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The DOJ’s Discordant Decision: An Overview of the Ruling and Its Repercussions

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Categories: Articles, Legal Issues, Music, Music Industry, Music Publishing, Performance, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

doj-decisionPerformance rights organizations (“PRO’s”) are organizations that track and collect performance royalties on behalf of songwriters and music publishers. In the United States, there are four PRO’s: ASCAP, BMI, SESAC, and Global Music Rights (“GMR”). ASCAP and BMI are the two largest U.S. PRO’s and are also non-profit organizations. Since 1941, ASCAP and BMI have been subject to consent decrees issued by the Department of Justice (“DOJ”). These consent decrees are agreements that allow the government to regulate ASCAP and BMI’s license fees and how they operate in order to prevent monopolization and encourage competition. SESAC and GMR are both independent, privately owned companies that operate on a for-profit basis and are not subject to consent decrees.

In 2014, the music community asked for a review of these decrees and requested the removal of digital licensing from the blanket licenses offered by the PRO’s, allowing publishers to negotiate directly with and be paid higher rates by companies licensing music for digital uses.  This is referred to as “Digital Rights Withdrawal” or “DRW.” Digital giants like Google, Pandora, and Sirius/XM, joined by terrestrial radio, lobbied against DRW in order to pay smaller licensing fees to music owners.   The DOJ denied the music community’s request for DRW and has now mandated that music publishers be either “all-in” or “all-out” with the PRO’s, meaning that publishers must allow the PRO’s to license all types of performances of their catalogues or none at all.

In its recent ruling, the DOJ also chose to enforce “full-work licensing,” also known as “100% licensing.”   Under the practice of 100% licensing, any person with a percentage of ownership of the work has the right to license 100% of the work, not just the percentage owned. That licensor is then liable to account to other co-owners of the work for those co-owners’ share of compensation. This principle is in line with the provisions of copyright law governing joint works, and the longstanding language of the consent decrees supports the practice of full-work licensing. Despite the language of the consent decrees, the music industry has never operated on a 100% licensing basis. The principle of allowing one co-owner to license an entire work can be overridden by a contract between the parties, and the music industry has always operated on a “fractional licensing” basis where most owners agree in writing that each owner will administer its own share. Music users obtaining licenses have also historically accepted the practice of fractional licensing, and those users experienced with PRO licenses know that one must get a license from each PRO so that all shares of co-written compositions are covered. PRO’s also collect license fees from music users and pay its members/affiliates on a fractional basis, i.e. the amount collected or paid is proportional to the share of the composition controlled by that PRO.

While the language of the consent decrees and the practice of the industry have long been out-of-sync, the DOJ’s sudden decision to enforce 100% licensing may force an entire industry to change its longstanding way of doing business. The DOJ’s ruling stipulated that if a PRO cannot license 100% of a composition, then that PRO cannot license that composition at all. This means that any compositions written by co-writers belonging to different societies would potentially become unlicensable by the PRO’s.

What Problems Does This Create?

Those that lobbied against reforming the consent decrees failed to realize that their efforts to pay less may also prevent them from using or playing a large percentage of music, or may require them to remove music from rebroadcasts of older programming, because much of the music they wish to use may become unlicensable by the PRO’s.   If compositions are unlicensable by the PRO’s, then music users will have to go directly to music owners for performance licenses. While obtaining direct licenses may be feasible for more experienced users, many music users will not know where to find composition owners or how to go about obtaining licenses from them. If compositions become unlicenseable by the PROs and licenses are not obtained directly from the music owners, it is possible that many compositions may not be used, or many compositions may be used without permission resulting in copyright infringement.

All of these scenarios may hinder music owners from receiving payments for performance royalties, and without the PRO’s, music owners will be responsible for tracking and policing all uses of their music, which is normally too labor intensive and financially burdensome for most music owners.

Foreign performance societies, writers, and publishers are also affected by the DOJ’s ruling. Via reciprocal agreements, U.S. and foreign PRO’s work together to track and collect royalties for performances in a work’s home country and foreign countries. If certain works become unlicensable by U.S. PRO’s, then foreign societies and owners may have to track U.S. performances of their works in the U.S. Anyone in the U.S. wishing to use a foreign work not licensable by a U.S. PRO will have to get a direct license from the foreign licensor. In addition, U.S. owners issuing direct licenses may have to track and collect on foreign performances outside of the societies. Again, this creates burdens on all societies and owners, as well as opening the door for mass amounts of infringement and owners not receiving payments.

The DOJ proposed a solution of modifying all past agreements between co-writers of different societies to allow administration by one owner or PRO. This would apply to both U.S. and foreign writers and publishers. However, this is an impractical solution because many writers will not want another PRO that is not their chosen PRO collecting on their behalf; many writers do not speak to past co-writers or know where to find them; many writers are deceased, leaving one or more co-writers to deal with heirs that may not understand the principles involved or cannot be found; and many writers will not have the financial resources to have their agreements amended.

From a creative standpoint, many writers feel the DOJ’s decision will restrict them to only writing with co-writers from their chosen PRO. Restricting the freedom of writers to collaborate would be a fatal blow to creativity itself and cause many musicians to relegate music to a hobby rather than a career.

Where Are We Now?

The DOJ has allowed ASCAP and BMI a period of one year to comply with the new mandated changes, and if they are still non-compliant after one year, the DOJ can sue ASCAP and BMI for non-compliance with its decision. However, the one-year compliance period has not started yet, and will be delayed by the current efforts of BMI and ASCAP to get this decision reversed.

As of this writing, BMI has sued the DOJ and is appealing the ruling through legal proceedings. ASCAP is developing a lobbying strategy to seek much needed Congressional support and achieve changes from the legislative side. Those of us on the forefront of this issue feel it is best to wait until we have a definite outcome before spending time and resources on modifying agreements or making other changes to longstanding industry practices.  However, consult with me on this issue if you are concerned.

Some resources to take action and stay up to date include www.standwithsongwriters.org and www.artistrightswatch.com.

 

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

 

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Why Posting a Cover Song on YouTube is Copyright Infringement

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Categories: Articles, Copyright, Infringement, Legal Issues, Music, Music Industry, Music Publishing, Royalties, Social Media, Tags: , , , , , , , , , , , , ,

by Erin M. Jacobson, Esq.

Erin Jacobson music attorney music industry lawyer youtube cover song copyright infringement

New artists trying to get discovered will frequently cover famous songs and upload videos of them performing these songs on YouTube. Many artists do not realize that without securing the proper permissions, posting a cover song on YouTube is actually copyright infringement.

User-generated cover song videos require permission to use the composition and permission to synchronize the audio elements with the video.*

To cover a composition, one needs to get a mechanical license. A mechanical license allows someone to record a song that has already been recorded and distributed by another artist. A mechanical license is most often obtained through the Harry Fox Agency. The related royalty stream is called a “mechanical royalty” which is a royalty payable to a composition owner for the privilege of being allowed to record that composition. This is the 9.1 cent royalty often mentioned in the music business.

However, the mechanical license only covers audio recordings of the original composition. It does not cover the synchronization of the audio with the video portion, for which one needs to obtain a synchronization or “sync” license. This is where most people get tripped up because they don’t get a synchronization license from the composition owner (usually the music publisher).

An artist who does not get permission from the owner of the song he is covering to synchronize his cover version with the accompanying video is infringing the copyright of the original composition.  [tweetthis display_mode=”button_link”]Failure to get a sync license for your YouTube cover song video is copyright infringement.[/tweetthis]

The consequences of posting a cover song without the proper synchronization license vary. In some instances, the copyright owners of the original composition don’t know about the cover on YouTube or they choose to do nothing about it. In other cases, the copyright owners will send a DMCA takedown notice to YouTube and have the video taken down. Further still, someone who posts an unauthorized cover might get a cease-and-desist letter or the threat of legal action, and might actually get sued, leading to liability for a lot of money in copyright infringement damages.

Do you have more questions or need a license for your project?  Contact Erin now to get your questions answered.

* In the case of a cover song, the original master recording is not used because someone else is making his or her own recording of the song and therefore no label permission is necessary. If one plans to use the original master recording in a video, that person would have to go to the master owner (usually the record label) and get a master use license to be able to pair the master recording with the video. I won’t discuss the performance right here since YouTube and similar websites have blanket licenses from the performance rights organizations. However, if an artist is uploading these videos to his or her personal website, that artist is also liable for the payment of performance royalties.

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or mattersThis article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user and Erin M. Jacobson, Esq. is not acting as your attorney or providing you with legal advice.   The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on,act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

 

 

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Everything You Need to Know About Using Album Artwork

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Categories: Articles, Business, Copyright, Music, Music Industry, Record Labels, Tags: , , , , , , , , , , , , , ,

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Image via freeimages.com

Artists seem to have a lot of confusion as to what artwork can and cannot be used on album covers and also who owns album artwork. In this article, I will cover the most common sources of album artwork and how that artwork is owned.

For the sake of convenience, I will refer to both artwork and photographs as the “work” or “works,” as the principles discussed herein apply to both.

1.  You created the work.

In this case you would likely create a piece of art and or take a photograph that you use on the album cover.  Absent any unusual circumstances, you should own and have the rights to use artwork you created or photographs you took.  If you are part of a band, it gets a little more complicated because one must note which member of the band created the work and what the agreement is within the band as to how the work will be owned.  A particular band member may retain ownership of the work as an individual and license the rights to the work to the band, or may assign ownership of the work to the band so that the band owns the rights.  If more than one member of the band created the work, they may be able to sign a simple Artwork Ownership Agreement, but again, it still needs to be determined whether those members will retain ownership of the work or assign ownership to the bands as an entity.  A band owning the work created by a single member or multiple members may be determined on a case-by-case basis or it might be based on a band agreement.

2.  Someone else created the work for you.

Usually this scenario plays out in one of two ways: either someone is hired by you or your band to create artwork for your album, or you hire a photographer to take photos of you or your band and then use the photograph(s) on the album.

Paying for something does not equate to ownership of it under copyright law. You may own a physical copy of the work – a photo print, a painting, a CD – but that does not automatically give you ownership rights in the copyright of the work itself.  If you have hired and paid an artist or photographer to create a visual image for your album cover, that artist or photographer will still own the copyright in the work unless that creator has assigned the copyright ownership of the work to you or your band.   The assignment of copyright will often include a higher fee and/or a payment of future royalties in exchange for the creator giving up his or her intellectual property rights.

If there was no transfer of copyright and the artist or photographer retains ownership of the work, you would need to get a license from the creator to use the work for your album cover, as well as for promotional and other uses associated with the album.  Again, this usually will involve a fee and/or possibly a royalty payment. Keep in mind that if the creator retains ownership, (s)he will be able to use or license the work for other purposes besides your album cover.  An example of this would be the creator giving a magazine permission to use a photograph of your band that the creator photographed.

Whether working with a photographer or artist, you should get the terms of the agreement in writing.  If the creator has given you a contract to sign, it would be wise to have a good music lawyer make sure the proper rights for uses related to album covers are granted in the language.   If not, these rights will need to be added.  If the creator retains copyright ownership, your lawyer may also be able to limit other uses granted by the creator. If the creator does not give you a contract, you should have your lawyer draft a contract so that the terms that are spelled out clearly.

3.  You got the work from the Internet or another source.

If you purchased a stock photo on the Internet, you will need to check the license provisions that come with that photo. Some photos do not allow for commercial uses, while others do allow for commercial uses, and yet others allow for commercial uses but with higher fees required.  You will have to choose a photo that allows for the rights that you will need for using the photo on your album cover and associated promotional uses. Using a photo that you like from the Internet without getting permission to use it is copyright infringement, even if you credit the source.

If there is a work that you like on the Internet that is not from a stock photo website or that you find offline, you will need to find out the identity of the owner of the work and contact that person to get a license for permission to use that work on your album cover.  Transfer of copyright ownership is probably a long shot in this scenario, but some creators might be willing to transfer ownership for the right price.

Again, consult with a good music attorney to make sure you are getting the rights you need for your specific situation.

Do you have questions that you’d like to get answered in an upcoming “Ask a Music Lawyer” article? Please send topic requests to askamusiclawyer@gmail.com. Please note that specific case advice cannot be given, and if you have questions pertaining to an issue you are personally experiencing, you should seek a consultation with a music attorney.

This post was originally published on Sonicbids.com.

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

 

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Warner Music Group Submits Class Action Settlement For Digital Royalties Suit

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Categories: Legal Disputes, Legal Issues, Music Industry, Record Labels, Royalties, Tags: , , , ,

“The Warner Music Group has submitted a settlement to the class action lawsuit filed by artists who claimed they were entitled to be paid on a licensing bases instead of a royalty bases for download and mastertones.” Read the full article at Billboard.