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Copyright and Competition Intersect on Two Coasts

· March 11, 2015

On two sides of the country yesterday two branches of the federal government engaged in legal processes likely to affect competition in the music industry.

As DisCo previewed, yesterday the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights considered the competitive challenges in the music publishing industry, and the effects on competition, innovation, and consumers.  Witnesses from across the music ecosystem discussed the continued need for the consent decrees.  Several urged that the consent decrees be strengthened with additional transparency safeguards, while others claimed they may no longer be necessary (at least in theory if you ignore all transaction costs and have a perfect marketplace).  Over the last year alone, four federal courts have found evidence that the same publisher behaviors that gave rise to the consent decrees in the first place still continue today, suggesting that the consent decrees remain necessary to curtail anticompetitive behaviors.

Just as the Senate hearing ended in D.C., jury deliberations in the Blurred Lines case (which we covered when Robin Thicke initiated the litigation by filing for a declaratory judgment) resumed in California, ultimately ending in a judgment against Robin Thicke and Pharrell Williams, for millions in actual damages plus profits.  Several observers have said that is “horrific” and “really dangerous”, as well as “a bad result” that is “bad for pop music” and “could make songwriting and recording a minefield for every artist”.

Copyright doctrines and precedents place limitations on what can be exclusively owned, including the idea/expression dichotomy.  As the defendants’ statement on how this is a “horrible precedent for music and creativity going forward” makes clear, judicial outcomes that expand what constitutes ‘expression’ may limit the ability of future authors to build on existing ideas.

But the ultimate effect of the jury’s decision is unclear.  According to defendants’ statement, they are “considering [their] options,” which suggests that this litigation is not over yet; Ars Technica reports that “Williams and Thicke are expected to appeal the decision.”  However, it also may mean that other rights holders will start bringing suit against other newer songs that sound reminiscent of an older genre.  It is also possible that there may be secondary liability risks for other parties in the music ecosystem, given that Gaye’s estate’s lawyer said “he is seeking an immediate injunction to halt sale and distribution of the song ‘Blurred Lines’ and that he will file the official paperwork by next week.”

To allow an author’s exclusive right to extend to the sound and feel of a song, providing an overly broad conception of what musical ideas may be ‘owned,’ could have as negative an impact on competition in the music industry as the collusion among publishers that the Senate considered yesterday.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.