In discussing music royalties, the controversy that usually makes the news is the dispute between music services and copyright holders – with services arguing that the royalties are too high and rightsholders contending that they are underpaid. The introduction of the Songwriters Equity Act in Congress earlier this year seems to point toward a new area of dispute – one between the various rightsholders themselves. This issue was one that was much discussed on a panel that I moderated last week at the RAIN Summit West (audio of that panel is available here). What is this conflict?
The Songwriters Equity Act, while not explicit in identifying the controversy, does point to the dispute. As we have written many times before, in any piece of recorded music, there are two copyrights – the sound recording copyright (also known as the “master recording,” the recording of a particular song by a particular artist, rights usually held by the record label), and the right to the musical work (or “musical composition,” the words and music to a song, usually held by a publishing company). The proposed legislation suggests that the amount of the royalties for the public performance of sound recordings can be taken into account in setting the royalties that are payable to songwriters for the public performance of the songs that they have written. This would amend Section 114(i) of the Copyright Act, which currently prohibits the consideration of the sound recording royalty in determining the rates to be paid for the public performance of musical works. The proposed legislation would also substitute the “willing buyer, willing seller” standard for the 801(b) standard in setting rates under Section 115 of the Copyright Act, the mechanical royalty (see our discussion of the difference between these standards, here). While this does not sound like a big deal, it may have a significant impact.