To extend or not to extend? - Fordham Intellectual Property, Media & Entertainment Law Journal
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To extend or not to extend?

To extend or not to extend?

By Ursula Clarke

In February 2008, the EU Commission proposed a directive to extend the copyright term for sound recordings from 50 to 95 years. The stated objective of this proposal was to “stop European performers from being the poor cousins of the music business.” (It should be noted that this branch of copyright concerns solely the sound recording, and not the literary and musical copyright.) According to Charlie McCreevy, Internal Market Commissioner, the extended term would enable performers and record producers to earn money for a longer period of time. As such, investment in new talent will increase as this extra revenue can be invested into developing the careers of new artists. Is this opinion warranted? Can it be said that an extension of the copyright term for sound recordings will be of such great benefit?

On first glance it is difficult not to be anything but in favor of copyright term extension. The Commission’s literature discusses the moral right of an artist to earn money from their talent for a longer period of time. An impact study executed by the Commission states that the proposal would give performers, on average, an additional income of between 150 – 2000 Euros ($197- $2632 as of March 2009).

The proposal also contains a ‘use it or lose it’ clause to be included in contracts between performers and and their record companies . This mechanism allows performers to get their rights back in sound recordings if the producer choses not to market them, thus avoiding the ‘locking up’ of recordings deemed commercially unmarketable. Record companies will also have to set up a fund into which they have to pay 20% of their revenues earned during the extended period. This revenue stream is to go directly towards helping session musicians.

In theory, this would appear to be a positive change. The UK is an example of a Member State with a current level of copyright protection for sound recordings of 50 years, from the date of the recording. After 50 years, the recording enters the public domain. According to the New Musical Express (NME), the Beatles back catalog of recordings will start to expire in 2013. In light of this, a number of high profile recording artists including Sir Paul McCartney and Roger Daltrey have signed an open letter (orchestrated by the British Phonographic Institute (BPI)) to the Times Newspaper in support of term extension. The BPI, who represent the UK’s major music labels, believe that copyright extension concerns ‘fairness’ for the artists. The British Culture Minister reiterated this by stating that there is “a moral case for performers benefitting from their work throughout their entire lifetime. We must ensure that any extension delivers maximum benefit to performers and musicians. That’s the test of any model as we go forward.”

However, in analyzing the background for proposing the directive, the Commission has not been intellectually honest in their pursuit of balancing consumer and creator interests. The directive goes against evidence from previous studies, including a study by Professor Hugenholtz of the Institute for Information Law (IviR) on which the Commission signed off. Hugenholtz, along with a number of other European academics, signed a letter published in the Times newspaper declaring the proposal as good only for, “record companies, aging rock stars or increasingly, artists’ estates. It does nothing for innovation and creativity.” The Commission should have addressed the conclusions from these studies in their proposal which would have given more transparency into their decision making process. From an outside perspective it is difficult not to presume that powerful lobbying by record companies has shaped their decision to go ahead with the proposal.

Critics also point to the fairytale aspect of extension that the Commission is painting. For Hogge, of the Open Rights Group, the Commission’s description of the proposal having a sole aim of benefitting the musician is illusory. Critics also believe extension negatively impacts innovation. For example, in watching fan-made videos available on sites like You Tube, it is clear music fans use sound recordings without a thought to their copyright . The fact that a sound recording is not in the public domain does not deter remixers and music fans from using a musical recording.

At the heart of the debate is the question of who actually benefits from term extension of copyright. Record companies are the owners of the copyright in the recordings. It is in the interest of a record company who pays for the recordings to be able to exploit the musical recording for the longest period possible. However, is 50 years not a sufficient period of time to exploit a recording?

Helga Trupel (German Green Party MEP) believes that the directive is out to benefit the ‘Big Four’ record companies (Warner Brothers, Universal, BMG and Sony). They own the largest back catalogs of the recordings and dominate the industry: “The ghost of the Big Four is behind all recommendations we have at the moment.” Kretschmer anticipates extra profits for record companies between 44- 843 million euros ($57.9 million – $1.1 billion as of March 2009) per year and that the session fund detailed by the Commission will fall within the 400% tax bracket. Consequently session musicians will not receive such a high benefit as the Commission has alluded to. The Commission believes that extra revenue will be used by the record companies to invest in new talent, however according to a study by Helberger only 2% of net revenues of major record companies are spent annually on A & R. It is difficult to believe that a term extension would change this trend when the industry has of late been naturally conservative in signing new acts. The industry appears to be, in this insecure environment, concentrating on established artists and not investing in new talent.

Established artists who have more bargaining power to control the copyright of their recordings would be in more of a position to benefit from an extension. However, this minority of star recording artists should not be the turning point of the debate. I agree with the legal commentator Nate Anderson who suggests the answer to ensuring performers earn from their talent is in not in extending copyright, but in addressing “unreasonably exploitative contracts during the existing term.” What is of benefit to the industry as a whole and in line with the stated objective of the proposal is  honoring the rights of all recording musicians, not record companies and a few star acts.

Chris Reid