Category: Law & Policy

Music Creators Seek Reform of Consent Decree

In his recent testimony before congress, songwriter and president of ASCAP Paul Williams remarked that it was astonishing to realize that he and fellow witness, songwriter Rosanne Cash, were subject to more government regulation than the multi-billion-dollar corporations whose interests were represented in the same hearing.  What Williams was referring to with that remark is the fact that licensing fees for certain public performances of works by composers and songwriters are still predicated on a WWII-era consent decree between ASCAP and the DOJ.  This decree granted a federal judge (aka the “rate court”) the sole right to set rates for these public performances, but for a market that looks nothing like the one we have today.

It is thanks to these outdated licensing terms that we continue to hear from various music composers and writers that, for instance, millions of plays of their songs on a streaming service like Spotify is worth less than a couple-hundred bucks.   And as the songwriters and composers presently lobby for change, we’ll surely be hearing plenty of hew and cry from Pandora, Spotify, and Google.  After all, when these tech companies evangelize new models, innovation, and disruption, they only really mean it if it’s good for their bottom line; so if a half-century-old law or system allows them to exploit someone else’s work in order to add a few million to their own coffers, then “old models” sound just fine. They won’t come out and say “leave the old system in place;” that would be too regressive-sounding and too bluntly honest.  Instead, they’ll try to scare consumers in one way or another that their streaming services will cease to operate or have to adopt new pay models or charge more for access, and so on; but the reality is that while these services dangle cheap and free in front of consumers in the short term, failure to reform the present system may result in higher prices, disenfranchised licensees, and/or decreased diversity in production over the long term.  Meanwhile, there’s no question songwriters and composers are getting pretty well hosed, shackled to an obsolete model from which they can neither effectively opt out nor negotiate within as free agents in a normal supply/demand market.

This matters now because streaming is how consumers want to listen to music, and why wouldn’t we?  If I’m in the mood to listen to a song I haven’t downloaded, I launch Spotify just like anyone else. Who wouldn’t want such on-demand convenience?  And for free?  But our convenience is presently subsidized by the dramatic underpayment of songwriters and composers who are increasingly dependent on revenue from this new way we want to listen to music. At the same time, these creators of the music we love are the folks without any other source of revenue.  They don’t tour, and they don’t sell merchandise.  Elton John is a big damn star and a knight and all that, but I don’t think anyone ever bought a Bernie Taupin tee shirt, if you know what I mean.

Music licensing can be confusing.  There are multiple ways to use music and different rights associated with each use as well as multiple stakeholders with any given track.  Readers will thank me for not attempting to wade too deeply into all the variables; I’d probably get some of it wrong, and it’s not exactly spellbinding.  Suffice to say that the rights associated with the consent decree and its reform are public performance rights covering uses like radio broadcasting, music streaming, live performance by musical artists, and uses in venues like bars, restaurants, and theaters.  Licenses for these types of use are granted automatically upon request, and they are generally bulk licenses covering tens of thousands of songs for a single, annual fee paid to a performing rights organization, commonly called a PRO.

ASCAP was the first PRO (founded in 1914) and is the largest of these organizations, followed by BMI, but in the present landscape, other PROs have emerged that are not subject to the consent decree.  Still, a PRO the size of ASCAP enables hundreds of billions of typical public performances for users through a collective licensing and fee structure that compensates the organization’s membership of composers, songwriters, and publishers.  For instance, the coffee house where I’m writing at the moment has a sign on the door with the logos of the three leading PROs because this place hosts open-mic nights and other live performances, and it has music playing continuously during normal hours.  A little venue like this pays a relatively low licensing fee that provides blanket coverage for this type of public performance, allowing any local musician to come in and play any cover she wants for whatever size crowd will fit in here.  In a similar way, if I wanted to use music incidentally on this blog site, I could get a license with the three major PROs for a few hundred bucks a year and have the use of just about every song in existence.

Without reform of the consent decree, the PROs could see the resignation of major publishers from membership, effectively abandoning collective licensing.  This would mean individual negotiations between publishers and new media services, which would almost certainly increase costs that would be passed on to consumers one way or another and would also create unnecessary burdens for traditional licensees like my local coffee house.  It is not hard to imagine a future in which the full adoption of music streaming wipes out a whole class of professional music creators. After all, nobody can argue that a sustainable market can be built on a model in which “success” in the primary market buys a half-order of groceries once in a while.  And regardless of what the Pandoras etc. may say in defense of the current system, there is simply no way they can promise that a world without professional songwriters and composers will not be a world devoid of the kind of music we’ve been lucky to enjoy so far.

Adding insult to injury, many start-up Internet companies offering music streams as the foundation of their business model are employing stall tactics to avoid paying any licensing fees at all.  The Silicon Valley culture has a long tradition of steal now, apologize and pay something later, and the PROs are seeing this first-hand with various web businesses.  Once the request for a license is made, it has to be granted; but then the PRO requests information about the applicant’s use, audience, etc. in order to set a fee.  ASCAP and the others are seeing a trend in which these companies stall on providing information and, therefore, stall on paying any fees while freely using all the music they want in order to grow their business.  (Man, I’d like to see somebody try that with construction and the cement supply company.  Just once.)  The recourse available to the PRO in this case is federal court, which is costly and time consuming.

Presently, the songwriters, composers, and publishers are proposing certain reforms to congress that release them from this outdated consent decree and enable them to negotiate (still through the PRO) more flexibly in response to current market realities.  For instance, ASCAP proposes shifting cases from the purview of the federal rate court to a more expedited process of private arbitration; and it calls for voluntary rather than compulsory licenses in order to create bundles of works, allowing the PRO to license music more complexly than the all-or-nothing model that exists now.   With these types of reforms, the PROs feel they can negotiate sustainable fees for songwriters and composers while keeping intact the collective licensing paradigm that keeps public performance licensing easy and affordable for tens of millions of users.

Fresh Scholarship on Copyright

For quite some time, too long perhaps, a considerable amount of academic scholarship has trended toward focus on copyright’s negative effects, or at least doubt its positive effects, without adequate analysis of the creative process itself.  When viewing the market, and especially creators, many academic views I have encountered appear to look solely at finished works, how the market interacts with those works, and then to interpolate from these data the creative process that generated the works in the first place.  As such, many attempts to reinvestigate copyright’s role in incentivizing production are incomplete. To quote from a new academic article that will be published in the March 2015 issue of the Harvard Law Review, “Copyright’s incentives/access debate has done a good job recognizing the risks. Yet it has all but ignored the rewards.”

At last, a legal scholar has emerged who has taken a scientific approach to examine the creative process in an effort to better understand copyright’s generative benefits.  Joseph P. Fishman, Climenko Fellow & Lecturer at Harvard Law School, is the first academic to my knowledge who has attempted to express in analytical terms what I believe most artists understand intuitively — that constraint is always part of the creative process, and that copyright’s constraints very likely produce a greater diversity of works than we would see in a market without such constraints.

In his paper, Fishman refutes the often misguided assumption that creative people require “absolute freedom” in order to be more creative.  Artists and creative producers understand that a process without constraints (or boundaries) is not a process at all but a road to madness or failure or both.  A novelist does not arbitrarily pick themes and plot devices and language as she goes, but makes firm choices and either sticks to them or changes them wholesale in the book in order to produce a story that her readers will want to follow.  Most of us are familiar with the Michelangelo-attributed quote about sculpting being the act of “cutting away everything that is not the angel.”  Fishman has quantified that metaphor in his paper titled Creating Around Copyright.

The title refers to a well-established and accepted benefit of patent law that “working around” patents generates the kind of diversity of useful inventions that benefit society exactly as intended.  Fishman’s thesis asks why this same working around principle is not applied to legal scholarship on the subject of copyright.  Why would working around copyright not be as diversely generative as working around patents?  Experientially, creators will tell you that it is.  And now Mr. Fishman has applied legal theory that corresponds with that experience.

Last July, I wrote this post describing how the creative process is always about working around obstacles and that obstacles — legal, financial, physical, logistical, and internal — are often the most important catalysts to producing unanticipated, creative solutions that themselves become the signature elements that give a work its unique or masterful qualities.  Shortly after publishing that piece, Fishman contacted me, still in the early stages of writing his paper.  We spoke for a while, and his article does cite that October post, but what I did not know was that he would produce such a thorough and scientifically-based explanation of what artists throughout history have consistently described anecdotally.

Citing extensive psychological research into the creative process, Fishman demonstrates that there is an optimal balance to be maintained between constraint and freedom.  Too much constraint fails to produce creative diversity, but so does too little constraint.  In order to view the creative process as a science, Fishman rightly describes artistic work as an exercise in problem solving no different from the activities of a scientist or technologist.  We tend to talk about the arts in emotional or poetic terms, but Fishman is right that the process is entirely analogous to problem identification and solution.  As such, the psychological experiments to which Fishman refers throughout his article suggest that a purely “open” process free of constraints produces less creative variation than a process with the right amount and right types of constraints.

Fishman contrasts various experiments in constraint with the path-of-least-resistance approach (i.e. freeform) to creative development; and in a copyright context, a path of least resistance might be the ability, for instance, to riff off any existing creative works without the permission of rights holders.  But Fishman explains, “Following this path of least resistance inhibits originality, and hence creativity, by launching a mimetic approach to problem solving.”  To translate that into a contemporary example:  the world would be more boring with a hundred simultaneously available Sherlock Holmes derivatives than with, say, one or two of those while creators are forced to invent other works.

One analogy that came to mind while reading Fishman’s article was child-raising.  You’re probably familiar either with the concept or the unfortunate experience of the young child whose parents allow him to “express himself” insofar as he is given few if any boundaries.  Those of us who have witnessed this catastrophe in action know that the unbounded child is not only a brat, but is a thoroughly unoriginal brat incapable of producing creative solutions, even if his parents might see genius in his mischief.  But the child who is given appropriate boundaries balanced with appropriate freedoms will produce volumes of creative work though play acting, building, arts and crafts, etc.  As engaged parents, we constantly try to find that balance between constraint and freedom that produces a person capable of creative (i.e. original) problem-solving skills, but we know for sure that the child without any constraints is a recipe for trouble.  It seems to me that Fishman is seeking an analogous balance with copyright law.

The article even goes so far as to create a taxonomy of constraints, identifying seven properties for examination with regard to their generative or restrictive effects.  With the first of these properties, Source, he discusses chosen vs imposed constraints, which is an interesting and important division to recognize.  An artist or group of artists will embark on a project with myriad imposed constraints (time and money always at the top of the list), and will need to pick a number of chosen constraints that actually give shape, texture, and voice to the finished product.  I would add to this taxonomy a third subcategory under Source that most artists probably understand, and this would be innate or internal constraints.   In fact, any artist who looks first at external constraints and not at internal ones may have to consider the possibility that his biggest barrier is that he is not in fact an artist.

 When I was still in college, I spent some time thinking about various artistic media in terms of their constraints, operating from the premise that these boundaries are in fact what define each medium and are, therefore, the source of their power to affect us as we want art to do. After all, when one attends a class in a medium, say photography, discussion begins with the boundaries of the medium, even though we don’t usually think of it that way.  New photo students will begin to consider composition, light, two-dimensionality, color, all of which are boundaries that define a thing we call a photograph as something distinct from, say, looking at the subject of that photograph in real life.  Or to put it another way, a constraint on a photograph is that it cannot make a sound, but a power that it has is that it can make the viewer perceive sound without hearing it and thus offer an experience that re-contextualizes “real life,” which is what art is supposed to do.

This contemplation of boundaries is particularly relevant, I believe, to filmmakers because film more than any other medium trades on a gestalt that what is being experienced is “real.”  Even the most fantastic on-screen world in a narrative film tends to draw viewers into an immersive experience that is more visceral than with other media.  Additionally, the hundreds of dynamic variables, choices, and obstacles that are constantly being managed in order to complete a motion picture ought to make filmmakers particularly cognizant of the generative power of constraint.  The line between an imposed workaround and a brilliant creative choice is so blurry as to be absurd.

In his article, Fishman mentions standup comedy, which is a medium that probably deserves more study than it gets in this context. He writes,  “In stand-up comedy, for instance, the reputational cost of appropriating others’ jokes stimulates continued innovation in developing new ones.”  What’s interesting about that world is that comedians don’t need copyright per se to protect their jokes because it is an unspoken rule that stealing someone else’s material will very quickly ostracize the thief from both fans and peers.  Some might view this as evidence of copyright’s irrelevance, but to Fishman’s point, it should be viewed as an endorsement of constraint’s generative capacity.  The accepted boundaries among comedians force them to work harder to find their own voices, which adds to the diversity of comedy rather than homogenize the medium.

It is heartening to see a legal scholar make the effort to examine the pros and cons of copyright from a creative-process perspective.  It is also about time.  I sincerely hope others in Mr. Fishman’s field take note.

See Working Around Copyright by Joseph P. Fishman here.

Lighten up, Derek Khanna

A legal cub named Derek Khanna, rather than finishing his law degree and taking the bar exam, has been steadily transforming himself into something of an anti-copyright celebrity purporting to represent a conservative perspective.  And yesterday,  he offered this inscrutable editorial, which appeared on Business Insider* among other places.  Ostensibly, the article is a criticism of copyright terms (i.e. the length of copyright), and there is certainly nothing wrong with having that discussion.  In fact, in the two plus years since I’ve personally been involved with these issues, I’ve met several strong proponents of copyrights who would be open to discussing the pros and cons of shorter terms; but it must be something about their 20-30 years worth of professional IP experience that makes them sound just a little less, I don’t know, hysterical than Derek Khanna.

Titled “The Conservative Case for Taking on the Copyright Lobby,”  one might think that the word case coming from a Fellow at Yale would involve some sort of logical construct written with the kind of dispassion legal scholars often exhibit, given their experience balancing complex and competing interests. Not so much.  Instead, Mr. Khanna offers a sort of screamo variation on the anachronistic theme that Hollywood lobbyists are robbing the future economic and creative capacity out from under the next generation while simultaneously committing treason against the orthodoxy of America’s Framers.  All of this is achieved, of course, by the “content lobby” sequestering creative works in the grip of terminal copyrights.

While Disney’s extended hold on its seminal cartoon Steamboat Willie certainly makes an interesting case for discussion, to read Khanna’s article, one might get the idea that creative work has receded thanks to Mickey and the 1976 Copyright Act rather than expanded. All the novels and plays and screenplays unwritten!  All those songs unperformed!  The films we’ve never seen!  And the computer games not produced!  All because of that damn mouse!   Seriously?  Even with terms as long as they are, I have yet to meet a single artist, great or small, who gives existing, protected works anything more than a passing thought when he or she begins to create something new. So, Derek should lighten up because he’s not only not a lawyer yet, he’s really very much not an artist.  I quote:

The costs of one of the greatest thefts in American history by these special interests hinders learning, destroys our cultural legacy, hurts innovation and the public, but, most important, it impedes filmmakers, artists, deejays, and other content creators who need to be able to build upon the work of others to create new content — as we have done for centuries. 

What do you mean we, kid?  And where have you been for the last 20 years?  Oh, right, growing up.

Certainly, Khanna is correct that the social purpose of copyright is to promote new works in the arts and sciences; and if the application of the law exceeds or betrays this purpose by preventing people from building upon the works of others, then reform is in order. Yet, despite whatever research opportunities his fellowship at Yale affords, Kahnna insists on trotting out some of the most overused, amateur complaints about copyrights — Steamboat Willie, corporate ownership of the song “Happy Birthday,” and some ill-advised things former MPAA head Jack Valenti said 32 years ago — rather than demonstrate how current copyright terms are having any tangible, negative effect on the creation of new works. This is because there are no solid data to support this accusation on any scale that can be considered problematic.  To the contrary, copyright continues to serve as a basis for fair trade among authors of works that enables multiple parties to benefit creatively and financially; and it also codifies the principle of fair use in the U.S., which happens to have the most liberal interpretation of that concept among countries that maintain copyright laws.

It is interesting, though, that Derek claims to be making a “conservative case” with this article.  In fact, the absence of a case by any definition of traditional argument reveals the piece for the emotional, buzzword vehicle that it is.  And to this end, the only apparently conservative position taken by Khanna (and it’s not his idea, by the way) in this editorial is a lightly veiled nod to “strict constitutionalism” with quotes like this one:

The steep costs to perpetual extension of copyright have been long known and are well documented. This is why the British copyright statute, the Statute of Anne, limited copyright duration to 14 years; why 12 of the original 13 colonies had similar copyright durations in their own statutes; why the Constitution includes the phrase “limited times”; and why the founders limited copyright to 14 years.

Of course, it’s rational to assume that the Framers anticipated the downsides of perpetual copyright, but the term of 14 years is as arbitrary and irrelevant to contemporary America as whatever it is Sarah Palin keeps babbling about muskets and militias.  When the U.S. extended terms in 1998, it was playing catch-up as one of the last countries to adopt the same terms other copyright-supporting countries already had in place.  What that means is that the U.S., as one of the largest exporters of entertainment and information media in the world, was literally leaving money on the table relative to its trade partners; and it’s difficult to imagine a conservative advocating a position that would support losing revenue in that manner.   One does not make a sound case for thoughtful reform simply by repeating incendiary and obsolete complaints or by bowling a googly like this one:

To their credit, in moments of candor, content-industry lobbyists at least admit their goal is to repeal the copyright clause from the Constitution. 

I got nothin’. I’ve read it several times and cannot figure out why Khanna claims content owners would want to repeal the copyright clause unless he means they would seek to repeal only the phrase “for a limited time.”  Either way, it’s pure, careless invention to suggest this notion lurks anywhere in the minds of serious copyright professionals. The clause itself is older than the Bill of Rights. And no matter what the subject, every time someone with a political axe to grind claims to know the intent of the Framers, it’s hard not to see how such “wisdom” in the wrong hands results in events like the armed standoff now taking place in Nevada.  To quote Terry Hart, who writes the blog Copyhype:

The fact is, the Founders spent remarkably little time on copyright. Joel Barlow told the Continental Congress we should have a copyright act and, by the way, you should just copy England’s law. The copyright clause was proposed just a few days before the Constitution was finalized, and adopted without debate. Compare that to the process going into the 1976 Act, which actually comprises 20 years worth of study by the Copyright Office, roundtables, discussion drafts, public comment, and congressional hearings.

And in case Derek Khanna and the editors who think he’s worth listening to hadn’t noticed, a new copyright review has been underway for several months now, complete with hearings in the House Judiciary Committee. It’s a complex matter being discussed by serious people with many points of view and by a variety of stakeholders. And I am told by lawyers I know who have been the room with studio execs and the MPAA, that nobody is talking about extending terms. Meanwhile, the narrative that Hollywood alone holds Washington in the grip of its lobbyists has been outdated for quite some time, with those resources dwarfed by the expenditures of Google alone in its efforts to weaken copyright.

I get why Khanna’s charm and good looks make him an attractive poster boy to watch poke a hornet nest with a stick. But despite all the aggrandized prattle about the digital age elevating discourse in the world, this is all too often what it really looks like:  a kid with exactly zero professional experience spouting a bunch of popular-sounding and oversimplified bullet points, all because it’s good click-bait. But that’s not where the real discussion is taking place, and neither should it be. This kind of reminds me of a moment in the year 2000 when CNN was reporting the unfolding disaster of the Russian sub Kursk, trapped deep in the Barents Sea and about to lose all hands. And CNN brings on action/thriller novelist Tom Clancy because of course he wrote The Hunt for Red October.   Fourteen years later, this circus gets more absurd by the hour.

*This was mistakenly attributed to another article and link in The Washington Post.  Thanks to Mr. Khanna for the correction.