Saying that they hope to create a more competitive environment for Web broadcasters by reducing litigation and ensuring consumer choice, two congressmen, in conjunction with trade group Digital Media Association (DiMA), announced a bill to amend the U.S. Copyright Act Friday.
Congressmen Chris Cannon, a Republican from Utah, and Rick Boucher, a Democrat from Virginia, introduced the Music Online Competition Act (MOCA) to address what they claim are deficiencies in the Copyright Act, which fails to address unique issues in the online music industry.
One of the main objectives of MOCA is to eliminate royalties that Web broadcasters are liable for on copies of copyright music that exist only because of the technology used to stream the music. "Incidental" copies, as they are sometimes called, include copies that may reside on a user's computer while they listen to a song and which disappear after the song has been played. Under current copyright law, Web broadcasters could be made to pay royalties on these copies, in addition to royalties for the performance right.
Under MOCA, however, Web broadcasters would be protected from being charged royalties on multiple copies of music that are created as a result of delivering that music over different technologies.
"As many copies that are necessary to effectively deliver the service will enjoy protection under the bill," Boucher said during a conference call Friday.
Copies made due to buffering would also be exempt from additional royalty fees, the congressman said. Furthermore, users would be allowed to make one backup copy of each song they download in case of a system crash, without worrying about copyright infringement. The backup copy would be protected under the bill just as a single backup copy of software is allowed under current legislation.
Although a draft of the bill itself was not released Friday morning, an announcement by DiMA stated that MOCA would streamline royalty payments to songwriters and music publishers, give recording artists the right to directly receive Web performance royalties and allow music consumers to listen to music online before they purchase it.
In addition, DiMA claimed that the bill would promote competition among online music providers by offering nondiscriminatory licensing of sound recordings.
"The purpose of the bill is to encourage lower costs for online music downloading ... and more choice," said Cannon.
The timing of the legislation comes as the major record labels are getting ready to jump into the online music business with their own subscription services. AOL Time Warner Inc., Bertelsmann AG, EMI Group PLC and RealNetworks Inc. formed online music venture MusicNet while Vivendi Universal SA joined with Sony Music Entertainment Inc. to create Pressplay. Both are due to launch later in the third quarter of this year.
Although Boucher said that he applauded the labels' foray into subscription services, he said that because MusicNet and Pressplay will each hold roughly 40 percent of the world's inventory of licensed music, and are likely to cross-license each other giving them 80 percent of licensed music, he feared that a "duopoly" could arise.
The congressmen are hoping that MOCA will level the playing field for Web broadcasters, offering them fair access to music at lower costs, while making sure that the artists get their due.
"This bill addresses critical (online music) technology and legal issues," said DiMA Executive Director Jonathan Potter, who noted that the industry has been mired in legal wrangling up until this point.
"We want to get out of the lawsuits, send the lawyers home and (move forward in) the music business," Potter said.
That might not be so easy, however. The Recording Industry Association of America Inc. (RIAA) has already come out staunchly against the proposed legislation, saying that it will divert time, energy and resources from the industry's goal of delivering music to consumers.
"(The Cannon-Boucher bill) is essentially a solution, a very bad solution, in search of a problem," RIAA President and Chief Executive Officer Hilary Rosen said in a statement Friday.
"The bill substitutes government regulation for the marketplace. This is not only wrong, it is also inconsistent with the strongly held view of experts in the private sector that government regulation of the Internet would be a disastrous mistake," she continued.
Rosen added that the association plans to fight the bill "aggressively."
The RIAA's opposition came as no surprise to the bill's supporters.
"I would assume that the recording industry would oppose quite strongly our nondiscrimination provision," said Boucher.
He emphasized, however, that MOCA was not a compulsory license bill, and ultimately leaves the decision to license music in the hands of the copyright holders.
Despite what looks like an impending battle with the recording industry, the congressmen were enthusiastic that the specific legal needs of online music were finally being addressed.
"We hope MOCA will be the caffeine to get the industry moving," Boucher said.