Análisis Crítico de la Matriz de Impacto de los Objetivos

a.

HistoricalBackground

Untiltheearlytwentiethcentury,ownersofmusicalworkswerecompensatedprimarily throughthereproductionanddistributionofsheetmusic. Salesofsheetmusicwerea significantsourceofrevenueformusicpublishersforalongtime.66 _{Andpricesforsheet}

musicwere,astheyaretoday,setinthefreemarket.67

Bytheearly1900s,however,technologicaladvancesmademusicavailableforthefirst timevia“mechanical”renderingsofsongscapturedinplayerpianorollsand

phonographrecords.68 _{Althoughmusicpublishersinsistedthatphysicalembodiments}

oftheirworkswerecopies,theSupremeCourtheldotherwiseinthe1908caseWhite‐

Smith Music Publishing v. Apollo,reasoningthatsuchreproductionswerenotinaform thathumanbeingscould“seeandread.”69

Withtheenactmentofthe1909CopyrightAct,however,CongressoverrodetheCourt’s decisionandrecognizedcopyrightowners’exclusiverighttomakeanddistribute,and authorizethemakinganddistribution,ofphonorecords—i.e.,mechanical

reproductions—ofmusicalworks.70 _{Atthesametime,Congresswasconcernedabouta}

lackofcompetitioninthemarketplace—inparticular,itwasallegedthattheAeolian Company,amanufacturerofplayerpianos,wasseekingtobuyupexclusiverightsfrom publisherstocreateamonopolyforpianorolls.71 _{Toaddressthatconcern,Congress}

simultaneouslycreatedacompulsorylicenseformechanicalreproductionsofmusical works—thefirstcompulsorylicenseinU.S.copyrightlaw—establishingastatutoryrate of2centspercopy.72

66_{See KOHNat674. By1919,asingledepartmentstorechain—Woolworth’s—wassellingover200}

millioncopiesofsheetmusic. Id. at6.

67_{Sheetmusicwasgenerallysoldfor10centspercopy. Id. at6.} 68_{Id. at6‐7.}

69_{White‐Smith Music Publ’g Co. v. Apollo Co.,209U.S.1,8‐9,17‐18(1908).}

70_{H.R.REP.NO.60‐2222,at6‐8(1909);see also Miller v. Goody,139F.Supp.176,182(S.D.N.Y.}

1956).

71_{H.R.REP.NO.59‐7083,pt.2,at5(1907);RUSSELLSANJEKUPDATEDBYDAVIDSANJEK,PENNIES}

FROMHEAVEN22‐23(1996).

72_{H.R.REP.NO.60‐2222,at7‐8;CopyrightActof1909,Pub.L.No.60‐349,§1(e),35Stat.1075,}

1075‐76. Adjustedforinflation,the2centratewouldbemorethan50centstoday. Music Licensing Hearings (statementofDavidM.Israelite,PresidentandChiefExecutiveOfficer, NMPA).

Thoughithasbeenamendedseveraltimes,the1909compulsorylicense,originallyset forthinsection1(e)oftheAct,73_{continuesinforcetoday. IntheCopyrightActof1976,}

Congressrecodifiedthecompulsorylicenseinsection115,andraisedthestatutoryrate to2.75cents.74 _{Atthattime,CongressalsocreatedtheCopyrightRoyaltyTribunal}

(“CRT”)—withfivecommissionersappointedbythePresident—toadjusttheroyalty ratethereafter.75 _{TheCRTwasreplacedin1993bytheCopyrightArbitrationRoyalty}

Panel(“CARP”)system;ratherthanpermanentappointees,theCARParbitratorswere convenedforspecificrateproceedings.76 _{TheCARPsystem,inturn,wasreplacedin}

2004bythecurrentsystem,theCopyrightRoyaltyBoard(“CRB”),whichiscomposedof threeadministrativejudgesappointedbytheLibrarianofCongress.77

In1995,CongressenactedtheDigitalPerformanceRightinSoundRecordingsActof 1995(“DPRSRA”),which,inadditiontograntingadigitalperformancerightforsound recordings,amendedsection115toexpresslycoverthereproductionanddistributionof musicalworksbydigitaltransmission,orDPDs.78 _{The1995legislationrecognizedwhat}

73_{CopyrightActof1909§1(e).}

74_{H.R.REP.NO.94‐1476,at111(1976), reprinted in 1976U.S.C.C.A.N.5659,5726. Notably,the}

RegisterofCopyrightshadproposedeliminationofthecompulsorylicenseintheprocessleading uptotheadoptionofthe1976CopyrightAct,butmusicpublishersandcomposersultimately chosetoopposesuchachange,optinginsteadforthethree‐quartercentrateincrease. See U.S. COPYRIGHTOFFICE,88THCONG.,REP.OFTHEREGISTEROFCOPYRIGHTSONTHEGENERALREVISION OFTHEU.S.COPYRIGHTLAW33,36(Comm.Print1961)(“GENERALREVISIONOFCOPYRIGHT REPORT”);S.REP.NO.94‐473,at91‐92(1975); see also Music Licensing Reform: Hearing Before the Subcomm. on Intell. Prop. of the S. Comm. on the Judiciary,109thCong.(2005)(“Music Licensing Reform Hearing”)(statementofMarybethPeters,RegisterofCopyrights), available at

http://copyright.gov/docs/regstat071205.html(statingthatpublishersandsongwriterswere concernedthateliminationofthestatutorylicensewouldcause“unnecessarydisruptionsinthe musicindustry”).

75_{CopyrightActof1976,Pub.L.No.94‐553,§§801‐802,90Stat.2541,2594‐96.}

76_{CopyrightRoyaltyTribunalReformActof1993,Pub.No.103‐198,§802,107Stat.2304,2305}

(1993).

77_{17U.S.C.§§801‐805;CopyrightRoyaltyandDistributionReformActof2004,Pub.L.No.108‐}

419,118Stat.2341. Thestatutecallstheratesettingbodythe“CopyrightRoyaltyJudges.” See 17 U.S.C.§801. Butitismorecommonlyreferredtoasthe“CopyrightRoyaltyBoard,”includingin theregulations,andthisreportusesthatconvention. See 37C.F.R.§301.1(“TheCopyright RoyaltyBoardistheinstitutionalentityintheLibraryofCongressthatwillhousetheCopyright RoyaltyJudges....”).

78_{See S.REP.NO.104‐128,at10(1995), reprinted in 1995U.S.C.C.A.N.356,357(“Thepurposeof}

[thisAct]istoensurethatperformingartists,recordcompaniesandotherswhoselivelihood dependsuponeffectivecopyrightprotectionforsoundrecordings,willbeprotectedasnew technologiesaffectthewaysinwhichtheircreativeworksareused....Inaddition,thebill clarifiestheapplicationoftheexistingreproductionanddistributionrightsofmusicalworkand

isoftenreferredtoas“pass‐through”licensingforDPDs,inthatitallowsasection115 licensee,suchasarecordlabel,toauthorizeathird‐partyservicetodistributeDPDsof theworkscoveredunderitslicense.79

Significantly,theexpressrecognitionofdigitaltransmissionsofmusicalworksasaright coveredbysection115ledtoalengthyrulemakingproceedingcommencedbythe CopyrightOfficein2001todeterminethescopeandapplicationofthesection115 compulsorylicensewithrespecttovarioususes,whichincludedthequestionwhether interactivestreamingserviceswererequiredtoprocuremechanicallicensesunder section115inadditiontoperformancelicenses.80 _{In2008,recognizingthatstreaming}

servicesmakeandrelyuponservercopiesandotherreproductionsofmusicalworksin ordertooperate,theOfficeconcludedthatstreamingservicescouldutilizethesection 115compulsorylicensingprocesstocoverthereproductionsmadetofacilitate

streaming.81 _{In2009,theCRBadoptedthefirststatutoryratesandtermsforinteractive}

streamingservices.82 _{Asaresultofthesedevelopments,on‐demandstreamingservices}

seekbothmechanicalandPROlicensesforthemusicalworkstheyuse.

b.

MechanicalRightsLicensing

Statutory Licensing

Undersection115,thosewhoseektomakeanddistributereproductionsofamusical workmayobtainalicensetodosobyservinganoticeofintent(“NOI”)onthe copyrightowner,nolaterthanthirtydaysaftermaking,andbeforedistributing,any phonorecords.83 _{OnceapersonhasservedtheNOI,thepersonmustprovidestatements}

ofaccountandpaythestatutorilyprescribedroyaltiesonamonthlybasis.84 _Ifthename

andaddressoftheowneroftheworkcannotbeidentifiedfromthepublicrecordsofthe

soundrecordingcopyrightownersinthecontextofcertaindigitaltransmissions.”); see also 17 U.S.C.§115(c)(3)(A).

79_{17U.S.C.§115(c)(3)(A).}

80_{CompulsoryLicenseforMakingandDistributingPhonorecords,IncludingDigital}

PhonorecordDeliveries,73Fed.Reg.40,802,40,804‐05(July18,2008).

81_{CompulsoryLicenseforMakingandDistributingPhonorecords,IncludingDigital}

PhonorecordDeliveries,73Fed.Reg.66,173,66,174(Nov.7,2008)(“Theinterimregulation clarifiesthat(1)wheneverthereisatransmissionthatresultsinaDPD,allreproductionsmade forthepurposeofmakingtheDPDarealsoincludedaspartoftheDPD,and(2)limited downloadsqualifyasDPDs.”).

82_{MechanicalandDigitalPhonorecordDeliveryRateDeterminationProceeding,74Fed.Reg.}

4510,4514‐15(Jan.26,2009);37C.F.R.§§385.1‐385.5,385.10‐385.17.

83_{17U.S.C.§115(b)(1).} 84_{17U.S.C.§115(c)(5).}

CopyrightOffice,theusermayfiletheNOIwiththeOffice.85 _{Inthatcase,theusermust}

payafilingfeetotheOfficebutdoesnotneedtodepositroyalties.86

Thecompulsorylicenseundersection115isavailableonlyafterarecordinghasbeen madeanddistributedtothepublicundertheauthorityofthecopyrightowner.87

Consequently,theinitialrecordingofamusicalwork,or“firstuse,”doesnotfallunder thecompulsorylicense,andthecopyrightownerhastheauthoritytodeterminewhether andhowtheworkisfirstreproducedanddistributed. Onceaworkiseligiblefor

statutorylicensing,section115limitsthewaytheworkcanbeexploited. Asection115 licenseincludestherighttomakeamusicalarrangementofthesongbutdoesnotpermit theusertochangethebasicmelodyorfundamentalcharacterofthework.88

Asnotedabove,theCRBistheadministrativebodyresponsibleforestablishing statutoryratesandtermsunderthesection115license,aprocessthatbystatutetakes placeeveryfiveyears.89 _{Whilecopyrightownersandusersarefreetonegotiate}

voluntarylicensesthatdepartfromthestatutoryratesandterms,inpracticaleffectthe CRB‐setrateactsasaceilingforwhattheownermaycharge. Ratesforthelicenseare establishedunderastandardsetforthinsection801(b)(1)oftheCopyrightAct,which requirestheCRBtoweighseveralpolicy‐orientedobjectives:

(A)Tomaximizetheavailabilityofcreativeworkstothepublic.

(B) Toaffordthecopyrightownerafairreturnforhiscreativeworkand thecopyrightuserafairincomeunderexistingeconomicconditions. (C)Toreflecttherelativerolesofthecopyrightownerandthecopyright

userintheproductmadeavailabletothepublicwithrespectto relativecreativecontribution,technologicalcontribution,capital investment,cost,risk,andcontributiontotheopeningofnewmarkets forcreativeexpressionandmediafortheircommunication.

(D)Tominimizeanydisruptiveimpactonthestructureoftheindustries involvedandongenerallyprevailingindustrypractices.90

Theratescurrentlyapplicableundersection115weretheresultofanindustry‐wide negotiatedagreementthatwassubmittedtotheCRBasasettlementofthemostrecent

85_{17U.S.C.§115(b)(1).}

86_{See 17U.S.C.§115(c)(1);37C.F.R.§201.18(f)(3).} 87_{KOHNat792‐93; see 17U.S.C.§115(a)(1).} 88_{17U.S.C.§115(a)(2).}

89_{KOHNat742;17U.S.C.§804(b)(4).} 90_{17U.S.C.§801(b)(1).}

ratesettingproceeding.91 _{Thecurrentratetomakeanddistributepermanentdownloads}

orphysicalphonorecordsofamusicalworkis9.1centspercopy.92 _{Forringtones,the}

rateis24centsperuse.93 _{Theroyaltyratetomakereproductionsofmusicalworksin}

connectionwithinteractivestreaming,limiteddownloadservices,andcertainother servicesisapercentageoftheservice’srevenuerangingfrom10.5%to12%,subjectto certainminimumroyaltyfloors,andafterdeductingroyaltiespaidbytheserviceforthe publicperformanceofthoseworks.94 _{Itmayseemcounterintuitivethatringtones—}

whichtypicallyuseonlyshortexcerptsofmusicalworks—haveasignificantlyhigher royaltyratethanfull‐lengthreproductions. Becauseringtonesabbreviatethefull‐length work,itwasnotimmediatelyclearwhetherringtoneswereeligibleforthesection115 license. Asaresult,manyringtonesellersenteredintoprivatelynegotiatedlicensing arrangementswithpublishersatrateswellabovethestatutoryrateforthefulluseofthe song.95 _{In2006,theCopyrightOfficeresolvedthesection115issue,opiningthat}

ringtonesweresubjecttocompulsorylicensing.96 _{Butintheensuingratesetting}

proceedingbeforetheCRB,musicpublisherswereabletointroducethepreviously negotiatedagreementsasmarketplacebenchmarks,andasaresultsecuredamuch higherrateforringtonesthantherateforfullsongs.97

Voluntary Licenses

Section115providesthatalicensethatisvoluntarilynegotiatedbetweenacopyright owneranduserwillbegiveneffectinlieuoftheratesandtermssetbytheCRB.98

Althoughtheuseofthesection115statutorylicensehasincreasedinrecentyearswith theadventofdigitalprovidersseekingtoclearlargequantitiesoflicenses,mechanical licensingisstilllargelyaccomplishedthroughvoluntarylicensesthatareissuedthrough

91_{AdjustmentofDeterminationofCompulsoryLicenseRatesforMechanicalandDigital}

Phonorecords,78Fed.Reg.67,938,67,939(Nov.12,2013).

92_{Forsongsoverfiveminutes,therateishigher—1.75centsperminuteorfractionthereof. 37}

C.F.R.§385.3(a).

93_{37C.F.R.§385.3(b).}

94_{37C.F.R.§§385.12‐385.14,385.23.}

95_{MechanicalandDigitalPhonorecordDeliveryRateAdjustmentProceeding,71Fed.Reg.64,303,}

64,308‐09(Nov.1,2006)(discussing“voluntarylicenseagreementsgrantingthelabelstherightto createringtonesatspecifiedmutually‐negotiatedroyaltyrates”).

96_{Id. at64,303.}

97_{MechanicalandDigitalPhonorecordDeliveryRateDeterminationProceeding,74Fed.Reg.at}

4517‐18; id. at4522(explainingthatthoselicensesconstitute“valuablerateevidencefromthe marketplacefor”ringtonesbutnotfor“otherproductsatissueinthisproceeding(i.e.,CDsand permanentdownloads)”).

amechanicallicensingagencysuchasHFAorbythepublisherdirectly.99 _WhileHFA

andotherlicensorstypicallyincorporatethekeyelementsofsection115intotheirdirect licenses,theymayalsovarythosetermstosomedegree,suchasbypermittingquarterly accountingsratherthanthemonthlystatementsrequiredunderthestatute.100 _Thatsaid,

asobservedabove,thetermsofthestatutorylicenseactasaghostintheattic,effectively establishingthemaximumamountacopyrightownercanseekunderanegotiated mechanicallicense.101

Recent Reform Efforts

Thelastsignificantlegislativeefforttomodernizemechanicallicensingtookplacenearly adecadeago. In2006,RepresentativesLamarSmithandHowardBermanintroduced theSection115ReformAct(“SIRA”).102 _{SIRAwouldhavecreatedablanketmechanical}

licensefordigitalservices,whileleavingtheremainderofsection115intactforphysical reproductions(andalsonotaffectingperformancerights).

SIRAincludedseveralnotablefeatures.103 _{Itwouldhaveestablisheda“general}

designatedagent”withthepossibilityofadditionaldesignatedagentsprovidedthey representedatleast15%ofthemusicpublishingmarket. Copyrightownerswouldelect toberepresentedbyadesignatedagent,withthegeneraldesignatedagentrepresenting anycopyrightownersthatfailedtomakesuchanelection. Eachdesignatedagent wouldhavebeenrequiredtomaintainasearchableelectronicdatabaseofmusicalworks representedbythatagent. Thecostofestablishingsuchdatabaseswouldhavebeen sharedbydesignatedagentsandlicensees,withcost‐sharingamountsdeterminedby theCRB. TheCRBwouldalsohaveestablishedratesandtermsforthelicenseitself,and therewouldhavebeenaninterimratesettingmechanismfornewtypesofservices. Therewerealsoprovisionsaddressingdistributionofunclaimedfundsandauditrights. SIRAenjoyedsupportfromkeyindustryparticipants,includingNMPA,DiMA,SGA, andthePROs.104 _{AlthoughthebillwasforwardedtothefullJudiciaryCommittee,due}

tooppositionfromotherparties,itwasnotreportedout.105

99_{W.JonathanCardi, Über‐Middleman: Reshaping the Broken Landscape of Music Copyright,92IOWA}

L.REV.835,841‐42(2007).

100_KOHNat771. 101_{Id. at771‐72.}

102_{SIRA,H.R.5553,109thCong.(2006). SIRAwaslaterincorporatedintotheCopyright}

ModernizationActof2006,H.R.6052,109thCong.(2006).

103_{See generally CopyrightModernizationActof2006,H.R.6052;SkylaMitchell, Reforming Section}

115: Escape from the Byzantine World of Mechanical Licensing,24CARDOZOARTS&ENT.L.J.1239, 1271(2007).

104_{Mitchell, Reforming Section 115: Escape from the Byzantine World of Mechanical Licensing at1277.}

SIRAfollowed—andwasperhapsanindustryresponseto—anearlier2005proposal fromtheCopyrightOffice. Then‐RegisterofCopyrightsMarybethPeterstestifiedbefore Congresstoproposea“21stCenturyMusicReformAct.”106 _{Amongotherthings,that}

proposalwouldhaveeffectivelyrepealedthesection115statutorylicense,andwould haveauthorizedtheestablishmentof“musicrightsorganizations”(“MROs”)thatcould licensebothperformanceandmechanicalrightsonablanketbasis. Theproposalalso conditionedanMRO’srecoveryofstatutorydamagesontheMROhavingmadepublicly availablethelistofworksitwasauthorizedtolicense. Whileindustryparticipants agreedinprinciplewiththebasicgoalsoftheCopyrightOffice’sproposal,they expressedconcernsaboutmanyofitsspecifics,includingthelackofalimitonthe numberofMROs,antitrustissues,andadministrativeburdens.107