Lawmaker Plans Digital Royalties Probe

WASHINGTON — A senior member of the House is planning an inquiry into the compensation artists receive when their content is transmitted over the Internet through on-demand streaming services, setting the stage for a legislative battle that would pit new-media services like Apple and Amazon against the old-guard of the entertainment industry.

Judiciary Committee Chairman John Conyers, D-Mich., is planning a hearing on the subject as he explores legislation on the so-called audio-visual royalties artists receive, his chief of staff, Perry Applebaum, said at a conference today.

“We’re looking at sometime this summer, hopefully July,” Applebaum said. “It appears to be an anomaly in the law and it’s something Mr. Conyers is concerned about.”

Applebaum stood in for his boss to deliver a speech here at the Global Copyright Summit, an international forum for rights holders and copyright advocates. Conyers had been scheduled to speak, but was called away to testify before a House subcommittee on a landmark health care bill he has introduced.

Applebaum was speaking to a grateful audience. The attendees burst into applause when he announced Conyers’ plan to explore legislation that would require online media companies to compensate artists for digital transmissions of their work in the form of a performance royalty.

Artists currently receive a small portion of each sale of a download from an online store such as Apple’s iTunes through what is known as a mechanical royalty. But a performance royalty could layer in a new form of compensation, as well as expanding their royalties to on-demand streaming services, a move that would face vigorous opposition from the Digital Media Association (DiMA), a trade group that represents firms like Apple, Amazon and Best Buy.

Appearing on a panel discussion yesterday, DiMA Executive Director Jonathan Potter argued against audio-visual performance royalties, saying of his members, “We’re delivering a product and paying all that’s due.”

But at the World Copyright Summit, which draws an international audience devoted to protecting rights holders in the digital age, he was decidedly in the minority.

Del Bryant, president and CEO of BMI, seemed to speak on behalf of the conference attendees when he declared to Potter, “Copyright should be technology neutral.”

The conference has drawn several supporters of stronger intellectual property rights from Capitol Hill. Applebaum’s talk this afternoon followed appearances by Sens. Patrick Leahy and Orrin Hatch, the cosponsors of the Patent Reform Act, and Rep. Robert Wexler, who spoke yesterday about the need to reach out to the “Napster generation” about the value of intellectual property.

Conyers has attached his name to several efforts to shore up intellectual property rights and ensure that artists are compensated for their work in a rapidly changing digital landscape.

He was the author of the PRO-IP Act, which, signed into law late last year, called for the creation of a new office in the White House to coordinate government enforcement of IP law.

Applebaum said Conyers is actively engaged with the Obama administration as it considers candidates to head that office, a so-called copyright czar, he hopes will be “someone who truly respects and understands the needs of copyright owners.” Conyers, who sponsored the identical version of the Patent Reform Act in the House, is also involved in the selection process for the next head of the U.S. Patent and Trademark Office, Applebaum said.

Conyers is also working to pass the Performance Rights Act, a bill that would require terrestrial radio broadcasters to pay artists royalties for playing their songs, just as satellite broadcasters do. That legislation, backed by the recording industry, has drawn fierce opposition from that broadcast lobby.

Another IP issue on Conyers’ plate concerns orphan works, a term that refers to books that are still under copyright, but whose authors cannot be found. How to deal with orphan works is one of the most controversial aspects of Google’s Book Search project, and an issue the search giant has long advocated for congressional action to clarify.

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