This paper examines the current system governing sound recording royalty rates, and suggests reforms to help the digital music economy adapt to the Internet age and the advent of a wide variety of music streaming services. First, it summarizes the current copyright royalty system for music streaming services, and describes the existing oversight for copyright streaming royalty rates and the statutory treatments of different streaming services. Next, it considers how certain statutory royalty rates are assessed under the Canadian equivalent of the American system, and proposes two options for reform that would help shape the law to foster the evolving market in music streaming services: the introduction of a mid-tier class of semi-interactive streaming services, and/or the replacement of the voluntary licensing deals for interactive services with a statutory license akin to that applicable for the noninteractive market. While significant barriers in the market stand in the way of such reforms, they are not as drastic as they initially appear, and in fact, Canada has adopted both reforms in its domestic system. Ultimately, the disparity between the statutory framework and the realities of the digital music economy will continue to diverge until reform is made; to reject proposed reforms on the grounds of some market opposition, or to insist on holding out for a flawless, idealized option for reform to emerge, would merely make the perfect the enemy of the good.
Shufro, Zachary, Partially Engaging: Copyright Royalties in Semi-Interactive Streaming Services (May 3, 2021).