better solution, and one that would result in services knowing what to pay and to whom, and where performers are directly compensated. But that’s apparently not how the mainstream music industry likes to do business. And this is why we can’t have nice things.