Despite Professors’ Misleading Rhetoric, CLASSICS is a Big Win for Everyone

By Matthew Barblan

America’s music industry is experiencing a historic moment. For the first time ever, stakeholders from across the industry have set aside their differences and come together to find a way to modernize our music licensing system. And what’s more, these diverse stakeholders—ranging from artists and record labels, to songwriters and music publishers, to the technology companies that distribute music throughout the country—have finally agreed on a framework for legislative reform. The resulting bill is the Music Modernization Act of 2018 (H.R. 5447, S. 2823, hereafter “MMA”), which passed the U.S. House of Representatives in April by a vote of 415-0 and is now under consideration in the U.S. Senate.

Nearly everyone sees the bill as the kind of win-win compromise that exemplifies lawmaking at its best. Nobody gets everything they want, but everyone gets something they need, and everyone is better off. Tech companies that distribute music will get relief from an uncertain patchwork of state laws for digital performances of pre-1972 sound recordings and from the difficulty of identifying the songwriters associated with millions of songs available on popular platforms like Spotify. Songwriters and music publishers will get a willing buyer/willing seller royalty rate for use of their songs that more closely resembles a rate negotiated in a free market, along with a brand new licensing collective to distribute royalties. Artists and record labels will get long-overdue recognition of the economic value of music recorded before 1972, which finally will be subject to the same federal licensing scheme for digital performances that applies to post-1972 sound recordings (and the licensing scheme, in turn, will be modified to create platform parity by applying the same royalty rate to all digital platforms).

Importantly, the public will get a healthier music ecosystem that spurs creativity by (1) giving artists and songwriters more confidence that the fruits of their labor will be protected and rewarded, and (2) giving technology platforms and others more confidence to distribute music without risking exposure to uncertain liabilities.

But not everyone is happy. Two weeks ago, a group of professors submitted a letter to the Senate Judiciary Committee complaining about the bill. Specifically, the professors take issue with the section of the bill that creates a federal right and a federal compulsory licensing scheme for the digital public performance of pre-1972 sound recordings. This section, titled Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS), takes a small step towards correcting a historical injustice inflicted upon artists who recorded their songs before 1972. Unfortunately, instead of acknowledging the importance of correcting this injustice or exploring how CLASSICS will improve artist/songwriter/platform confidence in America’s music ecosystem, the professors make several misleading claims about CLASSICS and ultimately argue that it will harm the public.

This essay provides an important corrective.

The Misleading Term Extension Argument

In their letter to the Senate, the professors accuse CLASSICS of being an unjust extension of copyright term. One of the letter’s signatories—Professor Larry Lessig—further echoed this criticism in a high profile op-ed in Wired, lamenting that “the fight for [copyright] term extension has begun anew.”

It is deeply misleading to characterize CLASSICS as copyright term extension, and lawmakers and the public should not be fooled by this rhetorical ploy. The truth is that CLASSICS does nothing to extend the copyright term of pre-1972 sound recordings. That term is set by a combination of state law and Section 301(c) of the federal Copyright Act, which was enacted long ago and which CLASSICS would not change. Under the existing law of most states, the copyright term for pre-1972 sound recordings is perpetual, but Section 301(c) of the Copyright Act will step in to extinguish state law copyrights for pre-1972 sound recordings in February of 2067. This is the framework now, and this will continue to be the framework if CLASSICS is adopted as law.

CLASSICS does create a new federal cause of action that owners of pre-1972 sound recordings (secured under state copyright law) can use to protect their property from unjust exploitation. Specifically, CLASSICS protects pre-1972 sound recording copyright owners from unauthorized digital public performances of their works. But this new federal cause of action does not extend the copyright term of pre-1972 sound recordings. In fact, with respect to the new cause of action, CLASSICS actually shortens the applicable enforceability period by excluding sound recordings made before 1923. By contrast, when it comes to reproduction, distribution and other rights protected under state copyright law, sound recording copyright owners can sue infringers regardless of how old the sound recordings are.

Furthermore, since the new cause of action would not be retroactive and would not take effect until after the MMA is signed into law, the effective enforceability period for the CLASSICS cause of action will be less than 50 years. If the law takes effect in 2019, it would run for 48 years from 2019 to 2067. This modest enforceability period is a far cry from the “total term of protection of 144 years” that Professor Lessig claims the bill provides.

In this context, to call CLASSICS a copyright term extension defies logic. Rather, the bill would create a new cause of action—attached at the hip to already existing copyrights—that does nothing to affect the already-existing term for those copyrights.

The Misleading Statutory Limitations Argument

Unfortunately, the misleading criticism of CLASSICS does not end with claims of term extension. In the same letter, the professors complain that CLASSICS “arbitrarily exempts pre-1972 sound recordings from almost all the statutory copyright limitations that apply to other types of works.” As an example, the professors note that, under CLASSICS, pre-1972 sound recordings would not be subject to Section 114 of the Copyright Act.

But it takes only a cursory glance at the bill to see that CLASSICS squarely situates pre-1972 sound recordings within Section 114’s compulsory licensing scheme. While CLASSICS prevents digital distribution platforms from profiting off of pre-1972 recording artists’ hard work without providing any compensation in return, CLASSICS does not give pre-1972 sound recording copyright owners a right to negotiate license rates in a free market. Instead, just like for post-1972 sound recordings, digital platforms will still be able to publicly perform pre-1972 sound recordings by simply complying with the terms of the Section 114 license. In light of this, it is truly bizarre to see professors complaining that CLASSICS exempts pre-1972 sound recordings from Section 114.

It is equally bizarre to see Professor Lessig argue in his Wired op-ed that because “there is no registry of [pre-1972 sound recording] owners anywhere,” if CLASSICS were to become law “no public or non-profit website could even begin to bear the cost of assuring they were not committing a crime.” For one thing, the Section 114 compulsory license is not limited to private or for-profit entities, and it does not require the licensee to identify the particular pre-1972 sound recording copyright owner in order to take advantage of the license. CLASSICS also makes the digital public performance of pre-1972 sound recordings subject to the Copyright Act’s statutory limitations for uses by libraries, archives, and educational institutions—limitations that would not otherwise apply to pre-1972 sound recordings. In doing so, CLASSICS makes it easier, not harder, for public and non-profit institutions to publicly perform pre-1972 sound recordings without risking liability.

Additionally, despite Professor Lessig’s suggestion to the contrary, CLASSICS would not create any criminal penalties. Simply reading the first sentence of the first subsection of CLASSICS makes clear that the cause of action is limited to the civil remedies codified in Sections 502 through 505 of the Copyright Act. Unfortunately, once Professor Lessig’s op-ed was published, thousands of Wired readers were potentially misled into thinking that Congress was trying to create new criminal penalties through the MMA.

Furthermore, it is deeply misleading to characterize CLASSICS as “arbitrarily exempting” pre-1972 sound recordings from any of the Copyright Act’s statutory limitations. CLASSICS itself doesn’t include any such exemptions; rather, the Copyright Act’s failure to include pre-1972 sound recordings as federal copyrightable works in the first place is the source of any so-called “exemptions.” In fact, CLASSICS significantly increases the statutory limitations applicable to pre-1972 sound recordings. And far from doing so “arbitrarily,” CLASSICS applies the limitations that are most relevant to the digital public performance of pre-1972 sound recordings. The professors lament that CLASSICS doesn’t make pre-1972 sound recordings subject to the limitations in Section 119 of the Copyright Act. But why would it? Section 119 deals with “secondary transmissions of distant television programming by satellite.” It’s simply not relevant to the new cause of action that CLASSICS would create.

To assert that CLASSICS “arbitrarily exempts” pre-1972 sound recordings from the Copyright Act’s limitations ignores both the fact that CLASSICS provides no such exemptions in the first place and the fact that CLASSICS, for the first time, subjects pre-1972 sound recordings to the most significant limitation in the Copyright Act—statutory licensing.

The Misleading “Purpose of Copyright” Argument

The professors also argue that because CLASSICS “grants new federal protections to old works,” it “does nothing to incentivize the creation of new works,” and as a result it does not serve the purposes of copyright law. Professor Lessig echoes this argument in his Wired op-ed, stating that CLASSICS “has nothing to do with the constitutional purpose of ‘promot[ing] Progress’” because it is a “blatant a gift without any public return as is conceivable.” This argument is misleading for two reasons. First, it implies that the only purpose of copyright law is the direct incentive to create new works. And second, it assumes that giving new protections to old works necessarily does nothing to incentivize the creation of new works. Neither of these assumptions are reasonable.

It is baffling to see scholars of copyright law ignore the fact that copyright serves more than one purpose. Simply looking at the way that copyright operates in the creative industries reveals that in addition to incentivizing the creation of new works, copyright also incentivizes investment in the dissemination and curation of pre-existing works. After all, the public interest—or the “Progress of Science”—isn’t served by the mere existence of creative works. The public interest is served by the existence of creative works that people actually know about and consume—the books and songs and movies and works of art that change our lives and contribute to a flourishing human experience. Like other property rights, copyright is the underlying asset that secures crucial investments in commercializing, marketing, and distributing products (in this case creative works) so that the public actually gets to enjoy them.

By adding clarity to the legal status of digital public performances of pre-1972 sound recordings—and jettisoning an uncertain patchwork of state laws—CLASSICS makes it easier for businesses and other organizations to disseminate these works without facing potential liability under the laws of the various states. Yes, they’ll have to secure a license to do so, but by bringing digital performances of pre-1972 sound recordings into the framework of the Copyright Act, including the provisions of Section 114, CLASSICS also makes it much easier to secure that license than at present. As a result, CLASSICS serves the purposes of copyright by making it easier to license and disseminate pre-1972 sound recordings.

CLASSICS also serves the purposes of copyright by rewarding pre-1972 sound recording artists for their creative labors, the results of which enrich our musical culture to this day. By finally securing to pre-1972 sound recording artists exclusive rights to the digital public performance of their sound recordings, CLASSICS acknowledges that these artists deserve to own the fruits of their hard work, and that doing so will promote a stronger and healthier music ecosystem. Securing property rights to artists for the fruits of their creative labors—and thus facilitating the myriad transactions that enable a thriving creative economy—is a core part of an effective copyright system, and it clearly serves the purposes of copyright.

But even under a narrow theory that copyright’s only purpose is to incentivize the creation of new works, CLASSICS will also help in that effort. By preventing digital platforms from selling access to pre-1972 sound recordings without paying anything to the artists who recorded those songs, CLASSICS will demonstrate to all artists that Congress is capable of correcting injustices that result from unpredictable changes in technology. As a result, CLASSICS will give artists more confidence that the fruits of their creative labors won’t be wrongfully expropriated in the future, and that if new technology makes it possible to unfairly exploit their works without compensating them, there is at least a chance that Congress will change the law to correct the injustice. This confidence will spur more artists to use their time and money (not to mention their hearts and souls) to create new works.

Whether you take a broad view of copyright’s purpose that considers the way that copyright actually functions in the music industry, or a narrow view that focuses solely on new works incentivized, CLASSICS clearly serves the purposes of copyright law.

A Good Result for the Public

 So where does the public fit into all of this? Reading the professors’ letter and Lessig’s op-ed, a lay observer might conclude that CLASSICS would rob the public of a precious resource without providing any benefit in return. That simply is not the case.

CLASSICS benefits the public in many ways. For starters, the public has an interest in treating people fairly. By preventing the unjust exploitation of artists who recorded their music before 1972, CLASSICS contributes to a society that rewards people for the fruits of their labor and that closes loopholes that allow multi-million dollar companies to profit off the backs of artists without compensating them. To the extent post-72 artists take note, CLASSICS further benefits the public by increasing artists’ confidence that the laws that govern the music industry will change over time to ensure the industry’s continuing health. CLASSICS also benefits the public by fostering a music ecosystem that enables companies and other organizations to invest in the dissemination of pre-1972 sound recordings without risking exposure to an uncertain patchwork of potential state law liability.

And what is the cost of these benefits? It’s simple. Just like for post-1972 sound recordings, if you want to digitally publicly perform pre-1972 sound recordings, you have to pay. And CLASSICS makes it easy to pay. Last I checked there wasn’t a public shortage of access to sound recordings from 1973 or later. There is simply no reason to believe that CLASSICS will hurt the public’s access to pre-1972 sound recordings.

Despite a few professors’ misleading rhetoric to the contrary, CLASSICS is a big win for everyone.

Matthew Barblan is Executive Director of the Center for the Protection of Intellectual Property and Assistant Professor of Law at Antonin Scalia Law School, George Mason University, where he teaches copyright and trademark law.