The Wall Street Journal has this piece today about the frustration YouTube is experiencing when it attempts to clear the rights to any piece of video or music on its site. Despite YouTube’s deals with a trio of top record companies, it hasn’t landed the rights to every component in those companies’ songs and videos.
Why? Because the record companies hold only some rights to the music and videos that fall under the YouTube contracts. For example, the record companies don’t address the royalties for the music publishers, the people who own the copyrights to the written music underlying the songs.
When it comes to videos, the number of parties that hold rights in the content increase dramatically — actors, directors, writers, studios and so forth.
In other words, YouTube is experiencing the exact same transactional headaches that the radio station and cable industries bumped up against in their early days.
“It’s such a mess because the [entertainment companies] have all of these valuable assets that are just locked up with so many people who need to sign off on them,” says YouTube Chief Executive Chad Hurley. “I don’t know what it requires, if the government needs to be involved,” Mr. Hurley laughs. “I don’t know.”
Hurley may think he’s joking when he suggests the government needs to step in, but in fact the government has intervened before in exactly this kind of situation. Both radio stations and cable systems, as well as DBS providers, for example, enjoy what are called “compulsory licenses” that enable them to use copyrighted works without permission so long as they pay according to fixed schedules into royalty pools, the funds from which are redistributed to the copyright owners.
All of these compulsory licenses were established by acts of Congress, as well as, in some cases, international treaties, and payments are mostly managed by government entitites, the U.S. Copyright Office, for example (radio stations pay rights organizations ASCAP and BMI under an additional regime that is not quite a compulsory license).
The reason these licenses exist is because of “market failure,” namely because there are too many copyright owners to deal with — the transactional costs are so high that if the compulsory license didn’t exist, cable operators couldn’t retransmit local or distant TV stations, radio stations couldn’t play music or jukeboxes might not even exist.
Hurley’s problems in tracking down rights owners and negotiating agreements with them is exactly the kind of situation a compulsory license is intended to address. While the notion has been floated that compulsory licenses should be created for P2P sharing, I haven’t seen anything that suggests compulsory licenses might be needed for online video or music used in user-generated content. But that’s an intriguing idea…
Cynthia Brumfield at 9:19 AM|Comments(1)
I have long agreed with Fred (von Lohman) re: the need for compulsory licensing for digital media, and think it's just a matter of time.
Great piece, Cynthia!
Posted by: Robert Young at November 3, 2006 5:10 PM
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