Current copyright law is a ramshackle outcome of 200 years of accommodations to the exigencies of the moment and the power of the affected interests, with only an occasional input from honest principle, so it cannot be expected to make coherent sense.

“It’s as if Franz Kafka designed this system and employed Rube Goldberg as his architect,” said one industry official, quoted in Lydia Pallas Loren, Untangling the Web of Music Copyrights (2003)(available via SSRN and an excellent source) .

From Music First

One anomaly is that over-the-air radio broadcasters pay royalties to composers but not to performers, a point that galls the music industry no end.  Broadcasters via satellite, cable, or the Internet are required to pay performance rights, and the establishment of the right for classic radio is a top legislative priority of the industry.

The National Association of Broadcasters is a tenacious bunch, though, and progress has been slow. The music industry got the support of the Administration a few months ago, but the NAB seems to have 260 Representatives on board.

Now, Ars Technica says that the two sides have reached a compromise: they will give away other people’s property, to wit, that of the tech industry. Under an amendment to the proposed Performance Rights Act, the music industry will get its performance right, the broadcasters will pay about $100 million per year, and – oh yes – the law will require that all mobile electronic devices contain FM radio chips.

The Consumer Electronic Association has gone incandescent, though it will try to cut a deal if it must.

The music industry has right on its side on the underlying issue. Radio argues that exposure boosts record sales, and this was probably true for decades. At least, the music industry thought it was, as illustrated by the long history of payola for radio plays, and by the artists’ practice of including a couple of “radio cuts” on every LP.  But the lack of performance royalties distorted the market, and the bans on payola exacerbated the problems. Radio turned into a self-parody, endlessly repeating top-40 songs to automobile-oriented audiences, when there should have been opportunities for new and integrated business models, including promotional payments to radio by the music industry.

Now, with the problems of unauthorized digital downloads more acute than ever, there is an even greater need for innovative business approaches. But these cannot develop if Congress sticks its ignorant, arbitrary, and corrupt paws into the pie.

So Congress should leave the tech industry alone and let it strike deals with the broadcasters if it wants, but not otherwise. Neither the NAB nor the MusicFirst Coalition should get the play without pay. Congress should also recognize the performance right, and remove bans on promotional payments (as long as they are disclosed), and otherwise leave it alone.

Who know? Perhaps the broadcasters or XM-Sirius will integrate upstream, supporting the creation of musical products in exchange for exclusive rights. Perhaps mobile devices will wind up with multiple radio chips, each receiving a different set of content.

The possibilities are legion, and incalculable. But they will develop via the genius of the market, not the depredations of the special interest state.