Bigger than Grokster?

The Grokster decision will be front page news.  And, as thoroughly discussed on The 463, it will have massive ramifications on state and federal legislation to come -- not to mention how people enjoy and use entertainment content.

However, something else happened this week in digital copyright land that could create a chain of events that could be just as big as MGM v. Grokster.  Yet, no one has written about it in any mainstream media outlet.  For one the issue is arcane (read: boring to some) and even the experts are slightly confounded over what the true implications could be. 

The happening?  The U.S. Copyright Office (which is part of the Library of Congress and advises Congress on copyright law) announced this week it recommends that a critical piece of the country's copyright scheme be rejiggered to do away with what is known as a compulsory license....

As you may guess, a license that is "compulsory" is inflexible and stringent.  It's impact, in a nutshell, is that online music providers need to go through a complex process to get the rights to deliver content from multiple music publishers and other sources.  We'll spare you the legal details, but needless to say, this process is the often cited as the reason that legal music services have trouble competing against P2P networks in terms of their cost/benefit ratio.

If we move away from an online world driven by a compulsory license, the question becomes: Where do we go next?  Presumably, it could be toward more of a streamlined "blanket" license structure.  A single blanket license would be negotiated and paid for by, say iTunes or Yahoo! Music.  The service would then have the right to distribute all content that falls under that blanket at a cost that would arguably be more reflective of current market rates.

Given this structure, it's not hard to predict that music distribution over P2P networks could compensated for via a modern licensing system paid for via a low subscription rate charged to users and/or advertising schemes.

This is big because regardless of what comes out of all the sound and fury in the post-Grokster world, we're eventually going to need to come back down to earth and find ways for users to enjoy content and fairly pay for it.  The Copyright Office may have started leaving bread crumbs for us to find this end goal.

Before we go any further (or get any more of this wrong), go to Ernest Miller's recap of what this all could mean. He largely pulls early opinions posted by the digital music brainiacs on the Pho List and provides links to commenting blogs.  The posting is flavored with guarded optimism and seasoned with confusion over what the Copyright Office quietly shot over the transom this week.

One last thing:  As noted here recently (see Music Publishers Leave Dark Age) there may be more room for optimism.  The music publishers have a new leader and he has expressed a willingness to look at new compensation mechanisms.

We shall see...