Is ‘Fair Pay’ Really A ‘Public Policy No-Brainer’?

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A bipartisan coalition of federal legislators recently introduced H.R. 1836, a copyright-related bill titled the “Fair Play Fair Pay Act of 2017.” If enacted, it would require owners of commercially licensed broadcast radio stations that play recorded music to either pay a government-set fee to their copyright owners or obtain their permission to waive payment of that fee.


The subject has unleashed a fierce debate among radio industry leaders — namely those with medium- to small-sized broadcast companies — who are against any additional rights fees.

But, is there a “fair pay/play” problem? Thomas Sydnor, a Visiting Fellow with AEI’s Center for Internet, Communications, and Technology Policy, thinks so. In this column, Sydnor believes such legislation is in the “legal, national, and economic interests of the U.S.”


By Thomas Syndor

As a general rule, any bill that alters the scope of existing federal intellectual property rights will tend to raise challenging questions on which reasonable people can disagree.

But, as I noted nearly a decade ago, the Fair Play Fair Pay Act and its predecessors are exceptions to that rule. Simply put, the legal, national, and economic interests of the United States would all be advanced were we to — belatedly — grant owners of copyrights in popular sound recordings rights equal in scope to those now granted by essentially every other functional representative democracy on Earth.

The “fair pay/play” problem
When you listen to your favorite recording of a popular song, you enjoy two copyright-protected works simultaneously. One is the song — the “musical composition” — created and recorded in musical notation by a songwriter and a lyricist. The other is the sound recording created by the musicians whose performance of a given song can add enormous value to it.

For example, Taylor Swift and I have pursued different careers — even though we are both equally capable of recording our performances of her songs. Unfortunately, I lack certain talents that she has developed. Consequently, she is an international star, while I am a middle-aged lawyer.

The vast differences between Swift and myself thus show why copyright laws must protect both songwriters and performers against unauthorized, uncompensated commercial exploitation of their recorded works. Indeed, essentially all of Earth’s nation-states now hold that if owners of their commercial, analog radio stations publicly perform a popular recording of a song, then they must either obtain the permission of or compensate the owner of the copyrights in the song, the musical composition.

Unfortunately, a handful of states do not require their commercial, analog radio broadcasters to obtain the permission of or to compensate musicians and singers who have recorded their own performances of a given song. Included in that handful are familiar rogue states such as Syria, North Korea, Iran, and one other — the United States of America.

The economics of fair play are simple: Adopting global norms for public-performance rights will increase U.S. jobs and GDP and reduce our trade deficit. Worse yet, there is one big difference between the US and Syria, Iran, and North Korea. The abnormally narrow copyright laws of the past three countries do not reduce their net GDPs because they are not major net exporters of globally popular song recordings. To their credit, international markets just don’t seem to value songs praising Assad, the Ayatollah, or Kim Jong-Un….

But the U.S. is one of the, if not the, most successful global net exporters of copyrighted sound recordings. Consequently, our existing copyright laws now cripple major, job-creating US industries, decrease our GDP, and increase our trade deficit.

The cause of all those problems is simple. Every other developed democracy requires its domestic, analog, commercial radio stations to pay creators of sound recordings when they publicly perform their recordings. Most collect payments from radio-station owners under a “remuneration right” — what U.S. copyright law would call a compulsory license. Because almost all countries are, in relation to the U.S., net importers of popular sound recordings, many of the royalties that they collect should be paid to American performers or copyright owners.

But they are not. Because the U.S. does not permit foreign musicians to collect any royalties when their songs are played by U.S.-based analog radio stations, foreign nations correctly perceive no reason to pay any domestically collected royalties to U.S.-based owners of copyrights in popular sound recordings. What they do with those collected royalties varies, but they never go to the entrepreneurs who earned them — the U.S.-based artists or corporations whose risky, long-term investments of human or financial capital created globally popular sound recordings.

That is why we decrease U.S. GDP and increase our balance of trade by failing to provide perfectly ordinary public-performance rights for owners of copyrights in sound recordings. Domestically, doing so might cause some capital to flow from distributors of already popular sound recordings to the entrepreneurs who try to create new popular sound recordings. That would neither increase nor decrease U.S. GDP. However, providing domestic public-performance rights broad enough to entitle U.S. performers to demand payment of royalties already collected on their behalf in almost all developed and developing countries would increase U.S. GDP, reduce “offshoring” of IP-based assets, and decrease our balance of trade.

More technologically neutral U.S. copyright laws will also encourage more distributional innovation. Fair-play-based U.S. copyright laws should also create more U.S. jobs and economic growth by encouraging more internet-based innovation. That result follows from one of the fundamental principles of modern U.S. copyright law — technological neutrality.

This one post cannot trace the century-long trail of errors that ultimately created the analog-broadcast-radio exception to U.S. public performance rights for owners of copyrights in sound recordings. Consequently, it must merely note that when Congress last rewrote U.S. copyright law in 1976, it explicitly and repeatedly adopted a new principle of US copyright law. This was technological neutrality: By default, U.S. copyright laws were now to be just as applicable and broadly construed as applied to later-developed 21st-century distribution technologies as they were to distribution technologies developed and deployed well before 1976.

This principle of technological neutrality strongly suggests the propriety of eliminating the analog-broadcast-radio exception to U.S. public performance rights. It makes no sense for U.S. copyright laws to give — for free — to radio broadcasters who use old, analog technologies public-performance rights that providers of satellite or internet-based radio-like services must pay for under existing US compulsory licenses.

To be sure, enacting legislation such as the Fair Play Fair Pay Act of 2017 will be politically challenging. Nevertheless, from international, national, and economic perspectives, it remains what it has always been — a “public-policy no-brainer.”

 


Thomas Sydnor II is a Visiting Fellow with AEI’s Center for Internet, Communications, and Technology Policy. Previously, he served as Director of the Center for the Study of Digital Property at the Progress & Freedom Foundation. His main areas of research include copyright and intellectual property, focusing on open source and patents. He witnessed the evolution of copyright discussion throughout his career, first as Counsel for Intellectual Property and Technology for the US Senate Judiciary Committee and later as copyright advisor to the Office of International Relations at the US Patent and Trademark Office. During his time with the Senate, Sydnor helped to secure passage of the Copyright Royalty and Distribution Reform Act and the Intellectual Property Protection and Courts Amendments Act, as well as other key pieces of copyright legislation.