Four little words

How the record industry used a tiny legislative amendment to try to steal recording copyrights from artists -- forever.

Published August 28, 2000 7:30PM (EDT)

"As a sound recording."

Margaret Cone read that innocuous-sounding legislative language and her heart skipped a beat. The time was last November, during the closing days of last year's congressional session. Cone was a veteran Washington lobbyist.

She'd been tipped off that an amendment to a pending bill -- quietly inserted without debate -- would reclassify under the nation's copyright laws all sound recordings, like cassettes and CDs, as "work made for hire."

If true, that slight change would mean musicians would never again be able to own their recordings. Instead, record companies would become the sole legal owners of a record over its legally copyrightable life, currently 95 years.

Talking to a friend on the phone as she sifted through pending legislative bills, Cone recalls having "a sinking feeling that something wasn't on the level." She checked one bill that dealt with copyright; no mention of work for hire. She sifted through another, Title I of the Satellite Home Viewer Improvement Act, and found nothing.

Then, "on a fluke," she went to the buried "definitions" section of that second bill and there she found this:

"(e) WORK MADE FOR HIRE-Section 101 of title 17, United State Code is amended in the definition relating to work for hire in paragraph (2) by inserting "as a sound recording."

"My knees literally gave way," says Cone, who often represents artists on Capitol Hill and instantly understood the ramifications of the proposed copyright change. "I told my friend on the phone, 'I gotta go! I gotta go!'"

She dashed to the offices of the Courts and Intellectual Property Subcommittee to try to get some answers. "I wanted to find out how bad it was," she recalls.

That was Nov 16. Two days later, despite Cone's frantic back-room protests and pleas, the work-for-hire amendment, attached to a massive 1,740-page omnibus spending bill, passed the House and Senate. President Clinton signed it into law Nov. 29.

Early this August, after months of public and often hostile debate, the record companies, lead by the Recording Industry Association of America, finally agreed to ask Congress to essentially repeal the work-for-hire amendment Cone discovered that day.

The battle represented a rare victory for musicians on both Capitol Hill and in the business arena.

Those who fought against it argue the chapter provides strong evidence that given the opportunity, record companies will do whatever they can to give artists the financial shaft.

"It was very sinister at its root," says former Eagles leader Don Henley. "We never should have had to go through this. But the RIAA thought they had enough clout in Congress to make it stick. And they almost did."

When asked for comment, record company representatives pass questions to the RIAA.

But the association, so vocal in its fight against Napster and its alleged theft of copyrighted material, is far less animated when it comes to the work-for-hire amendment. "The book needs to be closed on this issue so we can get back to a united industry on so many important challenges of the day," said RIAA president and CEO Hilary Rosen in a prepared statement.

Privately though, there is still lots of finger-pointing going on. For many involved, the power struggle left a particularly bad taste. "It reinforced a lot of ill will," says folk singer Dar Williams, one of 46 musicians and managers who fought the work-for-hire amendment by joining a group called Artists' Coalition, lead by Henley and Sheryl Crow.

"There was a real outrageous quality to it," said Williams. "What were they thinking?"

Meanwhile, an ongoing debate simmers over the role Billboard magazine played in the whole episode. From the moment it unearthed news of the amendment last January, the music industry's dominant trade magazine, long suspected of being a voice for major labels, has owned the story, running nearly a dozen, often critical, cover dispatches.

"I think Bill Holland should win a Pulitzer Prize," says copyright attorney Jay Rosenthal, with the Washington law firm Berliner, Corcoran & Rowe. He's referring to the magazine's Washington bureau chief, who has been covering Congress for 19 years and wrote all of Billboard's work-for-hire news stories. "He did a phenomenal job."

Rep. Rick Boucher, D-Va., agrees: "We probably would not be where we are today, on the verge of reinstating an artist's right, if it had not been for the Billboard reporting."

Others insist that in its zeal to right a perceived wrong, Billboard crossed an important line. "Their coverage was completely one-sided and inflammatory," says RIAA executive vice president and general counsel Cary Sherman. "They were not acting as journalists but rather as advocates, and they did damage to everybody and to the issue."

- - - - - - - - - - - -

The issue at hand is the 1976 Copyright Act. Among other things, the law spells out two types of relationships between employers and creators. One represents a clear-cut, long-term association based on full-time employment. Under that scenario, anything that a person creates while working for his employer (i.e. an article a staff writer produces for a magazine) belongs to the employer, not the worker.

The second type of relationship is more short-term and complicated. There, Congress spelled out nine categories that would be considered what the law calls "works for hire." The law decrees that material created as work-for-hire belongs to the employer, not the individual.

There are a lot of common publications and artistic work that are legally viewed in this way -- encyclopedias, movies, translations, compilations, atlases and instructional texts among them.

The small "sound recording" change was crucial. Ironically enough, virtually every recording contract signed today already includes a clause stating that the artist's contribution is a work for hire, which means the music belongs to the record companies.

But the same contracts also include provisions whereby if the artist transfers his rights to the label, after 35 years he or she will have a chance to terminate the contract and recapture his rights. With the new amendment classifying "sound recordings" as works for hire though, the artist loses that recapture right under the Copyright Act. Instead, record companies would become the sole "authors" of those works for the life of the record, or 95 years, according to today's copyright law.

That's not a notion that sits well with artists. "There is no confusion in the record industry as to who creates the sound recording," said Crow, testifying before Congress during an after-the-fact hearing in May. "It is the featured artists."

Last November, acting at the RIAA's request, Mitch Glazier, then chief counsel for Congress' copyright subcommittee, inserted the "sound recording" amendment to an unrelated bill. (The bill in question, the Satellite Home Viewer Improvement Act, had been green-lighted for safe passage through Congress.) The change effectively made all new commercial cassettes and CDs -- from Britney Spears to Slipknot, from Eminem to Andrea Bocelli -- a new category qualifying as work for hire.

No hearings were held, no public debate took place and no member of Congress sponsored the act. Glazier, who now works for the RIAA, consulted only a handful of congressional assistants last fall. He was able to make the change because he explained the alteration was non-controversial and technical in nature.

"Nobody thought much about it," says Jay Cooper, an attorney at Manatt, Phelps & Phillips, and who represents the Artists' Coalition.

Looking back, the process was "an extraordinary" one, says Boucher, an 18-year veteran of the Hill. "It's very unusual to alter a substantial right without the affected party having the opportunity to know what is being proposed and to comment on what's being proposed. Artists were never consulted."

In the past it often took years, even decades, to alter copyright law, as the concerned parties hashed out just the right legislative language.

The RIAA has a defense of its seemingly surreptitious move. The group argued that a technical clarification was needed in order to enforce a much-needed cyber-squatting bill, which artists such as Henley had lobbied for.

That law makes it a crime for Web users to extort artists who want to claim their name domain in cyberspace. Since the law revolves around works for hire, the RIAA added sound recordings to that list in order to make the cyber-squatting legislation work for musicians as well.

The irony is that the language of the cyber-squatting law was later expanded, so even though the work-for-hire amendment will in all likelihood be repealed this year, that change won't affect the once-central cyber-squatting law. In other words, the clarification the RIAA argued was so important, and the one that set off an artist revolt, in the end turned out to be completely unnecessary.

Artists manager Ron Stone, whose clients include Bonnie Raitt and Tracey Chapman, never bought the cyber-squatting argument in the first place: "Record companies have earned our scorn over many years of taking advantage of artists at every possible turn, so the level of suspicion is high," he notes.

The manager suspects the work-for-hire action had more to do with mergers and acquisitions. "Vivendi is buying Universal and AOL is buying Time Warner," Stone says. "The values of these companies are determined by assets, and those assets are the ownership of the master recordings. I think record companies are covering their asses and don't want any loose ends 13 years from now when artists start recovering the ownership of their records."

Stone is referring to another key element of the 1976 Copyright Act, which went into effect Jan. 1, 1978. Under the law, after 35 years, "authors" who transfer away their rights have a second chance and can recapture ownership. That means in 2013 the first artists contracts signed in 1978 will be triggered, and record companies could face a run on their masters. (Of course, it is possible many artists will renegotiate with the labels and continue the relationship they had had for the previous 35 years, assuming the royalty checks had been arriving on time.)

If sound recordings were classified as works for hire, though, the labels would have nothing to worry about in 2013, because artists would no longer be able to recapture their rights

Sherman at the RIAA says it's not that simple. He and others in the music industry are confident that the way the Copyright Act is currently worded there will be no run in 2013, even if the "sound recordings" work-for-hire amendment is repealed. Record label lawyers, as well as some outside legal scholars, argue that records already fall under the work-for-hire category of "collective works" or "compilation," and that when the first 2013 test case winds up in a court, a judge will side with them.

"There is so much ambiguity about what work for hire is," concedes Stone. But the secret amendment move was unconscionable, he says, and the artists' seeming victory is merely the latest battle in an ongoing war: "So we're back to squaring off with the record companies and arguing over this issue. All we've done is gotten them to take their foot off our throats."

Given artists' beleaguered past track record in boardrooms and up on Capitol Hill, that counts as an accomplishment.

Just look at how the crucial May 25 subcommittee hearing began, with Chairman Howard Coble, R-N.C., leveling this charge at an absent Henley: "I hope you get carpal tunnel syndrome from counting all the money you make, compliments of the Copyright Act and the Congress which wrote it."

Henley answered in the press that Coble was "perpetuating the plantation mentality that has forever plagued our industry." (A source says Coble's volley was written by a staffer who mistakenly believed Henley had been trashing the representative behind his back.)

Two days before that hearing, Henley's first studio album in 11 years arrived in record stores. He used the title track to vent his frustration over the work-for-hire saga:

It was an inside job
By the well-connected
Your little protest Summarily rejected
It was an inside job
Like it always is
Chalk it up to business as usual
While we are dreaming
This little island disappears
While you are looking the other way
They'll take your right to own your own ideas

Henley, as it turned out, was one of the catalysts of the Billboard campaign. A longtime friend of Billboard editor in chief Timothy White, Henley early on called for a complete investigation into the work-for-hire amendment. (Full disclosure: I was a staffer at the magazine under White from 1992 to 1995.)

Billboard's coverage proved crucial. Its early stories rallied the artists' community, which then drove the repeal effort. Later, three eyebrow-raising articles this summer undermined many of the RIAA's arguments.

The first two arrived like a pair of small grenades in the July 29 issue. One centered on Rosen's consistent public assurances that the association had never before tried to amend the Copyright Act to include sound recordings under work for hire. The association's firm position was that the issue came up only because of the cyber-squatting bill.

But Holland reported that as far back as 1990 the RIAA's then-senior vice president and general counsel, David Leibowitz, had written to the Register of Copyright, which assists Congress in drafting copyright legislation, hoping to have sound recordings added to a then-proposed work-for-hire bill.

RIAA's general counsel Sherman today concedes the association "later learned of discussions we hadn't been aware of before." He maintains, though, that amending the Copyright Act "was not part of our legislative agenda."

An accompanying story in the same issue detailed the generous amount of money Universal Music Group's parent, the Seagram Co., has been giving to politicians through individual contributions, PACs and soft money -- over $1 million though July of the 2000 election cycle.

That's significant because Hill watchers say executives at Universal, which has the world's largest catalog of recorded music, were a driving force behind the original work-for-hire push and the subsequent battle to beat back the repeal. "Doug Morris in particular," charges Henley, referring to the Universal Music Group chairman.

A company spokesman declined to comment, but a source at the label suggests Time Warner and Sony officials have also made their feelings plain to politicians. They just haven't copped to it publicly, and have even told Henley, who records for Time Warner's flagship Warner Bros. label, that they do not support the amendment.

A key figure in the contributions part of the story is Rep. Howard Berman, D-Calif., the ranking Democrat on the Subcommittee on Courts and Intellectual Property and a longtime friend of the recording industry. Billboard reported that Berman took in five times as much PAC and individual contributions from the entertainment industry as any other member of Congress.

Among those who have written personal, $1,000 checks to Berman recently are Time Warner lobbyist Timothy Boggs, Universal's Morris, Seagram CEO Edgar Bronfman Jr., Vicki Iovine, the wife of Interscope Records chief Jimmy Iovine, Universal Music tech guru Lawrence Kenswil and Universal Music Group COO Zach Horowitz.

The RIAA's Rosen was another contributor.

Meanwhile, for the 2000 fundraising season, Berman remains the largest recipient of music industry PAC money from the RIAA ($3,000), Time Warner ($7,000) and Seagram ($3,000).

As it turns out, Berman's staff was among just two or three that knew about, and quietly approved, the work-for-hire amendment last November. "Berman brought it in under his hat," charges attorney Rosenthal. Berman declined to comment for this story.

According to Hill sources, when the initial controversy arose Berman privately defended the amendment and told artists they were not going to get it repealed. But then some of Berman's Democratic colleagues, including Boucher and Rep. John Conyers, D-Mich., made it clear that if a repeal was not worked out they would introduce legislation of their own to make it happen. "The train was leaving the station so he decided to get out front," says one observer.

At the May 25, hearing, Berman signaled his change of heart: "I am now convinced that the inclusion of sound recordings as an enumerated category of works eligible for status as works made for hire was clearly not a technical amendment."

The third and final blow came in the Aug. 5 issue of Billboard when Henley weighed in with an article detailing how negotiations over a work-for-hire repeal had stalled.

There, he played the Napster card: "On the one hand, RIAA creates all this flap about Napster and copyright infringement, while with the other hand, they've taken away artists' copyrights."

Coming on the heels of the widely publicized July 28 court ruling that allowed the file-sharing phenomenon Napster (the RIAA's public enemy No. 1) to remain open for business while the 9th Circuit Court of Appeals hears the RIAA's case for injunction, Henley's reference no doubt stung.

"Record companies need artists in their battle against Napster and the attacks on intellectual property," points out Artists Coalition attorney Jay Cooper, who suggests a bigger-fish-to-fry mentality may have come into play at the RIAA. "Let's just say Napster in the background certainly didn't hurt our cause."

Just one week after Henley made his Napster comment, an agreement to ask Congress for a repeal of the work-for-hire amendment was announced.

Billboard's aggressive coverage, which took direct aim at the most powerful group of the industry it covers, raised some eyebrows. But it was the RIAA that came out fighting.

During her work-for-hire testimony before Congress, Rosen blasted Billboard as part of "a sensationalist media that simply could not resist adding fuel to the fire, fanning the flames of misunderstanding with a misleading but juicy story."

Responds White: "We work inside the castle but we don't work for the king. The consumer press doesn't understand how the music business works. We do, and it's our responsibility to part the curtain and let the world know how the industry works. People have a right to know."

Rosen told Congress: "It is a sad commentary that I could not even get one of our most prominent industry trade weeklies to accept for publication a one-page letter to the editor I wrote rebutting the allegations. I knew then that the purveyors of these stories did not want to be bothered with the 'facts.'"

The RIAA even posted the missive on its Web site, billed as "The Letter to the Editor Billboard Refused to Print."

Sherman, the group's lawyer, brought up the letter again in a recent interview: "When [Billboard] refused to print a letter from the president of our association -- they said they didn't have room -- we realized there wasn't much point in having a discussion with them after that."

But did the association ever really submit a letter to the magazine? In his response to Congress, White said the letter Rosen as referring to was a preemptive blow she wanted printed in conjunction with a story the magazine was working on.

"While on the phone with a Billboard staff editor," White wrote, "[Rosen] attempted to submit -- via the very editor then editing the unpublished article in question -- an unsigned note commenting on that as-yet unpublished story."

White says if Rosen or anyone else at the RIAA submits a formal letter for publication regarding work for hire, the magazine will print it. The charge is "smoke and mirrors designed to distract people from the real facts."

Rosen declined to comment on this issue. It's not the first time she and White have sparred. After the Billboard editor wrote a column last summer critical of the industry and calling for "stronger musicians' unions [and] more control by creators over copyrights," Rosen, in a published Billboard letter, responded, "Thank God we have personal tragedies, human frailties, stupid mistakes, and some bad music in our industry, otherwise Timothy White would have nothing to write about."

As for Billboard's work-for-hire coverage, "I assume they felt it was the right thing to do," says Sherman at the RIAA. "But William Randolph Hearst thought what he was doing was the right thing, too."

Along with a P.R. black eye, the work-for-hire fiasco may have cost record companies in another way: a newly energized artistic community.

"The Artists Coalition -- which will soon be renamed the Recording Artists Coalition -- is growing in strength and numbers," reports Henley. "We will continue to monitor any and all legislation that could affect the intellectual property rights of recording artists. This is only the beginning. It's high time artists woke up and stood together."

By Eric Boehlert

Eric Boehlert, a former senior writer for Salon, is the author of "Lapdogs: How the Press Rolled Over for Bush."

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