Something happened on June 18 that is too hard to ignore: Capitol Records v. Thomas-Rasset. Maybe you have already read about it in the news. If you haven’t heard about the decision, if you have ever shared music online, or if you have a business or idea based on file sharing or media content delivery over the Internet, you’ll probably want to read on.
A jury found Jammie Thomas-Rasset guilty of copyright infringement for sharing 24 MP3 songs over the Internet, and the court ordered Ms. Thomas-Rasset to pay $1.9 million in damages to the Recording Industry Association of America (RIAA), the group that represents the lion’s share of US recording industry distributors in America. To be sure, this 32 year old single mother of two kids was found to have violated the copyright of some of her favorite music acts. However, a verdict of almost $2 million for downloading 24 songs is likely a bit extreme. Regardless, and most importantly, it is very doubtful that the RIAA will ever see the $1.9 million in damages it was awarded, or anything close to it, given the infringer’s personal financial situation.
This wholly unsatisfactory scenario could have been avoided if a compulsory licensing scheme were implemented for file sharing. Under the Copyright Act of 1976 (17 U.S.C. §§101-803), there are certain uses under the compulsory license scheme that a person can make of music as long as the musical work already has been made available to the US public (17 U.S.C. §115(a)(1)). The compulsory license allows one to make and distribute recordings of a song for a set royalty as long as the person provides notice for the use and pays a royalty to the copyright owner. The notice must be sent to the copyright owner before making the recording or within thirty (30) days after a recording is made—and before distributing any copies. If a person cannot determine the copyright owner, then notice should be given to the Copyright Office, within thirty days of making the recording, but before distributing any copies of the new recording. Failure to provide this notice would constitute copyright infringement. Parties can negotiate their own royalty payments and license terms (17 U.S.C. §115(c)(3)(B)), but if the parties cannot agree on a royalty rate, the royalty can be set by Copyright Royalty Judges whose royalty determination will be binding (17 U.S.C. §115(c)(3)(D)). Under this system, there is room for negotiation, but the license still is compulsory.
On the performance end of things, the owner of the copyright in the underlying musical composition can still control public performance of the work or transmission over the radio (17 U.S.C. §106(4)). And, similar to negotiating a royalty under the compulsory licensing scheme, many recorded works can be licensed for public performance through a performance rights organizations such as ASCAP, BMI, or SESAC (See 17 U.S.C. §116).
Thus, royalty rates would not be too difficult to determine and such a system would not be difficult to understand from the consumer end, even though implementing the system likely would be quite complicated. Whether the system were one where Copyright Royalty Judges could step in and set royalties, or where license rates were set by groups such as the RIAA, ASCAP, BMI, or SESAC, or a hybrid of the two systems, something should be done.
If you are a copyright owner of music, think about what royalty rates you would charge for your copyrighted content, and stay tuned, because this song is not over.