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Gray Area

The world of music publishing and licensing is profoundly arcane, complex and frustrating. Before you doze off or decide to turn the page, you should know that music publishing and licensing control how a song gets from a composer’s brain into yours, and how a recording travels from the studio into your iPod. So it’s not unimportant stuff. And the rules are about to change.

An explanation of the raw basics of publishing and licensing would fill at least 10 Metrolands. And once you read the whole thing, you’d be more confused than informed. Songs are treated differently than the recordings of songs. For recordings of songs, there are different rules for digital and nondigital transmissions, and different rules for recordings by themselves versus sticking them in a movie, and more and different rules for making a copy of a recording versus broadcasting the recording on the radio.

Things got this weird because the laws were developed iteratively over time, as perceived needs arose, so what we’ve got today is a dysfunctional patchwork quilt of quick fixes designed to solve yesterday’s problems. The major law that controls how songs can be used was created in 1909 to break up player-piano roll-maker monopolies. Really! More laws were inserted over the years as new technologies came along that scared Big Media. Back in the day when the government cared about such things, antitrust laws were used to control the behemoth royalty collectives ASCAP and BMI, resulting in negotiated settlement agreements that contained more and complex quasi-laws. And since nobody was quite sure how these rules should apply to the Internet, a whole raft of new laws were developed in the mid-’90s that complicated things even further.

Amazingly, this big mess works—sort of. Music does find its way into movies and into your iPod, and folks do generally pay and get paid. But it is insanely complicated, irrational, and often counterproductive.

Congress is starting to look into how to fix the problem, how to streamline and simplify the rules. It will be a long process, and lots of decisions are going to have to be made, and the status quo is going to change drastically, for the better or for the worse. The result will dictate how music is made, performed, and sold in the future. We’re talking about all the marbles.

Mary Beth Peters, head of the U.S. Copyright Office, got the ball rolling a couple of weeks ago, with a statement to a House subcommittee. While she clearly identified the problem and listed a broad range of possible solutions, her main thrust was scary. Her preferred solution was to allow music publishing and licensing to be governed by “market forces.” This, of course, is consistent with the general trend over the past 15 years or so to deregulate everything, to get the government out of the commercial sphere. The market will provide!

Yes it will. The market has already provided us with Enron and WorldCom. Thank you, market. What’s next?

The problem with Peters’ preferred approach is that the market won’t provide, because there is no market! What we are talking about here is how copyrights are governed, and copyrights are nothing more than little government-created monopolies. And as anybody who’s taken Econ 101 will tell you, monopolies are great for the monopolist, and everybody else gets screwed.

Broadly speaking, if the government is going to create monopolies, it also has to take responsibility for controlling them, or we all get hurt. And Peters wants the government to walk away from that responsibility.

It’s like this: Right now, if you want to release your own version of a popular song, you can. That old player-piano law provides that the songwriter has to give you a license to release the song, so long as you agree to pay a statutorily set royalty to the songwriter. Peters wants to abolish this, so that if you want to release your version of a song, you will have to seek the permission of the songwriter, and even if the songwriter agrees to let you do it, the songwriter can charge you whatever he wants to charge you. In other words, the songwriter can exert his monopoly power over you. That’s the “market” providing for you.

There is no current parallel for sampling recordings. If you want to grab a little hunk of, say, a James Brown record to stick into your song, you have to go ask permission of James Brown’s recording company and James Brown’s publisher. And they can just say no to your request, and if they say yes they can charge you whatever they want. And, in my experience, unless you can guarantee them sales of 50,000 copies of your recording, they’re likely to say no.

There’s a disconnect between this current system and the real world. Last year, the DJ Danger Mouse created a brilliant album by mixing the vocals from Jay-Z’s Black Album and the instrumentals from The Beatles (aka the White Album). He called it The Gray Album. He couldn’t release his masterpiece commercially because he couldn’t get permission to use the Beatles’ instrumentals, even though he was willing to pay them for the privilege.

This isn’t the triumph of the market, it’s market failure. And the cost is borne out in the suppression of new creative works, like The Gray Album.

Congress is either going to fix this or make it worse, and it’s playing out right now. Watch this space!

—Paul Rapp


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