www.drmwatch.com/legal/article.php/3302091
By DRM Watch Staff January 22, 2004 CNet has reported on a dispute between music publishers and record labels over royalties from copy-protected CDs. The music publishers -- through their trade association, the National Music Publishers' Association -- claim that record companies owe them double "mechanical" royalties from each track on a copy-protected CD, since such CDs effectively have two copies of each track, one in standard CD audio format, the other in copy-protected PC-readable format. Of course, the entire music industry would prefer that the general public remains ignorant of this type of provincial accounting issue, one of several such hurdles to progress in launching consumer-friendly digital music services. All parties concerned expect (i.e., hope) that the two parties can negotiate a settlement. For the record companies, this dispute may well end up driving up the cost of producing copy-protected CDs even further. We wonder whether these extra costs, not to mention the attendant negative publicity and consumer lawsuits, are a good deal compared with the effect, if any, of copy-protected CDs in reducing piracy. In this case, on the royalty issue alone, and although we see the sense of the music publishers' literal interpretation of their mechanical licenses, we are likely to side with the record companies. A copy-protected CD is a single product, one that offers a bundle of music-listening rights to the consumer and happens to require two separate copies of the material in order to do so. This is an implementation detail that need not have been necessary if the CD were designed differently in the first place. It's possible to point to music products that offer similar bundles of rights without resorting to multiple copies of the bits of the music, and we wonder if music publishers obtained double royalties, for example, from the dual audio tracks on VHS-HiFi videotapes. |
