China's music industry sings the blues over new copyright rules

BEIJING Tue Apr 17, 2012 4:49am EDT

BEIJING (Reuters) - New music copyright rules proposed by China threaten to roll back protection for musicians and record companies and hand the government control over royalties, moves that have sparked an outcry from the local music industry and among legal experts.

The draft rules from the National Copyright Administration partly aimed at reining in rampant piracy would, if they become law, also apply to foreign music distributed in China, which has long been a frontline in battles over intellectual property.

Under the proposal, certain music rights would only have a three-month limit, allowing others to use, record or distribute songs after that period at government-set rates. Rights' holders would also lose veto power over who can use their work.

"It's as if I had a house for rent and somebody else is telling me who the tenant must be and how much to charge for rent," said Zhan Hua, the chief executive officer of Taihe Rye Music Co Ltd, a well-known Chinese music label.

Some lawyers say the draft represents such a significant rollback in protections enjoyed by producers of creative works in other countries that it is likely to be revised.

Copyright terms in many Western countries extend rights 70 years or more beyond an artist's death. China offers 50 years, although enforcement is weak.

While the draft rules would not negate that 50-year right in name, critics say they provide a workaround that essentially turns private intellectual property public. The rules also do not spell out what sort of royalties musicians would be entitled to.

The rules were proposed last month and China's copyright authorities have said they are seeking opinions from within the industry and abroad until the end of April.

They argue that the rules will help prevent piracy in a country where knock-off CDs are common and songs can be downloaded free online, as users will be required to register, list the copyright, and pay royalties set by authorities.

"Under current law we don't even have three months (protection). Three months is extending rights," Yan Xiaohong, the deputy director of National Copyright Administration told Reuters on the sidelines of an intellectual property forum in Beijing last week.

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Experts say that misses the point, because while China's current law says rights holders must agree to allow use of their work, a key article in the draft would remove control they have over who registers to use the music after the three months.

Elliot Papageorgiou, a Shanghai-based partner and executive at law firm Rouse Legal, said for the copyright to the lyrics and copyright to the musical score, the new rules would be "a huge derogation".

"Yes, it's trying to say: up until now you haven't been able to enforce your rights. We can help with that. But it's taking away so much more," he said.

Zhan, the music producer, said he could spend tens of thousands of dollars producing and promoting an artist and lose the exclusive rights before being able to recoup his costs.

"If that is the case, I'll just wait for other people to record. No one will go out and produce themselves," Zhan said.

Chinese musicians have turned to popular microblogs to denounce the draft and muster support for their cause.

Chinese search engine giant Baidu, which has an online music downloading deal with record companies, said it was waiting to see how thing would develop and would not comment on specific provisions of the draft.

Representatives in China from international recording companies Warner Music and Sony Music Entertainment said they were reviewing the proposal and coordinating a response through their industry body, the International Federation of the Phonographic Industry.

Chinese officials have acknowledged that piracy on intellectual property impedes China's ambitions of moving its producers up the design and innovation value chain, but legal experts say the draft runs counter to that aim.

"It doesn't seem to send the right message about the value of innovators and intellectual property and society," said Mike Dardzinski, a lawyer with law firm Reed Smith in Beijing.

"There are a lot of people other than the music industry who should be concerned about this," he said.

(Editing by Ken Wills and Edwina Gibbs)