Policy Studies Technology and Innovation

Transparency in music licensing and the statutory remedy problem

The modern conversation about music copyright has been shaped by the emergence of new digital business models. As these new markets for music open, one might expect the remunerative opportunities for creators would improve commensurately. But while new digital revenue streams produced $4.51 billion in sales last year, many musical artists suffer financially. Meanwhile, new entrants to the digital market often run at a deficit. In 2014, Pandora Radio paid close to 50 percent of its revenue to music labels and musicians, but only 4 percent to songwriters.

One consequence is that tensions have erupted between these new distribution platforms and traditional stakeholders in music copyright. As musician and songwriter David Byrne – famous for his work with the Talking Heads and a board member of the performance rights organization SoundExchange – wrote recently in an op-ed in The New York Times:

It’s easy to blame new technologies like streaming services for the drastic reduction in musicians’ income. But on closer inspection, we see that it is a bit more complicated.

If federal copyright was created to empower Congress to compensate creators fairly for their work, why hasn’t the copyright system – which, in the area of music, is shaped by rate-setting bodies and relatively new protections for recordings – evolved adequately to further that goal? Stakeholder lobbying likely plays a role, as does political gridlock and ignorance on the part of some policymakers of how music copyright operates.

But another significant issue in the modern system for music copyright is a startling lack of transparency. Without an effective system to identify precisely who holds copyright interests in many compositions and recordings, incumbent stakeholders and new digital services will fail to find common ground. This paper explores how this aspect of the music-copyright framework might be reformed to better serve a modern, free and disintermediated market.

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