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Quote of the Day: Excessive Royalties Edition

· August 13, 2020

gold and blue crown

As the Hollywood Reporter describes, the D.C. Circuit Court of Appeals recently found in favor of digital services in an appeal of a Copyright Royalty Board decision.  Below are several excerpts from the opinion where the court finds that rightsholders have exploited their unequal market power to extract excessive royalties, which can disincentivize competition and new services to the detriment of music fans:

The Board acknowledged that the sound recordings market is a complementary oligopoly and that the sound recording copyright holders can wield their considerable market power to extract excessive royalties. (at 14)

As the Board acknowledges, sound recording rightsholders have considerable market power vis-à-vis interactive streaming service providers, and they have leveraged that power to extract excessive royalties. . . . “[T]he [interactive streaming] services are . . . exposed to the labels’ market power. Record companies could, if they so chose, put th[ose] [s]ervices out of business entirely.” . . . [B]y virtue of their oligopoly power, the sound recording copyright holders have extracted “inflated” royalties. . . . (at 36)

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.