Music firms mull Net copyright claim

As the music business gets further entrenched on the Internet, the copyright issues involved are becoming increasingly complicated--and contentious.

The latest example is a letter sent recently by the Recording Industry Association of America (RIAA), a trade organization that represents more than 250 record labels, to Internet radio stations that it deems "Webcasters." The group seeks a licensing fee over and above what the stations already pay to copyright holders through agencies such as the American Society of Composers, Authors, and Publishers.

The Recording Industry Association sent the letter to about 40 Net radio stations indicating that they had not received licenses from the record companies for the Webcasting of their music.

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"I write because our record company members are the copyright owners of the sound recordings that you are transmitting, and we want to ensure that you have secured the appropriate permission to Webcast those recordings," wrote Steven Marks, vice president and deputy general counsel for the association.

The letter goes on to explain why the the association is making the claim: "You may not realize it, but Webcasting implicates the rights of the record companies that create those recordings. Specifically, the reproduction of sound recordings in your computer hardware and digital transmission of those sound recordings require a license from the respective sound recording owners."

The separate copyright to which Marks refers is in the Digital Performance Right in Sound Recordings Act, which went into effect in 1996. Most Internet radio outfits such as TheDJ.com, Imagine Radio, and Broadcast.com--along with their air-wave counterparts--already pay a fee to ASCAP, BMI, and other organizations. But the Recording Industry Association says the Digital Performance Right Act provides an additional copyright to recorded music transmitted over the Net.

"ASCAP and BMI represent songwriters and publishers for the composition of the written words and notes on the page," Marks said today. "There is also a separate copyright for the sound recording, and that is owned by the record company that produces it."

Unlike ASCAP and BMI, which collect a blanket fee for use of copyrighted works, the Digital Performance Right in Sound Recordings Act would require Webcasters to get licenses from each record company. The RIAA is looking to be a clearinghouse for the record labels where Webcasters could get all the licenses they need and pay fees. The RIAA would collect a percentage of the fees for its service.

Marks said the act "applies generally to the digital transmission of sound recordings."

That means traditional radio stations do not have to pay the additional license fee. The exception would be a traditional radio station that maintains a Web site on which it transmits material other than a rebroadcast of its regular programming.

But others say the industry association is stretching the law beyond its intent. According to the act, "the performance of a sound recording publicly by means of a digital audio transmission, other than as a part of an interactive service, is not an infringement...if the performance is part of a nonsubscription transmission?."

"As long as a member of the public is not able to receive a particular sound recording, the service is not interactive. And as long as the Web surfer is not charged a fee, the service is nonsubscription," said Bob Kohn, coauthor of the book Kohn on Music Licensing and chairman of GoodNoise, an independent record label that sells downloadable music files online and operates a Net radio station.

"The RIAA has some legitimate concerns about the licensing of interactive and subscription services," he said. "But the law makes it clear that Web radio stations provided on a nonsubscription and noninteractive basis do not require licenses from record companies."

Brad Porteus, managing director of Imagine Radio, said his organization is not yet sure how it will handle the association's claim. "Generally speaking, we want to play by the rules--but it is not yet clear to us what the rules are and who has jurisdiction to set them.

"The implications of the RIAA's stance, as we understand it, could have major ramifications for all traditional broadcasters who are distributing their signal over the Internet in addition to those of us who are Webcasting radio content exclusively over the Internet," he added.

"This is an opportunity for the record industry and the Net broadcast industry to get together and gauge what each other has to offer," said Josh Felser, president of TheDJ.com.

Felser said TheDJ.com's technology includes automated compliance with the Digital Performance Right in Sound Recordings Act so that, as the law specifies, no more than three songs from a given album can be played within three hours and no more than four songs from a given artist can be played in a three-hour period.

"We are pure when it comes to obeying the letter of the law," he added.

In general, record labels have been slow to accept the new medium beyond using it as an adjunct to other sales and marketing vehicles. Although the technology is advancing at lightning speeds and the potential for widespread digital delivery of music looms, observers have said the big labels so far have not embraced the digital medium because of its unruly nature.

For example, last week trade organization the Harry Fox Agency shut down the Online Guitar Archive, claiming that the site--which published guitar charts of copyrighted songs created by users--violated the copyright of the songs' publishers. And the Recording Industry Association last month sued two operators of so-called MP3 sites (MPEG 1, audio layer 3), which offer recorded works for digital download to Net surfers. The sites are generally not for profit, but they distribute copyrighted works without permission, which record companies see as a threat to their bottom lines.

"All the companies share the concern that when music is used on the Internet, there are proper models in place to ensure that their copyrights are safeguarded," the RIAA's Marks said, noting that the record companies don't put legitimate Net radio stations in the same category as MP3 sites. The RIAA letter was first reported by MP3.com, an MP3 community and information site.

"The companies aren't out to shut the Webcasters down. The companies aren't suing the Webcasters," Marks added. "It's an issue of ensuring that uses of music on the Internet are properly licensed. Right now, almost everything is unlicensed, and that just perpetuates the behavior, which isn't good for anyone in the music industry."

But the music industry is up against an international medium that is not ruled by any one country's laws and that was developed with a share-and-share-alike environment.

The industry, accustomed to having solid control over product distribution, is faced with a dilemma: On one hand, it wants to be active on the Net, where analysts say billions of dollars will change hands for music in the next five years. At the same, time, however, the industry is fighting for control of a global medium full of users who are accustomed to an array of free services, products, and resources.

For its part, Marks said the association sent the letter to "reiterate the need for them to obtain licenses" and to let the broadcasters know about the role the organization intends to play.