Section 115 Reform Act (SIRA) of 2006

Congress is currently ready to consider the Section 115 Reform Act of 2006 (SIRA), as a way to ammend the current copyright code to adapt to the realities of the current marketplace, which as we all know has been dramatically transformed by the dominance of digital transmission of audio recordings. The U.S. Copyright office has recently filed a statement with the House Subcommittee on Courts, the Internet, and Intellectual Property.

They are generally in favor of the bill:

First, by simply filing one license application—or in the case of multiple designated agents or a change in digital uses, a limited number of applications—a legitimate music service can obtain a license to utilize all musical works⁽⁴⁾ in the digital environment, rather than having to locate the various copyright owners of those works and clear the rights with each of them. Requiring the license to be available to all comers and deeming it to be automatically granted upon the filing of a proper application makes this licensing processing as instantaneous as possible.

...

Second, the proposed blanket license covers all intermediate copies (e.g., server, cache and buffer copies) necessary to facilitate the digital delivery of music and applies to streaming and limited downloads.⁽⁵⁾ Presently, there exists much confusion and controversy as to whether these copies and uses must be separately licensed, which the Office understands can result in protracted negotiations and delays. By resolving these issues, the SIRA clears the way for the legitimate music services to focus on rapidly delivering music to the consuming public and developing new technologies to make delivery even faster, regardless of whether such technologies involve additional intermediate copies or not.

This is good. Any debates about the need to licence "cache and buffer copies" is absurd, as these copies do nothing more than facilitate transmission of the work. For those who don't know, cached and buffered copies are the files/datastreams that you receive when listening to a "live" recording over the internet. That is, they are the files that are used to listen to something that you can't save, duplicate, or play later. Without such adjustments to the code, a conclusion could be reached by music industry groups or courts that would mandate multiple royalty payments for a single "listen." Payment would be required for the initial transmission from the source, another from your local server/cache, and another for the temporary internet file stored on your machine while you listen.

The Copyright office is aware of this:

Additionally, we note that the SIRA resolves complaints by online music services about what they characterize as “double-dipping” in one context, providing for a royalty-free license for intermediate copies in the context of noninteractive streaming, but does not resolve other situations involving arguably duplicative payments demanded by copyright holders’ representatives for both the performance as well as the reproduction and distribution rights when a musical work is delivered by a mechanism which is not clearly solely a distribution or a performance. Although these other situations involve important issues, it is not necessary to resolve them at this time to make the SIRA an effective piece of legislation. Its absence from the SIRA may even prompt the interested parties to resolve it on their own.

It's clear that paying for these rights is simply charging twice for the same thing. These intermediate copies do nothing but facilitate transfer, and attaching a second fee to them would only create perverse incentives for transmission methods; it's better to change only a single fee for the use. However, applying a blanket, royalty-free license creates an unnecessary administrative layer, which ultimately provides no service and just creates costs for everyone involved. A much better solution would be to provide a blanket exemption for these copies, which would make them legally available at the same cost (zero), but without a completely unnecessary layer of costs to all involved.

The Copyright Office agrees:

However, we believe that a less burdensome and equally effective approach would be to grant a statutory exemption for this activity. Establishing an administrative apparatus and charging an administrative fee for the issuance of a royalty-free license would offer little or no benefit over an exemption, while creating costs and burdens for both licensees and the designated agent.

We'll see if Congress does too.