RIAA Suggests Blanket Licenses, Market Based Rates and The Creation of Sound Performance Copyright For Music Licensing
Simplifying the licensing system for musical works is key to further expanding the digital music marketplace, providing fans with more music options and creating healthier revenue streams for music creators, according to the Recording Industry Association of America’s (RIAA) official comments filed as part of the U.S. Copyright Office’s examination of music licensing. “Modernizing the licensing system for musical works is a win for everyone, but must be a collaborative exercise,” says Cary Sherman, CEO RIAA.
The proposal encourages blanket licenses that would include “all necessary rights instead of multiple licenses from multiple entities with overlapping rights.” It also includes a suggestion that, “publishers and songwriters be compensated with rates negotiated and agreed to by industry partners rather than those set by the courts.” Finally the organization also calls for the establishment of a terrestrial performance right so, “artists and labels can be paid when their music is played over AM/FM radio.”
Adjusting rates to a market-based system would require the consent decrees which govern ASCAP and BMI to be radically rewritten or perhaps voided, something which many publishers and songwriters are in favor of doing. Perhaps the most revolutionary of the RIAA suggestions is to create what appears to be a single royalty for all rights which would then be split amongst stakeholders according to a set percentage. The RIAA explains it by saying in its press release, “A rate that is an agreed, consistent, set percentage of label revenues from modern music products…Only if a precise percentage were negotiated and agreed by stakeholders might it then be suggested as legislation, so that no party would be agreeing to reform without understanding its economic consequences. This would be a market-based royalty, because labels’ deals are negotiated in the marketplace, and publishers and songwriters would receive the percentage of that deal that they had previously negotiated with record companies.”
If a blanket licensing system were adopted then it would simply the licensing process and, according to the RIAA, stimulate the funding and development of innovative new music services that might spur usage and generate more income.
“We don’t pretend to have all the answers, says Sherman. “But we know the status quo is not working like it should. It’s time to have this conversation, think outside the box and begin to build a modern music marketplace – based on market-based concepts that work for all music creators. We appreciate the efforts of Congress and the Copyright Office in undertaking its examination of the complex licensing system.”
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Does the RIAA proposal go far enough? Or too far? Does it make sense to make royalty changes for the physical product marketplace and/or digital downloads at this time or should we purely focus on licensing with regards to streaming rights?