Expanded Role for Performance Rights Organizations Faces Hurdles

Two propositions dominate academic discussion of copyright, Merges said. The “withering away” theory says that “collaborative creativity” will eliminate the need for intellectual property rights. Merges said that wouldn’t work for large-scale projects like film production, where an amateur wouldn’t offer to “touch up a scene” for free in a blockbuster film. Free content thrives under a strong IP system because “the more ‘front porches’ you have, the more proprietary houses you have behind it” that users will pay for, he said. The “transactional bottleneck” theory says that IP protection slows the optimal flow of information. But consider that the DMCA has “grown up” in a period full of free, legal content, Merges said.

Implementing a compulsory license is usually the worst of both worlds, Merges said: There’s “legislative lock-in” with outdated rates, coupled with the constant worry by licensees that rates suddenly could change. Keeping rights “discrete” -- separating sound recording and composition -- also encourages economic growth, in this case giving songwriters more bargaining power and less reliance on record labels to defend their interests, he said. It’s “really just kind of ludicrous” to think that royalties could be measured and distributed fairly without PROs, which have painstakingly developed monitoring and distribution mechanisms over decades, Merges said.

PROs have largely prevented one catastrophe -- a massive orphan-works problem for music -- and may prevent more, as music increasingly is sold without DRM, Peters said. Compulsory licenses are rarely used because “the government is never more efficient than the marketplace,” she said. Peters noted the legislation, litigation and even Copyright Office criticism that have followed Copyright Royalty Board and predecessor decisions going back a decade. Though she opposes combining recording and publishing royalties into a single rate, which she said would hurt singer-songwriters, Peters pointed to a “crisis” in licensing that should spur Congress to consider “bundling” reproduction and public performance rights, at least for online music services.

Merges proposed a “meta-PRO” to increase transactional efficiency, recommending that Congress use legislation to “scoot” PROs toward a “uni-license structure” and revise the antitrust consent decrees that regulate ASCAP and BMI. Peters noted that the Copyright Office’s “floated” proposal to create such an organization swiftly drew condemnation from the Justice Department over antitrust concerns. “The Justice Department is really out of date on this,” considering the ubiquity of illicit free content that PROs must compete with, Merges said: “They really should encourage [PROs], not discipline you.”

‘Today’s Wacko Book Might Be Tomorrow’s Policy Proposal’

Most academics are only advocating a balance in copyright, said Public Knowledge President Gigi Sohn, asking Merges to identify the “hordes clamoring for the end of PROs.” Sohn’s group agrees with Peters on using PROs for bundled licensing, and Sohn also thinks PROs can reduce illicit file-sharing, perhaps through a P2P “universal service fund” or a fee paid by P2P users to avoid litigation. “I go back and forth” on the advisability of compulsory licenses, Sohn said.

Washington may not pay attention to law professors’ proposals to overhaul copyright, Merges said, but “they do get a lot of play with students” who could take over Washington. “Today’s wacko book might be tomorrow’s policy proposal.” The government ignores the “court of public opinion” at the copyright system’s peril, Peters said. A generation that grew up with free terrestrial radio must be shown that copyright is an “enabler,” she said, pointing not only to the success of the DRM-laden iTunes and iPod, but also the DVD, whose DRM was crucial to movie studios approving the higher-quality format.

“The court of public opinion doesn’t develop because Larry Lessig makes a speech,” Sohn countered, referring to the free-culture celebrity and Stanford University professor. The public perceives that powerful copyright holders “just go overboard… and don’t respect fair use,” she said. The shadowy drafting of the Anti-Counterfeiting Trade Agreement also shapes mistrust of the industry, Sohn said. “They use the rubric of counterfeiting” to gain support, but “when you start to fold in Internet piracy… and you have processes that are completely opaque, that’s where I have a lot of problems.” -- Greg Piper

GWU Event Notebook…

House IP Subcommittee Ranking Member Howard Coble, R- N.C., might have doused hopes for Hill support for an overarching performance rights organization to streamline music licensing. In brief remarks, he related his youth spent around bluegrass and traditional country music, as well as his enjoyment of troubled singer Amy Winehouse’s Grammy performance of her hit song “Rehab.” The creative industries are growing in North Carolina and elsewhere, Coble said. But the “new digital frontier” has produced “minimal royalty payments… This is unacceptable and this must change.” Competing PROs are crucial to ensure efficient cooperation with songwriters, Coble said, adding that he “can’t imagine” one organization responsible for collecting all royalties. Coble apologized for his departure before questions could be asked, explaining he had to return to “that funny farm on Capitol Hill.”