Copyright Act explicitly states disruptive innovation should be blocked

techdirt.com

60 pointsadityab18 comments

This blog post takes the statutory provision in question wildly out of context:

> I've read the Copyright Act many times, but have to admit that I'd never quite noticed this line from 17 USC 801(b)(1)(D), which explicitly states that the role of the Copyright Royalty Judges on the Copyright Royalty Board that sets the rates for internet radio are there: To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.

This is not referring to the Copyright Act as a whole, but to the purposes of Copyright Royalty Judges specifically. Here is the whole provision: http://www.copyright.gov/title17/92chap8.html.

What are Copyright Royalty Judges? They're judges who set rates for statutory licenses. Statutory licenses are compulsory licenses where copyright holders are obligated to agree to licenses and where rates are set by the Royalty Board and not by free negotiation between the copyright holder and the licensee: http://en.wikipedia.org/wiki/Statutory_license.

Basically, all this says is that Royalty Judges shouldn't use the compulsory licensing scheme and their rate-setting powers to disrupt industries. It doesn't say anything about the copyright law in general preventing the disruption of industries.

Ironically, this section of the Copyright Act is actually intended to reduce the ability of copyright holders to use their rights to prevent disruption in delivery methods: http://rightsflow.com/resources/copyright-licensing-resource...

"Because Congress was concerned about the potential for monopolistic behavior, it also created a statutory license, section 115 of the law, to allow anyone to make and distribute a mechanical reproduction of a musical composition without the consent of the copyright owner provided that the person adhered to the provisions of the license, most notably paying a statutorily established royalty to the copyright owner."

I like Mike Masnick, but this seems like a real miss. He should have gotten a second source before running it.

The purpose of the compulsory licensing scheme is the public good, to keep copyright holders from preventing certain socially-beneficial uses. The "disruption" provision a concession to copyright holders, basically promising them that the compulsory licensing scheme won't be used to gut their copyright protections.

I think Masnick's argument is that the Royalty Board should use its rate-setting powers to make online radio companies like Pandora more competitive. But Pandora is a for-profit business. Why should the Board give them rates lower than what they can get by freely negotiating with the copyright holders?

There are a lot of problems with copyright, but they're on the enforcement side. The streaming radio debate is just about money. Pandora can't make money selling Indie music. They want to sell Britney Spears, because that's what consumers want. But they don't like how much money Sony, etc, are charging for Britney Spears. So they want to force the government to force Sony, etc, to sell Britney Spears for less money.

History> http://en.wikipedia.org/wiki/Telecommunications_Act_of_1996

Regulatory capture at its finest.

I'm not sure how it's an example of regulatory capture, and even so how it's relevant to a discussion about copyright law.

Many CLECs formed in the post-Telecom Act "bubble" operated using the unbundled Network Element Platform (UNE-P), in which they resold the ILECs' service by leasing the underlying [assets]. This greater dependency on the ILECs made these "UNE-P CLECs" extremely vulnerable to changes in the UNE-P rules.
In the meantime, the largest facilities-based CLECs, MFS and TCG, had IPOs and then were acquired by Worldcom and AT&T, respectively, in 1996 and 1998 as those long distance companies prepared to defend their business customers from the Regional Bell Operating Companies' (RBOC) incipient entry into the long distance business. Important FCC Rulings

With the Triennial Review in August 2003, the FCC began to rewrite a large portion of the rules implemented by the Telecommunications Act of 1996...

And that was that. The cable and telco's own washington. The mechanisms and the game are the same. There will never be a viable business that leases another businesses core assets. Copyright and Fiber are interchangeble, one is just fact/history. These special interests are legalized, entrenched monoloply/cartels. The entire copyright industry is. (elsevier, edu publishers at all levels, et al).

I'm not sure how this is an example of cable and telcos "owning Washington." The cable companies and the telcos built that infrastructure, and Congress forced them to lease it out to CLECs.

It's even less applicable in this context. At least the telco infrastructure was publicly subsidized. Nobody subsidized Britney Spears, etc.

The 1996 act was completely undermined by telco lobbying. Its public policy purpose --legislated disruption-- was never successfully implemented. They won the war you never knew was fought, the greatest type of victory. The subtlety of the argument is precisely the point. =]

There is a reason the most $$$ paid man in washington is the head of RIAA, the hollywood/old media lobbying group. The Cable and the RLECs (now VZ, T, etc) are all-pro and in the same leaugue.

I think you are giving Masnick too much credit in his argument. It looks like he confused general copyright enforcement guidelines with specific compulsory rate setting guidelines. Sloppy at best, muckraking at worst.

I would be curious to know, though, how often compulsory rates are set and in what specific circumstances, if you know.

    Why should the Board give them rates lower
    than what they can get by freely negotiating
    with the copyright holders?

The answer is in your own post:

    The purpose of the compulsory licensing scheme
    is the public good, to keep copyright holders
    from preventing certain socially-beneficial uses.

If traditional radio compensates rights-holders as a form of advertising, why doesn't internet radio (which has restrictions on how often and how predictably it can play music)?

The following sums it up.

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. -- Niccolo Machiavelli

Politicians looking for donations are trying to follow the path of least resistance, not most. Hence the rules defend the status quo.

Pandora should work with alternative, indie music venues like MySpace or YouTube to find off-label music acts waiting to be discovered. There're hundreds of thousands, perhaps millions of amateur musicians in this country that're waiting to be discovered but can't get the record labels to pay attention to them. Some of them are quite talented.

If an unknown but good artist showed up in my Pandora stream, I'd love it. Hell, that's why I listen to Pandora - to learn about musical groups that I wouldn't otherwise have heard of. And they already have the algorithms and the data to distinguish crap from good stuff, at least in theory.

They're potentially sitting on a gold-mine. Just open a self-service webapp where an amateur musician can upload MP3s of their work and fill out a blurb & promotional photos, classify their work through the normal music genome project, and start injecting it into the streams of people willing to listen to unvetted music. The thumbs up / thumbs down buttons can do the rest.

Maybe, but:

1. That would make them a record label, rather than a radio station

2. Most people, myself included, do want to hear established artists.

After reading this, it seems that this could be a clear case of a law that should be struck down on constitutional grounds -- Article I section 8, "To promote the progress of science and useful arts", not "disrupt the progress".

The full line is "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

derekp7, I wish that the case was that simple, and that 17 USC 801(b)(1)(d) would be struck down. I'm afraid it's not that simple, though. IANAL, much less a constitutional lawyer, but I'll play devil's advocate and look at a possible rebuttal by the communications industry:

"The existing industries provide a time-tested way of asserting artists' rights (which itself promotes the progress of 'useful Arts'), by way of providing a stable system for the collection of royalties, and preventing distribution of materials, when such distribution is not desired by rights holders. An entity which seeks to interrupt the continued operation of this stable system could plausibly reduce the security upon which rights holders have come to rely. Therefore, Congress is within its rights to ensure the survival of this system as a means of implementing Article I section 8."

So it's not an open-shut case. The argument would have to be made that "disrupting the progress" of communications innovators, does more harm than ensuring the security of existing rights holders does good. I think everyone reading this site believes that, but I'm afraid it might not hold up legally.

Imagine a start-up where you rent a tiny radio receiver, a really tiny miniature scale radio receiver in a big warehouse in Virginia next to an even tinier transmitter that you control via a "fan request" API.

So might that count as radio?

<joke>Well then, I guess TechCrunch Disrupt is SOL.</joke>

I'm pretty sure this is a good idea. It keeps the peasants and proles in their place. It just wouldn't do to have that kind of people receiving new ideas. It would upset the Ordained Social Order.

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