Copyright Office Has Thoughts on What Streaming Music Services Should Pay for Music

It is past time to update copyright laws for music licensing, which are woefully out of sync with how Americans listen to music these days, according to a long-awaited report Thursday from the U.S. Copyright Office.

The 245-page report offers ten pages of recommendations for how existing copyright law over music licensing should be updated to better reflect how people listen to music now. “From a copyright perspective, we are trying to deliver bits and bytes through a Victrola,” the report concludes. “But the costs of failing to update our outmoded licensing methods are escalating.”

By itself, the report doesn’t do much. But it could be used as a basis for legislation that could change how much artists, songwriters and music labels receive for their music as well as the amount radio stations and music streaming services are required to pay.

The current system is a hodgepodge of rules that makes little sense to rational people. Songwriters get paid different royalties than the people who perform their songs. Payments differ according to where the songs are played, whether on AM/FM radio or digital music services. Artists and songwriters get a different fee for music sold in stores.

U.S. Copyright Office

Among the recommendations:

• Government licensing processes should aspire to treat like uses of music alike.
• Require AM/FM radio stations to pay performance fees to recording artists like satellite and Internet radio stations.
• Close a loophole that allows digital streaming services to avoid paying royalties on songs recorded before 1972.
• Consolidate all rate-setting activities within the Copyright Royalty Board, instead of having some rates set by federal district courts (thanks to decades-old industry consent decrees with the Justice Department).

The U.S. Copyright Office can’t actually change the current system but it generally advises Congress on how to update existing copyright laws.

Last year lawmakers debated two music licensing bills, one that would close a loophole that lets digital streaming services air music recorded before 1972 for free and another that would make it easier for songwriters to negotiate for higher royalties. Neither went anywhere, however, as industry groups on all sides of the debate bickered over the details — as they have in past years.

Current House Judiciary Committee Chairman Bob Goodlatte, R-Va, has indicated willingness to tackle the issue again this year. A House Judiciary Committee aide said Thursday they are looking at the report “and reactions to it” as part of their ongoing review about how to update the copyright laws.

Industry reaction to the report was mixed, as expected. ASCAP, which represents songwriters and publishers, said the report “underscore[s] yet again the inefficiency of the current system for music fans and creators alike.”

The Recording Industry of America said the Copyright Office had given the industry a “lot to digest and reflect upon” but agreed that “reform is necessary to develop new revenue streams for all creators.”

The National Association of Broadcasters, meanwhile, wasn’t keen on the idea of paying more to artists and released a statement that, “as it has for decades, the Copyright Office proposes music licensing recommendations looking only through the lens of copyright owners.”

Finally, Pandora agreed with the other parties that said the system was outdated. In a statement, the Internet radio service said it is open to paying royalties on those pre-1972 songs as long as it’s on a “technology-neutral approach that affords libraries, music services and consumers the same rights and responsibilities that are enjoyed with respect to all other sound recordings.”