Copyright Prof William Patry addresses derivative works today on The Patry Copyright Blog. He gets to the thorny intersection of the Section 115 compulsory license and newer multimedia discs, such as Super Audio and DualDisc, that contain multiple versions of the same recording.

Issues for compulsory licensing are presented because there is more than one layer on a single Super Audio disc. Two principal questions are: (1) whether some of these layers are merely "transfers" that do not represent new authorship, or, whether some, such as remixes for 5.1 channel surround sound, are derivative works for which a separate compulsory license fee is required unless (2) even though there are as many as three layers on a given disc (all perhaps with different derivative versions), the disc is considered to be one "phonorecord" within the meaning of Section 115, and thus one payment only is required notwithstanding that if the layers were separately released they would require three payments.

These aren't just law exam hypotheticals. About the only thing I've heard make record execs steam nearly as much as "peer-to-peer" is the music publishers' claim that they're entitled to double royalties for "copy protected but computer playable" CDs. The music publishers argue that they're entitled to royalties for each copy of the tracks on disc: one set of CD-audio tracks, often poorly hidden from the computer, and one set of WMA or other DRM'd files "meant" for computer playback. Perhaps end-users should be thanking music publishers, as well as incompatibility problems, for the market failure of copy-protected CDs.