Sen. Hatch Hopeful Congress Can Avoid Compulsory Music Licensing
by Greg Pastrick and Dave Brigham
After a four-hour hearing on online entertainment today featuring testimony from entertainment industry executives, technology companies and artists, Sen. Orrin Hatch said he hopes Congress won't need to mandate compulsory licensing for online music.
"I don't know that we can do without [compulsory licensing], but I hope that we can," Hatch (R-Utah) said. Representatives from the Recording Industry Association of America, the Motion Picture Association of America, AOL Time Warner, Napster, Liquid Audio and the Recording Artists Coalition, among others, testified before the Senate Judiciary Committee, which Hatch chairs [see 04.02.01 Stage Set for D.C. Hearing on State of Digital Downloading].
The committee members were trying to assess how much progress has been made in online music licensing since the committee held a hearing last July, and whether Congress needs to get involved.
Napster interim CEO Hank Barry pressed Congress to take action. "I believe it will take an act of Congress -- a change to the laws to provide a compulsory license for the transmission of music over the Internet," Barry said. "The Internet needs a simple and comprehensive solution, similar to the one that allowed radio to succeed -- not another decade of litigation."
RIAA President and CEO Hilary Rosen assured the committee that they needn't get involved in licensing procedures. "I have no doubt of the intensity of the effort currently being made and the determination [by labels] to be successful. The marketplace is working and we do not need additional legislation to assure progress."
The RIAA today issued a list of dozens of web sites where it says "licensed digital music can be found." The list includes high profile sites such as AOLMusic.com and ArtistDirect.com, as well as lesser-known sites including IChooseTV.com and Vidnet.com
As the public face of the music industry's lawsuit against Napster, Rosen pointed out that "the only reason Hank Barry's got all the music is because he doesn't license it."
MPAA Chairman and CEO Jack Valenti stressed several times that "creative property is private property," and encouraged the committee members to "stand guard" on existing copyright laws.
Don Henley, best known as a founding member of '70s rock giants the Eagles, was critical of the RIAA's attitudes toward artists. Testifying as a representative of advocacy group the Recording Artists Coalition, Henley stressed that artists need lobbying representation in Washington, D.C., because the RIAA does not speak for them. "Artists today are simply asking for a place at the table," Henley said.
Henley advocated for fair licensing, but said that compulsory licenses should be considered only as a last resort. He prefers digital performance royalties be paid directly to artists from online companies using music. He and singer-songwriter Alanis Morissette agreed that artists should be compensated for music licensed for interactive services, reversing the precedent set by terrestrial radio, where artists don't get paid for play.
Sen. Patrick Leahy (D-Vt.) asked those testifying why there isn't a digital equivalent of Tower Records online. AOL Time Warner Co-COO Richard Parsons said that AOL's new agreement with RealNetworks, EMI Recorded Music and Bertelsmann to develop and license a digital music platform fits the bill [see 04.02.01 RealNetworks to Launch Subscription Platform with Labels].
Called MusicNet, the four companies' joint venture will combine downloadable and streaming music with digital distribution technology developed by RealNetworks. Parsons said MusicNet licensees receive the full complement of digital rights alongside content from three of the major label groups.
Hatch has been critical of the major labels for failing to license their music to online businesses. Universal Music Group and Sony Music Entertainment are developing a MusicNet competitor called Duet. Although MusicNet and Duet are examples of the majors' plans to license music for online distribution, they are also examples of the majors licensing music to each other.
EMI Recorded Music CEO Ken Berry said his label group would consider licensing music to Napster. "We await the outcome of the new commercial model before we'll sign a license," Berry said. Napster and Bertelsmann hope to release a commercial version of Napster's service this summer, offering compensation to artists and labels.
EMI is in merger talks with Bertelsmann's BMG Entertainment.
Liquid Audio develops software with which record labels and artists may sell downloadable music. Company CEO Gerry Kearby, however, told the committee that he doesn't blame consumers for pursuing pirated music on the Internet. "Napster has proven there is a market," Kearby said. "Now the rest of us must work collaboratively to compete."
Hatch said he believes Napster is trying hard to comply with the recording industry's requests to filter infringing material out of its system.
While it's unclear whether the committee could decide to introduce legislation to the Senate, it wouldn't be without precedent. In his statement, Leahy issued a laundry list of bills that he and Hatch have successfully passed through the Senate, ranging from the Anticybersquatting Consumer Protection Act and the Satellite Home Viewers Improvements Act to the Digital Millennium Copyright Act and the Copyright Term Extension Act
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