The Illustrated Story of Copyright
© 2000 by Edward Samuels

[31]

CHAPTER TWO

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Music and Sound Recordings

The Music Business

[31] The special nature of music.

The music publishers of the 19th century worked in a society that used and regarded music in a very special way. . . . To identify the special nature of music in that society, we can begin by recognizing that in order to have any music at all a century ago, either of two conditions had to be met: either people had to make it themselves, or they had to come within earshot of others making it. In this respect, the people of the 19th century differed in no way from their ancestors of the 18th, 16th, or 14th centuries, or indeed of any other period of historical time. They differ only from us.

This society whose members had to make music in order to have it at all, needed and used the sets of directions for making music that the publishers provided. The 19th-century publishers were primarily printers, printers of multiple copies of musical scores, sets of directions for making music set down by composers, engraved, printed, and sold by publishers.

-Richard French.

The first U.S. copyright law was passed in the very first Congress in 1790. But that law protected only “maps, charts, and books.” It included books,* because that’s what copyright law traditionally covered, and that’s what the politicians were most familiar with; and it included maps and charts,† because it was important to a young, largely uncharted, country to encourage the likes of Lewis and Clark in recording their expeditions of discovery.

*Books, see p. 11.

†Maps, see p. 131.

But the new law said nothing about music. Maybe this omission wasn’t all that surprising, considering that there wasn’t a lot of original American music at the time. There were religious songs, but they were largely imported; and there were Revolutionary War songs, but as often as not they consisted of colonial lyrics patched onto English melodies, like “God Save the Thirteen Colonies” sung to the tune of “God Save the King,” or “Free America” sung to the tune of “The British Grenadiers.” Even “The Star-Spangled Banner” was Francis Scott Key’s 1814 poem set to the tune of “To Anacreon in Heaven,” an old English drinking song.

In 1831, Congress finally added music to the types of works eligible for federal copyright. But composers [32] still weren’t given the right to prevent others from performing their works, either for profit or otherwise. Throughout the nineteenth century, the composer’s rights basically covered only the publication of sheet music. Many composers of the day were simply unable to cash in on the popularity of songs that were sung by practically everyone across the country. Stephen Foster, who wrote works “so essentially American that they are regarded as folk music,” died virtually penniless in 1864.

By the 1890s, the publishing of sheet music finally came into its own. Some of the largest music publishers of the twentieth century, many of them setting up shop on “Tin Pan Alley” in New York, were formed by riding the coattails of popular composers of the day. The most successful work of the 1890s, “After the Ball,” by Charles Harris, was popularized at the Chicago World’s Fair, and sold over 2 million sheet music copies. In 1907, “School Days,” by Gus Edwards, sold over 3 million copies.

[32] Tin Pan Alley, circa 1914.

[32] Charles K. Harris’s hit (1892), published by the music company he founded.

Tin Pan Alley

After the Ball

[32] Foster’s poverty.

It’s probably unfair to suggest that Foster’s poverty was caused by any “especial malignancy” on the part of others or of the law. After his early successes, he was able to make contracts to receive as much as two cents for each copy of his sheet music sold.

If he found it difficult to make a bare living in his later years, one cause was the fact that out of his last hundred songs only one . . . was a hit. His average yearly income, during his comparatively prosperous years, was about seventeen hundred dollars. Today, as a double-A member of A.S.C.A.P. (which, of course, he would be), he would receive something more than ten times that sum. But that is idle speculation. We are talking of 1860, not 1946.
-Deems Taylor.

[33] But this method of doing business was doomed as a result of a technological development that had taken place back in 1877. Thomas Edison instructed his assistant, John Kreusi, to work on a new invention, the phonograph machine. By the end of that year, Edison spoke his first immortal words to be mechanically recorded: “Mary Had a Little Lamb.” Edison demonstrated his new machine for the editors of Scientific American magazine, and the world marveled.

With hindsight, the invention seems remarkably simple. The user spoke into a small horn, which collected the sound wave, while turning a crank to rotate a cylindrical tinfoil phonograph. A vibrating stylus etched a pattern onto the foil. When a needle, attached to a large amplification horn, was later pulled through the groove of the tinfoil by turning the crank of the phonograph, the vibrations reproduced the sounds originally spoken into the device.

Because of the crude nature of the technology, early recording favored “vocal bellowers and booming brass.” The process was totally mechanical—there was no electricity involved!. It took many years and many refinements, primarily electronic, before the phonograph developed into a machine capable of faithfully reproducing sound. But the world of music would never be the same.

Thomas Edison

[33] A banner day for Edison.

April 18, 1878, was a banner day for Edison. In Washington, D.C., to address a meeting of the Academy of Sciences, Edison was first whisked off to the studio of Mathew Brady for this photograph (above), which shows him demonstrating his phonograph with his host, Uriah Painter (correspondent for the Philadelphia Inquirer) and his assistant/collaborator, Charles Batchelor. Edison then visited Joseph Henry, president of the Academy (see p. 98), and attended the Academy meeting, where Edison and Batchelor showed off the new invention. As Neil Baldwin explained, later that evening Edison and Batchelor visited President Rutherford B. Hayes for “a private phonograph session. They ended up staying past three in the morning, because the President, in his enthusiasm, awakened his wife so that she, too, could experience this marvelous machine.”

Piano Rolls and Records:
A Congressional Compromise

[Image of piano player and engineer
recording a piano roll.]

[34] How do you make a piano roll?

Piano roll - Eastside, Westside

[34] An Aeolian piano roll: “Eastside, Westside.”

How did the law respond to this new invention? Curiously, the case that presented the legal issues did not directly involve the phonograph. Instead, the test case involved the use of paper rolls to record and reproduce piano music. The player piano was invented by Henri Fourneaux of France, and publicly exhibited at the Philadelphia Centennial Exposition in 1876. It allowed for the recording of piano music by accomplished pianists, whose performances were recorded as holes punched into rolls of paper, which could then [34] be played back in player pianos to reproduce the original performances. In their day, they actually sounded a lot better than phonographs, because the music they reproduced was performed right on the piano, with all the tonal quality of a live performance. By 1902, there were about seventy-five thousand player pianos in the United States, and over a million piano rolls were sold.

Here’s how the case ultimately came before the Supreme Court. In 1897, a man by the name of Adam Geibel wrote two songs—“Little Cotton Dolly” and “Kentucky Babe.” Geibel sold the copyright in his songs to the White-Smith Music Company, which published the original sheet music.

The Apollo Company was in the business of manufacturing player piano rolls. When Apollo made perforated music rolls that would play “Little Cotton Dolly” and “Kentucky Babe,” it did so without White-Smith’s permission or the payment of any royalties. Not surprisingly, the White-Smith Company sued Apollo for copyright infringement. The case was ultimately appealed to the U.S. Supreme Court, which in 1908 rendered a rather incredible interpretation of the existing law.

[35] The Supreme Court decided that Apollo’s piano rolls did not infringe White-Smith’s copyright in the two musical works. The decision had immediate impact upon music composers and the infant phonograph industry. By 1908, when the Supreme Court rendered its decision, the Columbia Graphophone Co. and the Victor Talking Machine Co. had begun building up considerable repertoires of phonograph recordings by such great artists as Enrico Caruso and other Metropolitan Opera stars. Under the White-Smith holding, the record producers didn’t have to pay anything for their use of the music that was copyrighted by others!

[37] What’s a copy?

“What is meant by a copy?” the Supreme Court asked in the White-Smith v. Apollo case. “Piano rolls are parts of a machine which, when duly applied and properly operated in connection with the mechanism to which they are adapted, produce musical tones in harmonious combination. But we cannot think that they are copies within the meaning of the copyright act.” The Court emphasized that

even those skilled in the making of these rolls are unable to read them as musical compositions, as those in staff notations are read by the performer.

. . . [T]hey are not intended to be read as an ordinary piece of sheet music, which, to those skilled in the art, conveys, by reading, in playing or singing, definite impressions of the melody.

This analysis has since been totally overturned by Congress.

[35] Player pianos.

George Gershwin, for example, made marvelously rich-sounding piano rolls that still represent the authoritative version of many of his works. Indeed, Gershwin learned to play the piano as a child by following the keys on a player piano. The liner notes to Gershwin Plays Gershwin: The Piano Rolls (1993) explain:

The player piano was a central force in American musical life between 1900 and 1930. Referred to variously as automatic pianos, pianolas and reproducing pianos, players of all types were found not only in penny arcades, but in homes, concert halls, restaurants, saloons, stores— virtually anywhere music was heard. Player pianos are normal acoustic pianos except that an internal piano-playing mechanism works as a computer using air pressure instead of electrical energy. The paper piano rolls are the “software” used to activate the notes to play. A punched hole in a paper piano roll causes a corresponding note to play as it goes across a “reader”; a five-note chord has five perforations, and so on. Air pressure in player pianos is established by foot-pumping the bellows to exhaust the air. In later models, the bellows were motor-driven.

[37] The response by Congress was swift. For several years, Congress had been considering a major revision of copyright. A 1906 bill would have granted to music composers the very right that the Supreme Court said was not already there—the exclusive right to make “any mechanical device by which music may be reproduced to the ear.” However, there were some embarrassing complications that were raised by the White-Smith case. The legal expenses of the plaintiff copyright owner were paid by the Aeolian Company, itself a “pioneer” in the piano roll business.

Now, why would a piano roll company sponsor a lawsuit to establish the rights of copyright owners against piano roll companies? Aeolian was just beginning to make a substantial capital investment in its manufacturing plants, and, as a prudent company, the one thing it didn’t want was uncertainty about its rights to make piano rolls. The company wanted a definitive ruling on the subject, and so it agreed to pay for the litigation. In exchange, Aeolian was able to make an advantageous bargain with many of the music publishers of the day. The music publishers formed a new organization, known as the Music Publishers’ Association, and the Association agreed that, if the copyright owners won the White-Smith case, they would grant to Aeolian, and only to Aeolian, the right to make mechanical reproductions of their music. So, in effect, Aeolian would win either way. If the copyright owners won, Aeolian would get by contract the exclusive right to create mechanical reproductions, edging out all their competitors. As it turned out, the copyright owners lost, and so Aeolian got the right, although not an exclusive right, to make its mechanical reproductions for free.

Kentucky Babe

[35] “Kentucky Babe.”

The song is an example of a popular style of songs stereotyping African Americans that, by today’s standards, is embarrassing.

This sounded to the congressional committee like collusion, or an attempted monopoly, which was not desirable. In the hearings, the committee members were relentless in their questioning of attorney Nathan Burkan, who had represented the Music Publishers’ Association, about the possibility that a company like Aeolian might obtain a monopoly in the manufacture of piano rolls or records by buying up the composers’ exclusive rights.

[38] The novel compromise ultimately adopted by Congress in 1909 was a special system of compensation that has come to be known as a compulsory license. On the one hand, the White-Smith case was overruled by Congress, and composers were granted the exclusive right to make mechanical reproductions of their music. On the other hand, this exclusive right was severely limited. Under the new law, composers could choose whether or not to allow recordings to be made of their works, and could charge whatever the market would bear for the first such recording. But thereafter, any other record companies would be allowed to make their own recordings of the song by paying a fixed rate, set in the statute at 2 cents per copy. So, if I wrote a song, I could license Eddie Cantor to record it for whatever I could get him to pay. But after that first recording, if Ethel Merman or Frank Sinatra or Bette Midler wanted to record their own renditions, perhaps updated versions for new generations, I couldn’t stop them, so long as they paid me 2 cents per recording. What this assured was that performers, who might otherwise not be able to afford licenses to record songs, could buy the rights to virtually any song at the legally prescribed rate.

To be sure, composers in this way are treated differently from other copyright owners, in that they lose control over who can record their works. Nonetheless, the composers are at least better off than if they received nothing for recordings of their works, as would have been the case under the White-Smith decision.

[36] The Sears Roebuck Catalogue of 1908—the very year the White-Smith case was decided. The top half of the page shows the Columbia P style records, along with the “talking machine” of the Edison design that played the cylinders shown. The bottom half of the page shows the F H Harvard machine, based upon the Berliner design that played flat records. On the right, the advertisement announces that Sears has contracted to purchase over 1 million records, fifty thousand per month, to make the “standard size wax cylinder records” available in unprecedented numbers and at unprecedented low prices.

Sears phonograph ad

[36] “Singing into the horn.”

In less than a score of years Caruso established the financial security of the Victor company and the Metropolitan. He gave respectability to recording. Before his time the artists were a little sheepish about singing into the horn [right], somewhat as the “legitimate” actors were at baring their emotions before the primitive movie cameras.
-Francis Robinson.

The drawing is a self-portrait by Caruso, showing him recording in the days before microphones.

Caruso

The compromise was one that all parties pretty much learned to live with. When the copyright law was revised in 1976, there was plenty of discussion about whether to retain or abandon the compulsory license. The music copyright owners argued that they should be free to sell their works for whatever the market would bear, and to negotiate the fees, just like all other copyright owners. The recording companies, on the other hand, argued that the compulsory license was reasonable, and should be retained. After considerable debate, the consensus seemed to be that the compulsory license worked fairly well, and the remaining controversy centered upon what the statutory rate should be. The composers argued that the rate should be adjusted considerably upward from 2 cents per copy to allow for inflation over the sixty-plus intervening years since the compulsory license was first adopted. The recording companies argued that increases in the number of records sold more than offset the per record amount lost to inflation.

[39] Ultimately, the 1976 response was to adjust the fees slightly upward to either 2.75 cents per work, or 0.5 cents per minute of playing time, whichever was greater. The new act also incorporated a mechanism for making periodic adjustments to these rates. The rates are currently scheduled to increase from 7.55 cents per song or 1.45 cents per minute of playing time in 2000, up to 9.1 cents per song or 1.75 cents per minute of playing time in 2006. Thus, if someone makes a record singing ten songs written by others, the total statutory fees amount to over 75 cents per record.

Beatlerama

Beatles - "Beattle" Mash

[37] Types of records we can get with the compulsory license.

Above, the Manchesters singing some Beatles hits, along with other classics like “Shortening Bread” and “My Bonnie Lies Over the Ocean.”

[38] “Beattle” Mash?

The notes on the back of the album introduce “The Liverpool Moptops—these four young men, who with a group of excellent musicians, have adopted the style of BEATLING, the hottest craze in show business on either side of the Atlantic.” Under American copyright law, the Beatles could not prevent such a record, which contains some Lennon-McCartney hits along with other works presumably written for the Liverpool Kids, so long as the group paid their compulsory licensing fees. Apple has objected strongly, however, to the unauthorized use of the word “Beatles” (or any variation) to sell such records.

[38] The Ripoffs? Enough said .

Ripoffs

[39] A trap for the unsophisticated.

The compulsory license can have a devastating impact upon performers who over-rely upon it for their recorded materials. Under most recording contracts, all of a portion of the compulsory licensing fees are deducted from the artist’s profits on any recording. If an artist incurs too many compulsory licensing fees, such charges can swallow up just about all of the artist’s potential profit from the album. The compulsory license can thus be something of a trap for the unsophisticated recording artist.


[39] The compulsory license also brings us different styles of Beatles.	Here are “pseudo-classical” Beatles (left), percussion Beatles (center), and various stars who played Lennon/McCartney music (right).

[40] “Our record just dropped right back off the charts.”

The compulsory license is usually viewed as a benefit to new performers, allowing them access to a vast repertoire of successful songs which might otherwise be tied up by the large music companies. However, it’s dangerous to generalize about who benefits from the compulsory license.

The television documentary series Rock and Roll highlighted the point that the British invasion of music in the early 1960s, spearheaded by the Beatles, cut off the rising popularity of black music among white audiences in the United States. In the following excerpts, to “cover” a song means to make a recording of someone else’s song, usually using the compulsory license rather than a separately negotiated fee. (The Shirelles were quite successful, the first female group to sell more than 1 million records. They continued to perform publicly until the death of Doris Jackson in early 2000.)

Announcer: The ensuing British invasion brought hard times to America’s rich tradition of black pop. Many black artists were squeezed off the pop charts as British bands began to cover their songs.

Doris Jackson (of The Shirelles): So actually they were smart, in the fact that they took our songs. And I mean, when I say our songs, I’m basically speaking about everybody across the board, and began to rerecord them and had an awful lot of success with them, so that of course did cut into our business.

Shirley Reeves (of The Shirelles): As a matter of fact, I remember Manfred Mann covering, we had a record that just started to make it across the country on the charts, called Sha-La-La, and Manfred Mann, a group from England, covered us and they immediately stopped playing [41] ours and started to play theirs, so our record just dropped right back off the charts.

Announcer: The same month as the Beatles’ conquest of America, Lieber and Stoller released Go Now, by Betsy Banks, a return to their first love, R & B. In a sign of the times, the song never reached a white audience until it became the first American hit of one of the new British bands, The Moody Blues.

This is not to suggest that the compulsory license was responsible for the British invasion of American music. But it did add insult to injury when the British artists were able to make hits of the very songs that had been introduced by American artists.

So there we have the legislative response to the first technological challenge to copyright in the twentieth century. What we see is that Congress was ultimately able to meet the challenge, adopting a compromise position that most of the parties were willing, or at least able, to live with.

Radio and Performing Rights: A Little Self-Help

Lee De Forrest

[41] “The Father of Radio.”

Lee De Forest, in Manhattan in 1907, speaking into a microphone (taken from a telephone) on a makeshift stand. In the foreground is part of the record player, for musical entertainment.

There was another technological development that occurred during the next two decades that threatened to undermine the 1909 victory of composers. In 1907, Lee De Forest, an engineer for Western Electric, developed the “Audion” vacuum tube, which could amplify radio [40] waves. In that same year, he began broadcasting recorded music from New York City. All of a sudden, records were not the only source of recorded music. And what’s more, after the initial cost of purchasing or assembling a radio receiver, a listener could hear radio music virtually for free.

Some entrepreneurs saw in radio a remarkable new vehicle for advertising and promoting their acts. But by the 1920s, Billboard magazine and others in the profession were warning that free music or other acts on radio undercut opportunities to make money from live or recorded performances. “Radiophone Cuts Into Show Business,” Billboard announced in a 1922 article. “Vaudeville Exchanges First To Realize Artists Hurt Their Value by Wireless Appearances.” In that same year, the Actors Equity Association adopted a resolution advising its members to refuse radio appearances without pay. Some managers, such as Florenz Ziegfeld, prohibited their artists from appearing on radio while they were under contract to him. And in 1923, claiming that radio playing was beginning to cut into record sales, the young American Society of Composers, Authors and Publishers (ASCAP) asked broadcasting stations to refrain from playing music without compensating the composers of the songs.

The composers’ fears were apparently justified. In part because of the Great Depression, but in part because radio provided “free” music to the public, record sales took a dramatic nosedive. While radio penetrated to 2 out of 5 homes by 1931, and to over 4 out of 5 homes by 1938, record sales plummeted from about $75 million in 1929 to a low of $5 million in 1933, and made only a partial recovery to $26 million by 1938. It wouldn’t be much of a victory to get a portion of the profits from record sales if there were no record sales!

But was there anything the copyright owners could do to either prevent radio playing of their works or at least [41] get a piece of the new action? As it turns out, there was something they could do. And it didn’t require going to Congress; the solution was already in the existing copyright law.

All the way back in 1897, Congress finally had seen fit to grant composers the exclusive right, with limitations, to publicly perform their songs. That right was continued in the 1909 statute, but it was subject to an important limitation. A composer’s rights only extended to “public” performances “for profit.” But was the new radio industry really for profit? Listeners didn’t have to pay directly to receive radio broadcasts—the revolution of radio was that it was free to anyone who had a receiver. And in the 1920s, radio stations were just beginning to figure out how to make money by selling advertising.

By the twenties, it had already been established by the courts that “for profit” wasn’t limited to direct profits. The cases that were to be critical in clarifying the rights of composers in the context of radio were those that had been brought by ASCAP in the teens and twenties.

[43] “If it pays . . .”

If the rights under the copyright are infringed only by a performance where money is taken at the door they are very imperfectly protected. . . . The defendants’ performances are not eleemosynary [charitable]. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order, is not important. It is true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere. . . . If music did not pay it would be given up. If it pays it pays out of the public’s pocket. Whether it pays or not, the purpose of employing it is profit and that is enough.
-Justice Oliver Wendell Holmes,
Herbert v. Shanley (1917).

Victor Herbert had been appalled to hear “Sweethearts,” his hit song from the operetta of the same name, being played at the popular Shanley’s Restaurant in Times Square just up the street from where the opera was playing on Broadway. While Herbert got his royalties from the theatrical presentation, he was getting not a penny from the orchestra playing his music in the restaurant. So, to test the strength of his new performing rights organization, he brought a lawsuit against the restaurant. The restaurant’s defense was that the performance was not “for profit,” since there was no separate charge for the music. The case was appealed to the Supreme Court, and in a colorful opinion by Justice Oliver Wendell Holmes, the Court found that the performance was indeed for profit. Another leading case held that the playing of piano music to accompany an otherwise [43] silent motion picture was a performance “for profit,” even though the playing of the music was “incidental” to the viewing of the motion picture.* The theater had to obtain an ASCAP license.

*Music accompaniment, see p. 181.

[Image of Shanley's Restaurant, exterior shot.]

[Click here for an image not in the book, dated about 1908,
showing Shanley's Restaurant. Look to the right side.]

[42] Shanley’s Restaurant, at Broadway and 43rd Street, circa 1914.

[Image of Shanley's Restaurant,
interior shot.]

[42] Off to see the Congress.

At front (left) is Victor Herbert, plaintiff in the lawsuit against Shanley’s Restaurant. With him (front row) are John Philip Sousa, Irving Berlin, Harry von Tilzer, and William Jerome. Peering from the back row, between Tilzer and Jerome, is Nathan Burkan, the attorney who helped to found ASCAP.

The entourage is shown at Pennsylvania Station in New York in 1924, on their way to testify against the Dill radio bill that would have allowed radio stations to play music without compensation to copyright owners. The bill was defeated, and ASCAP’s victories in the courts established the rights of composers to receive royalties for the playing of their works on radio.

Victor Herbert, Irving Berlin, ASCAP

[43] One of America’s great stores.

A department store is conducted for profit, which leads us to the very significant fact that the cost of the broadcasting was charged against the general expenses of the business. . . . While the defendant does not broadcast the sales prices of its wares, or refer specifically thereto, it does broadcast a slogan which appears in all of the defendant’s printed advertisements. . . . If the development or enlargement of the business of the department store was completely out of the minds of the promoters of this broadcasting enterprise, is it reasonable to believe that the slogan, “L. Bamberger and Co., One of America’s Great Stores, Newark, N.J.,” would be announced to all listeners one, two, three, four, five, or six times a day?
-District Charles Judge Lynch,
District Court of New Jersey (1923).

So, given the statute and these earlier cases, was the playing of music on radio a public performance “for profit”? The test case was brought against the Bamberger Department Store in Newark, New Jersey, which in 1922 had begun broadcasting music and other entertainment programming from its store on a new radio station known as WOR. Although no money was paid or received for commercials in those early days of radio, the federal district court in New Jersey, analogizing to the earlier cases, had no difficulty in finding that Bamberger’s motives were sufficiently commercial. The store announced at the beginning of its programs that the broadcast was from “L. Bamberger and Co., One of America’s Great Stores, Newark, New Jersey.” It also incidentally sold radio receivers, from which it of course expected to make a profit.

[44] ASCAP.

ASCAP was founded in 1914 by Victor Herbert and other composers, together with their attorney, Nathan Burkan, who had represented their interests in the White-Smith case. The purpose of the organization is to collectively enforce copyrights of all its members against not only dance halls and restaurants, but also other organizations that publicly play their songs, such as radio, television, and cable stations, and, most recently, sites on the Internet. ASCAP licenses only for the so-called non-dramatic performances. Composers still directly license users for “dramatic” presentations of their works, such as on the stage. The typical license is a so-called blanket license; for the payment of one annual fee, the subscriber is entitled to play an unlimited number of works from the vast repertoire of all ASCAP’s songs. ASCAP distributes its proceeds among its members, based upon various criteria, including the results of elaborate polls to determine what songs are generally being performed. ASCAP gets its licensees to pay their fees with a carrot and a stick: the carrot is the relative bargain of having access to hundreds of thousands of musical works for one low fee. The stick is the threat of a lawsuit, and the likelihood that the user will have to pay more in litigation expenses and damages than it would have cost simply to pay the license fee in the first place.

With its victory against WOR in 1923, ASCAP was able to begin collecting licensing fees from radio stations that played ASCAP music. Although that first license was a modest $250 per year for the privilege of playing all ASCAP music, the fees for larger radio stations soon went as high as $5,000. Today, radio and TV licensing represents the single greatest source of revenue for ASCAP and its composers. Together with BMI and SESAC, the other two major music-licensing organizations, total U.S. revenues for performing rights are almost $1 billion. That may sound like a lot of money, but remember that it’s divided by all of the composers to compensate them for all of the nondramatic public performances of their works. An average member of ASCAP gets about $150-200 per work per year, or about $5,000-6,000 for all of a member’s compositions. And of course, that average reflects high payments [44] for a few very successful composers, and small payments for the vast majority of composers.

In any event, the existing copyright law—together with some aggressive self-help by the composers and publishers themselves—was enough to take care of the radio revolution.

Sound Recordings:

The New Industry

The Protection of Sound Recordings

What we’ve been talking about until now are the rights composers have in their music. Although such rights include the right to make recordings of the music, until 1972 there were no separate federal rights in the sound recordings themselves. That is, the producers and performers who made recordings had no federal rights in their records, tapes or CDs. For the rest of this chapter, we’ll be talking about various ways in which copyright has been extended to protect such sound recordings directly.

Although the record companies had lobbied for protection of recordings as early as the 1906 hearings, for various reasons Congress did not act. The technological advance that reintroduced the issue with some [45] urgency was the development of the relatively inexpensive and efficient tape recorder. Record and tape piracy reached epidemic proportions in the 1960s and 1970s. The record companies went to Washington, and this time convinced Congress that record and tape piracy was enough of a “bad thing” that they ought to pass a law preventing it. Not only did record piracy hurt the record companies, but it also hurt consumers: if other companies “pirate” records without paying their fair share, then the original record companies have to charge more to make a profit, and we all end up paying in the form of higher prices for legitimate records and tapes. In 1971, Congress responded by passing a special amendment making sound recordings separately copyrightable under the federal statute, effective for records made after February 15, 1972.

As a result of the amendment, most records, tapes and CDs since 1972 involve two separate copyrights. The copyright in the music (usually identified on the album by the symbol ©) belongs to the composer, and extends to the making, distribution, or public performance of the song. The copyright in the sound recording (usually identified on the album by the symbol (p), for “phonorecord”) belongs to the record company (and sometimes partly to the performers), and extends only to the making or distribution of that particular recording of the song. (There’s usually also a separate copyright in the cover art of the record or CD.)

Sources of Revenue

For Composers

Use of copyrighted work

How payments made

Sheet music

Directly to publisher (which presumably has contractual arrangements with the composer).

Records, tapes, CDs, etc.

Directly to publisher for first authorized recording.

Thereafter, at the compulsory

licensing rate, frequently through Harry Fox Agency.

Motion pictures, television, home video

Synchronization or other fees usually paid through an agency like Harry Fox Agency.

Live performances and non-dramatic performances on television, radio, etc.

Performance fees usually collected through performance rights organizations—ASCAP, BMI, or SESAC

So Congress wasn’t exactly prompt in addressing the issue of record piracy—from 1909 to 1972 is a pretty long time even by congressional standards—but it did finally get around to the problem. And when it did, it did so by bringing sound recordings more or less into the existing framework that governed copyrights generally. With some fine-tuning, it was felt that the basic purpose of copyright—promoting the progress of art and science by creating exclusive rights in the works of authors—was served by extending federal copyright protection to sound recordings.

The New Revolution: Digitized Sound

	[Diagram showing stylus vibrating in two directions, picking up the vibrations form each side of the record groove.]
[46] Phonograph record, magnified about two hundred times.	[46] How the stylus picks up stereo sound, vibrating in two distinct directions from the patterns etched on either side of the record groove.

Until the 1970s, sound recordings were stored only in analog form. The music was “stored” on records as a wavy groove etched into the disk; and on audiotape as a continuous magnetic signal that corresponded to the analog vibrations. Engineers tweaked the technology to produce ever higher fidelity stereo and long-playing records, magnetic tape recordings, [46] and movie soundtracks. But the basic concept of storing an analog vibration, or an electronic or optical signal capable of reproducing an analog vibration, remained relatively unchanged in the century since Edison invented the phonograph.

Then, during the seventies, engineers perfected the technology that allowed sound to be “sampled” electronically, and converted into a series of numbers that could be stored and reproduced by computers. The first compact disk, or CD, was introduced in 1979, and within a decade the vinyl record was practically obsolete.

[Diagram showing a sound wave picked up by a microphone, and etched onto a CD.]

[47] How an analog sound wave is converted to binary code and then recorded on a CD.

Digital sound recording is fundamentally different from analog sound recording. Instead of the pattern of the sound waves being reproduced in the grooves of a record or the patterns of magnetism on a tape, information about those sound waves is stored in the form of digital signals. To do this, the sound is sampled thousands of times a second. At each sampling, the amplitude of the wave is noted and converted to a binary representation. . . .

The data on a compact disk is recorded as a series of closely spaced pits in the surface of the disk. The pits are arranged in a spiral track whose total length is more then 3.5 miles. To play back the CD, a laser retraces the spiral track, starting at the center. When it hits a pit the light is scattered; when it hits a smooth spot it’s reflected.

-Steven Lubar

Like other major technologies, the development of digitized sound had both positive and negative effects on the industry. On the positive side, the sound quality, durability, and versatility of CDs was considered by many to be superior to that of records. Consumers were willing to pay a premium to buy their music in the new format. Many music collectors, dissatisfied with their worn vinyl records, went out and bought new copies of works they already owned. This was a record company’s dream, to resell albums to people who already had them!

But there was also a downside to the new format, which became apparent in several distinct ways. While Congress might be criticized for having taken so long to protect sound recordings in the first place, it has been right at the forefront in amending copyright to deal with these [47] effects of digitized sound. We’ll take a look at several recent copyright amendments that were designed to address the copyright problems.

Masterworks digital processor

[47] Playing with digitized music.

The digitizing of sound allows for its manipulation in ways not previously possible. Using the music sequencer software controls, a musician/engineer can rearrange or alter the notes (bottom right) or the sound wave itself (center right).

Whatever Happened to the Audio Rental Stores?

In the 1980’s, video rental stores proliferated across the country.* Why had there never been audio rental stores? Probably because of the poor quality of used records. Once a record was handled a few times, it got [48] scratches and pops and hiss, and who would want to rent a worn-out used record?

*Video rental stores, see p. 69.

Well, the CD changed all that. CDs were not “indestructible,” as originally billed; you can easily prove that with a steel soap pad and just a little ingenuity. But if you take reasonable care of your CDs and put them back in their cases, then they can last virtually forever. Their quality doesn’t deteriorate in normal use, since the laser beam that reads the CD makes no physical contact with the CD itself.

So, in the early 1980s, alongside the emerging video rental stores, there began popping up audio rental stores, where you could rent a CD for a dollar or two a night. Most consumers only owned one video recorder, and so were not set up to make copies of rented movies in their homes. But most home music systems had a tape deck right alongside the CD player, so that making tapes of rented CDs was as simple as pressing a button. To facilitate copying (and make a little extra money), the audio rental stores also sold blank audiotapes.

As you might expect, the record companies felt that the unauthorized audio rental stores could have a disastrous effect upon the sale of CDs. But a simple copyright doctrine stood in the way. Under U.S. copyright, once a manufacturer sells a particular copy of a copyrighted work, then anyone else may resell or give away or rent that particular copy without paying any further copyright royalty. This is known as the “first sale” doctrine,* which provides that the copyright owner effectively “exhausts” its rights upon the “first sale” of a particular copy of a work. It is this principle that allows the video rental stores to exist, without storeowners having to pay copyright royalties for the privilege of renting out videos.

*First sale doctrine, see p. 167.

The upshot of all of this was that the record companies were able to convince Congress that audio rental stores were a bad thing. What Congress did was to pass an amendment in 1984 to make an exception to the first sale doctrine so that it wouldn’t apply to sound recordings. In other words, the amendment made clear that record companies retained the exclusive right to rent their works, and could prevent purchasers of their records (even stores) from commercially renting out their sound recordings—records, tapes or CDs. This 1984 amendment is the reason why audio rental stores virtually don’t exist in this country.

[49]

Why Can’t I Make Copies From Copies of My CDs?

The second major response to the digitizing of music was the Audio Home Recording Act of 1992. Here’s the problem. Inexpensive and easy-to-use cassette tape recorders had been around for decades, and everybody understood that lots of people made tape copies of music in their homes. Never mind that these recordings were technically copyright infringements, there was nothing anybody could do to stop the copying that took place in private homes.

But the situation was tolerable for one basic reason. No matter how much the technicians tweaked the technology, tapes were still not as good as the originals. Or if they did come close, it was still true that if you made a copy of a copy, the sound quality started deteriorating. And whether or not that’s true, record companies seemed to be selling more CDs and prerecorded tapes than at anytime in history, and it was hard to believe the hysterical outcries of such an apparently successful industry.

Now introduce the digital audio tape recorder. What it records is not the soundwave, but a bunch of ones and zeroes, ons and offs, that can be used to digitally reproduce the original recording exactly. And I mean exactly. Whether or not the tape perfectly captures reality, it does perfectly capture the original recording, because it records, digit for digit, the same sequence of electronic bits. And unto the second and third generations, and forever. The tenth copy of a copy will sound just as good as the original.

So, when the first such recording devices were introduced in the late 1980s, the record companies threatened to bar their sale by bringing suit under copyright. For a variety of reasons, the manufacturers held off selling the digital audio tape recorders in this country. In addition to the fear of litigation, there was the recession, which didn’t bode well for the introduction of a major new technology; there was the problem of incompatible systems (and no one wanted to get into a technology war on the level of the Beta-VHS competition); and there was the fact that some of the companies that would sell the new devices were still doing quite nicely selling CD players, and it didn’t seem wise to introduce one technology before realizing the full potential of the previous one.

Whatever the reason for the delay, it did give the parties time to negotiate a deal. What they came up with was an industry sponsored compromise that was presented to Congress as acceptable to both the [50] manufacturers of the new audio digital tape machines, and the music and record publishers. Congress ultimately adopted the deal in the form of the 1992 home recording amendment.

[50] Congress misses the market.

In passing the new home recording amendment, Congress obviously anticipated that the new digital audio tape systems would be the next major technology in the music industry. But it didn’t work out that way. For one reason or another, hardly anybody bought the new digital tape machines. Instead, the technology that caught on like wildfire in the later 1990s was the MP3 formal for storing and sending digital music over the Internet.

Diamond Multimedia Systems was the first company to market a portable device for storing and playing MP3 files captured from the Internet. The files could be stored on the Rio’s “hard drive,” or on memory cards that could be played on the Rio at a later time or on someone else’s Rio. The Recording Industry Association of America (RIAA) brought suit against Diamond, claiming that the device failed to comply with the audio home recording amendment, because it didn’t have a serial copy management system (and Diamond didn’t pay the royalty that it would have had to pay if the device were covered by the statute.)

The federal courts refused to grant an injunction, on the ground that the Rio was not a recording device; while it could store one copy of MP3 files, it had no capability for making additional copies. Why would you need a serial copy management chip if you couldn’t make serial copies (copies of copies) anyway? But, argued RIAA, if the Rio were not covered by the amendment, then the consumers were getting their right to make a “free” home copy without having to pay the price—the compulsory licensing fee—that the statute had contemplated. The technology had simply developed in ways not anticipated by Congress.

[51] Having lost the preliminary round, RIAA ultimately settled with Diamond, on Diamond’s promise to work with RIAA on the Secure Digital Music Initiative—a successor to the MP3 format that can protect against unauthorized copyright. As this book went to press, RIAA was bringing lawsuits against various parties for distributing or facilitating the unauthorized distribution of MP3 files over the Internet. One suit is against the creators of “Napster,” a program that doesn’t directly make or store MP3 files, but allows for systematic tracking and exchanging of MP3 files among various users. I’m not about to predict how these cases will come out. But I am fairly certain that the music industry will be fighting the unauthorized “free” MP3 music sites that are ubiquitous on the Internet, and shifting most of its inventory to the newer, secure formats.

There are three major components to the new statute. First, all digital recording devices must incorporate something called the “Serial Copy Management System.” This is a special chip that allows for the making of a first-generation copy of a digitally recorded work, but places a special signal on any copies that tells the chip not to make any further copies. In other words, you can copy the original, but you can’t copy the copy. Second, the statute provides for a new royalty fee of up to $8 per digital recording machine and 3 percent of the price of all digital audiotapes or disks used in such machines. These royalties are to be collected not from consumers, but from the manufacturers or importers of the machines and tapes, and distributed to copyright owners whose musical works and sound recordings are presumably being copied. Third, since royalties are being paid by the manufacturers or importers of the new recording devices and media, the copyright owners agreed to forever waive the right to sue consumers for copyright infringement using audio recording devices in their homes.

Although this package may appear to give the record companies a real windfall, in fact there are several substantial limitations. For one thing, there’s the Serial Copy Management System: it does prevent second-, third,- and later-generation copies, but it still allows users to make as many first-generation copies as they want. So, for example, I can still buy one copy of a CD, record it digitally, give the original to a friend, who records it digitally, who gives the original to a friend, who . . . well, you get the idea. The Serial Copy Management System doesn’t prevent users from making multiple copies, it only prevents them from making copies of copies.

[51] And this business about not suing anyone for home recording of music—that represents a wonderful gift for home users. Prior to the 1992 amendment, there was no “home use” exception for home taping, much as some people seemed to think there was. Well, now there is a specific home use exception. Effectively, the record companies just gave away any claim of copyright infringement for home taping of any kind. All the music publishers and record companies get is a share of the $8 royalty per machine, and the 3 percent royalty per tape or disk. Why did they give up their right to sue? Because it wasn’t worth much; there was no effective way to enforce the right anyway.

The new amendment adds a dozen pages of complicated and technical regulations that only a lawyer can understand and appreciate. But the important point is that copyright has adapted, and with a statute that the affected industries agreed to in advance.

Digital Audio Transmissions

Congress has recently responded to the digitization of music in a third major context. Here’s the concern: now that music is digitized, it can be sent over telephone or cable lines and through computer networks. Yes, I know you could always “send” music over telephone lines, but the quality of the music received would be about like listening to Beethoven through a paper cup. What I’m talking about is sending a stream of computer signals from which the music can be reconstructed at the other end. When you play the music on your computer or other receiver, voilá, it sounds just as good as the original.

The future is now. People connected to the Internet are already exchanging digital files containing pictures, music, video clips, you name it. Some companies have launched new subscription services that distribute music and video virtually on demand. There’s a big potential market here, and—you guessed it—the record companies are afraid that people will simply download their music, instead of buying CDs. That could put the CD manufacturers out of business. And if they’re out of [52] business, who’s going to pay the musicians and sound engineers who keep the music flowing?

[52] Music and video Internet services.
Real Player and other music playing programs can be used to play “streaming” audio of words or music. The radio stations listed here have authorized the use of their sounds, but hundreds of unauthorized streaming audio and video MP3 formatted sites are also widely available.

Real Player

The legislation passed by Congress to deal with all of this is the Digital Performance Right in Sound Recordings Act of 1995. It’s got several features, and it gets even more complicated than the earlier music amendments to copyright. To simplify a bit (and to update for further amendments made in 1998, discussed below), it divides the performance of digital music into three categories.

[52] Performance rights in sound recordings.

Prior to the 1995 amendments, there were no performance rights in sound recordings. A radio station or dance hall or store could play music from sound recordings, and would have to pay a performance right to the owner of the copyright in the underlying music, but would not have to pay anything to the owner of the copyright in the sound recording.

With the 1995 amendments, there now are performance rights in sound recordings, but limited to the right to certain digital performances, as described in the text and the accompanying chart.

The first category is nonsubscription broadcast transmissions, for which no royalties have to be paid to the sound recording copyright owners. As explained by the sponsors of the amendment, it “does not apply to” and would not create copyright liability for “traditional radio and TV broadcasts, or to background music services, such as Muzak or 3M, nor does it apply to public radio, restaurants, department stores, hotels, or amusement parks.” (These services have traditionally had to, and will continue to, pay ASCAP and BMI [53] for performance rights in the underlying music, but not anything to the owners of copyright in the sound recordings.)

The second category is certain other digital transmissions, including services in which a subscriber pays a fee but doesn’t control what music is played. In this context, Congress has provided that the copyright owners have to allow such uses for prenegotiated fees—another “compulsory license.”* Such fees currently amount to about 6 to 7 percent of gross revenues from residential music services.

*Compulsory licenses, see p. 184.

The third category is interactive digital subscription services, or services that allow a subscriber, for a fee, to listen to music either on demand, or on a schedule that allows for easy digital taping of the music. The owners of copyright are granted full control over such services, so that they can decide to license such services for a fee, or prevent such services in order to protect their CD sales.

Categories of Accountability

Under the Digital Performance Right

In Sound Recordings Act of 1995*

Used CDs: Sorry, No Protection

It’s not the case that copyright has expanded or should expand to cover every possible effect of digitized music. For example, because CDs retain their sound quality for so long, there has developed a market in used CDs that goes beyond the market that ever existed for used vinyl records. [55] Some authors have suggested that the used CD market undermines the new CD market, and that Congress should adopt a new amendment to the first sale doctrine that would prevent the resale as well as the rental of CDs. This suggestion apparently goes too far. Congress has not attempted to prevent the resale of old CDs. A record company just has to live with the fact that when it sells, say, a million copies of a particular CD, some tens or hundreds of thousands of those very CDs may be sold on the used CD market, thus theoretically reducing further initial sales. The record company just has to charge enough upon the first sale to recover the value for the full useful life of the CD. So there’s still a balance between the interests of copyright owners and copyright users—copyright users may not commercially rent out their records, tapes and CDs, but they may, if they want, resell them for whatever someone else is willing to pay.

Conclusion

So that’s a whirlwind tour of copyright in one of the fields most heavily affected by the new technologies. Perhaps not surprisingly, many of the legal issues raised by the introduction of new technologies have been addressed by specific legislation. Congress first created the exclusive right to make mechanical reproductions of music in 1909, and created exclusive rights in sound recordings themselves in 1971. Congress clarified and cautiously extended copyrights in separate amendments in 1984, 1992, 1995, and 1998. But expanding protection is not the only option. In some cases, Congress has withheld its power to expand copyright, and in other cases the owners of copyright have been able to achieve the results they wanted through private negotiations or the application of general copyright principles. Whether by amendment or otherwise, copyright has hardly stood still, and indeed may have changed more in the past few decades than it had in the previous two centuries.

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Permission, Limitations, and Format