Wednesday, November 9, 2011

The U.S. Copyright Office Advises Congress to Phase Out Statutory Licenses


                The United States Copyright Office ("CR Office") advises Congress regarding copyright issues.  Recently, the CR Office proposed phasing out the cable/satellite statutory licenses--an item which Hollywood wishes to repeal.  In 1976, Congress amended the Copyright Act.  As part of that amendment, Congress established a statutory compulsory license allowing cable/satellite operators to distribute broadcast television signals upon payment of the license fee to the Copyright Royalty Board.  This Board act in much the same way as ASCAP and BMI by allowing persons wishing to license certain works to pay the license to one entity rather than hunting down and paying each copyright owner to license that owner's portion of an entire work.  In return, the Copyright Royalty Board distributes the fees to the copyright owners (i.e. Hollywood studios, sports leagues, etc.). 
            The suggested change of eliminating the compulsory license will mean that cable/satellite providers would have to negotiate individually with each copyright holder.  In most instances there will be more than one copyright holder for an entire audio-visual work.  Each copyright holder will only own the copyright to a particular portion of the work (i.e. a movie's music score).  For example, for a song, there are usually two copyright holders:  the owner of the sound recording and the owner of the words and music to the song.  As you can imagine, this will undoubtedly increase the cost of cable/satellite programming which means, of course, the end users of cable/satellite services (the viewers) will ultimately pay more for those services.  Another by-product of implementation of this suggestion by the CR Office would be to increase copyright disputes.  After all, with so many rights holders for one work, missing getting permission from one of them would mean a headache for the cable/satellite companies.  Increases in disputes means an increase in operating costs for these companies. 
            The statutory license provision related to cable/satellite transmissions has been under attack by the CR Office for quite some time.  However, should Congress ever phase out this portion of the Copyright Act, it could mean that the copyright owners will be able to earn more for licensing their content, but that would mean the consumer will ultimately pay the price. 

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