[Ip-health] US Compulsory license for ringtones

[James Love]

On the subject of non-voluntary licensing of intellectual property
rights, the US recently decided that mobile phone ringtones fall
under compulsory licensing provisions for copyright.  Jamie

http://www.copyright.gov/docs/ringtone-decision.pdf

http://www.mondaq.com/article.asp?articleid=3D43784&searchresults=3D1

United States: More Ringtones To Choose Among: New Copyright Office
Decision Simplifies Acquisitions With Compulsory Licensing
Lawrence A. Schultis, Cydney A. Tune and Meighan E. O'Reardon
02 November 2006


http://arstechnica.com/news.ars/post/20061024-8063.html

Ringtones deserve a compulsory license

10/24/2006 1:16:32 PM, by Nate Anderson

Copyright owners have great control over the way in which their works
are used, but that control is not unlimited. Music publishers were
reminded of this fact when the US Register of Copyrights decided last
week that ringtones fall under the compulsory license provisions of
copyright law.

While that decision may sound esoteric, it's actually quite an
important one for the industry, and the fight over it was
contentious. Earlier this year, the RIAA asked the Copyright Royalty
Board=97the government group that sets royalty rates for compulsory
licenses=97to consider whether ringtones fell under the statutory
licensing provisions of US Code Chapter 17, Section 115. The
Copyright Royalty Board agreed that this was an interesting question,
and they referred it to the Register of Copyrights, Marybeth Peters.
Peters and her staff convened a hearing on October 4 at which the
RIAA presented its arguments in favor of the compulsory license,
while representatives of the National Music Publishers Association
(NMPA) and other put forward their strongest objections.

Section 115 was passed nearly a century ago, and was originally
designed to deal with the issue of player pianos and the rolls of
music that kept them going. Today, that section allows anyone to
produce a "phonorecord" of any song at a royalty rate set by the
Copyright Office. The only caveat is that the song must already have
been made available for sale to the public.

"Phonorecord" is different from "sound recording," though. The law
allows for me to license Pedro the Lion's "Big Trucks," for instance,
and to record a version of that song with Managing Editor Eric
Bangeman on the upright bass and Editor Ken Fisher contributing
washboard percussion. I can then release that song on my forthcoming
album ("Nate Anderson and the Orbiting HQ's Sing Songs of Love &
Freedom"), so long as I track sales and pay royalties at the
scheduled rate. All of this can be done without needing anyone's
permission.

I do not have the right, however, to rip the original version of the
song, include it on a compilation album, and sell that without
permission. The compulsory license does not extend to the actual
sound recordings made by the original performers, which is why groups
like The Beatles cannot be forced to put their music up for sale on
iTunes. In other words, I can force songwriters to license their
compositions, but I cannot force music labels to license their
particular recordings of those compositions.

The RIAA argues that ringtones should be subject to the same
requirements. Once a copyright holder authorizes his or her work for
sale as a ringtone, anyone ought to be able to use bits of that work
as a ringtone without permission. This would be good for the music
labels, since they would more easily be able to offer a package of
rights (to sell both songs and ringtones) to cell phone companies and
others.

Music publishers want to retain control of those rights, though, and
believe that the market should continue to decide if and for how much
ringtones should be licensed. As part of their defense, they insist
that ringtones represent "derivative works" deserving of their own
copyright protection.

The Register of Copyrights has now concluded that ringtones do fall
under the section 115 provisions, and has instructed the Copyright
Royalty Judges to draw up a schedule of royalties for the compulsory
license. Predictably, the RIAA was pleased with the ruling. General
Counsel Steven Marks said, "This decision injects clarity into the
marketplace=97clarity that will help satisfy fans' hunger for the
latest hits from today's best artists by affording record companies
and ringtone providers the ability to move new offerings quickly and
easily to consumers. Ultimately, we're all seeking a vibrant mobile
business. This decision helps us further that goal."

Music publishers were unhappy. The Harry Fox Agency, the largest
issuer of music licenses in the US, said, "Publishers have
successfully licensed ringtones and mastertones in the free market
for years, including through HFA's ringtones licensing program. HFA
is therefore greatly disappointed by the Register's decision in the
ratesetting proceeding to subject certain ringtones and mastertones
to the compulsory license, which will hurt publishers and
songwriters." They also promised to join forces with the NMPA to
evaluate "legal options" regarding the decision.

By setting rates, rather than letting the market decide, ringtones
should get cheaper, assuming that cell phone providers pass the
savings on to customers. The ruling may also mean that more ringtones
are available from more providers, which means that Michael Bolton's
"Time, Love And Tenderness" could soon let us know when Anders enters
the office.

---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

"If everyone thinks the same: No one thinks."  Bill Walton"