Thursday, June 8, 2006

Licensing Distribution Technology: U.S. SIRA Legislation Tries to Turn the Web into Radio

The relative quiet surrounding the Section 115 Reform Act (SIRA) pending in the U.S. congress is turning into a louder and late-breaking examination of its larger impact on Web publishing. The stated primary goal of this legislation is to provide a single point from which to license digitized music for distribution online and via emerging channels such as satellite radio. This single point is likely to be one of the agents already used for managing radio royalties. Along with this comes the necessity of artists to accept a blanket licensing fee similar to that provided by radio broadcasts - one can try to negotiate with individual outlets but there's scarcely leverage to do so. The U.S. Copyright Office's statement largely supports the legislation, seeing that it will allow consumers to enjoy vast quantities of music online through licensed channels.

While simplification of licensing is a good goal for online distributors, it's unclear that audiences will benefit in any great way and will very likely pay higher licensing fees based on the legislation's notion of "distribution." As pointed out by a letter delivered to Congress by legislation opponents "distribution" under this bill could be expanded to include every consumer timeshift recording on a VCR or TiVo, every text web page, any audio or video clip on any web site, every television that does "freeze frame"” or "“instant replay" and every analog cassette or CD recorded from FM or HD Radio. It's questionable as to whether the bill's provisions could be so easily extended to all of these options, but the potential is certainly there. It also leaves largely untouched the potential of users to be distributors and redistributors of content via this system - and thus leaving open a wide number of issues as to how or why users should use such a system to distribute their own works.

The most worrisome part of the legislation is that it provides for a royalty-free license for distributors to use intermediary technology to produce intermediate copies of works on their way to users. Free it may be, but the implication is that anyone not complying with this distribution system is using unlicensed technology to distribute electronic music content. All good for copyright holders, but it offers a potentially chilling effect to anyone wanting to develop innovative ways to deliver content. This legislation is trying to mix in controls similar to those provided by the Federal Communications Commission to govern radio broadcasts with royalty schemes that have been used in that medium - with no clear picture as to who in the government should be aware of and in charge of the technology that's used to distribute content. The bill itself is burdened with many specific references to technology that could be outdated easily within a short period of time. It's rather like recent "tax simplification acts" - in which things are simplified for those who are able to shepherd the legislation through to their advantage and complicated for the great number of people who must endure its impact.

The most discouraging aspect of this legislation is that it will widen the gap between user-generated content and commercially produced content. Everything points to the value of content becoming greatly enhanced on the Web when users are in control of distribution and helping to push content to its most valuable context. By insisting on regaining a chokehold on distribution and trying to segregate user content from commercial content music publishers are trying to make time stand still. Yes, you can use legislation to push amateur and non-commercial content down to "the end of the dial" but unlike the broadcast era there is no end to the dial online: there is relatively infinite bandwidth for new channels to emerge. Users will migrate to the technology that suits their needs best, with content sure to follow.

Supporters of this legislation should think long and hard about what they are about to set into motion. Passing this bill into law it will make the lines of demarcation between old content creation and distribution methods and new methods much more sharp - and in doing so reduce the opportunities for established content producers to take advantage of the most innovative and revenue-producing content packaging techniques. In creating a stronger fortress for copyright music producers and distributors are leaving open fertile plains for content that focuses on monetizing contexts rather than copies to flourish - and in doing so further erode the value of copyright as an instrument of commerce and innovation. Here's hoping that the broader implications of this bill are discussed thoroughly before it moves along any further.
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