Why it's so expensive to license the rights to a fictional characterS

Recently, two seemingly contradictory pieces of copyright law have popped up in the news. One is the case of Jonathan Coulton, whose arrangement of Sir Mix-a-Lot's "Baby Got Back" was lifted by the producers of Glee. Another is the recent case of a car customizer who was barred from making Batmobiles by a District Court judge who said the Batmobile is protected by copyright as a fictional character.

So why is it that you're permitted to create your own recording of someone else's song, but you're not allowed to market a (non-fair use) work of visual art or fiction using someone else's character without going through an often expensive and messy licensing process? And would it be possible apply the music licensing system to fictional characters?

Photo by Shane McGraw.

For the record, this particular post deals with commercial derivative works, not fan works posted for free online. It also doesn't get into questions of fair use, such as parody and transformative works. For a thorough discussion of fan works and fan use, check out my earlier post: "Are fan fiction and fan art legal?"

Also, all law cited below is US law, and none of this should be taken as legal advice.

How Music Licensing Works

So let's start at the beginning. If you write a song, you own the copyright to both the melody and the lyrics to that song. In the days before you could fix a song as a recording, there were two ways that composers generally made their money: 1) from selling sheet music and 2) from royalties earned from public performances of their songs. There wasn't a question of covers; there were simply different performances of musical pieces. Today, permissions and royalties for public performances of songs in the US are largely handled by the performing rights societies ASCAP, BMI, and SESAC. The societies collect public performance fees from broadcasters and venues and then compensate the rights holders.

Then, a revolutionary piece of technology came along: the phonograph. Suddenly, a single performance of a song could be fixed in a (more) permanent state and distributed to thousands of people. This caused a bit of concern for music publishers. After all, it was the accepted nature of music that someone would hear a song and then want to perform that song themselves. But it wasn't clear if the copyright law of the time dealt with someone performing their own version of someone else's song, recording it, and then pressing hundreds of records of their own version. So, to allow people to record their own versions of songs while protecting the rights of composers and musical publishers, the Copyright Act of 1909 introduced compulsory mechanical licenses into US law.

Here's how the compulsory mechanical license works: Sir Mix-a-Lot writes a song in appreciation of sizable female posteriors and is therefore the owner of the underlying copyright to that song. After Sir Mix-a-Lot releases his version of the song, Jonathan Coulton decides that he would like to record a cover version. Sir Mix-a-Lot must allow Coulton to cover his song, provided Coulton obeys the statutory requirements of recording a cover: 1) he must give Sir Mix-a-Lot notice that he is going to cover the song, 2) he must pay the licensing fees set by the statute, and 3) he may not change the "basic melody or fundamental character of the work." In all likelihood, Coulton does not deal with Sir Mix-a-Lot directly, but instead uses a licensing agency like the Harry Fox Agency, which collects the notices and the fees and distributes the licenses.

For the record, Sir Mix-a-Lot remains the sole copyright holder. Jonathan Coulton does not receive a copyright to his derivative work, the cover song. That means that if, say, the cast of Glee records Coulton's exact rendition of the song, they must notify and pay Sir Mix-a-Lot, but they do not need to notify or even acknowledge Coulton's existence under the law. What they must do according to the rules of polite society, however, is entirely another matter.

These licenses are handy, but they are also extremely limited. They only apply to creating a new recording of a song, not performing the song in public and not broadcasting the cover of the song. Still, they acknowledge that working with another person's intellectual property is a natural part of art.

Character Copyright

In fiction, authors receive the copyright not only to the actual words they write on the page, but also to the characters they create. This copyright protection extends to a fictional as far as the character "constitutes the story being told" (Warner Brothers, Inc. v Columbia Broadcasting System, commonly known as the "Sam Spade case"). So, if I write a story about a super-strong dude who can fly, I'm probably not infringing upon the Superman copyright, because super-strong flying dude is a stock character. But if I write a story about a super-strong flying dude who is also an alien raised by sweet Midwesterners and disguises himself as a mild-mannered newspaper reporter, then I am clearly telling the story of Superman.

The character copyright is the reason that you can't write non-parodic works about James Bond, Bruce Wayne, or Ellen Ripley without the express permission of the copyright holders. It might also extend to elements of a story that we don't traditionally think of as "characters"; after all, that judge mentioned earlier recently ruled that the Batmobile is a fictional character and therefore is covered by copyright protection.

What makes music and fiction so different?

Certainly covering a song and creating a new work with an established fictional character aren't quite analogous. But why does music have licensing structures in place that allows for covers while you can't pay for a license to write your own Wonder Woman story?

Well, as I noted above, musical works were not fixed outside of sheet music until the invention of technologies like the phonograph and the player piano. So the royalty system for public performances was already in place long before the Copyright Act of 1909. But as musical technology leaped forward, music publishers were dealt a distressing legal blow. The 1908 Supreme Court case White-Smith Music Publishing Company v. Apollo Company held that manufacturers of player piano rolls did not have to pay royalties to the composers because, according to the court, the roll was not perceptible to humans and therefore could not be considered a "copy." (The 1976 Copyright Act ensures that machine-readable copies of works are, indeed, copies.)

In Stanley Rothenberg's article "What If? In Copyright," published in the September 2003 issue of Journal of the Copyright Society of the USA, suggests that the decision White-Smith Music v. Apollo was a key factor in the push by music publishers not only to get protections for these technological copies included in the 1909 Copyright Act, but also the eventual push for the compulsory mechanical licensing scheme. The change in media technology, combined with an unfavorable court case likely helped codify the legality of recording cover songs.

Written fiction did not experience the technical shift music did in the late 19th century. Fiction has existed as a fixed media since humans could mark surfaces, and the printed book existed for centuries in a relatively stable form thanks to the printing press. And, as long as there has been fiction, there has been fan fiction. Elizabeth F. Judge's article "Kidnapped and Counterfeit Characters: Eighteenth-Century Fan Fiction, Copyright Law and the Custody of Fictional Characters," published in Originality and Intellectual Property in the French and English Enlightenment in 2009, contains some rather amusing examples of unauthorized sequels to some of the era's most popular novels. During that time, Judge notes, English common law (on which our own system is based) did not treat the use of characters as analogous to wholesale copying or piracy, but many of the authors certainly did. They felt that the characters they created had been kidnapped, violated, and made to behave in inappropriate ways.

And that brings us to the key difference between music and fictional characters: the right of the creator to control his or her work. One of the provisions of the compulsory license is that the person or persons covering the song must maintain "the fundamental character of the work." Sure, there's some wiggle room in there, but the idea is that the musician is performing the composer's original song in a way that will be readily recognizable and not "perverted, distorted, or travestied."

2 Live Crew was sued for this rendition of Roy Orbison's "Pretty Woman." The group conceded that the song did not qualify for a compulsory mechanical license because it strayed too far from the fundamental character of the work. However, the Supreme Court ruled that the song was a parody and therefore constituted fair use.

Writing a story with someone else's characters is an entirely different kettle of Magikarp. Unauthorized sequels can transform characters into something wholly different from what their authors intended. One need only peek into the close of Harry Potter/Draco Malfoy fan fiction to see just how against their original natures characters can act. One of the goals of copyright law is to grant content creators control over their works, and the compulsory mechanical license for music allows composers much greater control over their works than creating a similar license for characters would.

Using someone else's character in your story is more akin to musical sampling, in which a musician uses another composer's music as a component of their own original song. If you wish to make a recording (not a live performance) sampling someone else's song, you have to contact the music publisher and work out a license agreement. In that way, music and fiction are very similar; if you want to publish a story using someone else's fictional character, you have to get in touch with the copyright holder and work out an agreement.

Could we create a mechanical licensing system for fictional characters?

Our current legal situation places non-commercial fan works in a legal gray area while commercial derivative works must go through an often expensive and time-consuming licensing process. One of the nice things about musical covers is that they're accessible to musicians who don't have a lot of money or a huge team of lawyers. There's a simple process in place for obtaining a cover license, and all of the fees are set by statute. Even if songs and characters aren't analogous, could we have put a system in place that allows fans to sell their derivative works and pay royalties to the original creators?

First, there's the question of economic incentives. One of the goals of copyright is to ensure that creators have an economic incentive to create new works. When we talk about cover songs, there are certainly cover songs that outperform the original version—sometimes even provide competition for the original version and reduce demand for the original version in the market. If dozens of different companies were releasing their own Batman comics each week, chances are that someone would come up with a more popular Batman comic than DC's Batman comics. One of the questions we ask is: would this disincentivize companies like DC from creating new characters?

Well, one could argue that this might inspire DC to write the very best Batman stories they could, but it's possible that this question could be resolved by placing a high enough statutory fee on using characters. Perhaps, if DC found that it was making a lot of money in royalties from the sales of these derivative Batman comics, it might actually be incentivized to create more potentially popular characters for licensed use. There is, of course, a chance that it could disincentivize them from continuing to publish their own Batman comics. Some creators and companies might begin seeing themselves as IP factories, creating intriguing characters and then sending them out into the world.

But then there is also the question of artist control. If a compulsory statutory license forced artists to grant anyone permission to use their characters in another fictional work, then they don't have the same control over their characters that they do under current law. We have to ask ourselves whether creators have an inherent moral right to exclusive control over their creations and whether a statutory license might give some creators pause before sending their characters out into the market. Is it possible that we would have missed out on some of our favorite works of literature if authors were afraid of what might become of their characters? Of course, the truth is, in the age of the Internet and fan fiction, artists have very little control over what happens to their characters. A statutory license might mean they could at least benefit financially from all that Mary Suing.

There is also the problem of trademarks, which gets into a tricky interplay of intellectual property laws. Many fictional characters are covered by trademark as well as copyright. The purpose of a trademark is to avoid confusion in the marketplace, so you don't pick up a comic book thinking it's by Marvel or DC when it's not. If we allowed anyone to sell their own Batman book, the potential for market confusion is great. But Robert J. Morrison, in his fascinating article on this topic, "Derivers' Licenses: An Argument for Establishing a Statutory License for Derivative Works," published in the Chicago-Kent Journal of Intellectual Property in 2006, proposes a simple solution to the problem: that all derivative works be clearly marked "unofficial" as a matter of law.

There is, however, an alternative to a statutory licensing system: a voluntary one. The music industry has ASCAP and BMI to collect performance royalties; why couldn't literary content creators create their own licensing agency? We've already seen creators generously place their works under Creative Content licenses that allow for remixing, but the original creators don't receive any royalties, even if they permit remixers to sell their derivative works. Why not set up a licensing agency that allows creators of original content to opt-in, set their own licensing fees, and enable others to easily license their characters? They might be surprised at what they see in return.