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Intellectual Property and Music Licensing

Introduction

To understand music licensing, one must first break down a song into its component parts. There are written elements, mechanical elements, and aural elements, or the vocal style of the performer. Over time, each element has been accorded protection to some extent, primarily under copyright and publicity or privacy laws, but sometimes under allied rights. The rights to each aspect of a song may be held by a different rightholder, making critical the proper identification of the rightholder for each right implicated in a proposed use. The next step in developing a framework for music licensing is to envision the possible uses of a song, as the use determines the type of agreement necessary. The words, music, and arrangement of a song may be printed, in, for instance, sheet music, a textbook, hymnal or songbook, or photocopied for use by musicians and singers in a glee club, chorus, choir, school play or recital. This type of use requires a print license. The song may also be recorded. If the person who is creating the recording wants to hire a singer and/or musicians and hire a recording studio to lay down the recording, they require what is known as a “mechanical” license.

If, however, the person creating the recording wants to use an already existing recording (for instance, the recording of the performer who popularized the song), the required license is denominated a “master use” license, because it entails the duplication and use of the master recording of the earlier artist. Whether the recording is accomplished by means of a mechanical or master use license, if the recording is to be synchronized with the visual portion of an audiovisual work such as a motion picture, music or other video, or television program, a synchronization license is required. If the audiovisual work is to be distributed to employees or customers, not just used for demonstration purposes, a videogram license may be necessary. A final category of exploitation is the public performance of a musical work. Performance licenses govern uses such as radio or television broadcast, webcasting, concert performances, background music, and ambient sound in bars, restaurants, and other business establishments.

Music Right Protection

Protecting Against Unauthorized Copying of Audio Recordings

Until 1987, unauthorized copying of audio works was limited, as a practical matter, by the resultant degradation in sound quality from one “ generation” to the next. That situation changed radically, however, with the development in 1987 of the Digital Audio Tape (DAT), a digital recording technology that allowed virtually identical copies of audio works to be made, generation after generation (serial copying), without noticeable degradation between generations. In response, in the United States record companies concerned that serial copying would have a disastrous effect on their industry, together with manufacturers of recording equipment and recording media concerned about their potential contributory infringement liability, negotiated a compromise that was memorialized in the sui generis protection of the Audio Home Recording Act (AHRA). Under AHRA, importers or manufacturers of digital musical recordings are not required to encode information regarding copyright and generation status, but the encoding of inaccurate information by any person is prohibited. The Act requires that all digital audio recording equipment be capable of reading such encoded information and that the equipment use this information to prohibit the serial copying of copyrighted digital musical recordings. The Act also prohibits the importation, manufacture, or distribution of any device, or the offering or performance of any service to circumvent the copy protection system.

Protecting Against Unauthorized Fixation (Digital Sampling)

Digital sampling is the recording of a sound or portion of a sound recording, in binary form, by means of a computer. The new digital recording may then be easily modified, displayed, incorporated into a new work, manually distributed, or electronically transmitted by computer or electronic instrument. When the sound is copyrighted, these activities implicate the copyright owner' s exclusive rights to create derivative works, display, distribute, and transmit the work. Sounds that are sampled may originate in live or recorded performances, thereby potentially violate the anti-bootlegging or copyright laws. Unauthorized sampling might, therefore, infringe both the song and the recorded performance of the song. To avoid potential liability, one who wishes to utilize sampling techniques in the creation of a sound recording should request permission of the copyright owner of the relevant rights.

Anti-Circumvention Provisions and Rights Management Information

Under the terms of the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty, more than fifty countries, including the United States and Canada, have obligated themselves to provide protection for, and remedies against, the circumvention of effective technological measures which prevent the unauthorized use of copyrighted materials, such as electronic music files. These countries are further obligated to provide remedies against the unauthorized, knowing removal or alteration of electronic rights management information and against the unauthorized, knowing distribution and importation for distribution of works whose rights management information has been so removed or altered. The treaties do not man date what form the protections must take, but leave it to the national legislatures to determine whether, for instance, only the infringing use of, or also the manufacture, distribution, and importation of, circumvention technologies should be prohibited. In its implementation of the WIPO Copyright and Performances and Phonograms Treaties, the United States has implemented provisions on copyright protection systems and copyright management systems by prohibiting both the conduct and the products and services involved in the circumvention of technological measures to prevent copyright infringement.

International Legislative Developments

Under the proposed Copyright Harmonization Directive, EU Member States must protect against any activities, including the manufacture or distribution of devices or the performance of services, that circumvent technological copy protections. Member States must also prohibit the unauthorized removal or alteration of electronic rights management information, and the distribution, importation, broadcasting, communication or making available to the public of copies of works whose electronic rights management information has been removed or altered without authority.

Digital Rights Management

Digital Rights Management refers to controlling and managing rights to digital intellectual property. The term digital rights management (DRM) was coined by some combination of vendors, marketers and industry analysts in the late 1990s. When an individual creates content, the individual inherently controls a set of rights in that content: to see it, change it, print it, play it, excerpt it, translate it into another language and so on. Traditionally, such rights accrued from three sources: (a) Legal - rights obtained automatically under law (e.g., copyright) or by some legal procedure as with a patent; (b) Transactional - rights that obtained or relinquished by buying or selling them, such as purchasing a book or selling a script to a movie studio; (c) Implicit - rights that are defined by the medium in which that the information is displayed. In the digital age, the first two sources of rights have not changed very much. However, what has radically changed is the third source of rights, namely, the medium in which the content is provided.

Since content has been put into digital form, as opposed to physical forms of legacy media like print, vinyl or videotape, a copy of a copy of a copy of such content is as good as the original, allowing copyrighted content to be delivered to thousands or even millions of Internet users. Advancements in technology and the Internet (e.g., peer-to-peer filing sharing programs) make thievery of intellectual property a real and immediate threat to the copyright industry. As such, content providers today have made DRM a priority and are grappling with ways to control the use, copying and distribution of their content to both licensees and end users. In fact, entire industries have developed around emerging technologies that perform digital rights management. These technologies comprise many different types of functionality, such as systems that content providers can use for (1) defining, organizing and managing rights internally within a company; (2) distributing content to consumers in a controlled way; (3) managing access to content within an enterprise such as a corporation or educational institution; (4) licensing and distributing content to other publishers in a controlled manner; (5) measuring content usage; and (6) calculating fees that are due for the use of content.

In essence, DRM is the integrated application of technical, legal and business methods used to protect, and add value to, intellectual property released and licensed in the digital world. The goal of DRM is to prevent widespread unauthorized distribution and piracy of content; facilitate growth of legitimate digital content delivery business methods; maintain consumer ease of use, and hopefully enable enhanced commercialization in the realm of new technology. Typical concerns of DRM systems include: terms of use; user charges; product authentication; expiration of rights; and convenience. Today' s DRM technology uses the basic building blocks of watermarks, digital fingerprints, and encryption technology, along with the distribution of content through secured digitized “ envelopes” and “ containers,” which are technologies that “ wrap” files in additional layers of encryption and security to attempt to ensure control and tracking of copyrighted material during widespread digital distribution. Despite the unpopularity and abandonment of certain forms of DRM to protect music, it remains, in differing forms, a continuing part of the new distribution of media as music streaming and downloading services, as well as video sharing Web sites, continue to grow in popularity.

Content owners are also using DRM with e-books and computer software and are now, in increasing number, employing new content-identification technologies to monitor copyrighted video, music, and textual works on the Internet for such purposes as content filtering, market research, and monetization opportunities. Watermarks, usually embedded in the content but able to be read by a computer, are packets of inaudible or invisible digital data inserted directly into media, images, or programming content that travels with the content regardless of the format in which it is distributed (e.g., physical copies, broadcasts and on-line transmissions). A watermark helps to prove ownership of the digital work, provide access control, and traces illegal copies of the protected work. Digital watermarking is one solution to curbing the illegal downloading of music on P2P networks through the inclusion of watermark detection software in the client application ensuring that consumers are downloading lawful content. However, as with any DRM technology, watermarks can be detected with the right technology and are subject to circumvention.

Another DRM technology is “ fingerprinting,” which uses unique content identifiers based on the waveform of particular audio recording. The “ fingerprint” literally follows the customer around wherever the content is distributed (e.g., through email attachments or file exchange programs). Additionally, “ acoustic fingerprinting” has been developed to spot copyrighted media content on the Internet' s host of P2P networks. Essentially, acoustic fingerprinting, inserts the content owner' s and recipient' s identities into the work prior to the distribution of the audio file. A more sophisticated DRM method is encryption. Generally, encryption is used to restrict access and manipulation to content. Advanced encryption techniques have their basis in advanced mathematical algorithms. Still, despite the technological sophistication of the technology, encryption is not infallible or unbreakable. In the software industry, a common DRM method used is product activation, which is a technology that invalidates a product's functionality until the user registers it with the content owner or software maker using an activation code that is included in the product packaging or download information. Microsoft was prominently used product activation with its Windows XP operating system software. DRM systems ideally are designed to impose controls on content that represents the terms of the license by which the user is accessing and using the work. Besides language contained in licenses and contracts that govern usage by licensees and consumers, content owners using DRM have protection under the law.

The Digital Millennium Copyright Act (DMCA) addresses the threat of circumvention of DRM technologies by prohibiting proliferation of circumvention technology. The provisions apply to those who create technology and those who make it available to public. The Act offers civil remedies, including temporary and permanent injunctions to prevent violations; criminal penalties, and fines and imprisonment where there is willful violation of DMCA for financial gain. In the licensing context, content owners and licensors should consider the available choices of DRM systems available to protect their copyrighted content, especially as the content is sent “ downstream” to licensees, distributors, and ultimately end users. Licensors need to understand how well the technology will work, keep abreast of the prospective of technological advances, and ensure that the technology used will fall under the anti-circumvention provisions of the DMCA. With the combined protection of the law and DRM technology, content owners and licensors can strive to effect the best practices in order to maintain the highest protection for their copyrighted materials.

Content Identification Technologies

Content identification technologies represent the latest iteration of protective technologies in the age of widespread digital distribution. While not DRM per se , content identification technologies involve the inclusion of certain digital markers (e.g., watermarks or fingerprints) into audio or visual works so that copyright holders can monitor, filter, or monetize content uploaded onto the Internet. Content owners have taken interest in these methods because content identification technologies are “ passive,” given that the fingerprinting, unlike traditional DRM, does not affect a user' s ability to access or copy the media content and can also be used in conjunction with other DRM access controls. In addition, there are a number of service providers who offer content identification and monitoring services using digital fingerprint technology to copyright owners to help track their content as it moves across the Internet, and even send automated takedown notices to the websites that are hosting the unauthorized content. Content identification technologies have uses beyond piracy prevention. For example, the video sharing website YouTube employs its own content identification system in a slightly different manner. After copyright holders upload their video content onto the system, the Video Identification software identifies copyrighted material based upon unique digital fingerprints. Subsequently, once the owner' s work is detected within a user' s uploaded video, the content owner has three choices: (1) block the video; (2) allow the content to remain on the site for promotional purposes; or (3) monetize the video, that is, license the content for use on YouTube and enter into an advertising revenue sharing agreement. If the site detects any future upload of any registered content, the upload would be prohibited or allowed according to the choices of the particular copyright holder.