Creating a Merit-Based Music Economy: Compulsory or Blanket Licensing for Interactive Subscription Services
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MOCA addendum, August 2001

In August 2001, a new bill was introduced in Congress (the Music Online Competition Act, or MOCA) that addresses a number of concerns with the DMCA, including the issues of "ephemeral copies" and digital rights management. Also, importantly, it adds a new "non-discrimination" clause that requires labels to provide licenses to any interactive music service on the same terms it offers to affiliated services in which they own significant equity.

If this bill is enacted as originally written, interactive services will be in a more powerful position to create services that provide great value to their customers. However there are two drawbacks that would remain for independent artists:
  1. Independent artists and labels would not be guaranteed the same royalty rates as the major labels, perhaps even no royalty at all. This might be remedied if independent artists and labels were able to create a collective bargaining unit and receive a consent decree from the Department of Justice to offer a blanket license.

    Even so, it's not clear that even a blanket license for independent artists would necessarily guarantee that a full-catalog service could be licensed including major label artists. But without such an outcome, the Power Pillar of distribution revenue would remain.

  2. Major labels could still include terms in their licenses with their own affiliates that exclude independent artists from auto-recommendation features in personalized programming. These terms would then constrain all services from extending auto-recommendations to the full catalog. This would leave the Power Pillar of promotion in place, unless these terms were deemed illegal anti-trust violations.
MOCA would not necessarily empower grass roots artists. The non-discrimination clause does transfer some gatekeeper leverage from major labels to webcasters. But without a compulsory license to require webcasters to pay all artists fairly, or an artists' collective offering a blanket license for a significant share of market, webcasters would be in a position of unfair advantage over the music market.

Even under a blanket license, there is no guarantee that terms covered by non-discrimination would allow the sort of system that breaks down both of the Power Pillars. That would not be a solution, but only a changing of the guard. The star system would still be the only game in town, and we would still not have a merit-based music economy.

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