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Music Industry Cases to Watch in 2017

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Categories: Articles, Copyright, Infringement, Law, Legal Disputes, Legal Issues, Music Industry, Performance, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

by:  Erin M. Jacobson, Esq.

This article was previously published on Forbes.com.

Following are the top music legal cases to watch in 2017, what to expect, and how they could affect the industry as a whole.

Global Music Rights v. The Radio Music Licensing Commission (and The Radio Music Licensing Commission v. Global Music Rights)

Background: As explained here, The Radio Music Licensing Commission (“”RMLC”) sued performance rights organization Global Music Rights (“GMR”) on anti-trust grounds for creating an artificial monopoly over and charging “exorbitant” licensing fees for works in its repertoire. In a separate and non-retaliatory suit (and explained here), GMR sued the RMLC claiming that the RMLC’s committee of radio stations seeks to discourage competition amongst these stations with the common goal of keeping payments to songwriters and music publishers artificially low and using its collective power to do so.

What you might expect: The parties will probably settle, as the implementation of judicial rate supervision would significantly curb GMR’s objectives in negotiating higher rates for its writers. If GMR had to submit to judicial rate setting proceedings, it is probable Irving Azoff would find a way around the regulations to command higher compensation for GMR writers.

How it could affect the industry: If radio does not want to pay GMR’s rates, then radio stations can refuse to play works in the GMR repertoire. As a result, these artists would lose the promotion and performance income provided by radio airplay. It could also affect writers belonging to other performance rights organizations that have co-written songs with GMR writers or covered songs by GMR writers.  The band Anthrax has already issued an open letter to Irving Azoff seeking to have its name disassociated with GMR, as the band is not a GMR client but is listed in the GMR repertoire because Anthrax covered “Phantom Lord” by Metallica (a GMR client) early in Anthrax’s career. Anthrax is afraid this association could stop radio stations from playing all Anthrax songs.

However, the radio stations themselves would also suffer because it would harm stations’ popularity with listeners if stations cannot play the music their listeners want to hear, resulting in a significant loss of advertising revenue.

The Turtles v. SiriusXM

Background: Flo & Eddie of The Turtles sued SiriusXM for playing their sound recordings without paying royalties. In the United States, all sound recordings made after February 15, 1972 are protected by federal copyright law. Prior to that date, sound recordings only had protection under state laws. In 1995, sound recordings were granted a digital performance right to earn royalties when played on digital media like satellite radio or streamed online. This case raised the question as to whether all sound recordings were entitled to the performance right or only those recorded post-1972. Flo & Eddie have been successful in several states to champion the right to royalties for owners of older recordings, but a New York appeals court just ruled against themsaying that the pre-1972 recordings are only entitled to protection provided by state laws.

What you might expect:  The outcome could go either way here, but its definitely one to watch. A settlement might also be possible for those involved in the lawsuit, however, a settlement would not dictate the future of royalties for other pre-1972 recordings not included in this class action suit.

How it could affect the industry: If it is found that pre-1972 sound recordings are entitled to a digital performance royalty, then owners of these recordings and the artists who recorded them would be entitled to an income stream much needed for older catalogues that do not currently make much money in terms of sales or other uses. Satellite radio and other Internet services would have to pay an appropriate amount of royalties, which seems doable for a company like SiriusXM worth billions of dollars, but potentially less so for smaller providers. If the appeal is upheld, then satellite radio and Internet services would continue to play these early recordings without paying royalties to the owners and artists of these recordings and would further the financial hardships for older artists without current hits.

“Blurred Lines” v. “Got To Give It Up”

Background: Pharrell Williams and Robin Thicke wrote and recorded a song (“Blurred Lines”) that they, as stated in interviews, wanted to sound like Marvin Gaye’s “Got to Give It Up.” The Estate of Marvin Gaye sued Thicke and Williams for copyright infringement and the closely followed trial yielded a jury verdict in favor of the Gaye family, with a judgment ultimately set at $5.3 million plus future royalties. The verdict inspired a string of similar lawsuits, including one challenging the originality of “Stairway to Heaven.”

A major issue within the trial was whether to consider only the lead sheet (musical notes) deposited with the Copyright Office (protocol at the time “Got to Give It Up” was registered) and not the recording of the song. Insiders of the music community debate the finding of infringement when many of the actual notes were not an exact match in both compositions versus looking at patterns and other music elements that were similar and repeated within both songs.

The case is now up for appeal. Thicke and Williams’ attorney claims that the trial court’s verdict will “chill” creativity. The attorney for the Gaye family argues in his appellate brief that the copyright for “Got to Give It Up” is not “thin,” and states a reminder that the
test for infringement is substantial
similarity and not virtual identity.

What you might expect: This case will once again be closely followed, but the verdict cannot be predicted at this time. A settlement is doubtful because the stakes have become too high for both sides.  This case has become much bigger than just the two songs involved.

How it could affect the industry: The impact of this decision could set an important precedent. If Thicke and Williams win, it would open the door to frequent usage of elements from older songs with little recourse for the copyright owners of the original songs. If the Gaye family wins, it would probably inspire even more lawsuits for infringement. Regardless of whichever party wins, this case may influence all future copyright infringement lawsuits involving music, as it may dictate which sources (lead sheets, recordings, etc.) can be considered in a copyright infringement suit and based on what is included in those sources, which elements of a composition can be protected and/or infringed.

The Department of Justice v. ASCAP and BMI

Background: Performance rights organizations ASCAP and BMI asked the Department of Justice (which oversees the consent decrees governing ASCAP and BMI) to reform the decrees based on today’s digital age. Music publishers asked for the ability to negotiate directly with companies licensing music for digital uses. The Department of Justice ruled against all that was asked for by the music community and decided to implement a model of 100% licensing, which mandates that a performance rights organization can only license rights to perform a work if the organization controls 100% of that work.

BMI appealed the decision and got an immediate verdict in BMI’s favor allowing the industry practice of fractional licensing to continue. The Department of Justice has appealed BMI’s victory and that appeal is currently pending.

What you might expect: This is going to be an ongoing fight to the bitter end.

How it could affect the industry: As explained in more detail here, a ruling in favor of the Department of Justice would force the entire music industry to completely change the way it does business, render hundreds of thousands of works to be unlicensable by ASCAP and BMI, place incredible burdens on composition owners to track performances, potentially require hundreds of thousands of contracts to be amended, and would also affect the music industry throughout the world due to the reciprocal agreements ASCAP and BMI have with performance rights societies in other countries.

*This article does not constitute legal advice.

Erin M. Jacobson is a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogues, songwriters, music publishers, record labels, and independent artists and companies. She is based in Los Angeles where she handles a wide variety of music agreements and negotiations, in addition to owning and overseeing all operations for Indie Artist Resource, the independent musician’s resource for legal and business protection.

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The Significance Of Irving Azoff Calling The Radio Industry A Cartel (Forbes.com)

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Categories: Articles, Business, Legal Disputes, Legal Issues, Music, Music Contracts, Music Industry, Performance, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was originally published on Forbes.com.

Global Music Rights (“GMR”), a performance rights organization founded by music industry mogul Irving Azoff, sued the Radio Music Licensing Committee (“RMLC”) this week for antitrust violations, claiming that the RMLC’s committee of radio stations seeks to discourage competition amongst these stations with the common goal of keeping payments to songwriters and music publishers artificially low and using its collective power to do so.

As I explained in a previous article, the RMLC recently filed a lawsuit against GMR claiming that GMR has created an artificial monopoly over works in its repertoire since GMR can dictate license fees and deny licenses to perform the music it represents if music licensees are not willing to pay GMR’s fees. Azoff founded GMR to offer a more boutique experience for the writers in its repertoire and seek higher licensing fees than ASCAP and BMI who are subject to government consent decrees and judicially restricted rates. The RMLC argued that the license fees required by GMR are exorbitant and seeks to lower them by forcing GMR to submit to judicial rate-setting proceedings, which would require a judge to mandate the rates GMR can charge its licensees.

GMR has been in negotiations with the RMLC since its inception, but still have not reached a deal because GMR will not agree to judicial rate-setting proceedings. GMR’s complaint states that its lawsuit is not in response to the RMLC’s previously filed antitrust suit against GMR, but rather “the group’s illegal conduct including price fixing, information sharing and threats of group boycotting.” GMR, who did reach a deal with two individual radio stations, argues that all stations should compete for the music they play, rather than banding together to force the music industry to succumb to low rates in order for music to be played. According to a press release from GMR, radio stations currently pay only about 4% of their revenue to songwriters and music publishers. To further put things into perspective, the RMLC represents over 10,000 radio stations that collectively bring in about $16 billion in advertising revenue annually, whereas GMR is an independent performance rights organization representing 70 songwriters and earns under $100 million per year.

As also explained in my prior article, radio stations rely on music for their content. Radio stations and other music content platforms repeatedly seek to reduce compensation to the songwriters and music rights owners that create the very music that establishes their listenership and drives their revenues. Although the stations behavior makes sense from a profit margin standpoint, it is still surprising that radio would seek to so significantly undervalue the music that comprises the foundation of its product.

The parties are at a standoff because if radio does not want to pay GMR’s rates, then radio stations can refuse to play works in the GMR repertoire. This is unfortunate for the artists in the GMR repertoire because they would lose the promotion and performance income provided by radio airplay. However, the radio stations themselves would also suffer because it would harm stations’ popularity with listeners if stations cannot play a requested new single by a GMR writer like Drake or Pharrell Williams, or even classic compositions by John Lennon or The Eagles. If radio listeners stop listening to stations because they do not play the music their listeners want to hear, then advertisers will stop buying advertising on those stations and move on to whatever other platforms their target markets have adopted. The RMLC is banking on being successful with this lawsuit as they were in their recent and very similar fight with performance rights organization SESAC. However, if the RMLC is unsuccessful at forcing GMR to submit to judicial rate proceedings, then radio stations will have the choice of either paying higher license fees for GMR artists or losing advertising revenue, a dilemma in which it would probably be to the stations’ advantage to pay the higher license fees requested by GMR than losing its advertisers.

Azoff said, “I will not stop the fight for fairness to artists and songwriters,” and he is not alone in his principles. Both creators and professionals within the music industry have seen rates steadily decline and are tired of accepting undervalued rates. Simultaneous to GMR’s battle for higher rates, songwriters and performance rights organizations have been combatting the United States Department of Justice amid other restrictions on music licensing. While the music industry is not dead yet, many within the industry are concerned about the viability of music as a career because without proper payment to songwriters and music publishers, the creation of music may be relegated to a hobby if the majority of creators cannot make a living from creating music.

*This article does not constitute legal advice.

Erin M. Jacobson is a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogues, songwriters, music publishers, record labels, and independent artists and companies. She is based in Los Angeles where she handles a wide variety of music agreements and negotiations, in addition to owning and overseeing all operations for Indie Artist Resource, the independent musician’s resource for legal and business protection.

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Radio Seeks to Pay Songwriters Lower Rates — Again (Forbes.com)

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Categories: Articles, Business, Legal Disputes, Legal Issues, Music, Music Industry, Music Industry Interviews, Performance, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Radio Seeks to Pay Songwriters Lower Rates — Again

By:  Erin M. Jacobson, Esq.

This article was originally published on Forbes.com.

A committee representing roughly 10,000 commercial radio stations has sued performance rights organization Global Music Rights (“GMR”) in an effort to further reduce the amount radio stations pay to music composition creators and rights owners for performances of their works. This committee is the Radio Music Licensing Committee (“RMLC”) and it claims that GMR has created an artificial monopoly over works in its repertoire.

Performance 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 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. 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.

Music industry mogul Irving Azoff founded GMR in 2013 in order to provide a more boutique experience for managing performance rights licensing and potentially command higher rates for the performances of works in its repertoire, which includes compositions written and/or performed by artists such as Adele, The Beatles, Pharrell Williams, Katy Perry, Madonna, and many more.

Because GMR is not subject to a consent decree, it can deny a license to perform the works in its repertoire and can also negotiate license rates as it sees fit. The RMLC argues that the license fees required by GMR are exorbitant and seeks to lower them by forcing GMR to submit to judicial rate-setting proceedings, which would require a judge to mandate the rates GMR can charge its licensees. This is similar to procedures mandated for ASCAP and BMI, but without subjecting GMR to a full consent decree. The RMLC previously filed a similar suit against SESAC and reached a settlement in the RMLC’s favor.

Terrestrial radio makes its money on advertising revenue, and while radio is far from dead, it no longer holds the status of its heyday. Terrestrial radio and other broadcasters regularly fight to reduce license fees, as terrestrial radio lobbyists were also part of the group in favor of the Department of Justice’s crackdown on ASCAP and BMI’s licensing platforms, the outcome of which is still pending.

Most observers of this situation usually fail to mention that the public perception of radio’s purpose is music promotion. Without music driving the listenership of certain stations, those particular stations would not earn the ad revenue from advertisers who want to reach those stations’ listeners. However, the stations repeatedly seek to reduce compensation to the songwriters and music rights owners that create the very music that establishes their listenership and drives their revenues.

Terrestrial radio isn’t the only industry trying to reduce payments to music creators and rights’ owners. Those of us who regularly handle music licenses know that attempts to undervalue music also come from Internet and digital companies, as well as small bars and restaurants. Visual productions seeking synchronization and master use licenses also regularly try to lowball license fees or request gratis uses.

It is up to music creators and rights’ owners to value music (#valuemusic) and require proper payment for uses of their music, and to those that use music to recognize the value that music brings to their project or business.

*This article does not constitute legal advice.

Erin M. Jacobson is a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogues, songwriters, music publishers, record labels, and independent artists and companies. She is based in Los Angeles where she handles a wide variety of music agreements and negotiations, in addition to owning and overseeing all operations for Indie Artist Resource, the independent musician’s resource for legal and business protection.