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“This decision injects clarity into the marketplace that will help satisfy fans’ hunger for the latest hits from today’s best artists by affording record companies and ringtone providers the ability to move new offerings quickly and easily to consumers."
—-Steven Marks, RIAA EVP/General Counsel
RINGTONES SUBJECTED TO COMPULSORY LICENSE
Decision is a Victory for Record Labels That Seek to Offer Operators Master and Publishing Rights Together
The Copyright Office has decided that compositions used for ringtones may be subject to a compulsory license. The decision is a victory for record labels that want to offer ringtone operators the master rights and publishing rights as one package.

RIAA EVP/General Counsel Steven Marks hailed the announcement: “This decision injects clarity into the marketplace that will help satisfy fans’ hunger for the latest hits from today’s best artists by affording record companies and ringtone providers the ability to move new offerings quickly and easily to consumers. Ultimately, we’re all seeking a vibrant mobile market. This decision helps us further that goal.”

Last month, the Copyright Royalty Board (CRB) referred a decision about ringtones to the Copyright Office, questioning whether compositions used for ringtones—monophonic (single melody line) or polyphonic (melody and harmony)—or master ringtones (taken from a master recording) fall under the compulsory license provisions of the Copyright Act. If so, the CRB would determine the rates; if not, publishers would be free to withhold permission to use the compositions unless labels or ringtone providers negotiate a license and a royalty rate for each use. The rate is set by statute, which is periodically adjusted through a copyright tribunal proceeding.

As long as the ringtones are excerpts of a larger musical work or from a preexisting sound recording, then the composition used for the ringtone is subject to the compulsory license, according to the decision. For the composition to fall under the compulsory license, the ringtone may not recast, transform or adapt it—or include additional material—in such a way that it becomes an original work of authorship. If it does, then a license must be negotiated with the copyright owner.

"We are disappointed in the Register's decision, which could hurt songwriters significantly and represents an unprecedented broadening of the compulsory license for musical works," says a National Music Publishers' Assn. spokeswoman. "Of particular concern is that copyright owners who have negotiated ringtones licenses in the free market for years will now be subject to government regulation. We see no justification for this, and are currently reviewing our legal options."

The opinion also states: "If a newly created ringtone is considered a derivate work, and that work has been first distributed with the authorization of the copyright owner, then any person may use the statutory license to make and distribute the musical work in the ringtone."

Briefs arguing what statutory rates should be for ringtones and other formats are due to be filed with the CRB in mid-November.

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