San Francisco Intellectual Property Blog

The Internet has created exciting new opportunities for artists to distribute their music to the world, but cyberspace is not without its share of hucksters ready to trick artists into signing away all ownership rights to their music for a song.

A musician recently came to me to review a recording contract that had been offered to him from an independent record company. Although the artist had already recorded the CD of his original compositions, he wanted a record label to distribute his CD.

He thought he was signing a distribution deal. But buried in the back of the contract was a clause requiring the artist to assign all of his publishing copyrights in the music to the record label. Although the contract was labeled as a “Exclusive Recording Agreement”, it was in fact, also a Publishing Agreement, and this distinction is worth everything to an artist.

Many artists wonder if it worth the trouble to register their creative works with the US Copyright Office. The answer to any artist who hopes to distribute their works to the public is YES!

Registration is not a condition for copyright protection to attach. A work is protected by copyright when it “fixed in a tangible medium”, which basically means when it is written down, or otherwise recorded. Copyright law creates a number of important advantages to induce copyright holders to register their works. Some advantages of registration include:

• Registration of works are necessary before a lawsuit for infringement can be filed.

• Statutory damages and attorneys fees are available to copyright owners in court actions if registration is made prior to the infringement or within 3 months of the work’s publication. For non-registered works, only actual damages and profits are available to copyright owners in successful infringement actions.

• Registration establishes a public record of the copyright claim.

• Registration will establish prima facie evidence in court of the validity of the copyright and of the facts stated on the certificate (if registration is made before or within 5 years of publication).

• Registration permits the copyright owner to record the registration with the US Customs Service for protection against importation of infringing copies.

A creative work can be registered at any time during the life of the copyright, and if created in 2007, the copyright carries a term of 70-years after the life of the author.

Registration is a simple process and the fee is low ($45 for basic), so artists are encouraged to register their copyrights on their music, video and other works.

Innovative new media companies like San Francisco-based SNOCAP and UK-based 7Digital offer independent musicians tools to distribute their music digitally at their own price and on their own terms. The content-delivery services allow artists to sell their music on their own website, Myspace page, blog, or from 7Digital’s “IndieStore”. The music is distributed in a variety of formats, including the popular DRM-free MP3 format.

SNOCAP was created by Napster founder Shawn Fanning, Jordan Mendelson, and Ron Conway in 2002. SNOCAP provides artists with tools to create online stores and distribute their music using P2P file-sharing software. Artists upload their music and album information to SNOCAP’s Digital Registry and SNOCAP keeps .39 cents for each song downloaded.

With 7Digital’s do-it-yourself-digital-download-store, artists have an instant world-wide selling point and keep up to 80% of the profits from their music sales (with monthly accounting). The service takes PayPal and other click and buy payment methods to keep it simple.

Independent video producers who haven’t had access to major distribution channels in the past are in for some luck. iTunes has begun distributing video. And its not only the established label video that iTunes is pushing through its network, its also distributing independent video, such as action sports and documentary video.

As more online services like iTunes Video and YouTube.com become common, artists and video producers have more choices and opportunity than ever before to distribute their creativity to the public.

The action snowboarding video “That” sells on iTunes TV for $1.99. According to this article in Variety, Apple held-out until the video’s owner agreed to lower the price to $1.99 for the half-hour video. As with negotiations over major-label music on iTunes, Apple was able to use its market power to force the content producer to lower the price.

On 2 March 2007 the US Copyright Royalty Board (a 3-judge panel) sided with the Recording Industry Association of America (RIAA) and against Web-casters, musicians and consumers with a ruling on the new web-casting royalty rate. The CRB took the highly controversial position of adopting a pay-per-play rate for streaming digital music instead of the current percentage of revenue model. Web-casters report that the fee hike will put them entirely out of business and kill Internet radio since it amounts to more than 100% of their revenues. Here’s the story. A few details:

Royalty Rate Per Performance (streaming 1 song to 1 listener):

• 2006 $ .0008
• 2007 $ .0011
• 2008 $ . 0014
• 2009 $ . 0018
• 2010 $ . 0019

The minimum fee is $500 per channel per year, including non-commercial web-casters.

A group of broadcasters (including National Public Radio and Clear Channel) are challenging this decision since it will cripple emerging businesses that deliver music over the Internet.