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On Tuesday, the House Judiciary’s Subcommittee on Courts, Intellectual Property and the Internet is scheduled to hold a hearing titled The Rise of Innovative Business Models: Content Delivery Methods in the Digital Age. This is a subject that online distributors of digital content such as music, movies and books know far too well.
In the past decade or so, online distributors have devoted considerable amounts of time and energy in developing new and innovative business models that provide online consumers with legal — yet affordable — pathways to access the content of their choosing.
In the context of music, our efforts have meant the formation of Internet radio, on-demand streaming services and the creation of online music stores. Any interest in storing your music in the cloud for remote playback sometime later? Well, guess what, there’s an app for that.
In the context of video, our commitment has given rise to monthly video subscription services, digital movie rentals and permanent movie sales. Long gone are the days where TV viewing only occurs inside the home or taking your favorite movies on vacation requires traveling with a suitcase filled with DVDs.
In the context of electronic books, we’ve made personal reading a lot more fun and accessible. If you don’t believe me, just ask your local librarian.
By all accounts the future is bright for digital media service providers, but the ingenuity of online distributors will only take us so far. It’s up to members of Congress to fill in the remaining gaps.
A good starting point would be a change in the rate-setting standard that’s presently used to determine performance royalties for Internet radio so that it mirrors the current standard relied upon by cable, satellite and, yes, even the record labels when they license content under existing compulsory licenses. Aside from Internet radio being the newest entrant in the industry, it’s hard to discern any plausible distinction that would justify the disparate treatment the services currently experience.
A second item worthy of attention is the process by which musical compositions are licensed for online reproduction and distribution. The current process is outdated, lacks transparency and desperately needs to be streamlined. The former register of copyrights, Mary Beth Peters, made a similar pronouncement more than seven years ago. Regrettably, many of the same problems still persist today.
With regard to the distribution of online video, the promise and perils of this nascent industry are plentiful but can be summed up rather simply. On one hand, we find consumers increasingly turning to our services to find affordable content for online viewing, but we also encounter numerous obstacles that make it difficult for us to make the most popular programming available for viewing in a timely manner.
The changes outlined above wouldn’t just benefit online distributors. They would also benefit copyright owners and the entire stream of commerce for legitimate digital goods and services.
In the context of music, we’ve already witnessed a growing appreciation for the royalties that online distributors provide to copyright owners for our use of their creative works. Indeed, a prominent trade association recently acknowledged that the payments we make are beginning to add up to “real revenues” for the industry. The aforementioned reforms would only allow us to further enhance our ongoing efforts.
They would also permit us to continue to serve as a key platform for the discovery of up-and-coming recording artists. By now, it’s hard to deny that music publications are filled with stories about how online music services provided a given band or artist with a new outlet for connecting with fans — which ultimately ended up launching the artist’s career.
The biggest benefit of these reforms, however, would most likely be witnessed in the context of reducing online piracy. Several recent studies have demonstrated how the absence of providers that make content available for lawful online consumption produces an uptick in copyright infringement, while the presence of such services yields a 25 percent decline — and, in some cases, as much as a 40 percent reduction in such acts of piracy.
With a little help from Congress, digital media service providers are poised to be the champions of content distribution for the foreseeable future.
In the words of Katy Perry, it’s time to hear us roar.
Gregory Alan Barnes serves as general counsel to the Digital Media Association.