The sound of money: securing copyright, royalties, and creative "progress" in the digital music revolution.

• Author: Boyajian, Armen

1. INTRODUCTION II. U.S. COPYRIGHT LAW IN THE CONTEXT OF TECHNOLOGICAL AND MARKET CHANGE A. The Existing Legal Framework 1. Constitutional and Theoretical Foundations of Copyright 2. Strong Rights Granted to Composers and Recording Artists by Acts of Congress 3. Licensing Versus Assignment for Royalties and Creative Control Rights B. Revolution, Market Restructure, and Copyright Retention in the New Digital Music Industry 1. Self-Production 2. Self-Publishing and Self-Distribution 3. Self-Accounting and Royalty Collections C. Access, Diversification, and the Rise of Niche Genres D. Retention of Musical Work and Sound Recording Copyrights III. STRONG COPYRIGHT LAWS ARE IMPERATIVE FOR "PROGRESS" IN THE DIGITAL AGE A. Artist Empowerment Through Strong Copyrights 1. Greater Opportunities for Financial Rewards 2. More Discretion Over the Artistic Integrity of Works B. National Creative "Progress" Through Artist Empowerment C. Copyright Reforms in the New Digital Music Industry Are Unwarranted D. Enhancement of Transparency and Education IV. LET IT BE: A SOUND POLICY FOR "PROGRESS" I. INTRODUCTION

   As part of his technology and innovation platform, Barack Obama broadly pledged to "update and reform" copyright laws in ways that strike a balance between promoting the public good and treating copyright owners fairly. (1) Sweeping legal reforms are advocated by popular critics and leading copyright scholars alike. Recognizing market paradigm shifts in the ways we produce, distribute, publish, and consume music, this Note argues that little change, if any, is necessary to achieve that beautiful balance. Much of the animosity toward our existing copyright framework stems from the unpopular tactics of the record industry, which tried to enforce copyright laws to sustain an increasingly outmoded system. What those calling for reform fail to notice, however, is that the digital music revolution is ushering in a monumental shift in copyright proprietorship that redefines the whole game: for the first time in history, musical artists can keep their copyrights. Consequently, as intellectual property becomes a more essential part of our national economy and infringement becomes easier, (2) it is in the best interests of both artists and the public to maintain and enhance the existing "strong" copyright system.

   Compared to the costly production and distribution methods that characterized the age of tangible media (e.g., LPs, analog tapes, CDs, and DVDs), the advent of digitally compressed audio formats and online networks has opened superior channels for the proliferation of music. Wireless streams and downloads are now available anytime, anywhere, any way you want. This presents unlimited financial opportunities for copyright owners. Whether you buy that new single through the Rhapsody application on your BlackBerry, stream your personally tailored Pandora stations on your iPhone, hear the song synched to a video on YouTube, or download the entire album from Amazon.com to your desktop, copyright royalties will be raked in as you rock out.

   So who will get the money? The past decade witnessed mass civil revolt against the old-guard record industry as consumers--especially those turning to online file sharing--felt that the high prices they were paying for CDs were lining the pockets of industry executives instead of the musicians they loved. Up until the turn of the century, record labels and music publishers added unparalleled value to music production, distribution, and royalty collection. An artist longing for international exposure, therefore, had little choice but to sign away his or her statutorily vested copyrights, if so "lucky" as to land a record deal. By acquiring artists' copyrights through contractual assignment or "works made for hire," middlemen corporations thrived off of phonorecord sales and licensing royalties for decades. That is all changing now.

   The corporate oligopoly that reigned supreme in the age of tangible media is kneeling to a more efficient, dynamic, and democratic music industry run by composers, recording artists, managers, entrepreneurs, and consumers. (3) This is because innovative technologies have set the stage for an inevitable shift in copyright proprietorship. With costs of production, publishing, marketing, and distribution being vaporized, industry middlemen no longer add necessary value to an artist's career.

   Additionally, the digital marketplace allows a larger number of artists and a wider spectrum of genres to reach consumers' ears. Despite the irreversible decline of tangible media sales, intangible digital formats and networks are fostering a freer marketplace, which creates lucrative opportunities for developing music that is specially targeted to the tastes of niche audiences. As a result, artists of all genres should no longer feel obliged to sign away their rights through standard record deals and publishing contracts; they can now use their copyrights to develop sustainable careers based on licensing royalties, touring, and merchandise sales.

   For many artists, maintaining the sanctity and integrity of their original expressions is even more important than money. More artists will presumably create and disseminate original works if they have the peace of mind that they can bring infringement lawsuits against unlicensed, substantially similar derivative works that offend or degrade their originals. Because original works are arguably more valuable to a society's cultural progress than unauthorized derivative works, Congress and the courts should protect an artist's ability to fence off his original works from unlicensed trespassers (infringers). This may additionally benefit society by effectively encouraging those who would have otherwise made derivative works to create original works of their own.

   In the digital age where artists have an unprecedented opportunity to retain their copyrights, maintaining strong legal protections with flexible licensing options will give artists more power to choose what they want-royalties and financial security, integrity and creative control, recognition and fame, or a combination thereof--in exchange for devoting themselves to the creation and dissemination of original works. Thus, strong copyright law, coupled with enhanced transparency and educated awareness of licensing options, is the best way to drive up national creative output. Such a legal and policy framework would lead to an artistic renaissance, fulfilling the constitutional call for "Progress of Science"--the advancement of knowledge, discourse, and culture.

   Part II provides background information on the United States' characteristically strong copyright framework in the context of technological, economic, and popular developments that comprise the digital music revolution. It explores three exciting new ways music can be disseminated directly from copyright owners to consumers: (1) peer-to-peer file transfers (P2P), (2) online retail downloads, and (3) Webcasts through both "interactive" and "noninteractive" streams. Lastly, it discusses how these technologies and market dynamics bring about the new opportunity for artists to keep their copyrights and how this will lead to the empowerment of more musicians and diverse genres.

   Part III synthesizes the changing market structure, new opportunity for artists to keep their vested copyrights, and consequent power shift to set forth the argument in favor of maintaining strong copyright protections: because national creative "Progress" will be optimized through the natural empowerment of artists, there is no need to legislatively or judicially weaken our copyright laws. Prevalent counterarguments are outlined along with three suggested alterations to the existing copyright system: expanding compulsory license schemes, imposing levies, and expanding the fair use doctrine. Finally, this Note argues that such calls for drastic legal reforms should be scrapped in favor of a more sensible federal policy, such as promoting the practice of licensing through enhanced transparency and educational initiatives.

   Part IV concludes that reforming our copyright laws would be premature and unwise without more forward-looking analyses, which at least take into account the inevitable historic shift in copyright proprietorship. Our existing legal framework is set to foster a more diverse and financially stable artistry that will maximize output of original works for the benefit of us all. Maintaining our strong copyright, therefore, would be the most sensible way to balance the interests of artists and the public good.

2. U.S. COPYRIGHT LAW IN THE CONTEXT OF TECHNOLOGICAL AND MARKET CHANGE

   Copyright law in America is strung together by a web of constitutional authority, legislative acts embodying compromises between interest groups, and centuries of judicial interpretation. Powerful trade associations representing record labels and music publishers have, thus far, been able to enhance their business opportunities by successfully lobbying for strong copyright laws. But thanks to the digital music revolution, it is rather composers and recording artists who now stand to inherit the strong protections and incentives of our current legal framework.

   1. The Existing Legal Framework

      A copyright is a bundle of several intellectual property rights granted under law to protect an artist's power to choose who can copy or use his original work. (4) Copyright owners in the United States--who, up until now, have largely been publishers and record companies---enjoy strong legal protections. These protections include the following: exclusive rights to choose how the works will be reproduced, distributed, and digitally transmitted; exclusive rights to make and derive profits from adaptations (derivative works); exclusive rights to perform the works publicly; relatively long terms of protection; and favorable rules for litigating infringement. (5) These laws are...