The law soon resolved this battle in favor of the composer and the recording artist. Congress amended the law to make sure that composers would be paid for the “mechanical reproductions” of their music. But rather than simply granting the composer complete control over the right to make mechanical reproductions, Congress gave recording artists a right to record the music, at a price set by Congress, once the composer allowed it to be recorded once. This is the part of copyright law that makes cover songs possible. Once a composer authorizes a recording of his song, others are free to record the same song, so long as they pay the original composer a fee set by the law.
American law ordinarily calls this a “compulsory license,” but I will refer to it as a “statutory license.” A statutory license is a license whose key terms are set by law. After Congress’s amendment of the Copyright Act in 1909, record companies were free to distribute copies of recordings so long as they paid the composer (or copyright holder) the fee set by the statute.
This is an exception within the law of copyright. When John Grisham writes a novel, a publisher is free to publish that novel only if Grisham gives the publisher permission. Grisham, in turn, is free to charge whatever he wants for that permission. The price to publish Grisham is thus set by Grisham, and copyright law ordinarily says you have no permission to use Grisham’s work except with permission of Grisham.
But the law governing recordings gives recording artists less. And thus, in effect, the law subsidizes the recording industry through a kind of piracy — by giving recording artists a weaker right than it otherwise gives creative authors. The Beatles have less control over their creative work than Grisham does. And the beneficiaries of this less control are the recording industry and the public. The recording industry gets something of value for less than it otherwise would pay; the public gets access to a much wider range of musical creativity. Indeed, Congress was quite explicit about its reasons for granting this right. Its fear was the monopoly power of rights holders, and that that power would stifle follow-on creativity.[10]
While the recording industry has been quite coy about this recently, historically it has been quite a supporter of the statutory license for records. As a 1967 report from the House Committee on the Judiciary relates,
… the record producers argued vigorously that the compulsory license system must be retained. They asserted that the record industry is a half-billion-dollar business of great economic importance in the United States and throughout the world; records today are the principal means of disseminating music, and this creates special problems, since performers need unhampered access to musical material on nondiscriminatory terms. Historically, the record producers pointed out, there were no recording rights before 1909 and the 1909 statute adopted the compulsory license as a deliberate anti-monopoly condition on the grant of these rights. They argue that the result has been an outpouring of recorded music, with the public being given lower prices, improved quality, and a greater choice.[11]
By limiting the rights musicians have, by partially pirating their creative work, the record producers, and the public, benefit.
Radio was also born of piracy.
When a radio station plays a record on the air, that constitutes a “public performance” of the composer’s work.[12] As I described above, the law gives the composer (or copyright holder) an exclusive right to public performances of his work. The radio station thus owes the composer money for that performance.
But when the radio station plays a record, it is not only performing a copy of the composer’s work. The radio station is also performing a copy of the recording artist’s work. It’s one thing to have “Happy Birthday” sung on the radio by the local children’s choir; it’s quite another to have it sung by the Rolling Stones or Lyle Lovett. The recording artist is adding to the value of the composition performed on the radio station.
And if the law were perfectly consistent, the radio station would have to pay the recording artist for his work, just as it pays the composer of the music for his work.
But it doesn’t. Under the law governing radio performances, the radio station does not have to pay the recording artist. The radio station need only pay the composer. The radio station thus gets a bit of something for nothing. It gets to perform the recording artist’s work for free, even if it must pay the composer something for the privilege of playing the song.
This difference can be huge. Imagine you compose a piece of music. Imagine it is your first. You own the exclusive right to authorize public performances of that music. So if Madonna wants to sing your song in public, she has to get your permission.
Imagine she does sing your song, and imagine she likes it a lot. She then decides to make a recording of your song, and it becomes a top hit. Under our law, every time a radio station plays your song, you get some money. But Madonna gets nothing, save the indirect effect on the sale of her CDs. The public performance of her recording is not a “protected” right. The radio station thus gets to pirate the value of Madonna’s work without paying her anything.
No doubt, one might argue that, on balance, the recording artists benefit. On average, the promotion they get is worth more than the performance rights they give up. Maybe. But even if so, the law ordinarily gives the creator the right to make this choice. By making the choice for him or her, the law gives the radio station the right to take something for nothing.
Cable TV was also born of a kind of piracy.
When cable entrepreneurs first started wiring communities with cable television in 1948, most refused to pay broadcasters for the content that they echoed to their customers. Even when the cable companies started selling access to television broadcasts, they refused to pay for what they sold. Cable companies were thus Napsterizing broadcasters’ content, but more egregiously than anything Napster ever did — Napster never charged for the content it enabled others to give away.
Broadcasters and copyright owners were quick to attack this theft. Rosel Hyde, chairman of the FCC, viewed the practice as a kind of “unfair and potentially destructive competition.”[13] There may have been a “public interest” in spreading the reach of cable TV, but as Douglas Anello, general counsel to the National Association of Broadcasters, asked Senator Quentin Burdick during testimony, “Does public interest dictate that you use somebody else’s property?”[14] As another broadcaster put it,
The extraordinary thing about the CATV business is that it is the only business I know of where the product that is being sold is not paid for.[15]
Again, the demand of the copyright holders seemed reasonable enough:
All we are asking for is a very simple thing, that people who now take our property for nothing pay for it. We are trying to stop piracy and I don’t think there is any lesser word to describe it. I think there are harsher words which would fit it.[16]
These were “free-ride[rs],” Screen Actor’s Guild president Charlton Heston said, who were “depriving actors of compensation.”[17] But again, there was another side to the debate. As Assistant Attorney General Edwin Zimmerman put it,
10
Copyright Law Revision: Hearings on S. 2499, S. 2900, H.R. 243, and H.R. 11794 Before the ( Joint) Committee on Patents, 60th Cong., 1st sess., 217 (1908) (statement of Senator Reed Smoot, chairman), reprinted in Legislative History of the 1909 Copyright Act, E. Fulton Brylawski and Abe Goldman, eds. (South Hackensack, N.J.: Rothman Reprints, 1976).
11
Copyright Law Revision: Report to Accompany H.R. 2512, House Committee on the Judiciary, 90th Cong., 1st sess., House Document no. 83, 66 (8 March 1967). I am grateful to Glenn Brown for drawing my attention to this report.
12
See 17 United States Code, sections 106 and 110. At the beginning, record companies printed “Not Licensed for Radio Broadcast” and other messages purporting to restrict the ability to play a record on a radio station. Judge Learned Hand rejected the argument that a warning attached to a record might restrict the rights of the radio station. See RCA Manufacturing Co. v. Whiteman, 114 F. 2d 86 (2nd Cir. 1940). See also Randal C. Picker, “From Edison to the Broadcast Flag: Mechanisms of Consent and Refusal and the Propertization of Copyright,” University of Chicago Law Review 70 (2003): 281.
13
Copyright Law Revision -CATV: Hearing on S. 1006 Before the Subcommittee on Patents, Trademarks, and Copyrights of the Senate Committee on the Judiciary, 89th Cong., 2nd sess., 78 (1966) (statement of Rosel H. Hyde, chairman of the Federal Communications Commission).
14
. Copyright Law Revision -CATV, 116 (statement of Douglas A. Anello, general counsel of the National Association of Broadcasters).
15
Copyright Law Revision -CATV, 126 (statement of Ernest W. Jennes, general counsel of the Association of Maximum Service Telecasters, Inc.).
16
Copyright Law Revision -CATV, 169 (joint statement of Arthur B.Krim, president of United Artists Corp., and John Sinn, president of United Artists Television, Inc.).
17
Copyright Law Revision -CATV, 209 (statement of Charlton Heston, president of the Screen Actors Guild).