Music Rights and the Internet

January 1, 2001


Neil J. Rosini

An Outline of Rights, Licenses and Sources


1. In Every Track There Are Two Copyrights

(1) The copyright in the performance embodied in the phonorecord (“P” in a circle) — e.g., performer X’s recorded rendition of song Y

(2) The copyright in the underlying composition (“©” in a circle) — e.g., composer Z’s song Y

2. Technologies Used in Delivering Music on the Net

(1) Downloading: Transmission of music as a digital file usually intended for storage, and inaccessible until entire file is delivered

(2) Streaming: Transmission of music as digital data usually not intended for storage, and processed as a steady and continuous stream

The Rights

3. Nature of Rights Under Copyright

• Copyright is a bundle of rights

• Section 106 of the Copyright Act identifies the five specific rights under copyright that belong exclusively to the copyright owner

The five exclusive rights under copyright:

(1) Reproduction

(2) Adaptation

(3) Distribution

(4) Public performance (including digital performance of a sound recording)

(5) Public display (N/A)

Infringement and its Defenses

4. Infringement of Copyright

The five exclusive rights are legal monopolies of the copyright owner. Exercising one or more of these rights, without a license from copyright owner, is usually an infringement, with penalties including money damages and injunctive relief …

unless shielded by (a) the Fair Use Defense or (b) the DMCASafe Harbors” or (c) other limitations on exclusive rights in the Copyright Act not relevant here

5. The Fair Use Defense

The Fair Use Defense gives an exemption from infringement liability for unlicensed uses that a judge determines — in particular circumstances — should not be monopolies of the copyright owner

Fair Use favors parody, criticism, news reporting, teaching, scholarship, research, and noncommercial personal use (attempted defense)

Judge must apply a balancing test with at least four factors:

(1) nature of the use — whether “transformative” (+) or “commercial” (-)

(2) nature of the copyrighted work

(3) amount and substantiality of the portion taken vs. the whole

(4) effect upon potential market for or value of the copyrighted work

6. The DMCA “Safe Harbors” (Created in 1998)

ISPs (as defined) are free of liability for money damages if they fit within one of four “Safe Harbors” :

(1) transitory digital network communications (attempted Napster defense)

(2) system caching

(3) storing information on systems or networks at users’ direction

(4) referring or linking users to an online location (attempted Napster defense)

Certain conditions limit the application of each Safe Harbor.

E.g., ISP must have a policy of terminating rights of repeat infringers, and the third and fourth Safe Harbors are lost if the ISP has actual knowledge of — or awareness of “red flags” indicating — infringement, and fails to act

In absence of Fair Use Defense or DMCA “Safe Harbor,” to avoid liability for copyright infringement, usually need a license. Licenses can be (a) compulsory (required by the Copyright Act) or (b) voluntary (agreed upon by the owner)

Compulsory Licenses

7. The Digital Performance Right in Sound Recordings Act of 1995 (as amended in October 1998)

Provides owner of sound recording copyright a new exclusive public performance right, but only for transmissions that are digitalin nature. Also provides a compulsory license for some online performances of sound recordings — subject to myriad conditions

Conditions for compulsory license include:

• use must not be “interactive” (as defined)

• no advance program schedules

• length of on-demand programs at least 3 hours (sometimes 5)

• in 3-hour period, only 3 cuts from same album (with no more than 2 in a row)

• in 3-hour period, only 4 cuts from same artist

Analog broadcasts are not digital and are exempt from need for sound recording performance license. Issue: whether onlineretransmissions of analog broadcasts are exempt. (NAB v. RIAA)

The DPRSRA — despite its name — also provides a compulsory license for digital downloads of compositions

• Like the compulsory mechanical license for reproduction and distribution of physical phonorecords

The Sources of Voluntary Licenses

8. Split Rights

The five exclusive rights under copyright can be split among numerous owners in U.S. and abroad

(1) Compositions: publishers/administrators; agents, performing rights societies

(2) Sound recordings: music labels

9. Sources of Licenses


(1) Music Publishers/Administrators (reproduction/distribution; synchronization; adaptation; performance rights; rights in lyrics)

(2) Publisher’s agents, e.g., Harry Fox (mechanical licenses for reproduction/distribution; synchronization)

(3) Performing rights societies such as BMI, ASCAP, SESAC (blanket performing rights licenses)


(4) Record companies (reproduction/distribution; digital public performance licenses; name and likeness rights; liner notes and artwork)

(5) Artists (possible artist consent for name and likeness)

Concluding Overview of Rights, Licenses and Sources

10. Summary

Clearances Required for Online Use of Sound Recordings

(1) Reproduction/Distribution license

(2) Digital performance license (can be compulsory)

(3) Artwork/Liner Notes/Name & Likeness

11. Summary

Clearances Required for Online Use of Musical Compositions

(1) Mechanical license (reproduction/distribution — can be compulsory)

(2) Synchronization license

(3) Public performance license

(4) Lyrics

© 2001 Neil J. Rosini