Thursday, March 12, 2009

Performance Rights Act, Part II

So, where do I stand? To follow up on last week’s post, I support the act. Why? Well, at the outset let me say that it is not simply because I work in the Music Business. As I tried to point out in my previous post, the battle lines over this legislation have been drawn through the middle of the music industry. I have close friends and business associates on either side of this issue.

The reason I support this legislation is that it serves the greatest good—sounds Utopian, I know, but please let me explain before you write me off as a hopeless socialist.

I am a constitutionalist. My view of copyright legislation is seen through the lens of Article I, Section 8, Clause 8 of the U.S. Constitution, which states that “Congress shall have power…To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their Writings and Discoveries.” The specific words “To promote the Progress of Science and useful Arts” establish a utilitarian policy that guides Congress when enacting such laws.

It stands to reason that the grant of a copyright—which is nothing more than a monopoly (albeit a limited one)—must benefit more than the individual holder of that right. Indeed, very few monopolies are tolerated in the U.S. market without a utilitarian justification. Otherwise you simply have an unfair restraint of trade benefiting the few at the expense of the many.

Some argue that the utilitarian policy underlying copyright is contrary to the American ideals of self reliance and property rights. Yet, if authors are not given protectable property rights in their creations, some of them will stop creating for want of economic incentives. In other words, if you can’t make a living doing something, you are likely to abandon the endeavor and pursue a more lucrative path—that sounds very American to me.

As the U.S. Supreme Court stated in MGM Studios Inc, v. Grokster, Ltd. “… the administration of copyright law is an exercise in managing the trade-off” 125 S. Ct. 2764, 2775 (2005). While the court was speaking specifically of the tradeoff between technological innovation and artistic creation, it was also speaking more broadly to the tradeoff in all copyrights cases of balancing of the greatest good.

In applying this doctrine to the Performance Rights Act we can look to the vast majority of developed nations that have long ago mandated the payment of such royalties without a devastating impact to their over-the-air broadcast media. When compared to the devastating impact digital technology has had on the music industry, it is clear to me that the greatest good will be served with the passing of this act.

Without an objective economic impact analysis concluding, with some degree of certainty, that the trade off is a greater risk (i.e., that terrestrial radio in the U.S. will be driven out of business if forced to pay such royalties), the Performance Rights Act should be passed and signed into law.