'Music Creators Should Be Compensated,' Says Copyright Office

Government agency tries to close bizarre legal loophole allowing online streaming services to not pay royalties for pre-1972 songs

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After years of copyright battles between musicians, songwriters, record labels and companies from Pandora to Sirius XM, the U.S. Copyright Office has jumped back into the debate with a 245-page report declaring "music creators should be fairly compensated for their contributions." While that may seem like common sense, the Office's suggestions are pointedly specific: They would seal a bizarre legal loophole allowing online streaming services to not pay royalties for songs before 1972, and require old-school AM and FM radio stations to pay performance fees just like Pandora does.

"The time is ripe to question the existing paradigm for the licensing of musical works and sound recordings and consider meaningful change," the Office wrote in its report on Thursday. "There is a widespread perception that our licensing system is broken. Songwriters and recording artists are concerned that they cannot make a living under the existing structure, which raises serious and systemic concerns for the future."

For decades, byzantine copyright laws have meant artists and writers receive drastically different royalty rates when songs are used in different ways — one type of payment for Pandora, another for a CD or download sale, another for Spotify-style streaming. And companies that broadcast the music generally don't go out of their way to translate the royalty rates. The report proposes to change all this, recommending "government licensing processes should aspire to treat like uses of music alike" and "usage and payment information should be transparent and accessible to rights owners."

Although the Office doesn't create U.S. policy, its recommendations to Congress could potentially be the backbone for new or updated copyright laws. This could prevent skirmishes in the future like Flo & Eddie's lawsuits against Sirius XM and Pandora for not paying royalties on songs released before 1972. As federal law stands, copyrights apply only to recordings made on February 15th, 1972 or later, although a variety of state laws are different and confusing. The Copyright Office would "fully federalize" these recordings.

Much of the report is a fascinating, if dry, history of U.S. copyright laws, beginning with the first-ever copyright act in 1790, and how the laws evolved to deal with digital-age issues such as downloading, Internet and satellite radio and streaming. But the Office concludes on a simplistic note: "Our music-licensing system is in need of repair."

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