What’s the right rate for [fill in the blank] music service? Should we trust the Copyright Royalty Board? Should we let Congress decide? And if we let Congress decide, which Senate bill properly determines what is fair?

The fact is, there is no perfectly right answer to these questions. A lot of heat was generated today at a Senate Judiciary Committee hearing on music rates, but there was little light. That was easy to predict, because as the US Register of Copyrights Mary Beth Peters often points out, there is no free market in the music industry, whether you’re a songwriter or a performer.

There are so many compulsory licenses throughout the industry, some of them a century old. They reduce transaction costs but create tremendous regulatory friction. The Copyright Royalty Board was only created two years ago and its rulings have been controversial and have been appealed. It was created to replace the flawed Copyright Arbitration Royalty Panel (to avoid a not-so-good acronym, “arbitration” was put in front of “royalty”) and CARP replaced another flawed model. As Ben Franklin said, insanity is doing the same thing over and over and expecting a different result.

Now to be fair, these licenses aren’t going away, and my friends who are songwriters and performers by and large don’t want them to; the initial transition to a free market in the music industry would make the transition to a market economy when the Soviet Union collapsed look like a day in the park. But what I would ask is that when arbitration boards or Congress debate rates, that they put creators first. After all, without the creators, there is nothing to determine a rate for, and that technology that apparently is in such danger (today it was Internet radio) wouldn’t have any listeners without the music.

Senators Brownback (R-KS) and Wyden (D-OR) — both of whom have a strong track record promoting new technologies, which is a good thing — passionately spoke today (Brownback in an opening statement, Wyden in testimony) about saving Internet radio, but never said anything about the songwriters and performers that people enjoy with Internet radio. That’s not unlike the “consumer” advocates who push for more ways for people to take copyrighted works and re-use them, without acknowledging that there would be nothing to re-use if the creator hadn’t produced the work to begin with.

Now I must acknowledge that different artists will have different points of view, which is natural, after all. Songwriter and performer Matt Nathanson is not a household name and testified that he feels Internet radio is a great promotional tool for him, so he’s willing to get less in royalties to make sure more stations stay in operation. That is a logical calculation for him. But John Ondrasik of Five for Fighting in his testimony said that it only makes sense that regardless of technology, musicians should be paid according to fair market value. He neglected to say that in the absence of a market such a result isn’t possible, but what is clear to any observer of past rate proceedings is that there often, statutorily, is little or no attempt at calculating free market rates, and official standards vary by technology.

I don’t pretend to have the answers to the many questions raised at today’s panel. I wish I did, because my songwriter and performer friends deserve the same fairness that comes to, say, novelists, who write a book, contract with a publisher (or increasingly publish themselves), and then let consumers in the market decide directly how much they’ll earn. I don’t think I’ll see that world in my lifetime in the music industry.

But in the meantime, those of us who care about artists and creators must make sure they are first and foremost in any discussion of rate-setting. We also must make sure that those who would wish to dilute copyright don’t point to the legal and business complications found in music, which are systemic to that particular industry, and use them to urge broader rewrites of copyright law. The consequences for artists of all types would be disastrous.

This entry was posted on Tuesday, July 29th, 2008 at 10:48 am by Patrick Ross and is filed under capitol hill, copyright law, licensing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.