Opinion: On ringtones and copyrights
by MacJournals.com

We can already hear people complaining, “But the RIAA got the government to agree that ringtones aren’t protected by copyright so they wouldn’t have to pay the composers! It’s fair use! It’s just a giant scam to make more money! Engadget said so !” Well, yes, Engadget did say so, and it is a giant racket to make more money, but it has nothing to do with the RIAA’s arguments in the case cited.

The compulsory license is another exception to copyright law in the United States, as outlined in 17 USC §115. Enacted by Congress almost a century ago to address problems with (we are not making this up) player piano reels, the compulsory license requires those who hold copyright to a “nondramatic musical work” to license it to anyone who wants to make a recording of that musical work, if and only if “his or her primary purpose in making phonorecords is to distribute them to the public for private use, including by means of a digital phonorecord delivery.”

This is essentially the “cover band” rule—if you want to record someone else’s song, you’re free to do so as long as you pay the royalty rates as outlined by the Copyright Office at the time of the recording. You don’t have the automatic right to perform the musical work in public performance, or to sell recordings for commercial use (such as background music or for use in a film or other public presentation), but you can record a song for sale to ordinary people for their private use. This leads to the strange situation that your garage band can get automatic (though not “free”) permission to record almost any song you want, and still not be able to perform it in public without a separate license.

Congress enacted this license in the early 20th century to protect against a vast music monopoly—in the heyday of Tin Pan Alley, there was a fear that giant music publishers could purchase the rights to almost every song and then prohibit anyone from making player piano rolls of their own performances of them. It was later extended to sound recordings, and in the 1990s, digital recordings such as MP3 and AAC files.

To protect the rights of the composers and lyricists, the compulsory license leaves exclusive control of a song in the hands of its creators until it has been recorded for sale. That is, composers and lyricists (or their agents who hold their copyrights) get to choose who first records their work. Once it’s been recorded and made available for sale anywhere in the United States, though, anyone else is free to cover the song under the compulsory license by paying standard, statutory royalties.

In the Memorandum Opinion from the Registrar of Copyrights as touted by Engadget, the RIAA asked the government to determine that ringtones are deliveries of digital phonorecords as defined by 17 USC §115 and therefore subject to the compulsory license. That is, the RIAA wanted a clear ruling that by distributing ringtones of a popular song performance, they were essentially delivering either a recording or a “cover” of that recording, triggering the statutory royalty rate under the definitions of 17 USC §115. While this would mean that the RIAA would have to pay composers and lyricists the standard cover rate (if no other rate had been negotiated), it also meant that ringtones were simple “covers” that must be licensed on request—the copyright holders would not be allowed to withhold permission or demand higher royalty rates than the statute allowed.