by Michelle Davis, FMC Legal Intern and Kevin Erickson, Communications Associate

On Tuesday afternoon, the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet held a hearing titled “The Rise of Innovative Business Models: Content Delivery Methods in the Digital Age.” This was the latest in an ongoing series of hearings that the subcommittee began in May examining the roles played by copyright, technology and voluntary agreements, setting the stage for a top-to-bottom review of the Copyright Act.

Although music was not the sole focus of Tuesday’s hearing, song downloads and streaming services were among the many types of digital content that was discussed. Witnesses at the hearing included representatives from Amazon.com, the Motion Picture Association of America (MPAA), PreEmptive Solutions and the Center for Democracy and Technology (CDT). 

The testimony of Paul Misener, Vice President of Global Public Policy for Amazon.com was particularly of interest because of Amazon’s key role as a music retailer, with more than 24 million songs available in its MP3 store. He spoke about the development of Amazon’s download marketplace, and he commented on three potential barriers to digital content delivery which certainly resonate across the music industry: 1. The need for a centralized copyright database (something we have long advocated) and a streamlined licensing process 2. The risk of exorbitant statutory damage awards 3. The importance of maintaining an open internet.

Despite pressing questions from Rep. Judy Chu (D-CA) about the persistence of piracy despite legitimate alternatives,  the witnesses were reluctant to offer aggressive legislative strategies for combating piracy. Rather, they emphasized the importance of honing the legitimate markets to lure would-be pirates to legal media sources. John McCoskey (MPAA) and David Sohn of CDT both championed voluntary agreements (the topic of the last copyright hearing) as opposed to massive legislative overhaul, using the Copyright Alert System as an example of a step in the right direction. McCoskey acknowledged that piracy is an evolving issue, and that it’s important to continue to work with “every player in the ecosystem” towards an effective solution.

Rep. Tom Marino (R-PA) attempted to steer the conversation towards search engines but that topic seemed slightly outside the parameters of this panel’s expertise. Software engineer Sebastian Holst (PreEmptive Solutions) noted that adjusting algorithms so that legit content turns up higher on search results pages than rogue sites is a “cat and mouse game” in which the bad actors often cheat to get ahead. Perhaps future copyright hearings will include members of the “major search players” to more specifically address these concerns.

Questions regarding the First Sale Doctrine were served up by Representatives Jason Chaffetz (R-UT) and Blake Farenthold (R-TX). Chaffetz noted that when the Doctrine was first established, it related to physical media. Once you re-sell a book, for example, that book is gone. But when you re-sell a digital file, you are essentially just duplicating the original. As Farenthold pointedly asked, “Is digital first sale dead from a practical standpoint?” McCoskey noted that the limits of the first sale doctrine depend on the terms of the individual sale agreement. In order for there to be predictability and consistency in the marketplace, there needs to be transparency; consumers need to know exactly what rights they are entitled to when they download a song. As Chaffetz noted, when consumers download a song, there may be some “expectation of ownership,” some may feel like they can re-sell, share or distribute that song as they see fit because they bought it. The actual limits of those rights aren’t always clear at the time of purchase.

Of primary concern for all the witnesses was assessing and responding to consumer expectations. David Sohn of CDT matter-of-factly asserted that the current market trend for consumers is that they want “what they want when they want it,” and that convenience, immediacy, and unlimited choice are of the upmost importance.  So the smart thing to do is give consumers what they expect.

There’s something to be said for this approach, and indeed, it’s the logic that animates many of the dominant digital services.  It’s important to remember though, that just as musicians are a very diverse group, consumers are diverse as well, and so are their expectations. Some consumers do want to be able to have instant access to everything, when they want it. Other consumers might have different priorities. Additionally, consumer expectations and desire don’t exist in a vacuum: they’re quite intentionally cultivated and calibrated by what digital services and creators choose to offer, among other factors.

When we hear folks making assertions about “what consumers expect”, it’s worth investigating how diverse types of consumers could complicate those narratives, and perhaps considering some consumer wishes that don’t get enough attention. Indeed, many consumers would like to see more transparency around privacy.  Some consumers would like to see more accurate and complete metadata to make it easier both to find music and fully appreciate what they’re hearing.  Perhaps some consumers would like to be able to better know whether an artist is “featured” on a digital service because of a curatorial choice or because the service struck a financial deal with a major label.  And we’d bet that many consumers would like to feel confident that artists feel fairly compensated for the use of their music.

To that end, it would have been nice to see the committee talk to a representative of a successful digital music service that prioritizes artist and fan-friendliness over a gapless catalog. Just as it’s important for Congress to hear from diverse kinds of artists (not just radio hitmakers) and diverse kinds of labels (not just majors), it’s important that they consider the perspectives of different models and scales of digital services. Bandcamp for example, by remaining indifferent to whether major labels get on board is able to offer artist-centric features like easy integration with commerce, links back to artists’ choice of websites, options to include complete production credits, variable pricing, optional inclusion of creative commons licenses, etc. And unlike most digital music services, there are no NDAs; it’s easy to know how much of your money goes to the copyright owner (often the artist herself), making the service a good fit for certain types of artists and consumers, and resulting in rapid growth.

Future subcommittee hearings are set to focus on the scope of copyright protection, the scope of fair use, and notice & takedown provisions of the DMCA. As always, we’ll be watching closely.