Music publishers say they’ll fight last week’s ruling that establishes a compulsory licensing model for ringtones.
The U.S. Copyright Office granted a request by the Recording Industry Association of America Inc. to simplify the licensing of mastertones-10- to 30-second snippets of original, full-length tunes-and other ringtones by establishing yet-to-be-determined statutory rates for the content. The Register of Copyrights found that mastertones are subject to Section 115 of the Copyright Act, granting rights to any would-be publisher who pays the compulsory licensing rates established by the copyright office.
The move “injects clarity into the marketplace,” the RIAA said in a prepared statement, eliminating the need to negotiate licenses for each piece of music and allowing labels to bring mobile content to market more efficiently. Google Inc. Senior Counsel William Patry on his blog called it “an epoch-making decision” that may extend beyond ringtones and affect licensing structures for other types of content.
Contract hassles have long been a headache for U.S. ringtone publishers, who may have to hash out a half-dozen agreements or more to gain rights to just one piece of music. Analysts believe the problem has drastically increased time-to-market for ringtones of hot songs, costing the mobile music industry millions in potential revenues.
But opponents of the decision include the National Music Publishers’ Association, the Songwriters Guild of America and the Nashville Songwriters Association-placing the groups at odds with the RIAA, a traditional ally. The NMPA and others claim the move undermines the free market, arguing that ringtones are fundamental alterations of songs that aren’t subject to compulsory licensing.
Harry Fox Agency, which represents more than 30,000 U.S. music publishers, said it plans to ignore the ruling as it works with the NMPA to plot its next legal move.
“The decision has no effect on HFA’s existing policy that DPD (digital phonorecord deliveries) licenses issued by HFA on behalf of publishers are limited to the making and distribution of full downloads comprising full-length musical works and do not cover the additional configurations of ringtones or mastertones,” the agency claimed. “HFA has not issued and is not issuing ringtone or mastertone licenses under the compulsory license provisions of Section 115.”
Section 115 was established nearly 100 years ago to address concerns about “potential monopolistic behavior,” according to the copyright office. The statutory license was initially directed at the reproduction of musical compositions on perorated player-piano rolls, but has since been used to manage royalty issues regarding traditional recordings and, more recently, digital music.
Register of Copyrights Marybeth Peters found that while the Copyright Act may not apply to derivative works that use sampled tunes used to create entirely new compositions, it is applicable for mastertones as well as polyphonic and monophonic re-creations.
“It is clear that many, but not all, ringtones will fall within the scope of the Section 115 license,” Peters wrote. “Therefore, it is appropriate for the Copyright Royalty Judges to determine royalties to be payable for the making and distribution of ringtones under the statutory license.”
Onlookers say the decision gives leverage to carriers looking to deal directly with labels instead of content aggregators, and may result in lower prices to the consumer. The ruling appears to be a setback for content aggregators, allowing network operators more leverage in licensing content directly, and “paves the way for the carriers to enter the music distribution market in competition with Apple’s iPod,” according to Washington Analysis, a Beltway firm that analyzes political and economic legislation.
“The wireless carriers, including (Cingular Wireless L.L.C.) and Verizon [Wireless] were handed a significant legal victory,” the firm opined.
Whether the ruling will stand, though, is uncertain. Harry Fox Agency said it “is currently evaluating legal options” regarding the decision and appears poised for a drawn-out battle. Meanwhile, the Copyright Royalty Board is soliciting briefs from interested parties regarding what the statutory rates should be.
