Debating copyright reform: time for compulsory licenses?

Imagine a world where you could legally acquire and listen to as much music as you want for a flat fee. How you got the music—iTunes, Rhapsody, Usenet—and where you listened to it wouldn't matter. Your monthly license would give you carte blanche to snarf up as much music as you like. It's an idea that's been bandied about before, and it recently resurfaced in Las Vegas.

Most observers agree that the copyright and IP laws of the US are in dire need of reform. The ways in which they should be reformed is a subject for debate. One's views on whether the reach of copyright law—to take one hot-button issue—should be extended or shortened is informed by whether one is a composer, manufacturer, or music fan. A panel convened at the Consumer Electronics Show this year took on the questions of what shape IP reform should take and what kind of business model makes the most sense in an age of digital distribution where copyright owners find it difficult to maintain a semblance of control over how their content is used.

Titled "Washington, Intellectual Property and Your Living Room," the panel was moderated by Ars Editor-in-Chief Ken Fisher. The participants were mostly from the music business. Representing musicians and publishers were David Israelite, president and CEO of the National Music Publishers' Association; Fred Cannon, VP of government relations for BMI; and Ted Cohen, managing partner of TAG Strategic and former SVP of digital development and distribution for major label EMI. Representing the online media industry was Jonathan Potter, executive director of the Digital Media Association, which has been a major player in the fight against higher 'Net radio streaming royalties. Rounding out the panel was Gigi Sohn, president and cofounder of Public Knowledge.

"How do we get to balanced copyright laws? How do we make sure that the publishing industry makes a nice profit, but doesn't keep control over the entire value chain?" Sohn began by asking. The solution, she argued, was to blow up current copyright law and start again, spelling out Public Knowledge's six-point plan for reforming copyright law, which includes making fair use more explicit.

Israelite called the plan "fairly radical" and argued against weakening copyright law in any way in a time where theft of intellectual property "is rampant." He singled out Google and YouTube for building their business models on the back of copyright infringement. "Much of user-generated content is not user-generated, but songwriter-generated content," argued Israelite. "Google paid $1.65 billion for YouTube because people want to see copyrighted material, and the problem is that Google and YouTube don't pay songwriters."

Opinions differed on whether fair use should be simplified, better codified, strengthened, or something entirely different. Sohn believes that fair use should be made more explicit, and Public Knowledge's plans for copyright law reform call for the concept to expanded to "add incidental, transformative and noncommercial personal uses of content." DiMA head Jonathan Potter countered that he wasn't sure how to make fair use more explicit, pointing out that it has always functioned as a litigation defense rather than a guarantee that the use of a copyrighted work was in conformity with copyright law. There was no agreement amongst the panel that making fair use more "user friendly" was possible. As Potter noted, we can't very well throw everyone in jail, so another solution is needed. 

Is it time for blanket licenses?

The discussion then turned to how to ensure that music publishers and songwriters get fairly compensated for their efforts. Potter was the first to raise the idea of compulsory licenses. "Have we crossed the line where control is no longer the issue?" he wondered. "Consumer control has exceeded what copyright owners can do. Are we at the point of statutory licensing here?"

A compulsory license would force music companies to license their music, generally at a set rate, as musicians do now when they cover songs by other artists. It could also allow anyone to listen to or use any songs (or movies) covered by the license without having to negotiate what Potter called a "painful" system. For consumers, it could mean full access to the music of your choice on the medium of your choice (e.g., iTunes, Amazon, Rhapsody, BitTorrent) for a flat fee. It's a concept that some artists have advocated, including Steven Page of the Barenaked Ladies, and that labels appear to be at least thinking about.

"Not everyone's an artist," Page told Ars at a music conference last year, "but people can now express themselves like artists do, by sharing something that means something to them. If we had a system of compulsory licenses, they don't have to worry about going and getting a license to do it, or circumventing the system."

At the panel in Vegas, former EMI executive Ted Cohen agreed that the licensing process can be painful at times. "One of the things we have to do is to make it better," he said. "Instead of taking about [how the music is transported]—who cares about that? The question is who's going to pay and how's the money going to be divided up?"

Israelite again angrily accused companies like YouTube of diverting revenues away from copyright holders, but Potter countered that YouTube doesn't monetize content that it hasn't licensed. "Eventually, the artistic community, the creative community, will make the decision that they've lost enough control that compulsory or statutory licensing is the way to go. Is that what it's going to take to get Congress to not just sit back?"

Cannon agreed. "I still think the blanket licenses are a solution," he said. "We negotiate blanket licenses, so we rate the true value of the music."

The stars may be beginning to align for compulsory licenses, but there are still a couple of significant hurdles. First, the US Register of Copyrights, Marybeth Peters, opposes them. "I hope we don't go to a system of compulsory licenses," she told Ars last year. "I don't see how any creator benefits from a compulsory license."

The other hurdle is agreeing on a price. Not only has the revenue pie gotten smaller over the past several years, but it's being sliced up differently. Everyone one on the panel was in agreement that artists, songwriters, and publishers should be compensated fairly. Deciding on what constitutes "fair" is another matter entirely. Israelite gave the impression that he yearned for the good old (pre-digital) days, but those days are gone forever as consumers' tastes, buying habits, and listening patterns have been forever changed.

EFF staff attorney Fred von Lohmann, who was in the audience, said that it's up to the market to decide. "The good news is that we don't have to wait for Congress to fix the problem," he remarked. "I agree with Potter that a blanket license makes sense."

von Lohmann also pointed out that all-you-can-eat subscription services like those of Rhapsody and Napster haven't proven as popular as the alternatives, which he interpreted as meaning that consumers think $14.95 per month is too much for unlimited music. "In terms of the pricing, you're already competing with free," he said. "The key is finding a profit maximizing price that consumers find worthwhile."

That's the hard part, and it means that everybody along the music value chain is going to need to content themselves with a smaller percentage piece of pie, while hoping that the pie itself gets much larger.