House Subcommittee on Intellectual Property,
Competition Policy and the Internet
2138 Rayburn Office Building
Washington, DC 20515

May 17, 2013

Dear Chairman Goodlatte, Congressman Quayle and members of the committee:

It is a privilege to submit the following testimony for the record in this initial hearing on matters relating to U.S. copyright law.

Future of Music Coalition (FMC) is a national nonprofit education, research and advocacy organization for musicians. For more than a decade, we have observed changes to traditional music industry business models, and sought to inform artists about what these changes could mean for their ability to reach audiences and grow their careers. With regard to copyright, FMC has long championed artists’ ability to leverage their expression in the ways that make the most sense for their careers.

Clearly, the tremendous changes to the music business due to rapid technological shifts have impacted how musicians, songwriters and composers reach audiences and earn a living, but we are inclined to be optimistic about the future. From iTunes to Pandora to Spotify to YouTube, musicians have more ways than ever to make their music available through legal, licensed channels, and fans are able to enjoy access to huge catalogs of music, on demand and across devices.

Still, there is a lot to be done to ensure that artists are equitably, transparently and – where possible – directly compensated for the uses of their work. To meet these goals, it is necessary to examine how copyright functions in a digitally networked, increasingly globalized world. The much-used term “copyright reform” might better be thought of as “copyright optimization” — a deliberate approach towards harmonizing creator and public interests. This is nothing less than a constitutional imperative, and one that those on all sides of the debate should have a vested interest in achieving.

After attending the Committee’s hearing on May 15, we were struck by three reoccurring themes: (1) copyright debates, both current and past, are highly charged because there is so much at stake; (2) reform efforts suffer when stakeholders approach the problems with distrust and “sharp elbows,” and; (3) the entire policymaking process lacks primary source data on the real-world impact of copyright on creators’ ability to produce, disseminate and monetize their works. FMC agrees with all three of these takeaways, and offers this Committee any assistance needed to make progress on this important work. More specifically:

Including creators in the conversation

We welcome the Chairman’s efforts to hold hearings on the state of U.S. copyright, and understand that this initial hearing is the beginning of a broader inquiry. However, we would encourage the Committee to take every effort to include creators in future hearings, as they are important stakeholders whose perspectives will serve to inform the process in crucial ways. Understanding the experiences of creators is essential to achieving copyright laws that can provide for continued investment in expression while ensuring that musicians and other artists have the necessary flexibility to exploit their work in a manner that best serves their interests. 

With thirteen years of organizing and curating panel discussions for our own Future of Music Policy Summits, we not only appreciate the value of bring diverse voices together to tackle big problems, but we also have a good sense of stakeholders’ positions on these key issues. FMC is happy to help this Committee identify musicians, performers, composers, or other stakeholders who will bring a reasonable perspective to the conversation.

Primary source data collected from musicians and composers

During Thursday’s hearing, a few members and witnesses cited the National Academy of Science’s recent report, Copyright Policy in the Digital Era: Building Evidence for Policy.[1] “Acknowledging that a lack of data has handicapped research on copyright policy, the report calls for the collection, organization, and availability of data associated with the activities of various stakeholders and end-user populations.”[2]

FMC absolutely agrees with this report’s call for more data to inform the policymaking process. More so, we have primary source data to contribute to the effort. 

In 2010, FMC launched Artist Revenue Streams – a multi-method, cross-genre examination of whether and how musicians’ revenue streams are changing in this new music landscape.

The impetus for this particular research project stems from the same sentiment that underscores both the NAS report and this Committee’s own work: it’s quite clear that new technologies such as digital music stores, streaming services and webcasting stations have simultaneously reduced the cost barriers and increased musicians’ access to the marketplace, but how have these changes impacted musicians’ ability to generate revenue based on their creative work? Almost all existing analyses of the current music industry landscape rest purely on assumptions that they have improved musicians’ bottom lines, or on top-level assessments of the music industry based on traditional metrics: number of albums sold, number of spins on radio, even stock price valuations.

Since 2010, the Artist Revenue Streams project has collected information from a diverse set of US-based musicians about the ways that they are currently generating income from their recordings, compositions, performances or brand, and whether this has changed over the past five years.

We used three data collection methods simultaneously: in-depth interviews with more than 25 different musician types; financial snapshots that show individual artists’ income and expenses in any given year and across time; and, a wide ranging online survey that collected rich data from over 5,300 US-based musicians and composers in fall 2011. Findings and reports from this project can be found at http://money.futureofmusic.org.

We believe that this qualitative and quantitative data serves as a vital benchmark for understanding the shifting revenue streams for musicians. For example, this information — and that collected going forward — can help provide a realistic picture of musician earnings from both the sound recording copyright and the composition copyright, as well as a sense of how these rights impact direct and indirect compensation, depending on various roles and career profiles. Further extrapolations may be possible, such as the degree of artist leverage within specific compensation structures (for example, collective vs. direct licensing on digital music services) and copyright’s underlying incentive to the creation of new works.  We welcome the Committee’s questions regarding the existing dataset, or about further evidence that could inform policymaking.

CCP and key issues

Given our abiding interest in how copyright law impacts artist compensation and the development of a legitimate digital marketplace, we read with much interest the report from the Copyright Principles Project (CPP), as well as the testimony of its members, several of whom were witnesses at Thursday’s hearing. We share the basic view that the copyright debates have become unnecessarily contentious, and often fail to capture the complexities — or even the fundamental realities — of today’s creative landscape. We welcome any efforts to engender greater respect and civility in these conversations.

The Copyright Principles Project touched on several areas we see as impacting the broader creative sector, and musicians and composers in particular. The following are either issues touched on in the CPP report, or areas that we at FMC believe worthy of further investigation by the Committee.

Voluntary Rights Database(s): Several FMC associates have been working diligently to bring stakeholders together to establish global databases for music.[3] This would make it much easier to know who owns both the composition and the sound recording, thereby streamlining licensing and putting more money in rightsholders’ pockets, artists included. We recognize that compulsory registries are not in step with our international treaty obligations. However, we maintain that the establishment of voluntary rights databases is an important prerequisite to an efficient, global licensing system. We believe that the US policymakers — Congress, the Copyright Office and beyond — should examine current registry efforts and help nudge US rightsholders towards making them a reality.

Licensing and Leverage: We often hear complaints from artists and independent labels about the lack of transparency regarding payments on emerging digital services, particularly those that operate under an “interactive” statutory designation. Some of this could be because the market for streaming on-demand is not yet mature; greater transparency may result from market pressure and compensation may increase along with consumer adoption of these platforms. Regardless, there is likely more to be done to ensure transparent, equitable compensation for creators, and Congress may have a role to play. Due to the contours of current copyright law, and depending on the platform or use, the mechanisms for artist compensation look very different. A review of §114 and §115 of the Copyright Act should be undertaken to ensure that the statutory language enables, not inhibits, artist compensation and the promulgation of more legal, licensed services. The ability to more efficiently bring large catalogs of music to the marketplace is one part of the picture. Also important are compensation structures that provide for timely, equitable and transparent payment to artists. One model that provides for streamlined licensing, efficient enforcement and clear creator splits is the public performance right for digital broadcasts, as managed by SoundExchange. It may be time to look more closely at the leverage and transparency afforded by such licensing schemes as a potential framework for other digital environments. We will stop short of advocating for an expanded statutory license for broader classes of service, but suggest that all options should be open to evaluation.

Orphan Works: One of the more persistent issues in the recorded music industry is in knowing what material can legally be used for new purposes. While we see functional rights databases as necessary to solving many issues of assignment, there is still the problem of how to treat works whose copyright owners cannot be located. We believe in the ability of the public and other parties to access and build upon works that are essentially abandoned, but have the strong preference that authors are eligible for some limited remedies in the instance that they are locatable but the owner of the copyright is not. By aligning the interests of creators and new users, this “low hanging fruit” of copyright reform could finally happen. We encourage the respective agencies and Congress to work with stakeholders to implement a solution that allows for lawful access to more works while recognizing the needs of authors/creators. Our recommendations for how to achieve this outcome can be found in our comments to the Copyright Office in its Inquiry Concerning Orphan Works and Mass Digitization.[4]

Closing Loopholes: Previous written testimony offered to this Committee around its “Music Licensing, Part 1” hearing in November 2012 outlined our take on “parity” among broadcast-type services. While we will not go into detail here, we would like to remind the Committee that true parity requires, at the very least, closing the loophole in copyright law that exempts terrestrial radio broadcasters from compensating performers and sound copyright owners for the over-the-air performance of their recordings. FMC stands with many other artist and music industry organizations in urging Congress to adopt a public performance right for sound recordings, to ensure that American musicians are fairly compensated when their recordings are used, whether broadcast in the US or abroad.

Safe Harbors and Third-Party Liability: We understand that there is a great deal of debate around the “safe harbor” provisions and notice-and-takedown requirements outlined in §512 of the Act. This issue is surely the Pandora’s box of copyright, and there are legitimate arguments to be made by stakeholders including rightsholders, artists, services and the public. Congress must closely consider issues of third-party liability in light of court decisions and statutory intent, but we caution the Committee from being overzealous in applying remedies that would inhibit those innovations that have come to prove so crucial to today’s legitimate digital marketplace.

FMC remains committed to advocating for copyright laws that reflect the balance between creator and public benefit. We offer our organization as a resource in any negotiations and encourage policymakers to include musicians in these important conversations.

Casey Rae
Deputy Director
Future of Music Coalition