Department of Commerce Green Paper Highlights Copyright Imperatives

On July 31 the U.S. Department of Commerce released "Copyright Policy, Creativity, and Innovation in the Digital Economy." It's a so-called Green Paper, prepared by the Commerce Department's Internet Policy Task Force to further discussion on copyright policy. To that end, the Green Paper set out a number of specific copyright policy issues for future rounds of discussion.

The Internet Policy Task Force's Green Paper presented a handful of quick takeaways. Namely, it touted the critical economic role of copyright and reaffirmed the institutional legitimacy of copyright. The Green Paper also endorsed the basic principles of copyright law, while nonetheless recognizing the need for new solutions to challenges posed by technological changes. In particular, the Green Paper expressed disapproval of the advantage that broadcast TV enjoys over competing technologies under current copyright performance rights' laws. And it questioned the compulsory licensing regime's disparate treatment of different technological platforms.   

At the outset, the Internet Policy Task Force's Green Paper offered an important assessment of the role of copyright in our economy:

The industries that rely on copyright are today an integral part of the U.S. economy, accounting for millions of jobs and contributing billions of dollars to the G.D.P. Moreover, the creative content they produce contributes to the development of the broader Internet economy, spurring the creation and adoption of innovative distribution technologies. Not only do these industries make important economic contributions, they are at the core of our cultural expression and heritage.

The Green Paper also defended the institution of copyright from assaults on its legitimacy:

Effective and balanced copyright protection need not be antithetical to the free flow of information, nor need encouraging the free flow of information undermine copyright. In fact, as the Supreme Court has recognized, "the Framers intended copyright itself to be the engine of free expression."

The Green Paper similarly reaffirmed the basic soundness of legally-protected rights in creative works: "The Task Force believes that the core principles of U.S. copyright law remain fundamentally sound." With those foundations in place, the Green Paper identified more concrete areas where changing technologies make new law and policy solutions necessary.

The market for digital transmission of sound recordings is one of the specific areas of copyright policy where the Green Paper weighed in. As it pointed out, "questions have been raised as to different obligations for different types of services using sound recordings, and disparities in rate-setting standards for those digital services that are subject to the statutory license."

The Green Paper elaborated:

Of particular concern in the context of the growing digital audio market is the fact that there is still no public performance right when sound recordings are used by over-the-air FCC-licensed broadcasters. As a result, over- the-air broadcasters enjoy a competitive advantage over emerging digital services. 

For over thirty years, the Administration and Copyright Office have made repeated calls to create a public performance right for the broadcasting of sound recordings. Apart from the inability to obtain compensation in the United States, this omission has had a real impact on the balance of payments from abroad. While broad public performance rights are enjoyed by owners of sound recordings in most other countries, U.S. sound recording owners and performers have been unable to collect remuneration for the broadcasting of their works in those countries, due to the lack of reciprocal protection here.

Relatedly, the Internet Task Force voiced its support for Congress "[a]ssessing the appropriateness of different rate-setting standards for the public performance of sound recordings by different types of digital music services." The Green Paper doesn't offer any particular policy solutions on this matter. It merely suggests a broad focus on "the interests of all involved parties." And it expressly declined to address "the scope of statutory licenses for cable and satellite retransmissions." But the Green Paper's identification of the problematic nature of disparate treatment of competing technologies and services is important enough.

Under the federal Copyright Act, when a music performance copyright's holder and providers of music services can't agree on royalty terms for performances, the statute imposes a compulsory licensing and royalty rate-setting scheme. Not only that, our current compulsory licensing system subjects different types of services to different rate standards. For example, webcasting services are subjected to a different copyright royalty rate standard than cable and satellite services. And as mentioned above, broadcast TV does not need to reach agreement with music copyright holders or pay any royalties for public performances– i.e., for playing music on over-the-air radio broadcasts. 

The Internet Policy Task Force should get credit for reaffirming the importance of copyright protection and for raising copyright issues that require new solutions. The Green Paper made good points about the problems inherent in a copyright licensing and rate-setting scheme that gives preferential treatment to certain technologies and services. Those points need to be taken up in future discussions of copyright policy reform. As I've written about previously, the ultimate task for Congress is "Putting Music Copyright Policy on a Free Market Footing."