I’ve got 99 issues…
I've got 99 issues...
By Alexander Loveyko
“Music is enough for a lifetime, but a lifetime is not enough for music.”
As one aspiring musician/music lawyer told me once - “I love being uncomfortable. I live in that out-of-comfort-zone.” Last week, I decided to do exactly that and go to a conference on a legal topic I don’t know much about and then sound semi-professional putting what I’ve heard on paper. My name is Alex; I am an LLM student and here is my first attempt at trying to step out of the comfort zone of BLS classroom on your behalf and bug some lecturers around New York on what is new in different areas of Entertainment Law.
The lecturer in this case, Katie Wagner, Executive Director of Volunteer Lawyers for the Arts (VLA), was extremely knowledgeable and her enthusiasm on the subject of Music Law and precise answers to the questions compensated for ridiculously uncomfortable chairs in the lecture hall and lack of any food served.
In this post, I will go over key issues and cases that captured my attention, taking into account some rudimentary knowledge of music law that I have.
How Compulsory Licenses Came to Be
Anyone wanting to reproduce a musical composition that has been previously recorded and distributed in a phonorecord may do so under what is called a compulsory mechanical license, paying the according fee (currently the rate stands at a maximum of 9.1 cents per copy). Such compulsory licenses could be obtained either through a filing with a Copyright Office or through a Harry Fox agency, which I will touch upon below. What is interesting is how this concept was created. The idea of compulsory license was first introduced on a legislative level in the Copyright Revision Act of 1909 as a response to a Supreme Court decision in White-Smith Music Publ'g Co. v. Apollo Co., 209 U.S. 1 (1908). The court held that the unauthorized embodiment of a song in a player piano roll did not infringe the copyright in the song. Id. at 18. That led to everyone, including the Congress, getting scared that one piano roll company could buy all the exclusive rights from music publishers to manufacture piano rolls and have all music under its control (which Aeolian Company was trying to do). The solution was the compulsory license system that we pretty much have today.
No Performance Rights in Sound Recordings (Almost)
One of the things that make sound recordings different from musical compositions is that the record’s owner cannot receive performance fees (on radio stations, or in bars/restaurants, for instance), and the only one who is paid in such cases is a songwriter. However since 1995 and the introduction of Digital Performance Right in Sound Recordings Act, there is a limited public performance right for online digital transmissions. There are different rates for interactive and non-interactive services in that regard – Pandora, for instance, is transmitting non-interactively, needs to get a compulsory license, and pays royalties that are fixed, while Spotify, which is interactive, is required to negotiate a license agreement with each copyright holder. SoundExchange is responsible for recording those digital transmissions and collecting digital performance royalties.
The lecturer mentioned the case of Williams v. Bridgeport Music, Inc., No. LACV1306004JAKAGRX, 2015 WL 4479500 (C.D. Cal. July 14, 2015), that could possible change the industry of music, specifically regarding copyright infringement, i.e. plagiarism. This case introduced the concept of “vibe” as a something that can be copied, and opened the floodgates to a possible new wave of litigation.
«This was something that had never previously been a consideration in a lawsuit of this nature. “Vibe,” as one commentator put it “was not something you used to be able to put on trial.”»* (@ClassicRockMag - http://teamrock.com/feature/2016-05-16/how-robin-thicke-s-blurred-lines-could-cost-led-zeppelin.)
Previously, the expert testimony on substantial similarity of one song to another (in a copyright infringement lawsuit) relied on things like musical notes, however, in Blurred Lines the court indeed pushed those lines to include a “general feel” of the song.
Issue of Fractional Licensing in Music
Another more recent development in the industry can be found in the business of Performing Rights Organizations. PROs - ASCAP, BMI, and SESAC – monitor, manage and license non-dramatic, public performance rights on behalf of their members, including songwriters, composers, and music publishers. They collect money for artists affiliated with them when artist’s music is played on the radio, in bars/restaurants, etc. They distribute it based on an undisclosed formula that accounts for a percentage of times the song is played and attribute a specific sum to an artist. BMI and ASCAP, however, due to the time when they were created, are regulated. That means, among other things that they are within the jurisdiction of Department of Justice and its consent decrees.
One of the DoJ decrees that came out recently prohibited an ongoing industrial practice of fractional licensing (Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees https://www.justice.gov/atr/file/882101/download). Fractional licensing means that each PRO collects and pays out for only the shares of musical works it represents in its respective repertoire. That decree introduced mandatory 100 percent licensing and created a massive wave of dissatisfaction in the area of collective works. Now, the choice of a co-author, for instance, would be determined by his affiliation (with ASCAP or BMI) and the rates that apply and not the actual search for the best writer, as BMI website states. The Department of Justice gave BMI and ASCAP a year to adopt that licensing (which would require many songwriters to change their songwriting contracts). However, the Rate Court judge for BMI (the two PROs have different rate court judges) decided that fractional licensing is allowed. The proverbial jury is still out on the case of ASCAP and whether the Department of Justice will turn to Court of Appeals in regards to Judge Stanton’s ruling.
SESAC Acquisition of Harry Fox Agency
In practice, no one acquires the compulsory licenses through the Copyright Office, they go to Harry Fox Agency. HFA manages about 90 percent of the rights in regards to compulsory mechanical licenses. However, SESAC, which is the PRO that is not regulated by the consent decree, recently purchased HFA and created the first Music Rights Organization that covers both mechanical and performance licensing. It allows for an easier song registration, increases payments for mechanical reproductions because SESAC s able to register more song uses, as well as greater transparency for both right holders and distributors.
In conclusion, I wanted to say that I’ve only covered about 10 percent of everything said by the lecturer or brought up by the audience, - from general copyright provisions to types of record companies and relevant clauses in publishing and recording agreements and so much more. Overall, the presentation given by VLA can serve as an excellent introductory guide to both fundamental issues and new developments in music law industry. I hope the links provided by VLA and reproduced by me in this post will be helpful to your research and will lead to new discoveries in the field.