Blanket License For File Sharing: Easier Said Than Done

Despite all of the efforts by the record industry -- including educational initiatives, Congressional lobbying and lawsuits -- illegal file sharing of copyrighted music continues to thrive and poses a huge challenge to existing business models. Some representatives of the music industry and, lately, even of file sharing companies, believe that the only real solution to the problem of file sharing is to legalize it.

Some commentators have proposed that file sharing could be legalized by implementing a collective licensing approach similar to that of the music performing rights organizations (i.e., ASCAP, BMI and SESAC in the United States).

The performing rights organizations represent songwriters and music publishers and issue blanket licenses to businesses such as radio and television stations and live music venues. A blanket license allows the business to publicly perform all songs represented by the organization that issues the license. The organization collects license fees and pays royalties to songwriters and publishers, based on monitoring procedures designed to estimate how many times individual songs have been performed.

The main benefit of such a system is that licensees can obtain a single license from each rights body to cover all of their music usage, rather than having to negotiate licenses individually with the many copyright owners.

File sharing companies would benefit greatly from such a collective licensing approach, since they would otherwise need licenses covering virtually every song and sound recording in existence.

At first glance, the blanket license model might seem to offer a simple solution to the problem of illegal file sharing. However, there are several factors unique to file sharing that make collective licensing a much more complicated issue than it may appear.

One major impediment is that, at least according to the file sharing companies, it is impossible to know what files are being traded by individuals. A blanket licensing scheme is dependent on monitoring music usage (at least on a sampling basis) in order to determine how the license fees collected should be apportioned among copyright owners and authors. If some means of monitoring is not possible, blanket licensing wouldn't seem to be a realistic solution.

Adding an additional layer of complexity, there are two copyrights involved in each piece of music distributed online, the sound recording and the musical composition contained on the sound recording. These copyrights are typically owned by different parties (i.e., record companies and music publishers) and licensed by different organizations (SoundExchange for recordings and the performing rights organizations for musical compositions). The performance right is not applicable to sound recordings outside of digital transmissions so it is a bit simpler to apply blanket licensing to radio and other non-digital performances.

File sharing is a relatively new technology that poses some unique challenges to the application of copyright law. However, in many respects, the issues involved are similar to previous challenges posed by other innovative means of distributing copyrighted works. There is inevitably resistance: on the part of copyright owners in allowing their works to be used in new ways, and on the part of businesses exploiting such new uses to pay for their use of copyrighted works.

The history of performing rights organizations in the United States provides a good example. ASCAP was formed in 1914 so that songwriters could get paid for performances of their music in live venues. Venues such as restaurants and nightclubs resisted paying for the use of music, and ASCAP had to resort to filing lawsuits to set examples and pave the way for a licensing system.

Similarly, in the 1920s, radio stations resisted obtaining licenses from ASCAP (BMI did not exist at the time) until court decisions made clear that they must do so. A few decades later, the television industry initially resisted paying licensing fees for their broadcasts of music (followed several more decades later by cable television).

From just under a century of history, a pattern seems evident. Whenever new technology results in a new way of using music, the industry built upon that technology will resist paying for its use of music. After all, music is free -- at least until you're sued and forced to pay for it. History shows that, although it may take five to 10 years, some legalized system for new uses of music will ultimately emerge. Copyright owners must therefore continually enforce their rights, even if that means filing lawsuits that result in negative publicity.

At the same time, copyright owners should be more supportive of new legal uses of music. A collective licensing system is a potential solution for at least some online distribution of music (ie., streaming and download services such as iTunes) and may, with some compromises on both sides, even be possible for file sharing.

David Moser is an attorney who practices entertainment and intellectual property law and a professor at the Mike Curb College of Entertainment & Music Business at Belmont University in Nashville, where he teaches courses in intellectual property law and legal issues in the entertainment industry. He also operates a Web site with information on copyright, trademark, entertainment and Internet law at http://www.copyrightguru.com.