Don’t Write Angry!

GroundhogWay too much writing about copyright issues is done by first, allowing your blood pressure and heart rate to rise as high as possible, and then second doing your entire article (or blog comment) in “steamed” mode. This tends to lead to not-so-insightful analysis. An example appeared in this morning’s Washington Post in Steven Pearlstein’s article, “A Sound Marketplace For Recorded Music,” which focuses (eventually) on the record labels’ lawsuit filed last month against XM Satellite Radio.

The RIAA complaint alleges that XM’s new “XM + MP3” service, which transmits to XM’s associated “Inno” receiver, falls outside the statutory license provisions for digital music transmissions and therefore violates the Copyright Act. There’s some interesting issues there, but they’re hard to glean from Pearlstein’s article.

First, Pearlstein makes the standard swipes at “monopolists” shutting down “innovation.” This isn’t much more illuminating than the standard rhetoric from large copyright owners, that “pirates” are destroying incentives. It gets very murky when you realize that “innovation” and “piracy” are not distinct categories — you can have innovative pirates. Whether a given service is or should be legal can’t be determined based on these labels, unless you’re an extremist.

Pearlstein follows up with a remark that the record labels are attempting to “extract every last penny” out of the new market of satellite transmissions. This is an odd thing for a business reporter to complain about, since I believe most businesses attempt to extract every last penny from any market they can get a foothold in.

When your blood pressure is high, every slight seems to coalesce into a massive conspiracy to make you annoyed. So, Pearlstein offers this analysis of the issue: “The fundamental problem here is that there really isn’t a free and open ‘market’ for recorded music.”

It starts with copyrights, which are nothing more than little government-issued monopolies. As a result of the recording industry’s lavish political contributions, Congress has extended the copyright for music to absurd lengths of time (70 years after the death of the artist) and absurd situations (singalongs at Boy Scout campfires). This is well beyond what is reasonably required to meet the aim of encouraging artistic creation.

Interesting, but not at all relevant to the issue presented in the complaint. Sure terms are too long, and copyright owners make political contributions (what industry *doesn’t*?). So what? Then there’s the monopolies issue again, and the Boy Scout singalongs. Copyright “monopolies” are weird sorts of monopolies, though — they’re monopolies in hot competition with other monopolies. I.e., not monopolies. If Scott Turow is priced too high, you might buy John Grisham instead. General Mills has a similar “monopoly” on Cheerios. There’s an obvious difference, of course, which is that consumption and reproduction of Cheerios is not normally part of participation in a wider culture, which may give certain copyright owners — the ones whose works that have really captured some part of the zeitgeist — monopoly-like power over use of that particular work. In other words, really successful copyright owners. That’s a difficult issue (should there be a “success tax”?), one that’s obscured by throwing around the word “monopolies” willy-nilly.

And the Boy Scouts (actually Girl Scouts) singalong issue deals with: 1) the public performance right, i.e., songwriters, not record labels; 2) a demand letter, not a court decision or statute (I believe — has a case actually been litigated?). It’s also a red herring, because any time you write laws of general applicability with broad exceptions, like the Copyright Act, you get grey border-area cases. I doubt Pearlstein’s calling for abolition of the public performance right.

Continuing with the grab-bag of complaints, Pearlstein believes this was all resolved by the Betamax case more than twenty years ago: “Never mind that the Supreme Court long ago ruled that the ‘fair use’ doctrine included the right of consumers to tape programs off TV and radio as long as they’re for personal use.” The fair use portion of the Betamax case, of course, only dealt with time-shifting, not archiving, so it’s irrelevant here. And it certainly didn’t hold that all “personal use” recordings are exempted. If so, Grokster would have been an easy case, since there was no evidence I’m aware of that Grokster users were going out and selling their recordings.

Pearlstein then refers — finally — to the Audio Home Recording Act, and that’s where the rubber hits the road with respect to what’s really at issue in the RIAA’s suit.

The facts are little hard to determine without buying an Inno and testing it out myself, but I take it how it works is that it can search, Tivo-like, through all the offerings on XM’s radio service and record songs that you’ve previously identified when they play in the normal course of XM’s programming. The RIAA refers in its complaint to “downloads” (see para. 36) and XM itself seems to be fostering that idea through the addition of “MP3” to the service’s name, but as far as I can tell (e.g. from this CNET review), there’s no transmission of MP3 files here, just encrypted streaming audio.

Recording from a channel guide is fine for television, but subscription digital audio broadcasts are different (should they be? Maybe not, but they are). Section 114(d)(2) offers a statutory license for transmission of digital music files so long as certain conditions are met, such as:

(A) (ii) … the transmitting entity does not automatically and intentionally cause any device receiving the transmission to switch from one program channel to another; and …

(B) (ii) the transmitting entity does not cause to be published by means of an advance program schedule or prior announcement the titles of the specific sound recordings or phonorecords embodying such sound recordings to be transmitted ….

Here, there’s no channel guide offered to users, and the transmission doesn’t itself cause a switch, but it seems like the Inno’s search function effectively substitutes for both. It’s a bit of a sneak past the limits of Section 114(d)(2).

The question is whether that sneak is permitted by the Copyright Act. The twist to this case is that it involves a company, XM, that is acting both as the device maker and the broadcaster. I don’t know that this was anticipated in 1995 in passing Section 114(d). Should such a company be able to claim protection under the AHRA for the device, while the transmission gets covered under 114? I’ve never litigated in this area, so my knowledge is limited, but just reading the statutes, it appears that as long as the transmissions are “radio-like,” so that they fall within 114, and the channel guide is built into the operation of the device, and not “published” to the consumer, I don’t see why XM can’t claim protection under both sections.

There’s also the provision in Section 112(e) that restricts a digital music transmitter from making “more than 1 phonorecord of the sound recording;” even that one copy must meet certain conditions, such as “[t]he phonorecord is retained and used solely by the transmitting organization that made it, and no further phonorecords are reproduced from it.” The RIAA claims that XM is making and distributing copies to its subscribers, and therefore should be subject to the license in Section 115. The question is whether XM’s broadcasts to receivers it knows have (indeed, it designed to have) a recording function, effectively “make” and “distribute” copies. It’s not totally obvious, but I think the answer is no. Many receivers have associated recorders now; but that fact does not turn broadcasts into distribution of copies, even if broadcasters are aware of the prevalence of recorders. (The EFF tries to connect this question to digital downloads, but I think downloads are different, because the whole purpose of a download is to make a copy.)

Which means I think the RIAA may lose this one. I’m just not angry about it.

I’m not picking on Pearlstein in particular — lots of writing about copyright law, even by some famous law professors, proceeds in this vein. So he has plenty of company. But I find it more than simply not useful; in inflaming passions through lopsided rhetoric, I think such reporting does as much harm as the television news reports that complain about how “YOUR MONEY, THAT YOU EARNED” is being wasted on some small research project, parodied brilliantly by the Daily Show a while back.

And Pearlstein does conclude with one very interesting point. He states that “[t]he copyright laws also effectively set up the record labels as a cartel that can bargain as a group with satellite and Internet radio operators over royalties and other terms.” In other words, by setting up a scheme that has large players come together to defend their common interests, Congress may unintentionally be muting some of the positive effects of competition. By designating a group, you give that group a sense of identity. If that’s true (and I’m not sure it is, but it’s an intriguing suggestion), then it may be a problem with all such schemes, such as compulsory license schemes, that rely on non-market mechanisms to come to agreement on compensation or protection issues. But I don’t think the solution is to get rid of all such schemes; the alternative, it seems to me, invites licensing chaos, which law professors and others have been complaining about for years — the so-called “tragedy of the anti-commons.” It’s licensing chaos, for example, that has documentary filmmakers stymied in trying to clear the rights for their products. A compulsory license or device tariff or collective licensing regime overrides holdouts in such circumstances. But there may be a hidden cost.

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3 Responses

  1. Frank says:

    This is a very comprehensive and thoughtful analysis of the legal issue at hand. But if it were truly balanced, it would highlight

    a) RIAA and MPAA dominance of the relevant policymaking bodies, so ably and expertly documented by Jessica Litman

    c) the real antitrust problem here. Look at Judge Patel’s ruling in Napster, where she was alarmed by the collusive behavior of the industry, ordered further discovery on it….and then the whole misuse/antitrust inquiry got stopped when one of the suspect companies bought Napster! Very respected economists, like Roger Noll at Stanford, have noted a) a long string of FTC and DOJ investigations and actions and b) the frequency with which anticompetitive behavior arises out of the industry. They don’t have an ax to grind.

    You state

    “Copyright ‘monopolies’ are weird sorts of monopolies, though — they’re monopolies in hot competition with other monopolies. I.e., not monopolies.”

    Perhaps that is true in publishing, and perhaps in many other fields of expression. But I don’t see it in recordings. In an oligopolistic industry where four companies own over 90% of the content, I can’t see the “hot competition” you describe.

  2. Bruce Boyden says:

    Thanks, Frank, I was surprised this post didn’t draw any comments right away and was beginning to worry I’d have to propose “Killing Puppies.”

    On the substance of your comment, I would caution against simply mixing together complaints about media companies in one big pot. Maybe there are antitrust issues in certain markets, but what’s the causal relationship between those issues and copyright? If there isn’t one, I don’t think it’s terribly helpful to focus on them. E.g., perhaps there’s a problem with fraud in the art world, but even if that’s true I don’t think it would strengthen the case against the Visual Artists Rights Act.

    And to the extent you and others argue that there is something about copyrights that makes industries based on copyrighted works somehow inherently collusive and anti-competitive, I’m skeptical of that claim — although as I noted, I find the suggestion that engaging in collective inter-industry negotiations may reduce competition intriguing, but if so, it would be a general problem you should be able to find in other industries as well.

    And what’s wrong with 4 companies controlling 90% of the market? It isn’t my area of expertise, but my impression was that 4 companies splitting a market was a good thing, not a bad thing.

  3. Don says:

    This reminded me of a recent question and discussion I read from a creator weighing his options with regards to performance rights and organizations. The fact that ASCAP & BMI behave in a very scattershot way based on their overall control is certainly a problem but there are choices for artists even in performance rights, much less the more varied recording industry.