The statutory licence for cover versions and Creative Commons licensing

Section 55 of the Copyright Act provides a statutory licence that allows 'manufacturers' to record musical works for retail sale, or for making other records for retail sale. The scheme is remarkably convoluted, and there are a number of restrictions – most importantly, a licensed recording of the work must have already been available for at least one month.1)

The statutory licence extends to copyright in the lyrics (literary or dramatic works) that have also been recorded with the music and released in Australia.2) In compliance with the statutory licence, the manufacturer must give notice to the owner of the copyright in the musical work and pay a royalty to the owner.

The first thing to note about the statutory licence is that it only applies to musical works and the associated lyrics. It will not apply to recordings at all. This means that it might be possible to record a new cover version, but the licence provides no latitude for remixing an already recorded track.

So, today's question is – under the statutory licence, can I record a cover version and release it under a Creative Commons or other open licence?

Creative Commons licensing of cover recordings

The statutory licence provides no clear guidance as to what licence can be applied to a cover version. However, several restrictions apply to widespread distribution under the licence.

The first is the requirement that the record be made for 'retail sale'. This requirement is further limited to exclude sale for “a consideration not consisting wholly of money” and sale by anyone “not ordinarily carrying on the business of making or selling records”3) So, people distributing their own recordings on the internet for no fee are out of luck. Licensing to Apple for sale on iTunes is presumably allowable, but selling on your own website for a nominal fee is probably not, unless you are ordinarily in 'the business'. But here we run into another problem – the statutory licence covers 'records', not 'recordings'.4) It refers to physical records, and is certainly not technologically neutral. So electronic distribution appears to be right out.
A certain amount of 'gratuitous disposal' is permissible – that is, you can give away records at your gig or elsewhere, as long as you're planning on selling a substantial proportion of the records, and you pay royalties on each of the records you give away.5)

The next question is whether, if you do manage to satisfy the requirement that you sell the records, what licence can you apply? Well, to the extent that you own the copyright in the recording and any new music and lyrics, you can apply whatever licence you like. However, the statutory licence provides no rights for downstream users. So while you could technically stick a CC sticker on your cover record that you're selling (or giving away), you would have to specifically exclude any claim over the original music and lyrics.

Practically, what does this mean? Simply put, downstream users will have no right to copy or remix the record unless they can separate out your new material (that is not based on the original material in any substantial way) from the original, which is unlikely. So, in terms of electronic distribution and downstream licensing, the statutory licence is fairly underwhelming.

Can you change the lyrics?

APRA/AMCOS maintain that “Lyric changes and parodies of works must have been cleared directly with the copyright owner.”

This conclusion appears to be supported by the wording of s 59, which allows lyrics to be recorded in conjunction with the musical work only if “those words, or words substantially the same as those words, were sung, or were spoken incidentally to or in association with the music” on an existing (licensed) recording.

There is also a conspicuous absence of a provision for literary or dramatic works in similar terms to that in s 54(1)(a), which states that

a reference to a musical work shall be read as a reference to the work in its original form or to an adaptation of the work.

So, under the statutory licence, it appears that modifying and interpreting the music is permissible under the statutory licence, but modifying or interpreting the lyrics is not.

Restrictions on style – the moral right of integrity

Under the previous law, s 55(2) provided a requirement that the recording artist not 'debase' the musical work, but this condition was removed with the introduction of moral rights into the Copyright Act.6) Now, the style of the cover is governed by the moral right of integrity. Interestingly, because we still do not have much guidance on the meaning of the moral right of integrity, a case under s 55(2) still provides the best assistance for determining when the moral right will be infringed.

The Federal Court and the Full Federal Court on appeal considered the meaning of 'debase' in the Carmina Burana case.7) The question in that case was whether four techno remixes of the chorus of Carmina Burana 'debased' the original work. The Full Federal Court found that the techno remixes did not 'debase' the original. Importantly, Wilcox J held that the qualitative analysis need not be technical – because the term 'debase' is a strong one, for it to be applicable, “the adaptation must be so lacking in integrity or quality that it can properly be said to have degraded the original work.”8) His Honour concluded that the requisite level of quality is quite low, noting that “[i]t is difficult to think an adaptation that has its own integrity could be so characterised, even if it is musically inferior and however radical or distasteful (to some) it may be.”9) Justice Lindgren agreed with Wilcox J, noting that

an arrangement will be less likely to be a debasement where, as here, it is an arrangement which 'makes available' the original musical work to the musical tastes of a different period of time or of a different subculture, or (as here) of both, and which thereby acquires its own integrity.10)

It is likely that in future, courts interpreting the concept of 'derogatory treatment' in the moral right of integrity with relation to cover versions will follow a similar approach – meaning that a cover version will have to be extraordinarily bad in order to infringe on the original author's moral rights.

Conclusion: the future for the statutory licence?

This analysis shows some flaws in the statutory licence for the digital age. Primarily, it does not apply to electronic distribution at all. Additionally, by focusing on sales, it fails to take into account other methods of licensing music and other business models.

The argument can be made that the licence compensates musicians by providing royalties on sales, and that adequate compensation would not be payable if the cover version were made available under the open terms of a CC licence that allows unlimited distribution and remixing. Perhaps this is a valid argument, but it needs to be examined in detail. Is there some acceptable form of statutory licence that would allow for open licensing of cover recordings? How would we go about compensating the original author in such a situation?

Section 54(1A) provides that “'record' means a disc, tape, paper or other device in which sounds are embodied.”
Copyright Amendment (Moral Rights) Act 2000 (Cth).
Schott Musik International GmbH v Colossal Records of Australia (1997) 75 FCR 321.
Ibid, 324.
Ibid, 338.