Are Copyright Royalties "Out of Whack"?
By Wes Phillips December 17, 2006 — In the heated debate over new digital technologies and their impact upon the traditional recording distribution system, we've grown used to intemperate dialog, but an organization now charges that "mechanical royalties currently are out of whack with historical and international rates."

Here's the twist: The group is the RIAA (Recording Industry Association of America). And here's the part that won't surprise you: Their solution is to lower the rate they pay music publishers and songwriters for using lyrics and melodies to create sound recordings.

Well, not all sound recordings, just digital stuff like ring tones and, presumably, downloads. You can read the actual petition here.

Here's the passage that has me busting out in giggles every time I read it: "While record companies and music publishers were able to agree on royalty rates during [the last] 25-year period, the assumptions on which those decisions were based have changed beyond recognition." Well gosh, why hasn't anybody said so before now? Oh wait, we have been—it's been the record labels denying it.

The joke gets richer, however. The Digital Freedom Campaign, which has been characterized by RIAA president Cary Sherman as a "farce", has issued a statement criticizing the recording labels for "gouging" musicians. Of course, these are the guys who the RIAA claims are harming musicians with their "new business model" rhetoric.

The statement, written by Don Goldberg, Digital Freedom Campaign spokesman, reads: "The RIAA is at it again. Even as the big labels portray themselves as the protector of the artists' livelihoods, they are fighting to maximize their profits at the artists' expense.

"The RIAA claims its recent wave of lawsuits and legislation was to ensure artists received their due payment. But their current campaign to pry money from the hands of artists shows their real goal is to protect their business models and profit margins.

"At Digital Freedom, we know that artists must be compensated for their work. But unlike RIAA, we think it's time to embrace new digital technologies—not try to sue them out of existence.

"We urge the big labels to treat artists fairly. We hope the copyright royalty judges reject the big labels' attempt to evade their obligations to the creative community."

I almost ended this article with the statement that I couldn't actually improve upon this round of dueling accusations, but the week's events have trumped me. Speaking on the subject of DRM (digital rights management), Microsoft CEO Bill Gates expressed dissatisfaction with the current state of DRM. Speaking to TechCrunch, Gates said, "DRM is not where it should be, but you won't get me to say that there should be usage models and different payment models for usage. At the end of the day, incentive systems do make a difference, but we don't have it right with incentives or interoperability."

DRM, he said, confuses consumers about legal and illegal uses of music files, "causing too much pain for legitimate buyers." His solution? "Buy a CD and rip it yourself."