---+ I. Introduction

Creative Commons (“CC”) is a non-profit organization provides standardized copyright licenses under which copyright owners can publish their works that the public can use and share. Instead of getting rid of copyright, CC licenses work alongside copyright and let copyright owners change their copyright terms from the default of “all rights reserved” to “some rights reserved.” [1] This article will examine the business and legal models of “old” music industry with full copyright and the “new” Internet-based music industry with CC licenses and pay special attention to songwriters’ benefits and losses in order to answer the question whether the latter model can provide sufficient incentives for musical creation.

---+ II. How the “old” music industry with full copyright works

Let’s have a look at the major players in the recording. Usually a songwriter will enter into a publishing agreement with a publisher who pitch the songs to recording company. The recording company hires recording artists (also performers) and creates, markets and distributes the recordings. Performance right organizations (“PROs”) license the public performance on behalf of the copyright owners. Mechanical rights agency provides service of mechanical royalty collection. [2] Songwriters’ compensation which is associated with the middlemen mentioned above comes from three major sources: (1) mechanical royalties from sale of physical records which are based on a statutory rate at $0.08 or a lower negotiated rate; [3] (2) performance royalties. For streaming online, the royalty rate is $0.0017 per song, while other PROs like ASCAP pay a higher rate. [4] However, a songwriter is not the only person enjoying the fruits of his/her creative works. They have to split mechanical royalties with publishers (usually at 50/50) and split performance royalties with recording companies. If a songwriter has a song sold for one million copies, he/she at most can get $40,000 mechanical royalties. For new songwriters, they might coercively enter into an agreement with publishers or recording companies which makes them worse off. For songwriters who are also recording artists, their share of royalties will be further reduced by a controlled composition clause. [5]

---+ III. How the “new” Internet-based music industry with CC licenses works

As technology and new media improve, the music industry and its major players are moving into an entirely different level of sharing, purchasing, marketing and distributing. [6] On one side, songwriters can take advantage of low cost of marketing and distributing through Internet service providers and have their works published without dealing with the big record labels and other intermediate agents or simply by contracting with small Internet record labels with whom songwriters can get better deals. On the other side, publishing their works online songwriters inevitably face the problem of free downloading by Internet users.

CC tries to solve the problem by making such downloading legal under its standard licenses signed by copyright owners. There are six types of licenses provided by CC which concern attribution, commercial use and derivative works. The most accommodating license is “CC BY” which lets others distribute, remix, tweak, and build upon the original work, even commercially, as long as they credit the author for the original creation. The most restrictive license is “CC BY-NC-ND” which only allows others to download the works and share them with others as long as they credit the author, but they can’t change them in any way or use them commercially. [7]

Pitifully, even under the most restricted CC license, the songwriter cannot make any mechanical royalties. But we should consider songwriters as different individuals instead of as a whole. As Zac Shaw, a musician, points out in his blog, “[f]ree exposure is only a lost profit opportunity for the minority of musicians who succeeded in the pre-digital record business paradigm. Most of the time musicians didn’t profit beyond statutory royalties anyway, because they could never recoup the cost of marketing and advertising.” [8]

Moreover, the “lost profit” due to free exposure can be financially compensated after songwriters gain fans and success as long as they do not give out their rights to commercial use of their works under CC licenses. Through other tools on the Internet, such as Facebook, Kickstarter and Bandcamp, songwriters can establish a direct connection to their fans and be funded by fans through low-cost Internet service providers instead of wasting money on the middlemen in the old music industry. Songwriters, who are not performers at the same time, might be in a slightly disadvantaged position than the recording artists of their works as they cannot benefit directly from performance. But by restricting their works for only non-commercial use under CC licenses, songwriters can gain performance royalties and split from sale of physical recordings for fans in the future. And the main players in the “new” music industry have more equal bargaining powers over the agreements they are reaching.

---+ IV. Summary

To summarize, though empirical studies might better prove that the “new” Internet-based music industry can benefit songwriters no less than, if not better, the “old” music industry, the analysis above can at least make the point that the criticism against CC based on the welfare of songwriters should not be taken as granted.

---+ Endnotes

[1] For a detailed introduction to Creative Community, see http://creativecommons.org/about

[2] [3] Lee Ann Obringer, How Music Royalties Work, http://entertainment.howstuffworks.com/music-royalties6.htm. See also, Jeff Price, Music Industry Survival Guide, http://www.tunecore.com/guides/sixrights.

[4] Jacob Ganz, Where to Buy Music to get More Cents on the Dollar to the Musician, http://www.npr.org/blogs/therecord/2011/02/18/133872018/where-to-buy-music-to-get-the-most-of-your-cash-to-the-musician.

[5] Jay Rosenthal, The Recording Artist/Songwriter Dilemma: The Controlled Composition Clause – Enough Already!, http://www.nmpa.org/pdf/copyrights/RosenthalLandslide3_4Mar_April2011.pdf

[6] For a discussion about digital age and music industry, see Sadie A. Stafford, Music in the Digital Age: The Emergence of Digital Music and its Repercussions on the Music Industry, The Elon Journal of Undergraduate Research in Communications, Vol. 1, No. 2 (Fall 2010), available at http://www.elon.edu/docs/e-web/academics/communications/research/vol1no2/09StaffordEJFall10.pdf.

[7] For a full explanation of CC licenses, see http://creativecommons.org/licenses/.

[8] Zac Shaw, How do Musicians Make Money in a Free Culture?, http://www.mediapocalypse.com/answering-the-question-how-do-musicians-make-money-in-a-free-culture/.

Subsection B

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