BMI Testimony . . .

Stock Asylum Staff Report
March 29, 2006

(Editors note: Following is written testimony presented to the U.S House of Representatives' Judiciary Committee, Subcommittee on Courts, the Internet, and Intellectual Property about proposed orphan works legislation by the Broadcast Music, Inc, (BMI). Footnotes have been removed.)

WRITTEN STATEMENT OF BROADCAST MUSIC, INC.
on
“The Report on Orphan Works by the Copyright Office”
March 17, 2006

 

Chairman Smith, Ranking Member Berman, and Members of the Subcommittee, Broadcast Music, Inc. (“BMI”) is pleased to submit its written comments for the hearing record on the Copyright Office’s legislative proposal for how to deal with the problem of so-called “orphan works”. BMI commends the Subcommittee for holding a hearing on the complex and important goal of creating a new copyright law system designed to facilitate the use of copyrighted content whose owners/creators cannot be located. BMI thanks Marybeth Peters and the Copyright Office for their extensive work on this subject made at your behest. BMI urges the Congress to proceed deliberately and with caution in this area, however, because any orphan works regime that Congress may adopt entails the risk of unfairly compromising the rights and economic interests of this country’s creators.

STATEMENT

BMI is a music performing right licensing organization whose business centers on licensing of public performances of over 6.5 million musical works by a wide spectrum of users, including digital and analog broadcasting entities such as radio, broadcast television, cable, satellite and the Internet, as well as restaurants, stores, concerts, background music services, aerobics and dance studios, and many more. BMI’s fundamental and lawful role is to license to these users the “public performing” right in musical works on behalf of its over 300,000 affiliated songwriters, composers and music publishers. The majority of these songwriters are neither performers nor major recording artists and therefore do not receive income from making sound recordings of their own music, or from concert tours, television appearances, commercial endorsements, sales of souvenirs or any other activities enjoyed by recording artists. As a result, the majority of BMI’s affiliated songwriters and publishers are the consummate “small businessmen and women” who depend on their BMI royalties for a major portion of their income.

BMI also has entered into reciprocal license agreements with more than 70 foreign performing right societies worldwide that permit BMI to license in the U.S. the public performing right in many thousands of musical works by foreign songwriters and composers. Through these reciprocal agreements, BMI also collects royalties from those societies for performances of BMI musical works occurring overseas. BMI operates as a non-profit making business and does not retain earnings. Instead BMI returns all license fees collected, less operating expenses, as royalties to its affiliated songwriters, composers, and music publishers whose works are publicly performed.

Last year BMI submitted comments to the Copyright Office in its orphan works proceeding. In those comments, BMI contended that at least with respect to the public performing right in musical works, the orphan works scenario should not be a problem because the performing rights organizations, BMI, the American Society of Composers, Authors and Publishers (“ASCAP”) and SESAC, together represent the rights to in excess of 99% of copyrighted music. The significance of this is that a user seeking to license the public performing right in music can obtain licenses from the performing rights organization whose repertoire includes that work.

BMI and ASCAP also maintain extensive proprietary databases of copyright information as well as contact information for their respective affiliates and members. BMI pioneered an online database greatly facilitating the public’s ability to identify the copyright owners of BMI musical works. The Harry Fox Agency also submitted comments to the Office that it is able to identify publishers for purposes of mechanical rights licensing. In the circumstances, it is not likely that a user will encounter a work for which licensing and/or contact information is not available.

Although the Copyright Office’s report takes notice of the existence and the efficacy of collective licensing organizations , the Office’s legislative proposal does not itself reflect the role that collective licensing organizations can play in reducing the incidents of orphan works problems. Jule Sigall did candidly acknowledge in his written testimony on behalf of the Office that the adoption of the proposed legislation by Congress might galvanize the non-music copyright industries to create collective licensing organizations similar to the music performing rights organizations. Mr. Sigall stated that: “In fact, enactment of orphan works legislation may be the catalyst necessary to prompt the non-legal marketplace reforms that will most efficiently address the problems identified by photographers and creators of visual images.” The logic of this statement is apparent.

While most commentators would agree that adherence to the Berne Convention would preclude any orphan works legislation that called for mandatory registration of works, it appears that the Office’s proposal creates a scenario in which, for all practical purposes, a copyright owner must keep his or her address on file somewhere that is publicly available in order to preserve the economic value of his or her copyright rights. Even if the creator is capable of meeting this burden, the creator must ensure that the corporate entity owning or controlling the copyright (e.g., a work-for-hire owner) is similarly locatable. In addition to public access to contact information, there must be adequate assurance that someone coming across a copy of the work can reasonably link it to that particular creator or copyright owner. In this regard, concern has been expressed that the Office’s proposal for attribution to copyright owners by orphan works users (which should be helpful to authors) may actually lead to improper or incorrect information being put on works by orphan works’ users, which in turn could lead to reliance by subsequent orphan works users on incorrect data when they do their searches. All of this tends to argue for the creation of collective licensing organizations in non-music fields.

BMI is confident that the Committee will be able to address the many difficult issues presented by orphan works situations. BMI believes that any legislation adopted by Congress should, at a minimum, be accompanied by legislative history that addresses the case of a copyrighted work for which a license is available through a readily locatable collective licensing organization, such as the music performing rights organizations. The legislative history should clarify that: (1) a reasonably diligent good faith search to locate the owner should include research of databases of collective licensing organizations which may have the rights to license to the user; and (2) if a license is available from the collective (which itself is an “owner” of non-exclusive rights in the work) and is not taken, the work would not be considered “orphaned” (stated otherwise, the search would not be considered reasonable within the meaning of the Act). Such a provision would serve as a further incentive to the marketplace “reform” being advocated by the Copyright Office.

BMI also believes that orphan works treatment should not be allowed for any uses subject to statutory compulsory licenses (e.g. sections 111, 115, 118 and 119) where Congress has created the means of access to a license and the Copyright Royalty Board has established the fees, and there are established methods and practices for dealing with unidentified works.

David Trust of the Professional Photographers of America association testified that in the case of uses that have relatively small value, it will not be cost efficient for the owner of an orphan work to negotiate a reasonable fee when the incentives created by statutory damages and attorneys fees are removed from the negotiating equation. Jule Sigall testified that a “small claims” court for copyright owners could be the solution to this problem but the cost of going to even a small claims court is going to be relatively high in some cases. Attorneys fees should therefore be available to copyright owners who have to pursue legal remedies such as reasonable license fees for orphan works uses, at least in cases of flagrant and willful disregard of the owners’ economic interest.

CONCLUSION

Mr. Chairman, BMI applauds your efforts and initiative – and those of the Copyright Office -- in this challenging area of law. Collective licensing organizations such as BMI can serve as a cost-effective marketplace solution to orphan works licensing and BMI believes that at a minimum the legislative history to any orphan works bill should reflect this valuable role by specifying that reasonable searches include licensing through such organizations where available.