India should take lessons from US' MMA; concepts like central database could bring transparency in exchange of music copyrights
The existing music copyright system in India is plagued by a sordid lack of transparency in licensing negotiations, enabling copyright societies to extract maximum revenue from buyers whilst withholding fair remuneration from creators
On 11 October, 2018, the President of the United States signed the Music Modernization Act (MMA) into law. The MMA amends the extant US copyright regime pertaining to musical works to make it more conducive to the digital era. A major pain-point till the passage of the MMA was that streaming services were required to file a Notice of Intention with the owner of a composition's copyright if they sought to license that particular work. In instances where the copyright holder could not be located or identified, the streaming service was required to go through the US Copyright Office. Complications arising from this tedious process often led to delayed royalty payments and exposed streaming services to legal action. Now, the introduction of a transparent and streamlined licensing mechanism allows composers to collect more royalties while limiting the liability of online streaming services.
India has its fair share of quandaries when it comes to copyright licensing under the current framework. The rise of the digital medium exacerbates these problems as streaming platforms must rapidly acquire content to remain competitive, but are forced to navigate a labyrinthine copyright landscape in order to do so.
The system is also plagued by a sordid lack of transparency in licensing negotiations, enabling copyright societies — entities that have a veritable monopoly over the content licensing under the Indian Copyright Act, 1957 (the Act) — to extract maximum revenue from buyers whilst withholding fair remuneration from creators.
Though the Act was amended in 2012 to ameliorate some of these issues, it's unclear that it has effectively done so. As such, it would behove policymakers to consider importing certain features of the MMA that would imbue the Indian copyright licensing process with greater accountability and transparency.
One notable regulatory intervention in the MMA is the introduction of a publicly visible musical rights database. The database shall comprise of metadata pertaining to the copyrighted work such as the title, ownership percentages of the different rights-holders, creator’s identity, location and contact information. If rights holders cannot be located or identified, the ownership percentage of the unidentified rights holder must be displayed. The database would be searchable, accessible to the public, and free of charge.
The MMA also provides for the creation of a body called the Mechanical Licensing Collective (MLC) that is in-charge of the upkeep of the aforementioned database. The MLC is also responsible for the collection and disbursement of royalty payments, issuance of mechanical licences, and administration of compulsory licences in certain cases. The MLC is governed by music publishers and self-published songwriters and is financially supported by digital music platforms. To ensure transparency in its operations, the MLC is beholden to a set of stringent accountability and audit measures.
The induction of a similar right-holder database in India would allow right-holders to see the exact amount of royalties they are entitled to. Additionally, it would create commercial efficiencies for digital music entities wishing to broadcast those works. For an added layer of transparency and efficiency, a blockchain-based copyright database could be an option. Such a database would be secure, tamper-proof, transparent, audit-friendly, and permit the payment of royalties in real time.
This, however, begs the question as to which entity should be entrusted with the responsibility of creating and managing such a database?
Existing copyright authorities suffer from severe capacity deficits — a long-standing trend that doesn’t show any indication of changing.
For several years, the Copyright Board — a body charged with the responsibility of deciding tariffs and issuing compulsory and statutory licences — stood defunct. Its duties were then passed on to the Intellectual Property Appellate Board (IPAB), which till that point dealt with appeals from the Intellectual Property Office and revocation and rectification petitions against registered trademarks and patents. The move was heavily criticised as experts doubted whether the IPAB, overburdened as it was before its new charge, also had the requisite expertise to adequately discharge its new copyright duties.
Introducing a body similar to the MLC might not be feasible in India. As the experience with the Copyright Board has shown, the introduction of a new body would only compound current problem. Finding the proper personnel with the requisite qualifications and industry expertise would also pose a significant hurdle.
Copyright societies could possibly be charged with the responsibility of creating a similar rights database for their repositories. To prevent any abuse of power, the accountability mechanisms currently applicable to the MLC could be replicated to check the working of Indian copyright societies. Specifically, the MMA allows copyright owners to audit the MLC once a year. A similar appraisal process could be introduced into the current copyright framework to ensure that copyright societies operate fairly and meet their obligations to rights holders.
Another possible conceptual import from the MMA that would ensure better accountability is the espousal of free market principles. The MMA prompts a shift from the old standard that was not based on market rates to a "willing buyer/willing seller" standard, impelling the US Copyright Royalty Board to heed free market considerations when deciding royalties for compulsory licences.
In India, free market principles could be introduced to dissolve the statutory monopoly granted to copyright societies. Currently, only one copyright society may be registered in India to conduct business with respect to a particular class of works. Doing away with this stipulation would introduce the free market element of competition that could effectively reign-in the abuse of monopolistic power many of these societies have been accused of. Of course, ancillary provisions may also have to be introduced to protect against cartelisation.
An important aspect of the MMA is that it acknowledges the capacity constraints of public sector authorities charged with dispensing resource-intensive duties. Illustratively, one of the major reasons for introducing the MMA was to spare an overburdened US Copyright Office from being inundated with Notice of Intention requests from digital music platforms. The introduction of the MLC allows industry stakeholders to relieve some of the burden of the US Copyright Office vis-à-vis compulsory licensing, while remaining accountable to the latter through the course of its functioning. The MLC is funded by digital music platforms and governed by songwriters and publishers — and therefore is a progressive, multi-stakeholder construct.
A similar framework could be conceptualised for India — one that places copyright societies at the centre. Such a move would serve the dual purpose of forcing these entities to operate in a more transparent manner while facilitating a fluidity of rights-exchange that is commensurate with the dynamism of the current digital era.
The author is a lawyer and currently serves as Strategy and Operations Officer for ConsenSys, a US-based blockchain technology firm
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