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(This Open Letter was sent to the Chairman and Ranking Member of the
Senate Judiciary Committee)
3/14/01
Honorable Senator Orrin G. Hatch, Chairman
Honorable Senator Patrick Leahy, Ranking Member
Senate Judiciary Committee
United States Senate
Washington, DC 20510
Dear Senators:
I have a solution to the controversy about about music piracy on the
Internet. I believe that what is necessary is the creation of a
compulsory statutory license for music file sharing on the Internet.
This would provide for a statutory rate for a music duplication and
distribution license fee that would go to the owner of the copyright in
the sound recording whenever a file is copied. Right now, that owner is
usually the record label, but some musicians own the copyrights to
their own master recordings.
This solution has a precedent in copyright law under the United States
Copyright Act. The Act provides that once a song copyright owner has
recorded and distributed a song to the U.S. public or permitted another
to do so, a compulsory mechanical license is available to anyone else
who wants to record and distribute the work in the U.S. upon the
payment of license fees at the statutory "compulsory" rate as set forth
in Section 115 of the Act. This allows an artist to record and release
any song they wish provided that they pay the copyright owner of the
song in question a mechanical royalty, which is currently set at 7.55
cents per song per record sold. This royalty goes to the publisher of
the song, who typically splits the royalty with the song's composer.
This mechanical license does not include the right to reproduce an
already existing sound recording.
A compulsory statutory license tends to act as a maximum royalty.
People are free to negotiate any deal they want, but in the absence of
negotiations, the compulsory statutory license rate holds. I would like
to see the compulsory statutory license fee for file sharing set at
about 25 cents per minute of recording for the time being. Since
mechanical licenses will already have been acquired by the sound
recording copyright holders, any compulsory statutory duplication and
distribution license fee will have to be high enough for the sound
recording copyright holder to pay the mechanical license royalty from.
For example, the Pay2StealMusic.com web site enables a download of a
four minute song composed by Joe Songwriter, published by Get Your Song
Recorded Publishing, performed by the band Covers R Us, and released on
Huge Major Label Records. With a statutory license rate of 25 cents per
minute, Pay2StealMusic.com would pay Huge Major Label Records $1 for
the download. Huge Major Label Records would pay Get Your Song Recorded
Publishing 7.55 cents for the song's mechanical royalty. Typically, Get
Your Song Recorded Publishing would pay 50% of this (3.775 cents) to
Joe Songwriter. If Covers R Us has negotiated extremely well with Huge
Major Label Records, then Huge Major Label Records would credit the
Covers R Us recording fund 42.5 cents (half of the download income less
the cost of the mechanical royalty). If Covers R Us has used their
studio time to good effect and has spent only $4250 recording the song,
then they have to log 10,000 downloads before they can start seeing
some income.
This would allow any site on the Internet to promote music file sharing
provided that they pay the compulsory statutory license fee to the
sound recording copyright holder. Internet sites would be free to
negotiate a lower license fee, and many would be successful at such
negotiations. A central database of sound recording copyright holders
could be set up to assist small organizations and individuals in
arranging licenses.
Musicians, independent labels, major labels, file sharing sites and the
public would benefit from such an arrangement. Musicians would benefit
by not being as tied to an exclusive contract with a label. Independent
labels would get added distribution. The major labels would benefit
greatly financially because they own a huge portion of the content.
File sharing sites could offer any music they choose and could also
negotiate with copyright holders for bulk rates based on any
promotional value they may be able to offer. The public would support
this because it is fair and allows file sharing to continue.
Sincerely,
Matthew Montfort
Musical Director
Ancient Future
World Fusion Music Ensemble
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