Tag: Chris Coons

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Copyright Legislation

Senate IP Subcommittee Considers the Role of Private Agreements and Existing Technology in Curbing Online Piracy

The following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

U.S. Capitol buildingBy Liz Velander

In mid-December, the Senate Intellectual Property Subcommittee, led by its Chairman, Senator Thom Tillis (R-NC), held a hearing entitled “The Role of Private Agreements and Existing Technology in Curbing Online Piracy.” The hearing came ahead of Sen. Tillis’s release of his first discussion draft of legislation to reform the Digital Millennium Copyright Act (DMCA). In his opening remarks, Sen. Tillis stated that reforming the DMCA is one of his top priorities in the 117th Congress, but it may take his entire second term to get a DMCA reform bill across the finish line. The purpose of the hearing was to identify voluntary steps that copyright owners and tech companies can take now to curb online infringement.

The hearing consisted of two panels. Panel I included: Ruth Vitale, CEO, CreativeFuture; Probir Mehta, Head of Global Intellectual Property and Trade Policy, Facebook, Inc.; Mitch Glazier, Chairman and CEO, Recording Industry Association of America (RIAA); and Joshua Lamel, Executive Director, Re:Create. Panel II included: Katherine Oyama, Global Director of Business Public Policy, YouTube; Keith Kupferschmid, CEO, Copyright Alliance; Noah Becker, President and Co-Founder, AdRev; and Dean Marks, Executive Director and Legal Counsel, Coalition for Online Accountability.

Sen. Tillis began the hearing by voicing his opinion on the matter, informed by a year-long series of hearings and months of feedback from creators, user groups, and technology companies. “There is absolutely more big tech can and should do to stop online piracy,” Sen. Tillis said. “Unfortunately, it seems that some in big tech aren’t serious about stopping online piracy, and I don’t know why that is. Maybe it isn’t a priority—or maybe some companies are actually profiting off the piracy on their site. It is clear as day to me that many multi-national, multi-billion-dollar companies simply aren’t using all the tools they have to stop theft from small creators. And that’s wrong.”

Mitch Glazier, Chairman and CEO of RIAA, stated that the problem is that big tech companies aren’t properly incentivized to take steps in combatting online piracy. Keith Kupferschmid, CEO of the Copyright Alliance, explained that Section 512 of the DMCA has been so misinterpreted by the courts that most service providers know that they have little risk of liability and need only do the absolute minimum required under the DMCA to avoid liability.

Mr. Glazier said that one of the most important things Congress can do is to provide the right incentives to encourage voluntary private agreements. He explained that there are two types of private agreements. First, there are individual agreements entered into by copyright owners and technology providers. These can be nimble and evolve with technology. Second, there are standards developed in the marketplace that eventually achieve broad enough consensus and use that they become required. In Mr. Glazier’s view, that is what the DMCA contemplated—a multi-stakeholder standard technical measure (STM) process where there was enough consensus and use that it would be unfair for outliers to compete without using them. Mr. Glazier said that a voluntary system only works if there exist the right incentives, which the DMCA does not currently provide.

The panelists disagreed as to whether Congress needs to reform the DMCA in order to incentivize voluntary agreements. The panelists representing big tech companies asserted that the process is working as the DMCA intended, pointing to the policies and procedures of their platforms and existing content protection technology. Probir Mehta, Head of Global IP and Trade Policy at Facebook, touted Facebook’s content management tool, Rights Manager. Katherine Oyama, Global Director of Business Public Policy at YouTube, pointed to Youtube’s Copyright Management Tools, which include a webform, Content ID, and Copyright Match. These panelists emphasized the significant amount of work their companies undertook to create these technologies, which they view as going above and beyond the requirements of the DMCA.

Members of the IP Subcommittee were very interested to hear how these tools work in practice. Ruth Vitale, CEO of CreativeFuture, testified that most individual creators are not given access to YouTube’s Content ID, nor are they given an explanation for why they are denied. Ms. Oyama stated that while Content ID has eligibility requirements, YouTube built an entirely new tool for smaller creators, Copyright Match, which runs on Content ID itself. She claimed that Content ID is such a powerful tool that, if used improperly, will erroneously take down content that is noninfringing.

Ranking Member Senator Chris Coons (D-DE) wanted to know what the panelists viewed as the path forward. Mr. Kupferschmid said that while voluntary agreements have a role, they cannot address everything. He emphasized that legislative action is appropriate in this circumstance because service providers are not being cooperative. Noah Becker, President and Co-Founder of AdRev, a digital rights management and media technology company, agreed with Mr. Kupferschmid. He explained his business’ revenue-sharing proposition is a better fit for copyright owners that do not want to use YouTube’s monetization tools. In addition to legislation, he explained that there should be some sort of support for the concept of a list of approved vendors, like AdRev, to be able to access copyright APIs on massive platforms. He urged that this would reduce the large cost and technology burden of accessing APIs, making takedowns more affordable for creators.

Sen. Tillis closed the hearing by stating that the parties need to engage with one another in order to avoid a potential legislative overreach. He said that the hearing showed that tech companies must do more to combat online piracy. Sen. Tillis stressed that they have the tools and resources but must find ways to get greater engagement and create voluntary paths to prevent Congress from paving less voluntary ones.

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Copyright

Senate IP Subcommittee Hearing Addresses Section 1201 Reform

The following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

U.S. Capitol buildingBy Liz Velander

Last week, the Senate Intellectual Property Subcommittee, led by its Chairman, Senator Thom Tillis (R-NC), held a hearing entitled “Are Reforms to Section 1201 Needed and Warranted?” The hearing explored Section 1201’s operation, as well as potential reforms to improve the effectiveness of Section 1201 in the administration of the triennial rulemaking proceeding that establishes temporary exemptions. Chairman Tillis was particularly interested in hearing proposals to further streamline the rulemaking process and to amend the statute so that exemptions permit third-party assistance.

The hearing consisted of two panels. First, the U.S. Copyright Office, who administers Section 1201 rulemaking. Second, industry and academic experts who shed light on how Section 1201 has been working for copyright owners and users, and the practical implications of potential reforms. Regan Smith, General Counsel and Associate Register of Copyrights, U.S. Copyright Office, was the sole panelist on Panel I. Panel II included: Vanessa Bailey, Global Director, Intellectual Property Policy, Intel Corporation; Professor Blake Reid, Director, Samuelson-Glushko Technology Law & Policy Clinic, University of Colorado Law School; Matthew Williams, Partner, Mitchell Silberberg & Knupp LLP; Seth Greenstein, Partner, Constantine Cannon LLP; Morgan Reed, President, ACT | The App Association; and Aaron Lowe, Senior Vice President, Regulatory and Government Affairs, Auto Care Association.

Section 1201 of the Digital Millennium Copyright Act (DMCA) protects “technological measures,” also known as “technological protection measures” (TPMs), employed by copyright owners to protect their works from unauthorized access or use. Section 1201 gives copyright owners a cause of action when someone circumvents TPMs that have been employed to prevent unauthorized access or use of their copyrighted works. Common examples of TPMs include password systems that prevent nonsubscribers from accessing streaming services, code that prevents DVDs from playing on unauthorized devices, and code that prevents a purchaser from copying the text of an e-book or sending the file to others.

Congress enacted Section 1201 to foster a lawful online market for copyrighted works while providing several statutory exemptions to avoid impeding lawful uses. For additional flexibility, the law authorizes the Librarian of Congress to adopt temporary exemptions following a rulemaking proceeding administered by the Copyright Office every three years. During the triennial rulemaking, the Copyright Office solicits exemption petitions from the public and develops a comprehensive administrative record using information submitted by interested parties. Based on the evidence submitted, the Register of Copyrights provides a written recommendation to the Librarian of Congress as to which exemptions are warranted, along with proposed regulatory text. Upon the Librarian’s approval, the exemptions are published in the Federal Register and remain in effect for three years.

In the seventh triennial rulemaking (2017-2018), the Copyright Office instituted a new “streamlined” process for renewing existing exemptions. In this streamlined process, proponents of an existing exemption can petition to have the exemption renewed by certifying that they are not aware of material changes in fact, law, or other circumstances that would justify reevaluating the basis for the exemption. If the Copyright Office does not receive an objection outlining relevant new circumstances, the exemption will be renewed without going through the traditional three-step commenting process. These changes have greatly improved the efficiency of the rulemaking process.

On the first panel, Ms. Smith, representing the U.S. Copyright Office, explained the crux of the dispute about Section 1201 reform. On the one hand, “some Section 1201 stakeholders credit the subsequent explosion of legitimate digital dissemination models to the protection established by section 1201 in 1998.” On the other hand, “stakeholders express that the growing ubiquity of software-enabled products in American life—automobiles, refrigerators, medical devices, and so on—raises concerns that Section 1201 may be operating with an unintended reach that the permanent exemptions and the triennial rulemaking only partially address.” In 2017, the Copyright Office “completed a comprehensive study in the operation of the law, taking into account stakeholder perspectives throughout the copyright ecosystem.” It concluded that “while the overall framework of Section 1201 appears to be functioning as intended, the system would benefit from certain updates to the rulemaking procedures, as well as targeted legislative reforms.”

Ms. Smith listed the recommended legislative reforms in order of priority. First, for Congress to provide discretion in the rulemaking to adopt exemptions that permit third-party assistance at the direction of the intended user. Second, for reconsideration of several changes to the permanent exemptions for security testing and encryption research, “including expanding the types of permitted activities, easing the requirements to seek authorization from the owner of the relevant system or technology, and eliminating or clarifying the multifactor eligibility tests for certain statutory exemptions.” Third, for Congress to adopt new permanent exemptions, such as: “an exemption to enable blind, visually impaired, or print disabled person to utilize assistive technologies; an exemption for unlocking used mobile devices; and an exemption to allow diagnosis, repair, or maintenance of a computer program, including to circumvent obsolete access controls.” Finally, Ms. Smith recommended legislation to provide for presumptive renewal of exemptions adopted in the previous rulemaking cycle.

On the second panel, stakeholders argued for and against legislative reform. Ms. Bailey, representing Intel Corporation, testified that “the Librarian of Congress has struck the right balance between ease of use and content protection under the existing regulatory framework.” She described Section 1201 as “the bedrock on which the digital content ecosystem is built.” She urged against legislative revision, arguing that “the reliable protection provided by Section 1201 is essential to the maintenance of industry-standard TPMs and the digital content ecosystem.”

The next panelist, Prof. Reid, strongly disagreed with Ms. Bailey. He represented “people who are blind, visually impaired, or print disabled, educational disability services professionals, and security researchers.” Prof. Reid argued for expansive changes to the triennial rulemaking process, asserting that “the triennial review regularly imposes an unnecessary and unfair burden on decent, hard-working people who play by the rules and who merely seek to go about their livelihoods and serve their communities without fear of breaking a law that could subject them to ruinous liability in federal court litigation or even criminal charges.” Mr. Greenstein echoed many of Prof. Reid’s concerns about Section 1201’s overreach. He proposed a number of legislative reforms to the Subcommittee, such as allowing third parties to obtain the means to circumvent access in order to repair consumer products at the direction of the intended user. “Congress intended Section 1201 is protect copyrights, not business models,” stated Mr. Greenstein.

Senator Chris Coons (D-DE) sought feedback from other panelists about the suggestion that Congress provide the Librarian flexibility to allow consumers to seek third-party help. Mr. Reed, representing the App Association, asserted that we already have a “robust ability” to conduct authorized repair. Ms. Bailey agreed, stating “the Copyright Office has already taken steps to make the exemptions more usable.” She pointed out that “unlike anti-circumvention exemptions, which can be modified or abandoned if they prove less useful than expected, should an anti-trafficking exemption be improvidently granted, the effects on the marketplace would be permanent because the tools can’t distinguish between permissible and impermissible use.”

Senator Richard Blumenthal (D-CT) was specifically concerned about voting machine integrity, asking the panel whether they would support a permanent cybersecurity and voting machine exemption. Prof. Reid stated that such an exemption is “critical to the cybersecurity of this country and the future of our democracy.” Mr. Reed and Ms. Bailey both reiterated their position that a legislative change was unnecessary because the Copyright Office already had the flexibility to address the issue.

The hearing was cut short by a live vote, and Chairman Tillis concluded the hearing by thanking each panelist and stating that they may submit further comments to the record.

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Copyright

Senate IP Subcommittee Hearing Addresses Intersection of DMCA and Fair Use

The following post comes from Yumi Oda, an LLM Candidate at Scalia Law and a Research Assistant at CPIP.

U.S. Capitol buildingBy Yumi Oda

As part of its year-long review of the Digital Millennium Copyright Act (DMCA), the Senate Subcommittee on Intellectual Property tackled yet another contentious issue in our copyright system—fair use. A virtual online hearing, held on July 28 and entitled How Does the DMCA Contemplate Limitations and Exceptions Like Fair Use?, focused on the role of fair use for digital platforms. Calling fair use “a bit of a touchy subject,” Chairman Thom Tillis (R-NC) specifically requested the witnesses’ input on how the original DMCA envisioned fair use and how the reform bill should address it. Ranking Member Chris Coons (D-DE) likewise emphasized the importance of striking a balance to “safeguard free speech and fair use, while also combating digital piracy and ensuring creators are fairly compensated.”

The panelists included: Sherwin Siy, Lead Public Policy Manager of Wikimedia Foundation; Mickey H. Osterreicher, General Counsel of National Press Photographers Association; Jane C. Ginsburg, Morton L. Janklow Professor of Literary and Artistic Property Law at Columbia University School of Law; Christopher Mohr, Vice President for Intellectual Property and General Counsel of Software and Information Industry Association (SIIA); Rick Beato, Songwriter, Producer, Engineer, and Educator; Yolanda Adams, GRAMMY Award-winning artist and Recording Academy Trustee; Joseph C. Gratz, Partner of Durie Tangri LLP; Matthew Sanderson, Co-lead, Political Law Group of Caplin & Drysdale; and Jacqueline Charlesworth, Partner of Alter, Kendrick & Baron LLP. These panelists represented industry and scholarly experts, as well as creators, users, and intermediaries of copyrighted works.

As a limitation to the exclusive rights in creative works, fair use is intended to simultaneously promote free speech and foster authorship and creativity. Taking a hint from case law, Congress codified Section 107 of the Copyright Act, enumerating four factors to be considered in a fair use analysis, namely: (1) the purpose and character of the use, including whether such use is commercial or educational; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. However, since these factors are neither dispositive nor exhaustive, courts typically explore fair use claims in an open-ended, case-by-case manner.

On the first panel, Mr. Siy, representing the host of Wikipedia and Wikimedia Commons, testified that his Foundation heavily relies on fair use and the DMCA’s safe harbor provisions. Mr. Siy asserted that his Foundation receives approximately 30 DMCA takedown notices annually as risk-averse volunteers remove seemingly infringing content according to its volunteer-created standards, which are stricter than what the law requires. Of those notices, Mr. Siy explained, two-thirds are usually found to be noninfringing uses, such as fair use, thus demonstrating the ease of attacking harmless fair uses under the DMCA.

On the other hand, Mr. Osterreicher, representing visual journalists, pleaded with the Subcommittee to change the current lop-sided, whack-a-mole situation, which places an “insurmountable” burden on photographers, but “little to no responsibility” on online service providers (OSPs) for online infringement. As he pointed out, “the more amorphous the fair use interpretation the better” for OSPs to draw more visitors and advertisers. He argued that copyright infringement, sometimes disguised as fair use, reduces economic incentives, discourages participation in visual journalism, and “devalues photography as both a news medium and art form.”

Next, Prof. Ginsburg explained how Sections 512 and 1201 accommodate copyright limitations and exceptions. She noted that Section 512 has not worked as intended, largely due to the vastly higher number of postings than Congress originally anticipated. Conversely, the seemingly low number of counternotices, she continued, could suggest that “many fair uses are being suppressed,” “the vast majority of postings are in fact infringing,” or “fear or ignorance [are causing] some fair users to decline to send a counternotification.” As a potential solution to the timely counternotification procedure, Prof. Ginsburg proposed an alternative dispute resolution (ADR) mechanism. Moreover, she explained that “by design, [Section] 1201 does not provide a general fair use defense,” and that the triennial rulemakings to identify exempted classes of works have been largely effective.

Mr. Mohr, representing the software industry, provided the last testimony on this panel. He stated that Sections 512 and 1201 have been successful mainly because Congress left fair use out of both. Rather, he considered fair use as “a built-in safety valve” to preclude overly broad assertions of rights.

Senators Tillis and Coons then raised a series of specific questions. In response to a question regarding the extent to which OSPs should consider fair use, Prof. Ginsburg testified that OSPs have no duty to consider fair use and that they can remain mere conduits as long as they comply with the DMCA safe harbor provisions. Moreover, in response to a question regarding the misunderstanding surrounding fair use and newsworthiness, Mr. Osterreicher answered that there is a common misconception that newsworthy materials can be used more freely, which in turn deprives visual journalists of licensing opportunities due to the time-sensitive nature of such materials. Furthermore, in response to a question regarding the recent evolution of fair use, Prof. Ginsburg testified that broader fair use claims wrongly recognized in lower courts have been corrected by the higher courts, thereby demonstrating that courts are better equipped to analyze the inherently malleable fair use doctrine.

Lastly, each panelist was asked to specify which area of the DMCA Congress should look at in drafting a reform bill. Mr. Siy simply called for a holistic review. Mr. Osterreicher recommended clarifying the red flag knowledge standard for OSPs, and he pledged to continue advocating for the ADR system and the currently blocked Copyright Alternative in Small-Claims Enforcement (CASE) Act. Neither Prof. Ginsburg nor Mr. Mohr advocated for a legislative change, but Prof. Ginsburg did recommend that Congress closely monitor the development of the European Union’s approach to see if requiring OSPs to filter and block infringing content could reach a better balance.

On the second panel, witnesses testified how fair use has been applied in practice in their specific areas, many touching on the hot subject of political misappropriation. First to testify was Mr. Beato, a musician and popular YouTube music instructor who uses excerpts from famous songs in his videos. He explained that he never sought fair use claims in response to DMCA notices because it would be a waste of time and money, although he believed a good case could be made considering the new educational role YouTube has been playing. Although he himself successfully stood up against DMCA notices by a major label thanks to his large viewership, he warned that “frivolous” DMCA notices can be used to harass small content creators. Ultimately, he proposed a “Fair Use Registry,” similar to Twitter’s blue check mark, to certify and notate a good actor and to whitelist his or her use.

Another musician’s input came from Ms. Adams, a renowned gospel singer and songwriter who is also known as the “First Lady of Modern Gospel.” She maintained that “if someone’s claim of fair use reduces the artists’ ability to earn a living, it should be treated as infringement, plain and simple.” In addition to this monetization aspect of fair use, Ms. Adams also focused on its moral aspect, stating that “fair use can be very unfair to the artist if it takes our control away.” Reiterating the importance of the long-standing radio performance right issue, Ms. Adams concluded that seeking “permission” is the key when it comes to working with musicians, including use in political campaigns.

In contrast, Mr. Gratz, representing internet intermediaries, defended free speech and fair use, stating “nobody likes to be criticized or have their music used in ways they can’t control, but . . . even more so where the copyright holder does not like the use, fair use is needed to make sure that free expression can thrive even in the presence of copyrighted material.” Additionally, he made the following three points: (1) Section 512 has provided no practical remedy to the serious DMCA abuse; (2) automated filtering including any “staydown” systems should not be mandated; and (3) the current “reasonableness” standard for terminating repeat infringers is the right standard.

Similarly, Mr. Sanderson, who consults election and advocacy organizations, explained that political campaigns receive increasingly more takedown notices from artists who do not wish to be associated with the campaigns’ messages, even when the uses are permitted under performance rights organizations’ blanket licenses.

Finally, Ms. Charlesworth, an attorney representing songwriters and artists, reminded the Subcommittee that “creators, too, [as well as politicians,] are intended beneficiaries of the First Amendment.” She noted that creators’ messages can be appropriated and altered in political campaigns in ways that alienate fans and cause economic damages. Particularly, she argued that a fair use claim in a political campaign should also be analyzed under the regular four-factor test, with the emphasis on the first factor’s focus on whether the use is “transformative.” On this point, she explained that simply attaching a song to a political campaign video would not amount to a “transformative” use. Citing her clients’ experience, Ms. Charlesworth argued that “the current system imposes unjust burdens on creators and small copyright owners . . . without adequate tools or resources at hand when a political ad containing their song suddenly appears” online.

The second panel did not receive as many questions as the first one because the hearing was cut short by a live vote, but Senator Tillis concluded the hearing by thanking each panelist and acknowledging that some issues probably can be addressed without any legislative fix, while others may require congressional action.

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Copyright

The AM-FM Bill and the Status of Terrestrial Music Broadcast Performance Rights

The following post comes from David Ward, a rising 2L at Scalia Law who is working as a Research Assistant this summer at CPIP.

U.S. Capitol buildingBy David Ward

This past Wednesday, the Senate Intellectual Property Subcommittee, led by its Chairman, Senator Thom Tillis (R-NC), held a virtual online briefing on the current state of music rights. Specifically, members of the music and broadcast industry debated a bill called the Ask Musicians for Music Act (AM-FM Act), which would create new terrestrial broadcast performance royalties for sound recordings. Some of the biggest names in the music and broadcast industry were invited to testify, including: Harvey Mason Jr., CEO of the Recording Academy; Curtis LeGeyt, COO of the National Association of Broadcasters (NAB); Dr. Richard Burgess, CEO of the American Association of Independent Music (A2IM); Scott Hunter, Executive Director of the National Religious Broadcasters Music License Committee (NRBMLC); and Colin Rushing, Chief Legal Officer of SoundExchange. These panelists represented both musicians and broadcasters, big and small, who have been engaged in a sometimes-tense dialogue about the future of terrestrial broadcasting rights.

For a bit of background, all music we hear on the radio has two copyrights: a copyright for the musical work (lyrics, notes, melodies, chords that an artist writes), and a copyright for the sound recording itself (that a producer or sound engineer usually helps create). The scope of the discussion here is about performance royalties for the sound recording, not the musical work. It should be noted, however, that radio stations still need licenses to play musical works over the air. These are usually obtained in the form of blanket licenses from performance rights organizations (PROs) such as ASCAP or BMI. Blanket licenses allow radio stations to broadcast musical works from the PRO’s repertoire, within the scope of their agreement.

Under the current system, though, radio stations are not required to pay a per-performance royalty when they broadcast a sound recording over a terrestrial broadcast, such as AM or FM radio. However, stations that broadcast over the internet, or any other entity that broadcasts performances digitally (such as a webcast), are required to pay digital performance royalties for the sound recordings they play. This being the 100th anniversary of broadcast radio, the AM-FM Act currently being debated aims to end this exemption that radio broadcasters have enjoyed for exactly 100 years.

Curtis LeGeyt from the NAB and Scott Hunter from the NRBMLC represented the interests of broadcasters who have long opposed the introduction of such a royalty on their expense reports. Mr. Hunter testified that a terrestrial sound recording performance royalty is “unwarranted” and “unnecessary,” and that Congress has repeatedly declined to create such a right even as recently as 2018. In 2018, Congress passed the Music Modernization Act, which made major reforms to music copyrights, including extensive reforms of how royalties are set and split for both musical work and sound recording copyrights. Mr. LeGeyt argued that Congress could have created a terrestrial performance royalty for recordings then, but did not. He further argued that copyrights are statutory devices intended to promote the creation and distribution of works, and that allowing radio to freely broadcast sound recordings best serves the purposes of copyright law.

Both Mr. LeGeyt and Mr. Hunter characterized the exemption as a mutually beneficial promotional tool for performers and broadcasters. They warned of a decline in local radio programming and further financial instability of the industry if new royalties were mandated. Noting the financial instability caused by the coronavirus pandemic, they argued this could be fatal to many local radio stations in the short term as well as disrupt radio business models in the long term.

On the other side of the issue were Harvey Mason Jr. from the Recording Academy, Dr. Richard Burgess from A2IM, and Colin Rushing from SoundExchange. Mr. Mason began his testimony by contrasting our current system with the rest of the world’s; namely, most other major countries have sound recording performance royalties for terrestrial broadcasters. Musicians are some of the hardest hit in the economy during the pandemic, and despite this, Mr. Mason testified, they are still playing free online shows for the benefit of others. This situation underscored the need to do away with the outdated exemption from paying sound recording performance royalties enjoyed by terrestrial broadcasters. Mr. Mason suggested that the AM-FM bill could be included in a new coronavirus relief package, so musicians can recoup some of the losses they have recently experienced.

Dr. Burgess of A2IM echoed these sentiments, adding that musicians are the only copyright owners that are not allowed to profit from the performance of their works over terrestrial broadcasts. In Dr. Burgess’ view, musicians are being forced to subsidize the radio industry even though their own revenues have been decimated.

Colin Rushing of SoundExchange, the company that collects digital performance royalties for sound recordings suggested there are few, if any, major differences between digital and terrestrial broadcasts in the modern age. Most broadcasters are simulcasting online, which already requires them to pay digital (but not terrestrial) performance fees. Many apps and devices also seamlessly transition between digital and terrestrial broadcasts. He testified that the lack of terrestrial performance rights creates a loophole that distorts the market and creates an incentive to invest in old technologies, making it harder for new platforms to compete. Echoing many of his colleagues’ sentiments, he also reiterated that the U.S. is an outlier on this issue and that this harms music creators who are generating value for broadcasters, now more than ever.

Questioning by Senate offices drew out the sharpest differences in positions. Mr. LeGeyt of the NAB and Dr. Burgess of A2IM engaged in a (sometimes terse) dialogue. Mr. LeGeyt painted a picture of mom and pop broadcasters forced to consolidate operations and lay off workers, even before the pandemic, while Dr. Burgess was not persuaded that struggling musicians should therefore be forced to take promotion and exposure as the only consideration for radio plays.

Senator Coons’ office (D-DE) began the staff questioning with something that was likely on everyone’s mind: what level of royalties are at issue. Being the expert in performance royalties, Mr. Rushing from SoundExchange chimed in with a short “we’re not sure” answer. In his mind, and even in the minds of the broadcasters, it would be impossible to speculate. Either the free market would dictate the rates, or some other rate-setting entity would set the rate based on the current market rates. Since the current market rate is zero in the U.S., defining any number would be speculation. However, Mr. LeGeyt was quick to draw a comparison to the royalties they already pay for digital performances, and that they already inhibit the growth of mid- and small-sized broadcasters.

The costs incurred by mid- and small-sized broadcasters was another topic that came up frequently in responses. Mr. Mason of the Recording Academy made a point to share that the proposal would put a cap of $1.50 per day on terrestrial performance royalties for true small and local radio stations. Mr. Rushing of SoundExchange added to this, stating that even most larger radio stations would likely be paying less than $500 per year. The broadcasting representatives again pointed out the already constrained budgets of many stations and that any increase in costs would hurt the industry.

Perhaps the most contentious issue was the purpose of terrestrial radio in the music ecosystem, and the role of “promotion” in that ecosystem. Broadcasters argued that terrestrial radio is and always has been a public service. It provides weather, news, and other important public service announcements for free while also promoting musicians’ work. Therefore, broadcasters should not have to pay performance royalties, as they have not for a century. Music industry representatives, however, argued that providing a public service does not warrant profiting off others’ work for free.

Senator Tillis’ office asked the question that got to the heart of the “promotion” issue: whether radio mainly plays music that is already popular and does not need promotion, or whether sound recordings become popular because they are promoted on the radio. Mr. Rushing of SoundExchange offered his view that it is a bit of both. He and his colleagues did not contest that many artists benefit from the promotion and exposure of broadcast radio plays, but not all of them do. In their opinions, the free market should decide what the rates should be for sound recording performance royalties so that any artists who want to provide their product for free in exchange for promotion and exposure would be able to make that choice. The broadcasters argued that broadcast radio is different than other forms of media, and that the value of promotion has been time-tested.

Although all participants committed to continue good faith discussions on the matter, it does not bode well for a quick agreement that the radio sound recording royalty exemption has already reached its century mark.