A bipartisan coalition of federal legislators have just introduced H.R. 1836 (0), a copyright-related bill titled the “Fair Play Fair Pay Act of 2017 (1).” If enacted, it would require owners of US, analog, commercial broadcast-radio stations who publicly perform popular sound recordings to either pay a government-set fee to their copyright owners or to obtain their permission to waive payment of that fee. As a general rule, any bill that alters the scope of existing federal intellectual-property rights will tend to raise challenging questions on which reasonable people can disagree.
But as I noted nearly a decade ago (2), the Fair Play Act and its predecessors are exceptions to that rule. Simply put, the legal, national, and economic interests of the United States would all be advanced were we to — belatedly — grant owners of copyrights in popular sound recordings rights equal in scope to those now granted by essentially every other functional representative democracy on Earth.
The “fair pay/play” problem
When you listen to your favorite recording of a popular song, you enjoy two copyright-protected works simultaneously. One is the song — the “musical composition” — created and recorded in musical notation by a songwriter and a lyricist. The other is the sound recording created by the musicians whose performance of a given song can add enormous value to it.
For example, Taylor Swift and I have pursued different careers — even though we are both equally capable of recording our performances of her songs. Unfortunately, I lack certain talents that she has developed. Consequently, she is an international star, while I am a middle-aged lawyer.
The vast differences between Swift and myself thus show why copyright laws must protect both songwriters and performers against unauthorized, uncompensated commercial exploitation of their recorded works. Indeed, essentially all of Earth’s nation-states now hold that if owners of their commercial, analog radio stations publicly perform a popular recording of a song, then they must either obtain the permission of or compensate the owner of the copyrights in the song, the musical composition.
Unfortunately, a handful of states do not require their commercial, analog radio broadcasters to obtain the permission of or to compensate musicians and singers who have recorded their own performances of a given song. Included in that handful are familiar rogue states such as Syria, North Korea, Iran, and one other — the United States of America.
The economics of fair play are simple: Adopting global norms for public-performance rights will increase US jobs and GDP and reduce our trade deficit
Worse yet, there is one big difference between the US and Syria, Iran, and North Korea. The abnormally narrow copyright laws of the past three countries do not reduce their net GDPs because they are not major net exporters of globally popular song recordings. To their credit, international markets just don’t seem to value songs praising Assad, the Ayatollah, or Kim Jong-Un….
But the US is one of the, if not the, most successful global net exporters of copyrighted sound recordings. Consequently, our existing copyright laws now cripple major, job-creating US industries, decrease our GDP, and increase our trade deficit.
The cause of all those problems is simple. Every other developed democracy requires its domestic, analog, commercial radio stations to pay creators of sound recordings when they publicly perform their recordings. Most collect payments from radio-station owners under a “remuneration right” — what US copyright law would call a compulsory license. Because almost all countries are, in relation to the US, net importers of popular sound recordings, many of the royalties that they collect should be paid to American performers or copyright owners.
But they are not. Because the US does not permit foreign musicians to collect any royalties when their songs are played by US-based analog radio stations, foreign nations correctly perceive no reason to pay any domestically collected royalties to US-based owners of copyrights in popular sound recordings. What they do with those collected royalties varies, but they never go to the entrepreneurs who earned them — the US-based artists or corporations whose risky, long-term investments of human or financial capital created globally popular sound recordings.
That is why we decrease US GDP and increase our balance of trade by failing to provide perfectly ordinary public-performance rights for owners of copyrights in sound recordings. Domestically, doing so might cause some capital to flow from distributors of already popular sound recordings to the entrepreneurs who try to create new popular sound recordings. That would neither increase nor decrease US GDP. However, providing domestic public-performance rights broad enough to entitle US performers to demand payment of royalties already collected on their behalf in almost all developed and developing countries would increase US GDP, reduce “offshoring” of IP-based assets, and decrease our balance of trade.
More technologically neutral US copyright laws will also encourage more distributional innovation
Fair-play-based US copyright laws should also create more US jobs and economic growth by encouraging more internet-based innovation. That result follows from one of the fundamental principles of modern US copyright law — technological neutrality.
This one post cannot trace the century-long trail of errors that ultimately created the analog-broadcast-radio exception to US public performance rights for owners of copyrights in sound recordings. Consequently, it must merely note that when Congress last rewrote US copyright law in 1976, it explicitly and repeatedly adopted (3) a new principle of US copyright law. This was technological neutrality: By default, US copyright laws were now to be just as applicable and broadly construed as applied to later-developed 21st-centrury distribution technologies as they were to distribution technologies developed and deployed well before 1976.
This principle of technological neutrality strongly suggests the propriety of eliminating the analog-broadcast-radio exception to US public performance rights. It makes no sense for US copyright laws to give — for free — to radio broadcasters who use old, analog technologies public-performance rights that providers of satellite or internet-based radio-like services must pay for under existing US compulsory licenses.
To be sure, enacting legislation such as the Fair Play Fair Pay Act of 2017 will be politically challenging. Nevertheless, from international, national, and economic perspectives, it remains what it has always been — a “public-policy no-brainer (4).”