Happy Thoughts Series: The Homestyle Exemption

This second Happy Thought is a good thing in the US's domestic  copyright law, though it may fall under another category internationally.

Sec. 110(5) of the US Copyright Act is a bit infamous in its own way.  It was the subject of a WTO dispute almost a decade ago.  Although the law was found to be partially in violation of TRIPs, the US has not changed it.  Despite this international aspect, Sec. 110(5) is still a good part of the US Copyright Act.

Sec. 1110(5) allows special exemptions to small bars, restaurants and shops, or bars restaurants and shops that have minimal sound and video equipment who play broadcasts in their establishments.  This covers things like corner pubs with a small television, restaurants that play the radio for their customers, and shops playing music in the backroom that can be heard out front.

The original homestyle exemption was added to the 1976 Copyright Act as Sec. 110(5) after the famous Aiken case.  In Aiken, the Supreme Court decided that the owner of a small chicken shack was not infringing the copyright of rights owners whose work was being played on the radio station to which Aiken had his radio tuned despite the fact that customers in the restaurant could hear the radio. 

Congress amended Sec. 110(5) in 1998, splitting it into two parts: one a narrower version of the original homestyle exemption and the other another variation in line with the original exemption that came to be known as the business exemption.  The amended Sec.110(5) was part of a package deal negotiated and worked out by Congress to protect small users from abuse at the hands of the collecting management organizations but still recognize the right holders' rights by limiting the exceptions in terms of size, equipment and type of performance (i.e. only re-broadcasts).  That is why it is a good thing in the US's copyright law: it shows a successful balancing of interests between users and creators/owners.

Follow-Up to: Developing Decent Digital Distribution Solutions

In our previous post, Developing Decent Digital Distribution Solutions, Ip's What's Up reported about a Vanderbilt University class called "Stealing in Music City" where the students had to develop a new digital distribution system for the music industry.  The three student groups presented their solutions last week Tuesday, December 2nd.  The video of their presentations is now available on YouTube and VUCast.

The video itself is almost an hour long, and Ip's What's Up doubts many of its readers have time to watch the whole thing.  We wanted to summarize the groups' projects for you.  Unfortunately, the Nigerian internet didn't like that plan.  So, we offer you a summary of the first group and most of the second group.  (Our apologies to Group 3.  We are sure you put a lot of effort into your project as well and will report on it as soon as we're able.)

Groups one and two each consisted of three, visibly nervous, first-year students.  It is apparent from their presentations that they learned a lot about copyright and the music industry during their semester and that they put a lot of work into developing their solutions.  We hope their professors are proud of them and will continue the seminar in the future.

Group 1

The first group pulled ideas to improve the music industry from a variety of sources.  They talked about revising the copyright law to make it easier for artists, consumers and labels to understand, particularly the areas relating to ownership, fair use and the public domain.  That's probably good for everyone, except the attorneys.

On the production end, the group adopted the licensing model mentioned by David Byrne in a Wired.com article.  Through the group's version of this model, artists could only license their recordings to a label for a limited time, rather than assigning the entire copyright to the label.  (The label would not be allowed to own any masters.)  The group adopted this plan because they believe labels play an important role in promoting artists but also think artists should have more say in their careers.

On the distribution side, the group incorporated two ideas supported by Professor Michael Bressman.  (Professor Bressman teaches the IP Clinic at Vanderbilt law and visited the undergraduate class as a guest speaker.)  The group suggested an increase in the number of legal online music distribution sites and that these sites should use monthly fees rather than per song payment arrangements.  The group seemed unaware that there are more music download sites than iTunes, but perhaps that was just their example.  [Some music sites: iTunes (the standard), eMusic (which is monthly subscribtions), amazon.com (drm free), napster (the newer, legal version), payplay.fm, puretracks, there are many more.  Note: Some of these will not work outside the US.]

The group also looked at changing social norms, turning illegal downloading into something un-cool instead of something normal.  The ideas here were a bit reminiscent of anti-drug and anti-gang programs (Downloading Abuse Resistance Education?), and made this Ipper feel rather old.  Their suggestion: include internet safety and copyright in the existing elementary school computer classes.  These classes already teach students how to type and use the internet; they should teach how to do it safely and legally.

In addition to incorporating music downloading etiquette into computer classes, the government should also use things like pamphlets and public service announcements to educate people about piracy.  They suggested these tools be a bit less extreme and a bit more honest than the RIAA's versions.

Overall, it seemed the group attempted to address several different aspects of the music downloading issue: the relationships between people in the industry, the availability of legal downloadable music for consumers, and the social norms that still seem to lean towards acceptability for illegal downloading.

Group 2

Group 2 took a different approach and developed a unique system for digital distribution.  They described it as using the technology of file sharing but ensuring artists and labels get paid.  Their system consists of a government run network that sounds sort of like a Facebook for record labels and publishing companies.

Record labels, publishing companies and independent artists with more than twelve songs can sign-up to be part of the network.  They will get their own page that they can design however they'd like.  They can use the page to promote different artists, activities and events, and to offer downloads of their catalogues.  (The reason for the minimum of twelve songs has to do with balancing the costs and benefits of the system for independent artists.)

The consumers choose from one of various subscription levels.  Each subscription allows them to share a certain number of files per month, with the platinum level giving them unlimited access.  The prices for these subscriptions are intended to be fairly low in order to shift the economic supply curve: lower cost = more downloads.  It's a little confusing if the "sharing" involves offering tracks already in consumers libraries for upload/download by another, or if it really just means downloading from one of the label/publisher pages.  (This may be clarified later in the group's presentation, if anybody is able to watch the whole thing and can add some clarity to this point, please leave a comment.)

The government is in charge of setting up this network and managing it, as well as acting as a sort of collecting society for all transactions on the network.  The group chose the government to run the network in order to eliminate the cost created by a middle-man like iTunes and because they felt the government would bring a certain neutrality, less focused on profit and more focused on boosting the economy and supporting the industry.

Although similar in some ways to existing on-line stores, their system seems to present some unique ideas.  If it does indeed involve file sharing with a collecting society-type entity tracking, it offers some definite benefits over existing on-line music options, like locating those hard to find remixes.  There would be a lot of details to work out before such a system would be viable (such as ensuring that tracks are properly identified), but it's certainly an interesting idea to ponder.

 

 

{related to digital distribution...]

Alphabet War

About a month ago, Ip's What's Up posted an entry about the status of collecting societies in Nigeria.  The main issue is the ongoing feud between the two former collecting societies, MCSN and PMRS, and the Nigerian Copyright Commission (NCC).  Well, it looks like the beef is getting bigger.

The Guardian newspaper published a story this past Friday about allegations flying back and forth between MCSN and the NCC.  The news article is a bit cryptic, especially for those of us who are not fluent in Nigerian English, but it appears that the NCC and MCSN are on opposing sides in two different matters.

MCSN v. NCC

First, there is the old matter of MCSN suing the NCC (as its counterpart, PMRS is doing) over the Collecting Society Regulations and the section of the Copyright Act that authorizes these regulations.  (For those who are interested, the MCSN suit is: Musical Copyright Society of Nigeria LTD/GTE v. Nigerian Copyright Commission, SUIT NO. FHC/L/CS/478/2008, but this Ipper has no idea where you can find any reporting on the case.)  Basically, MCSN claims that the relevant sections of the Nigerian Copyright Act violate MCSN's fundamental human rights as protected by Sections 40 and 44 of the 1999 Nigerian Constitution, as well as violating Articles 10 and 14 of the African Charter on Human and Peoples' Rights.

NCC v. MCSN

The Guardian article discusses a second conflict between the NCC and MCSN.  According to the article, the NCC is currently investigating MCSN based on a complaint from the International Federation of Phonographic Industries.  The complaint alleges that MCSN is pirating films, both reproducing them and publishing them.  (Publishing, under the Nigerian Copyright Act, is making a work available to the public.)

MCSN claims that this complaint never existed and was only fabricated by the NCC in order to make it appear that the NCC's raids on the MCSN offices were justified.  NCC says it's legitimate.  MCSN says that NCC is harassing MCSN and its affiliates by questioning collecting societies in the UK (Performing Rights Society and Mechanical Copyright Protection Society) and raiding MCSN offices in Nigeria.  NCC says it had to question the UK societies because MCSN claimed to have received authorization for their alleged pirating behavior from those societies.

Clear as Mud

This Ipper is quite confused by all of this, and doesn't really know what to believe.  Both parties involved in this battle have been known to spin things a little bit away from the truth.  What is certain is that MCSN does not have authorization to act as a collecting society, and that, in general, the NCC has authority to conduct investigations in matters of alleged piracy.  The Director General has stated that MCSN cannot receive authorization to become a collecting society until it meets transparency requirements.  MCSN seems to think there it is actually some sort of NCC vendetta that is preventing MCSN from receiving authorization.  Both parties claim to be acting in the best interests of copyright and the artists.  Maybe some readers can shed some light on the situation.

One thing is clear, whatever is going on here, it's not doing anybody any good, especially not the artists.

Developing Decent Digital Distribution Solutions

A couple of press releases recently caught the Ippers' attention.  Two groups are each working to ensure that fans get their digital music and artists get their money, but they're working from different angles.

Getting the Infringers to Fight Infringement

Freshman at Vanderbilt University in Nashville, TN, politely called "first-year students," are developing a new distribution system for the music industry.  The project is part of a seminar called "Stealing in Music City."  In addition to their own perspective as the ones trying to get the music, the students will have the input of various industry stakeholders and experts, including Alice Randall and this Ipper's own copyright professor, Steven Hetcher.  Hopefully the students have some very interesting and viable ideas.  The class will present its three solutions in class next week Tuesday.  Ip's What's Up will let you know when we hear about any of them.  (Full press release.)

Europe Re-Evaluates Collective Management

This week, WIPO is also looking at the affect of the digital age on music distribution.  The Conference to Examine Future Development of Collective Management of Copyright and Related Rights in Europe meets this week Monday and Tuesday in Brussels.  The 400+ participants are listed to include: "collective management organizations, lawyers, academia, intergovernmental and non-governmental organizations, developers of digital technology and services and creative industries."  Where are the users?  Looks like the student group at Vanderbilt might be smaller but more comprehensive in its stakeholder input. (Full press release.  Conference Info.)

It's great that collecting rights organizations in Europe are engaging in discourse about the changes in the industry and the role they can play in facilitating positive developments.  Some other countries could use a few good collecting organization conferences, especially in the developing world.  (Africa, the Middle East, India.)

Anybody Feel Like Starting a Collecting Society?

Nigeria is desperately in need of one.

What is a Collecting Society?

For those who are unfamiliar, a collecting society is an intermediary between the user of a work and the owner of the copyright in the work.  An artist's work can be used by millions of people any where in the world at any time.  Logistically, it's impossible for one artist to monitor all the possible places where the work might be used.  The collecting society pools the resources of many artists and does this monitoring for the artists collectively.  There are many different types of collecting societies, such as performing rights organizations and reproduction rights organizations.

The Situation in Nigeria

There are currently no collecting societies in Nigeria.  This has been the situation for the past three years.  Grab some popcorn, and enjoy a little drama-filled story.

One, Two, None - the Background

Once upon a time Nigeria was a British colony.  The British Performing Right Society (PRS) represented the colony's musical artists.  Sometime after gaining independence, Nigeria decided it didn't want any foreign owned companies operating inside it's borders.  So the Nigerian section of PRS became MCSN, Musical Copyright Society of Nigeria.  And everything was fine.... Or so it seemed.

The Nigerian government was concerned that the lone collecting society was taking advantage of the artists, taking too much of the royalties for itself and not accounting completely for what it had collected.  The government decided to do something about this and issued the 1992 Copyright (Amendment) Decree.  (Laws of the Federation of Nigeria 2004 Cap. 28 Sec. 39.)  This decree authorized the Nigerian Copyright Commission to set up regulations for collecting societies and required collecting societies to register with the Nigerian Copyright Commission.  The Commission's regulations went into effect in 1993.  (Copyright (Collecting Society) Regulations, 1993.)

MCSN applied for approval but was denied.  The Commission said that MCSN was being sneaky, not disclosing enough information about the royalties it was collecting for its artists.  Like the Itsy-Bitsy Spider continually going up the water spout, MCSN kept renewing their application, but down came the Commission and denied it every time.

The Commission did recognize the importance of collecting societies, so, in 1994, it helped form a new organization, PMRS, Performing and Mechanical Rights Society of Nigeria.  This made MCSN really angry.  Some people thought there should only be one collecting society in the country, and MCSN was there first.  MCSN kept trying for approval, and the Commission finally granted the approval in 2005.  Within six months the President of Nigeria revoked the approval and removed the Director General of the Commission.  The Director General's law firm had represented MCSN in the past and the President felt there had been a conflict of interest.

Somewhere in all of this PMRS and MCSN discussed merging.  The merger talks fell apart, and during this time PMRS's registration lapsed.  And then there were none.

How the Situation Sits Today

Both MCSN and PMRS claim to be proper collecting societies in Nigeria (as can be seen from their websites.)  Both are currently suing the Nigerian Copyright Commission.  Neither can collect royalties for their supposed clients.  Artist are not getting paid, and they're losing out on other opportunities.

International companies, such as MTV, don't know who to pay, so they don't pay anyone.  Nigerian superstar D'banj recently explained to the House Committee on Information & National Orientation that he and several other Nigerian music stars have well over $30,000 each sitting in a bank account in South Africa.  In MTV's bank account.  MTV doesn't know who to pay, so it's holding the money until it knows who to pay.  It's nice that MTV isn't spending the money, but the artists would really like to get it sooner than later.  In the meantime, the artists don't get paid.

Whenever MCSN or PMRS attempt to bring a lawsuit on behalf of one of their artists for infringing performances, the court throws the suit out citing a lack of standing by the plaintiffs.  Restaurants, hotels, bars, clubs and even radio stations know they can't be sued for playing music without paying royalties.  They play whatever they want, whenever they want.  (On the upside for listeners, this produces a lot of really neat remixes, recently featuring a number of Obama's speeches mixed-in.)  The artists don't get paid.

D'banj has also highlighted another way in which the lack of collecting societies is hurting artists.  Nigerian artists are losing opportunities to reach world-class stardom (and at least get royalties from other countries).  International superstars (including R.Kelly and Snoop Dogg) have approached Nigerian artists about doing collaborations.  These types of collaborations could turn Nigerian artists like D'banj or 2Face into the next Akon, a household name around the world.  But the deals fall through.  Why?  As D'banj put it, the artists ask a simple question for which there is no answer, "How do we get our royalty?"

The Questions

Now, being a lowly little intern with no collecting society experience, this sad soap has left this Ipper with some questions.  Perhaps some fellow IP enthusiasts can shed some light on the subject.

Why can't the artists just collect the money MTV owes them by themselves?  Does it have something to do with agreements they may have signed with MCSN or PMRS?  Is MTV somehow prevented from working directly with artists?

Is there any reason interested people with the available capital couldn't come in and start a new collecting society in Nigeria?  One that complied with the provisions of the Copyright Act (Sec. 32B in this version) and the Collecting Society Regulations?  Would the government allow it?  And if it is possible, where can we find these interested people with available capital?  The artists are suffering.

And lastly, can the international superstars stop worrying about getting their own money from Nigeria and collaborate with these amazing Nigerian artists anyway?  Please!

 

 

Image credits: map outline from About.com:Geography; D'banj photo courtesy of goldenrail; 200 Naira notes courtesy of Encyclopedia Britannica; 5, 20, 50, 100 and 1000 Naira notes courtesy of Statni vlajky sveta; diagonal bills courtesy of Hit Naira; all images (minus D'banj photo) found using Creative Commons, but I couldn't always find information regarding the license for the images.