The Justification For Fair Use Treatment Of Parodies
Parodies are fair use because copyright owners would almost never permit them otherwise, and as a matter of public policy, judges long ago decided that the value of parody and satire as a genre, particularly given its potential political aspects, was more important than the economic rights of the owners of copyrights of parodied works. Judges recognized that otherwise copyright could be used as a tool of systemic censorship of controversial ideas. This public policy concern overrides the general logic of copyright law that would otherwise treat parodies as derivative works.
These public policy concerns are deep and old and trace back to English copyright law even before the United States existed.
The History And Justification For Special Treatment For Covers
As noted by user6726, covers are also singled out for special treatment. This legislative fix, since it wasn't imposed by judges, was not required to take an all or nothing approach as judges in the parody context did. These too would be derivative works if the statute didn't single them out for special treatment.
The motive for the special treatment is similar to that for the special treatment of parody, which is the concern that owners of copyrights would refuse to authorize covers even when it would be in the transaction level economic interests to do so. But, the right to a compulsory license to make a cover also flows from historical precedents of musicians covering other musician's works as an important genre of music with a long tradition that the copyright laws would have exterminated if an exception from the derivative works right was not made for it.
However, since, unlike parody, making a cover is usually just a part of the ordinary music business for professional musicians rather than usually being an act with strong political or social messages to convey, exempting covers from the obligation to compensate the original creator of the work was not viewed as necessary.
The speculation that special treatment of covers was due to Recording Industry Association of America lobbying, while not entirely wrong, mostly gets the order of cause and effect backwards.
Prior to the unification of copyright law for almost all kinds of works (except design patents and a couple of other isolated areas) in 1972, a separate body of law from the main historical antecedent to modern copyright law governed musical performances and recordings. So, there was an open question at that point about precisely how sound recording and musical performance intellectual property protections should be integrated into the copyright doctrines that had applied, for example, to literary works, for almost two hundred years in the United States and longer in common law countries.
Because legal doctrines for the protection of intellectual property in sound recordings and performances had developed outside the historical scope of copyright law, lawmakers had to balance a desire for uniformity and simplicity in copyright law, with a desire for continuity with existing expectations related to sound recordings and performances under pre-1972 non-copyright laws.
Also, most of the non-copyright protections for musical recordings (which was something that didn't exist in a commercially viable manner until Edison invented the phonograph in 1877) and musical performances, was itself much more recent than the rest of copyright law. Essentially all of the great classical music composers operated in an environment in which there were no such intellectual property protections for music and in which the only way to mass produce music was to sell sheet music from which someone could cover the composer's work. Since music couldn't be mass produced and commodified prior to the invention of sound recordings and radio, prior to that, the music industry was financed through admissions charges to live performances and patronage commissioners from wealthy individuals and institutions to composers. Sales of mass produced sheet music, which became viable when the printing press was invented in 1436, then and now, was only a minor part of the overall revenue stream for composers in the music industry.
Pre-1972 non-copyright laws for music recordings arose under diverse state laws in the United States:
Although the first federal copyright statute was passed in 1790, music
was not accorded any federal protection until 1831. However, this
protection was limited to music composition, or the actual notation
written on the page. Initial arguments calling for protection against
the unauthorized duplication of sound recordings failed. In the case
of White-Smith Music Publishing Co. v. Apollo Co., the court held
that piano rolls were not copies of a music composition for the
purposes of infringement. . . .
Although Congress subjected federal copyright protection to an
overhaul by enacting the 1909 Copyright Act, it still failed to grant
statutory copyright protection to sound recordings. Despite efforts by
some members of Congress to raise the issue of sound recordings, the
final bill declined to extend protection.
Indeed, the report released with the Copyright Act expressly stated
that Congress did not intend to protect sound recordings: “It is not
the intention of the committee to extend the right of copyright to the
mechanical reproductions themselves, but only to give the composer or
copyright proprietor the control, in accordance with the provisions of
the bill, of the manufacture and use of such devices.”
According to one commentator, Congress had two principal concerns
about sound recordings, leading it to decline to protect them. First,
Congress wondered about the constitutional validity of such
protection. The Constitution allows Congress to protect “writings,”
and Congress was uncertain as to whether a sound recording could
constitute a writing. Second, Congress worried that allowing producers
to exclusively control both the musical notation and the sound
recording could lead to the creation of a music monopoly.
Instead of directly protecting sound recordings, Congress opted to
create a compulsory licensing provision that would allow the copyright
holder of the composition to control who would be the first person or
group to fix the work in a tangible medium. However, this attempted
solution left open the question of whether someone could just pay the
licensing fee for the composition and then simply duplicate the
recorded version of it. It also left unsatisfied the desire of the
recording industry for greater federal law protection. . . .
Because Congress failed to extend protection to sound recordings until
1971 (effective 1972), parties concerned about the unauthorized
duplication of sound recordings turned to the states. Although states
ultimately began to pass statutes criminalizing unauthorized
manufacture and distribution of recordings, this did not occur until
the late 1960s and early 1970s. Instead, state courts drew upon a
number of common law theories to protect sound recordings. Common law
copyright and the doctrine of unfair competition, however, constituted
the two most prevalent and most important theories. Indeed, these
theories ultimately paved the way for the states to enact
unauthorized-distribution laws.
In the case of covers, the new unified law departed from a simple and uniform treatment to reflect historical norms in this field in as fair a manner as possible in the eyes of legislators.
Certainly, the recording industry was at the table along with everyone else interested in intellectual property law at the time of this dramatic overhaul of copyright law in a manner that was generally more protective of copyright and intellectual property owners than prior law.
But, the near monopolistic dominance of the RIAA in the music recording intellectual property protection world was more of a natural result of the new scheme of intellectual property protections that arose from the copyright law overhaul that took effect in 1972 and the economics and organization of the recording and radio industries, than it was from any previous dominant position of the industry association.
The recording industry would have preferred not to have mandatory licensing of covers, but had to concede that point in exchange for much stronger intellectual property protection for music recordings under the new law overall.
