Congressmen Call for Copyright Law Changes

If technology is about helping the world evolve to some degree, some
evolutionary changes to the U.S. Copyright Act may be a good thing,
according to two legislators.

The Digital Media Association (DiMA),
a trade organization that claims to
represent the interests of digital entertainment technology companies the
likes of Napster, teamed with U.S. Reps. Chris Cannon (R-Utah) and
Rick Boucher (D-Va.) Friday to announce the proposal of the Music Online
Competition Act,
(MOCA), which addresses “specific deficiencies” in current copyright laws.

Via live conference call from Washington, D.C., the congressmen and
DiMA Executive Director Jonathan Potter discussed the amendments in detail,
offering more “narrowly drawn” suggestions to open up competition among, and
allow more freedom to, online music companies.

Or as DiMA put it, new rules that would aid the development of “legal,
consumer-friendly online media.” The proposed bill comes in the wake of myriad legal woes over online music
copyright infringement, with members of U.S. Congress, DiMA and technology
companies brainstorming amendments to current laws they believe are somewhat
dated with respect to evolving digital media.

Boucher was the most vocal throughout the conference, breaking down the
problems in the current Copyright Act and possible solutions tabled by he
and Cannon. The solutions proposed would apply only to digital music
delivery — by streams or downloads.

“In order to have an effective launch of Web-based music services, you need
to record multiple copies on different servers, you need a different copy
for each format [Windows, RealPlayer] and bit rates [128k, 256k] to go along
with a number of caches,” Boucher explained. “Before long, 30 or 40 copies of
each song are needed in order to make this work. Current law allows only one
and it’s only good for six months. We’d like to expand existing exemptions
to remove those barriers.”

Boucher also said he wanted to change the Act section regarding the playing
of digital music within physical retail stores, such as Virgin Records or
Sam Goody. Under current law, each individual store must house a single
server from which music may be played to cater to consumers. Because this is
both extremely redundant and hardly cost-effective, Boucher called for music
retailers with their chains to house a single server from which multiple
music samples may be played.

Boucher also dispelled as anomalous and nonpractical the notion that the
Copyright Act allows music purchasers to make back-up copies of software in
case of hard-disk crashes or natural disasters, but does not allow the same
for the actual music that was purchased. Basically, if you lose your digital
copy, you would have to purchase it again. Boucher would amend this Act
section to allow users to have back-ups of songs.

But to hear Boucher list the proposed changes, it was clear he wasn’t
necessarily going in order of importance, particularly with respect to the
timing of the pending MusicNet and pressplay. While he said he applauded the
decision of MusicNet and pressplay to offer online music subscription
services that would please labels, artists and consumers alike, he said
because each faction owns the rights to 40 percent of the world’s music
catalog, with the remaining 20 percent spread far and wide, it is difficult
to ensure fair competition among the companies; some might grant certain
rights or licenses that would put the others at a disadvantage. Boucher
called for a non-discriminatory practice whereby labels could decide not to
license to anyone, but if they did, they would not be able to shut out other
parties interested in using their content, or charge different licensing fees.

Matt Bailey, a senior analyst with digital entertainment research firm Webnoize, said he didn’t know if such a bill would pass muster. With regard to pressplay and musicNet, Bailey said they would would need to do something more liberal and widespread, noting that the fact that the content was tethered, (relegated to the computer system of the paying subscriber) might be a turnoff for consumers. MOCA, as proposed by Boucher and Cannon, lobbies for digital music to be portable.

“The danger with them, is that the oligolopoly could turn into a duopoly,” Bailey told “Between the two of them they’re carving up the market.”

As for the recording industry’s reticence surrounding MOCA, Bailey was not surpised at all.

“Traditionally, record labels are slow to move,” he said. “Free market economics is a powerful force and as long as there is powerful competition government needs to act.

Boucher also vowed to try to strike down the notion that companies
interested in licensing music for commercial use would have to check with
the copyright holder first, which impedes the licensing process and is often
difficult. He called for a simple notice to the U.S. Copyright Office, and even
better, an electronic system whereby prospective licensees could apply
online in lieu of the current snail-like paper trial the office employs. This, he argued, is an efficient safe-harbor provision.

But it is the proposals on licensing that are sure to draw heavy fire from the Recording Industry Association of America (RIAA). RIAA President and CEO Hilary Rosen
dismissed the bill thus far, saying it would take too much time, effort and resources to implement. Rosen also told Reuters said this was an example of government legislation trying to hold court in the marketplace.
To be sure, insiders have said that idea of making record labels cut same-priced deals to licensees won’t pass muster in Republican Congress.

When asked about what they thought the RIAA’s stance on the proposal, Cannon and Boucher said they had
heard rumblings that the organization would disagree with certain aspects,
such as the licensing amendment.

“I have heard that the RIAA has branded MOCA as a compulsory license bill
and it is absolutely not,” Boucher said. “Record companies would not be
required to license and when they do they may set their own rules and
contracts with the licensees.”

Webnoize senior analyst Ric Dube said the major point of MOCA is opening licensing up — certainly not compulsory licensing, which means that the content owner would have no choice but to prescribe set rules for offering their content to licensees. For instance, he said, if Warner Music cut an online music deal with AOL, they would be required to offer the same deal to everyone else. This would not be an advantage because other companies may not have the same requirements.

“I’ll think we’ll see a happy medium between what’s been proposed and what will get passed,” Dube told “The recording industry is slow to move because if there is no advantage [of making chnages] evident, they won’t do anything. If the government sees the advantage of changes in the market, they will act on it. Legislation will look at whether what the labels are doing is depressing the market and if they believe it does depress the market they would have to act.”

Cannon, who said he and Boucher introduced MOCA to add a little caffeine to
the industry to get it moving, stressed the importance of the timing of the
bill, which will be put before the House Judiciary Committee this fall;
interestingly, it coincides with the launch of pressplay, MusicNet, and
quite possibly, the newly-knighted-as-legitimate Napster service.

“We need to get a bill moving through Congress,” Cannon said, simply.

Indeed, although Napster’s reign as a free-to-all service has seen its
twilight, file sharing of music and movies
runs roughshod over the Web, with demos and final cuts of songs and films
making it onto people’s PCs before they even hit the shelves or silver

While the bill may not impede this deluge of unpaid-for media,
the MOCA would ensure that consumers have Internet access to legal music,
and most importantly in terms of the law, content
creators and rights holders would get paid. DiMA’s Potter also said the bill
would drive competition
instead of sparking lawsuits among companies and organizations. It calls for, in a
word, legitimization — a vindication for online digital entertainment
businesses, something
that the Big 5 hopes to bring to the table with their dueling online music
subscription services, MusicNet and pressplay.

“We applaud Congressmen Cannon and Boucher’s effort to craft a narrow
approach that would bring copyright law current with today’s digital and
on-line economy,” Potter said.

Regardless of the outcome, MOCA seems to be a Holy Grail of sorts on paper; in summary, it would:

  • Equalize the copyright law treatment of Webcasters and broadcasters.
    Currently, because Webcast technology requires multiple servers and several
    codecs, Webcasters are potentially liable for “reproduction” rights
    obligations that do not impact broadcasters. MOCA would eliminate such legal

  • Ensure that online music consumers will continue to be able to listen
    to music before they purchase it, just like traditional consumers in
    brick-and-mortar stores;

  • Compensate songwriters and music publishers;
  • Give artists the right to receive Webcast performance royalties

  • Promote competition among online music providers by assuring
    non-discriminatory licensing of sound recordings.

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