On October 4, 2006, lawyers from some of the most powerful organizations in the music industry gathered at the U.S. Copyright Office in the Library of Congress for oral arguments before representatives of the Register of Copyrights. [Attorneys representing the Recording Industry Association of America (“RIAA”), EMI Music Publishing, the National Music Publishers’ Association (“NMPA”), the Songwriters Guild of America (“SGA”), and the Nashville Songwriters Association International (“NSAI”) assembled to argue one of the most hotly debated copyright issues facing the music industry. The final outcome of this legal issue will determine the allocation of millions of dollars in a four billion dollar specialty music market. What, you might ask, could create such a legal fight that music industry players cannot agree and are forced to petition the Register of Copyrights for an answer? None other than cell phone ringtones. Yes, those loud, annoying snippets of music that everyone seems to use these days have music industry power players up in arms.
Before a ringtone can find its way onto someone’s cell phone, the ringtone provider must license the copyright-protected music featured in the ringtone from whomever owns that copyright. For years, ringtone licenses were freely negotiated between copyright owners and ringtone providers. Recently, however, changes in ringtone technology and the ringtone market have put a crunch on the profit margins of ringtone providers, and, as a result, providers have begun to look for new ways to decrease costs and increase profits. The argument that copyright licensing for ringtones should not be freely negotiated but rather should be facilitated through the compulsory licensing statute in section 115 has emerged as one such cost-cutting strategy. Section 115 requires copyright owners to license musical compositions under certain limited circumstances at a set statutory rate, currently only $0.091, that is much lower than the freely negotiated rates. As could be expected, copyright owners strongly opposed this change, and the debate ultimately ended up in front of the Register of Copyrights.
After reviewing briefs submitted by lawyers on both sides of the dispute and listening to an oral argument that included the playing of music by Beyoncé, Gwen Stefani, and Pretty Ricky–not typical fare for the Library of Congress–the Register of Copyrights issued her decision on October 16, 2006, finding that the compulsory license provision of section 115 covers ringtones. Music publishers instantly disagreed with the ruling and refused to follow it. Additional litigation on the subject seems imminent because the Register’s decision is not binding on courts and music publishers have already claimed to be exploring their legal options.
This Comment explores the law behind the growing debate over whether cell phone ringtones are subject to compulsory licensing under section 115 of the Copyright Act and evaluates the Register’s decision. Part II presents an overview of the relevant copyright law, the structure of the music industry, the history of ringtones and the technology behind them, and the details of the Register’s October 16, 2006 decision. Part III applies the relevant copyright law to ringtones and concludes that, contrary to the Register’s decisions, they should not be subject to compulsory licensing. Part III also examines the likely negative effects of the Register’s decision on the music industry and proposes that when a judicial ruling on compulsory licensing of ringtones is sought, the best response will be a bright-line rule against the application of section 115 to ringtones. Part III then examines the benefits of such a bright-line rule and provides multiple potential legal bases on which such a rule could be based. Last, Part IV concludes that a judicial ruling creating a bright-line rule against the application of compulsory licensing to ringtones is necessary to bring efficiency to the ringtone licensing process.