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The policy debate surrounding a public performance right in sound recordings has been well rehearsed for over 40 years. Despite increasingly strong arguments favoring the right, the political will has materialized slowly. The proposed Performance Rights Act (PRA) is the next incremental step. However, because it is limited to broadcast performances, it does not address performances in dispersed public venues (clubs, stores, bars, restaurants, noncommercial settings, and other venues where recorded music is played) as well as unique situations such as ringtones (which may or may not be public performances, pending further legislation or litigation).

Because it falls short of the full performance right recognized by most Rome Convention countries, the PRA will fail to trigger full reciprocity from those countries, depriving U.S. rightsholders of additional overseas royalties. While the PRA piggybacks on the existing statutory royalty for digital subscription transmissions and webcasting (a royalty mechanism that is already complex), enacting a full performance right that encompasses dispersed public venues will present even greater implementation challenges. As public performance rights are broadened, the number of licensees will increase, and the nature of their music-related activities and revenue streams (or lack thereof, in the case of noncommercial users) will be more diverse. This will make rate-setting and data collection more challenging; one size will no longer fit all. Even under the PRA, all broadcasters are not subject to identical rates. In the nontransmission public performance context, the existing statutory royalty mechanism simply will not work; yet a system of fully negotiated royalties could obstruct the flow of royalties to composers and publishers.

Designing a model for full performance rights in sound recordings should accomplish two goals: (1) support new music industry models that foster creativity and benefit consumers, and (2) optimize the inflow of foreign performance royalties to U.S. rightsholders.

Complicating this task (under the existing statutory royalty scheme as well as any broader scheme) is the proliferation of rightsholders resulting from changes in the music industry and its legal environment. Major record labels will decline as musicians embrace new alternatives for funding, promotion, and distribution. Increasingly, these artists will retain the copyrights in their recordings. When the work-made-for-hire status of older recordings emerges from legal limbo (through legislation or litigation), artists may be able to terminate their grants and regain their copyrights. Many copyrights will be jointly owned (by band members, perhaps together with the record label). With the restoration of federal copyrights in pre-1972 foreign sound recordings, additional rightsholders are emerging, many of them outside the U.S. and possibly difficult to locate. In the case of pre-1972 U.S. sound recordings, varying levels of state copyright protection are being implemented, raising the question whether a federal performance right should apply to producers and/or performers on those recordings. The possibility of future federal protection for pre-1972 domestic recordings adds another wrinkle. Finally, a large number of additional rightsholders may not share in the ownership of the sound recording copyright (for example, orchestra employees); yet they will be entitled to royalties in their capacity as performers. Unions may assist, but not all rightsholders will be union members. Identifying all rightsholders for each recording, and maintaining their contact information, will present formidable challenges. To trigger reciprocity, both domestic and foreign rightsholders must be included.

Whether the U.S. approach to performance rights will trigger reciprocity from foreign performance rights societies (PRSs) depends on international treaties, national laws, and the specific policies of each PRS. Thus, these foreign authorities must be considered in designing the new performance rights regime. It may not be possible to satisfy every foreign PRS, but the most important foreign markets for U.S. music should be considered. The Fairness in Music Licensing Act may present a significant obstacle to full reciprocity in many markets.

This article examines possible solutions to the tasks of setting rates, tracking usage, maintaining rightsholder data, and collecting, allocating, and disbursing royalties under a full performance rights regime, with the twin goals of (1) benefitting creators and consumers, (including facilitating growth of new business models to achieve these goals) and (2) maximizing the benefits of reciprocity. Foreign regimes are considered in depth, both for their solutions to the implementation challenge, and as guideposts for triggering reciprocity.

Publication Citation

2 Harv. J. Sports & Ent. L. 221 (2011)