A New Business Model Explained

In my view, public policy should strongly support both the right and the opportunity of music industry rights holders to derive ample financial rewards from their contributions to culture and to commerce. By the same token, however, the music industry should not have the right to demand that public policy support its desire to do business in a particular way.

An alternative to the sales-based revenue model is needed for digital transmissions of recorded music. I suggest this:

Lawmakers should aggregate the rights of songwriters, music publishers, recording artists and record labels in their respective musical works and sound recordings and create a single right specifically adapted to digital transmissions of recorded music. The digital transmission right would be a new right not an additional right. It would replace the parties’ now-existing reproduction, public performance and distribution rights (and, where applicable, the communication to the public and making available rights) for purposes of digital transmissions of sound recordings and the musical works they embody.

Going forward, the determinative consideration will be whether transmissions of recorded music have occurred, not whether transmissions result in sales, promote sales, or may cause sales to be lost. Licenses will be made available without regard to whether recordings are streamed, downloaded, or transmitted by some other means not yet devised; whether programming is interactive or non-interactive, or contains this, that or another recording; or whether the service that provides the transmission accepts user-generated content or operates as a P2P network. The number of copies made in the course of transmissions (including server copies, and ephemeral, transitory and buffer copies), the type of transmission technology used, and the file format in which recordings are transmitted will not be of concern.

Ownership of the digital transmission right in each recording will be held jointly by the songwriter(s), music publisher(s), recording artist(s) and record label who contribute to it. Each party will be a co-owner of the right in the recording in question.

No one co-owner would be permitted to act as gatekeeper of the rights of all, with sole discretion to determine, by way of a veto, if, when, how and by whom this newly-established right may be exploited. Rather, regardless of the nature of their relationships to each other under pre-existing agreements, or to particular recordings under current law, under the digital transmission right each rights holder will have independent and sufficient authority to grant non-exclusive licenses on any terms to which they and their licensees agree. The only limitation on this authority will be the obligation to account to co-owners for royalties earned.

Rights holders of individual recordings may make whatever arrangements they wish among themselves for division of royalties. However, when voluntary agreement is not possible, I suggest that the interests of the songwriter(s), music publisher(s), recording artist(s) and record label should each be allocated 25% of royalties earned from licensed transmissions of their recordings.

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