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Society of Composers and Lyricists

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Society of Composers and Lyricists ! ! ! ! Before&the&& United&States&Copyright&Office& LIBRARY&OF&CONGRESS& Washington,&D.C.& & Music&Licensing&Study:&Notice&and&Request&for&Public&Comment& & DocKet&No.&2014P03& ! ! ! THE!SOCIETY!OF!COMPOSERS!&!LYRICISTS! COMMENTS!ON!THE!COPYRIGHT!OFFICE!! MUSIC!LICENSING!STUDY! & & & & Duly&submitted& May&23,&2014& ! ! ! 1! Table!of!Contents! ! ! 1. Introduction! ! ! ! ! ! ! p.!3! 2. Defining!the!Audiovisual!Composer!or!Songwriter! ! p.!4! 3. Broadcast!Mechanical!Rights! ! ! ! ! p.!6! 4. The!European!Rights!Model!for!the!AV!Composer! ! p.!7! 5. Example!Foreign!Composer!Contracts! ! ! ! p.!8! 6. The!AV!Music!Creator’s!Relationship!! ! ! ! p.!11! ! ! ! !!!!!!!with!His/Her!Performing!Rights!Organization! 7. The!Inequities!and!Inefficiencies!of!the!Consent!Decree! p.!12! !!!!!!!!!!!!!!and!the!Rate!Courts! 8. The!Current!Licensing!Disparity! ! ! ! p.!12! 9. Foreign!Interpretations!of!Performances! ! ! p.!13! ! !!!!!!!(Streams!v.!Downloads)! 10. Conclusion! ! ! ! ! ! ! p.!15! ! ! Appendix!A:!!The!SCL’s!Mission!Statement! ! ! ! p.!17! ! Appendix!B:!!The!SCL's!History!Y!From!SCA!to!CLGA!to!SCL! ! p.!18! ! ! SUPPLEMENTARY!MATERIALS! ! Annexure!A:!!Examples!of!Foreign!Composer!Contracts! ! p.!25! ! Annexure!B:!!GEMA!Royalty!Rate!Schedules! ! ! ! p.!124! ! ! ! ! ! ! ! ! ! ! 2! INTRODUCTION! ! Audiovisual!music!creators!find!themselves!at!a!critical!juncture!through!no!fault!of! their!own.!While!the!introduction!of!new!technologies!and!delivery!platforms! ensure!their!music!is,!and!will!continue!to!be,!delivered!to!a!much!broader!audience,! they!are!less!assured!of!receiving!fair!payment!for!their!works!than!ever!before.! ! Unlike!their!overseas!counterparts,!U.S.!music!creators!have!virtually!no!control! over!the!music!they!write.! ! Audiovisual!works,!of!which!music!is!an!integral!component,!generated!$96.48! billion!dollars!of!foreign!income!from!2009Y20121!accounting!for!approximately! 6.5%!of!the!U.S.!Gross!Domestic!Product.!AV!music!creators!may!be!small!in!number! but!they!generate!enormous!revenues!around!the!world.!! ! The!copyright!economy!is!growing!faster!than!the!national!economy.!Between!2009Y 2012!the!copyright!economy!grew!by!4.73%!while!the!national!economy!only!grew! by!2.14%2.! ! However,!the!problems!with!the!Consent!Decree!and!the!rate!courts’!rulings,!if!not! corrected,!may!cause!certain!publishers!to!consider!withdrawing!from!the! performing!rights!organizations!in!order!to!maximize!their!earning!potential.!! ! This!scenario!would!be!catastrophic!for!AV!music!creators!who!rely!on!the! transparency!of,!and!the!payments!from,!the!PROs!to!earn!a!living.!For!the!AV!music! creator,!performance!royalties!are!their!lifeblood!and!the!PROs!currently!offer!the! best!solution.! ! The!future!of!licensing!for!AV!composers!relies!on!the!viability!of!collective!licensing! of!rights!through!the!Performing!Rights!Organizations.! ! While!ever!the!courts!maintain!that!there!are!no!performances!in!downloads,!the!AV! music!creator!is!not!receiving!any!royalties!from!downloads!of!film!and!TV! programs,!unlike!the!creators!of!nonYAV!works!who!receive!mechanical!royalties! when!their!songs!are!downloaded.!Therefore!we!respectfully!request!that!Congress! amend!the!law!and!define!in!law,!once!and!for!all,!the!“Writer’s!Share”!of!royalty! revenues.!The!SCL!respectfully!asks!that!ASCAP!and!BMI!be!afforded!wider!powers! to!collect!a!variety!of!royalties!on!behalf!of!all!music!creators,!particularly!those! working!in!the!audiovisual!realm.! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1!From!the!2013!report:!“Copyright&Industries&and&the&U.S&Economy”&by&Stephen&E.&SiweK! 2!From!the!2013!report:!“Copyright&Industries&and&the&U.S&Economy”&by&Stephen&E.&SiweK! ! 3! DEFINING!THE!AUDIOVISUAL!COMPOSER!OR!SONGWRITER! ! The!audiovisual!composer!or!songwriter!(i.e.!music!creator)!is!most!commonly! engaged!in!the!U.S.!under!contracts!governed!by!the!terms!of!!“work!made!for!hire”! or!“work!for!hire”!(WFH3).! ! These!terms!put!the!AV!music!creator!in!a!unique!situation!by!virtue!of!the!fact!that,! unlike!most!other!music!creators!in!the!U.S.!and!around!the!world,!the!U.S.!AV!music! creator!has!no!control!over!the!music!he/she!has!created,!as!the!“author”!is! considered!the!entity!that!commissioned!the!work!to!be!incorporated!in!an!AV! program.!This!establishes!an!anomaly!that!exists,!in!law,!nowhere!else!in!the!world.! ! While!the!National!Labor!Relations!Board!has,!on!multiple!occasions,!rejected!the! composers’!reQuests!to!form!a!labor!union,!deeming!the!composers!“employers”! (because!they!employ!musicians,!music!preparation!staff,!recording!engineers!etc.),! there!is!no!dispute!that!they!do!not!conform!to!the!accepted!definition!of!an! “employee”!but!instead!are!“independent!contractors”:! ! 1.! Employees!are!salaried!!Y!Independent!Contractors!are!not! AV!music!creators!are!paid!by!the!job! ! 2.! Employees!work!under!direct!supervision!–!Independent!Contractors!do!not! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3!Section!101!of!the!Copyright!Act!(title!17!of!the!U.S.!Code)!defines!a!“work!made!for!hire”!in!two! parts:! ! a)!! a!work!prepared!by!an!employee!within!the!scope!of!his!or!her!employment!! ! or! ! b)!! a!work!specially!ordered!or!commissioned!for!use!! ! ! i!! as!a!contribution!to!a!collective!work,!! ! ! ii!! as!a!part!of!a!motion!picture!or!other!audiovisual!work,!! ! ! iii!! as!a!translation,!! ! ! iv!! as!a!supplementary!work,!! ! ! v! !as!a!compilation,!! ! ! vi!! as!an!instructional!text,!! ! ! vii! !as!a!test,!! ! ! viii!! as!answer!material!for!a!test,!or!! ! ! ix!! as!an!atlas,!! ! if!the!parties!expressly!agree!in!a!written!instrument!signed!by!them!that!the!work!shall!be! considered!a!work!made!for!hire.! ! 4! AV!music!creators!are!given!initial!direction,!but!do!not!work!under! direct!supervision! ! 3.! Employees!are!reQuired!to!work!at!a!specific!location!and!use!eQuipment! provided!by!the!employer!Y!Independent!Contractors!are!not! AV!music!creators!work!in!their!own!or!rented!facilities!and!use!their! own!or!rented!equipment! ! 4.! Employees!are!reQuired!to!work!specifically!regulated!hours!with!overtime! allowances!etc.!Y!Independent!Contractors!do!not! AV!music!creators!work!their!own!hours,!often!many!more!than! anticipated! ! 5.! Employees!receive!benefits!such!as!health!insurance!and!pension! contributions!Y!Independent!Contractors!do!not! AV!music!creators!must!make!their!own!health!and!welfare! contributions! ! 6.! Employees!have!an!ongoing!relationship!with!the!employer!for!whom!they! perform!their!services!Y!Independent!Contractors!do!not! ! AV!music!creators!customarily!are!engaged!on!a!projectSbySproject! basis! ! 7.! Employees!have!the!order!of!services!set!by!the!employer!–!Independent! Contractors!do!not! AV!music!creators!work!to!their!own!schedule!and!perform!their! services!at!their!own!discretion!in!order!to!meet!milestones!along!the! way!and!an!ultimate!delivery!deadline! ! 8.! Employees!are!generally!restricted!from!working!for!multiple!employers!Y! Independent!Contractors!are!not! AV!music!creators!often!work!on!multiple!projects!at!any!given!time! while!managing!and!ensuring!each!project!has!its!milestones!and! deadlines!met! ! These!are!just!some!of!the!many!distinctions!that!define!AV!music!creators!as! independent!contractors.!Nonetheless,!AV!music!creators!find!themselves!shackled! with!“work!for!hire”!contracts!unlike!their!counterparts!throughout!the!rest!of!the! world.! ! Operating!as!independent!contractors,!AV!music!creators!are!ostensibly!small! businesses.!In!order!to!“manufacture”!our!product!we!need!thousands!of!dollars!of! eQuipment!housed!in!a!specifically!designed!space!and!the!product!we!manufacture! (i.e.!the!“Music”)!contains!copyright,!which!then!gets!folded!into!yet!another! copyright!(i.e.!the!“Program”)!and!this!is!what!puts!the!U.S.!AV!music!creator!in!such! a!uniQue!predicament.!Elsewhere!in!the!world,!the!common!practice!is!for!the!AV! music!creator!to!issue!a!license!to!use!the!Music!in!perpetuity!to!the!producer!of!the! ! 5! Program.!This!allows!the!producer!to!do!everything!with!the!Music!allowed!under!a! WFH!agreement!except!collect!the!publisher!share!of!revenue.! ! However,!given!that!the!vast!majority!of!AV!music!creator!agreements!are!created! under!WFH!terms,!it!is!imperative!that!there!are!independent!entities!to!monitor! and!collect!these!revenue!streams!on!behalf!of!the!creators.!The!primary!revenue! stream!for!the!AV!music!creator!is!the!performance!royalty,!generated!every!time! there!is!a!transmission!of!the!Program.!Other!revenue!streams!(e.g.!soundtracks! CDs,!downloads,!sheet!music!etc.)!pale!in!comparison.!Also,!as!a!rule,!AV!music! creators!do!not!share!in!any!revenue!from!DVD!sales!and,!because!of!the!1948!! Alden!Rochelle4!court!ruling,!there!are!no!performance!royalties!generated!by! theatrical!exhibition!in!U.S.!cinemas.!Again,!the!latter!is!out!of!step!with!the!rest!of! the!world!where!cinemas!do!pay!performance!royalties!to!their!local!performing! rights!organization!for!theatrical!exhibition!and!the!raises!the!Question!of! reciprocity!for!the!foreign!PROs.! ! The!SCL!would!like!to!see!the!abolition!of!“work!for!hire”!contracts!and!the! adoption!of!“license!in!perpetuity”!agreements!as!they!exist!in!the!rest!of!the! world,!where!the!Composer!retains!the!copyright!in!the!work!and!the!entity! contracting!with!the!Composer!(e.g.!the!Producer)!retains!the!copyright!in!the! Sound!Recording!and!the!right!of!exploitation!therein.! ! ! BROADCAST!MECHANICAL!RIGHTS! ! Throughout!Europe!royalties!associated!with!broadcast!music,!including!the!
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