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Categotry Archives: Legal Issues

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Erin M. Jacobson quoted in new book “Leaving the Building: The Lucrative Afterlife of Music Estates”

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Categories: Articles, Catalogue Acquisitions, Legal Issues, Music Catalogues, Music Industry, Tags: , , , , , , , , , , , , , , , , ,

I am proud to announce I am quoted throughout a fascinating and original new book, Leaving the Building: The Lucrative Afterlife of Music Estates, by renowned music journalist, Eamonn Forde.

This is a very interesting book that takes an in-depth look at some of the most famous music estates, with commentary from industry experts regarding managing music estates, how the music is used, the problems they face, etc. This is definitely an insider look into a topic that the public usually doesn’t have access to, so pick up a copy if you are interested in this topic!

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2019 LEGAL ROUND-UP – AND WHAT IT MEANS FOR THE MUSIC INDUSTRY IN 2020

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Categories: Articles, Business, Legal Disputes, Legal Issues, Music Industry, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.   This article was originally published on Synchtank’s Synchblog.   It’s been an interesting year in the music legal field. Some outcomes were positive steps forward for the music industry, and some, well, not so much. Here’s a recap of some of the most talked-about legal happenings of 2019, and what they could mean for 2020.

Katy Perry’s “Dark Horse” Infringement Lawsuit

Background: Christian rapper Marcus Gray, professionally known as “Flame”, sued Katy Perry and her collaborators stating that Perry’s song “Dark Horse” infringed on his song, “Joyful Noise”. Perry and her team testified that they had never heard “Joyful Noise” and therefore could not have copied a song of which they had no knowledge. The actual musical evidence was lacking in similarity as well.  However, the jury decided against Perry and her team because (1) the songs have a similar sound repeated in them, (2) “Joyful Noise” had been nominated for a Grammy in the Christian music category, and (3) Katy Perry had once been a Christian artist before she hit pop superstardom. Perry has appealed the lawsuit and the appeal is currently pending. What it Means: Copyright infringement lawsuits require two elements to be proved, substantial similarity and access. The two works must show enough similarity that one could attest one creator had copied the other, and the infringing party must have had access to, i.e. heard, the allegedly infringed song. Access is often proven by performance of the infringed song on the radio, a producer who worked with the both artists or their team sharing music with the infringing artist, or other similar manner of delivery. Perry and her team were found guilty of infringement despite a lack of compelling evidence for both elements. Copyright law also allows for independent creation, meaning that two people can write songs that sound similar, despite never having heard each other’s songs. However, it seems this tenant has been forgotten in this and many other recent infringement cases. What to Look for in 2020: While there are definitely legitimate cases of infringement, verdicts like this will encourage the filing of more frivolous cases. Many artists are already afraid that anything they create will be taken advantage of by opportunistic people looking to boost their own fame by capitalizing on the publicity of someone else’s creation. Hopefully, we will see this verdict overturned on appeal.  

Led Zeppelin “Stairway to Heaven” Copyright Lawsuit

Background: The trustee for Randy California, the late lead singer of the band Spirit, sued Robert Plant and Jimmy Page, saying “Stairway to Heaven” infringed on Spirit’s composition, “Taurus”. Despite the fact both of these songs are decades old, the case went to trial.  In this case, there was access (Spirit had toured with Led Zeppelin in the late 1960s) and some similarity, but no infringement was found. The lawyer for California’s estate appealed, and the new decision is currently pending. What It Means: Those in the music industry agree this verdict was correct. While California could have sued during his lifetime, he chose not to do so, and the evidence here was not compelling enough to prove the infringement claim. What to Look for in 2020: Hopefully, the original decision will be upheld. The industry needs some precedent for correct rulings in copyright infringement cases.  

Spotify’s Appeal of the Mechanical Royalty Rate Increase

Background: Last year, the Copyright Royalty Board (“CRB”) judges decided that music publishers and songwriters will get an increase on their mechanical royalty rates. The timing of this proceeding happened to coincide with the efforts of the music industry to pass the Music Modernization Act (the “MMA”). The digital service providers (“DSPs”), including Spotify, Pandora, Google, Apple, etc. rallied in cooperation with the music industry to pass the MMA. After the MMA was passed, the DSPs (except Apple) appealed the CRB’s decision to increase mechanical royalties.  The appeal is pending. What It Means: The CRB decision provides for a 44% increase in mechanical royalties to songwriters and music publishers, with incremental raises from the current rates until the 44% is reached in 2022. The DSPs supported the passage of the MMA to gain immunity for being sued for copyright infringement for failure to license and pay for all of the music streamed on their services. Once achieving that immunity, they appealed the CRB decision to try to avoid paying fair rates to songwriters. What to Look for in 2020: CRB decisions are historically difficult to overturn, so hopefully the music industry will receive the new rates it was promised. Despite the goliath size and bank accounts of the DSPs, they need to realize they cannot push the music industry around and must pay fairly for the content on which many of the them have built their businesses.  

Passage of the Music Modernization Act

Background: The Music Modernization Act passed in October of 2018, which promised more streamlined licensing procedures for music on streaming services, a new, centralized registration database, and hopefully a better system for creators and rights owners to be paid streaming royalties. 2019 has been all about actually turning these promises into reality. The Music Licensing Collective board was elected to oversee the operations of this new structure, they negotiated the funding for the database with the DSPs, and choose a vendor to build the infrastructure and supply the data (recently revealed to be The Harry Fox Agency). What It Means: There will be a lot of changes in data practice, and a lot of work for creators and rights’ owners to learn a new system and register their works with the new database. What to Look for in 2020: The database is slated to roll out in beta-mode, with it planned to be fully operational by 2021.  2020 will involve a lot of data uploads.  

Taylor Swift’s Master Recordings Dispute

Background: Taylor Swift hit it big while signed to Big Machine Records, and then moved on to Universal Music Group.  Big Machine decided to sell its catalogue of masters to Scooter Braun, backed by some investment funds. Swift and Braun have a longstanding personal beef, and when the sale occurred, Swift took to social media to express her horror at her nemesis owning her masters. Swift stated she was not given the opportunity to buy her masters back. The parties engaged in a public back-and-forth. Taylor announced she will re-record all of her old masters in 2020 once her re-recording restriction from her Big Machine contract has expired. Later, Swift said Braun was blocking her from performing her older songs on the American Music Awards and using the older music in an upcoming Netflix documentary. Another public battle ensued, with Swift ultimately being able to perform as planned.  Now stories have emerged that Swift is denying all licensing requests for her music until she is able to re-record her masters in 2020 and then will resume licensing with masters she owns. What It Means: Regarding the American Music Awards performance, this is the first time that a record label has publicly argued that a recorded television performance violates a contractual re-recording restriction, when normally that restriction is limited to recording new audio masters. When Swift does re-record her masters, it could negatively impact Braun’s recoupment of his investment. This dispute has opened the eyes of many artists as to what they may give up when signing a record deal, and there is a growing trend toward artists seeking to retain master ownership. What to Look for in 2020: Swift will most likely continue with her plan to re-record her masters. More public mudslinging may ensue. Artists overall will increasingly seek opportunities that allow them to retain master ownership.   Overall, 2020 will see a lot of changes in the music industry. Hopefully, the results will be just as exciting as the anticipation for their arrival.    

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Erin M. Jacobson, Esq. Quoted Again in US Weekly

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

Erin M. Jacobson has been quoted again in US Weekly magazine regarding further developments in the Taylor Swift masters dispute.

Click here to read the article.

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Erin M. Jacobson, Esq. Explains Taylor Swift’s Music Drama

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Categories: Articles, Legal Disputes, Legal Issues, Music Contracts, Music Industry, Music Publishing, Record Labels, Tags: , , , , , , , , , , , , , , , , , , , , , ,

Erin M. Jacobson is interviewed in US Weekly magazine to explain how Big Machine is blocking Taylor Swift from performing her old songs.

Read the article here:  https://www.usmagazine.com/celebrity-news/news/taylor-swifts-music-drama-explained-can-big-machine-block-her/ 

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Copyright Terminations: What Rights’ Owners Need to Know

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Categories: Articles, Legal Issues, Music Industry, Music Publishing, Terminations, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was originally posted on Synchtank.

The window is open for authors and heirs to recapture ownership of their copyrights.  Terminations create a lot of new movement for copyrights in the marketplace and rights’ owners need to be just as knowledgeable as authors and heirs in order to stay competitive.

Statutory Requirements

Statutory terminations come with many complexities, but the basics are as follows:

In the United States, termination of a grant can be effected during a five year period: (1)  Beginning 56 years after the original copyright date of the work for grants made before January 1, 1978; or (2) Beginning 35 years after the date of the grant for grants executed on or after January 1, 1978.*

Both of these categories of termination require that proper notice be sent anywhere between ten and two years before the effective date of termination and notices must also follow strict requirements.  Works for hire and grants by will are not terminable and terminations under U.S. copyright law only apply to U.S. rights.

Outside of the U.S., there are some other countries that have their own rules regarding terminations, most notably, the British Commonwealth countries.  British Reversionary Rights are generally uniform throughout the Commonwealth, but vary slightly per country and must be assessed on a case-by-case basis. Other countries do not have any termination rights included in their copyright laws.

Information on the recapture of music rights usually refers to composition rights only, as whether master recordings rights can be recaptured is the subject of an ongoing debate in the U.S. that will only be solved by litigation or a change in copyright law.

Information on the recapture of music rights usually refers to composition rights only, as whether master recordings rights can be recaptured is the subject of an ongoing debate in the U.S. that will only be solved by litigation or a change in copyright law. The issue here is that, as stated above, works for hire are not terminable, and most recording agreements state that the masters are works for hire for the record company.  However, U.S. law requires that for a work to truly be a work for hire, it must be either created by an employee within the scope of employment, or specially ordered or commissioned by the company, with an agreement in writing stating the work is a work for hire, and the type of work must fall within nine categories established in the law.  The problem here is that artists are not employees of record labels and master recordings are not one of the nine categories required for works to qualify as works for hire.  Until this point, labels have been successful in retaining the masters by arguing the masters qualify as collective works or compilations, and by giving artists a few additional royalty points.  However, at the time of this writing, there is a class action lawsuit pending in California to decide this very issue.

The Real Reason Why Authors and Heirs Want to Recapture Their Rights

Although the legal requirements for termination are imperative to navigating the copyright recapture landscape, most discussions on this topic fail to address why authors and heirs are so keen to exercise their termination rights in the first place.  The answer to this question is that authors and heirs are terminating because they are not happy with their current publisher or label.  This unhappiness normally is caused by the companies’ lack of attention paid to the catalogues, which results in significantly decreased earnings for those catalogues.

Authors and heirs are terminating because they are not happy with their current publisher or label.  This unhappiness normally is caused by the companies’ lack of attention paid to the catalogues, which results in significantly decreased earnings for those catalogues.

Large companies, typically the “majors”, tend to focus their efforts on acquisitions and growth, which is not bad, but they fail to increase staff and training at the same rate as their growth.  This leaves many compositions lost at these large companies because they are not being actively exploited and, in many cases, the staff isn’t even aware of the compositions.  Further, when creators or heirs do try to get a company’s attention, their efforts are often ignored because the company does not want to spend time and resources on low-earning compositions.  To further exacerbate the situation, many of these companies are not even accounting properly to the creators or heirs, and again, won’t take the time to investigate or remedy the situation because their efforts are focused solely on the highest earning compositions and further growth.

On the master side, not only are the royalty rates from the labels paltry, but in many cases, the albums are out of print and not being sold, and therefore the creator or heirs really just want a chance to do something with the music again instead of accepting the music’s fate of being locked in a vault, with the original tapes rotting away, never to see the light of day again.

In my experience, independent publishers tend to receive fewer termination notices because they do a better job with attending to and exploiting their catalogues, and usually make fewer mistakes in collection and accounting.  I work with many independent publishers (both those I represent and those who work for my author/heir clients) who do a fabulous job making sure these works continue to stay relevant and earn income.

Handling Terminations

Some companies think they can prevent authors from terminating their rights by inserting provisions in their contracts whereby the authors waive their rights of termination. However, this practice is completely ineffective because the right to terminate cannot be waived via contract. Some companies also try to prevent terminations by making new, and equally unfair, deals with aging authors and heirs.  I’ve even seen major companies effectively force creators or heirs into a new deal by using the threat of litigation against them when these companies know full well that their opponents do not have the resources to fight to reclaim their rights.

The other tactic companies take is to ignore received notices of termination or wait until right before the effective date to raise objections in an effort to deprive the authors/heirs with ample time to respond.  It’s a common joke throughout the subset of attorneys dealing with terminations that the fastest way to be ignored by a company is to send them a termination notice (or tell them they owe you money).

When rights’ owners receive a termination notice, they should address it and engage good counsel who knows how to deal with the dynamics of these situations.  Typically, once companies can no longer ignore the notices, they then dispatch the same few lawyers to repeatedly make the same narrow deals.  When I represent music publishers, I work with them on specific strategies to address the catalogue at issue and craft a deal that benefits both parties in each situation, whereby the company can retain the work and continue to reap the financial benefits, but whereby the author or heirs also feel their needs are satisfied.

Music will always be the foundation of the music business, but the music business is not the same as it was 56 or 35 (or even 10) years ago. Music has a life and legacy of its own and how these copyrights are handled can either set them up to flourish or be forgotten.

Music has a life and legacy of its own and how these copyrights are handled can either set them up to flourish or be forgotten.

The changing times require changing ways and my practice focuses on this innovation to benefit both the rights’ owners and creators so that both can continue to benefit from these magnificent musical creations.

 

* Technically, section 203 of the U.S. Copyright Law says the window opens at the end of 35 years after the date of execution of the grant, or if the grant covers the right of publication, then at the end of 35 years after the date of publication or at the end of 40 years after the date the grant was executed, whichever is earlier.

Note:  This article does not constitute legal advice.

 Erin M. Jacobson, known as “The Music Industry Lawyer”, represents and protects independent, established, and legacy songwriters and artists (including their heirs and estates), distinguished legacy catalogues, independent music publishers, Grammy and Emmy Award winners, and other music professionals at her law practice based in Beverly Hills, CA.  For more information, visit www.themusicindustrylawyer.com.

 

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5 Things to Do If You’ve Inherited a Music Catalogue

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Categories: Articles, Copyright, Legacy, Legal Issues, Music, Music Catalogues, Music Contracts, Music Industry, Music Publishing, Royalties, Terminations, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

  1.  Call Me.

Seriously.  Call me.  I regularly work with legacy artists/songwriters/composers, heirs, and estates to protect and revitalize their catalogues.  I assess what they own, what the current state of the catalogue is, and the various options for the catalogue to increase income while protecting the legacy of the creator and the works.

  1. Assess What is There.

Decisions involving how to move forward with a catalogue can’t be made if one doesn’t know what (s)he has to work with.  The first step is to know what compositions are in the catalogue, what agreements are in place, and who is collecting the income.

If the details are fuzzy, don’t worry.  Most heirs and estates do not have previous experience with music catalogues and start with a vague idea.  It’s my job to assist in making those fuzzy details become clear so that my clients know what they have, what options are available, and implement a plan to move forward.

  1. Clean It Up.

Not only are the details of most inherited catalogues fuzzy, but the money is too.  Most older catalogues have a lot of mistakes in the maintenance and management of the catalogue which prevents the catalogue from reaching its earning potential.  I’ve worked on catalogues with 50-year old mistakes not corrected by the current owner, problems with chain of title, improperly handled derivative works, and more.  I fix the problems and get income flowing again.

  1. Terminate.

Copyright law provides a valuable gift to authors and heirs, which is the right to recapture ownership of copyrights.  That’s right — authors and their heirs can reclaim ownership and control over their rights and how they are exploited.  However, this gift comes with strict requirements as to when and how rights can be recaptured.  (See articles with more information hereand here.)  An attorney with extensive experience in copyright terminations is essential here, because there is only one chance to recapture rights – and that chance is lost if deadlines are missed or the procedure isn’t followed correctly.

  1. Decide a Plan of Action.

I frequently see legacy artists and songwriters, and their heirs, who have been misguided in the management of their catalogues, who have lost rights to recapture, who don’t realize their catalogues are under-earning, and who don’t know where to start.   The right advisors are tantamount to a successful recapture process and future for the catalogue.  Each catalogue is unique and each client has different goals for the catalogue, its income, and the preservation of its legacy.  Some options include negotiating a new deal for the catalogue, selling the catalogue, or self-publishing the catalogue.  I work specifically to achieve what is best for each catalogue and each owner of that catalogue, and the results most often include clarity of mind and increased income for beneficiaries of the catalogue.*

There is only one chance to reclaim ownership of a catalogue and revitalize it – and the catalogue deserves it.

Please contact me to assist you in taking care of your legacy catalogue.

 

*  Information stated is based on past experiences.  Results are not guaranteed.

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Attention Legacy Artists: 6 Things You Need to Know to Recapture Your Copyrights

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Categories: Articles, Business, Copyright, Legacy, Legal Issues, Music, Music Catalogues, Music Contracts, Music Industry, Music Publishing, Royalties, Terminations, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was first published on Billboard.com.

There has been a lot of buzz recently about songwriters and artists (or their heirs) recapturing copyright ownership of their songs – and youcanbelieve the hype.  Copyright law provides a chance for authors (or heirs of authors) to recapture ownership of the copyrights to works granted away many years ago, and the window allowed by the law to recapture those rights is now.[1] Recapturing rights can allow for an author or author’s heirs to negotiate better deals with higher royalty splits in their favor, sell catalogues for large sums of money, or finally regain control of how a catalogue is exploited and increase profits with the right team in place.

However, recapturing rights is a complicated business filled with many requirements and nuances.  Here are six things authors need to know about recapturing rights.

  1. Dates Matter

An author (or author’s heirs) can terminate grants of copyrights made before January 1, 1978 during a window beginning 56 years and ending 61 years from the original copyright date.[2]  However, notice of termination must be served on the current owner anytime between ten and two years before the date the author intends the rights to revert.[3]  For grants made after January 1, 1978, the calculation of when rights can be recaptured is based on the date of the grant, not the original copyright date.   These post-1978 grants may be terminated beginning at 35 or 40 years after the grant date (depending on the language in the grant)[4]with a five-year termination window. Again, notice of termination must be served on the current owner anytime between ten and two years before the date the author intends the rights to revert.[5]

Being proactive is one of the most important factors when it comes to recapturing rights.  As mentioned above, serving notice on the current owners of the copyrights is required to recapture rights.  Because of the additional requirement that this notice must be sent between ten and two years beforethe date the rights will revert, anyone intending to recapture rights must look at leasttwo years ahead.  If someone intending to recapture rights misses the notice window – rights cannotbe recaptured and the opportunity is forever lost. 

  1. Works for Hire Need Not Apply

If an author signed a work for hire agreement for the works in question, don’t bother.  Copyright Law specifically states that works for hire are not eligible for termination.[6]

  1. U.S. Rights Only

The termination provisions that are the subject of this article are part of United
States Copyright Law and therefore only apply to U.S. rights.  That means one can recapture U.S. rights, but not foreign rights.  Also, as of this writing, the chance to recapture is only applicable to U.S. contracts.[7]

  1. Masters are an Uphill Battle

Most discussions around recapture of copyrights refer to composition copyrights because compositions are generally more straightforward to recapture than master recordings.  Most record company contracts say that masters are works made for hire for the record company, and as explained above, works made for hire are not eligible to be terminated.  However, copyright law dictates that works made for hire must meet certain requirements to qualify as a work made for hire:  (a) it must be made by an employee within the scope of their employment, or (b) it must be specially commissioned by the owner of the work for hire, it must be agreed in writing, and the type of work must fall within one of nine categories designated by the law.[8]  “Master recordings” is not one of those nine categories.

While there have been a few instances where labels have quietly relinquished rights to masters and sworn all parties to secrecy, most record labels refuse to release rights to masters and instead negotiate with the artist to increase their royalty rates.  A higher royalty rate does not help artists whose masters are not being exploited and not earning money, but it is all in an effort for the labels to avoid setting a precedent.   Master recordings are record labels’ main assets and businesses cannot give away their assets without also giving away power and profit.

Unfortunately, this is an issue that will only be decided by litigation and/or copyright reform, and neither of those has happened yet.

  1. Relationships Matter

For pre-1978 grants, one author’s share may be terminated, rather than requiring co-writers to terminate together.  However, if an author’s heirs are the ones effecting termination, then a majority of those heirs must terminate together.

Post-1978 grants signed by more than one author require a majority of those authors to terminate the grant together, and if any one of more of those authors is deceased, then a majority of the heirs of each deceased author must sign instead.   However, there are exceptions to this rule if separate grants were signed.

Requiring multiple parties to sign the termination notices can be problematic if co-writers, or heirs fighting about estate issues, no longer speak.  Even if the parties may have lost touch over the years, it benefits everyone involved to coordinate and cooperate to recapture rights.

  1. Don’t Try This at Home, Kids

If not already apparent by reading this article, assessing eligibility for filing terminations and carrying out the proper procedures to recapture rights is extremely complex.  Furthermore, there are numerous nuances and requirements not discussed here that could also affect whether an author or an author’s heirs may recapture rights. Anyone seeking to recapture copyrights needs an attorney specifically focused on the music industry that also has extensive experience with assessing these issues and recapturing rights.  Not all entertainment attorneys understand music and not all music attorneys are experienced with terminations.

I regularly recapture rights for my clients, as well as advise them on protecting and revitalizing their catalogues, as I am in a unique position where I am deeply familiar with both older music and how to navigate those catalogues within today’s marketplace.  Being in this space also means I frequently see legacy artists and their heirs who have been misguided, who have lost their chance to recapture their rights, who don’t realize their catalogues are under-earning, and who don’t know where to start.   The right advisors are tantamount to a successful recapture process and future for the catalogue.

There is only one chanceto recapture copyrights, one chanceto regain control of one’s legacy, and one chance to get it right.  Choose wisely.

_____________________________________________________________________

[1]Depending on the circumstances of each individual work, as some works are not yet eligible, no longer eligible, or not eligible at all to recapture.

[2]U.S.C. 17 §304(c)(3) (1992).

[3]U.S.C. 17 §304(c)(4)(A) (1998).

[4]Post-1978 grants are terminable at 35 years after the date of the grant, however, if the grant’s language includes the right of publication for the work, then that five-year period begins either on 35 years after the date of publication, or 40 years after the date of the grant, whichever is earlier.

U.S.C. 17 §203(a)(3) (1998).

[5]U.S.C. 17 §203(a)(4)(A).

[6]U.S.C. 17 §304(c) (1992); U.S.C. 17 §203 (1998).

[7]There have been a couple of high profile disputes on this matter involving U.K. contracts (namely Duran Duran in one instance and Sir Paul McCartney in another), but Duran Duran lost in a U.K. lower court and subsequently settled, and McCartney settled without litigation.  Some other countries do have their own provisions for recapture of rights, but they vary by country and differ from U.S. law.

[8]U.S.C. 17 §101 (1992).

 

Disclaimer:  This article does not constitute legal advice.

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How Amazon’s Twitch.tv Cheats Music Creators

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Categories: Articles, Copyright, Infringement, Legal Issues, Music, Music Industry, Music Publishing, Performance, Record Labels, Royalties, Streaming, Videos, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was originally posted on Forbes.com.

Music creators (songwriters and performing artists) and rights’ owners (music publishers and record labels) are not collecting a new and substantial source of income – and most of them are not aware they are not collecting it. Enter Twitch, the website exploiting creators and owners without paying for a single cent of music usage.

What is Twitch

Twitch, a subsidiary of Amazon, is a live-streaming video platform that has “over two million broadcasters and 15 million daily active users.” Anyone can become a Twitch “broadcaster,” meaning users set up their own channels and live-stream various content, which includes, but is not limited to, video-game play, card games, pranks, craft tutorials and more.

The broadcasts start out as live streams and are saved on the channel for re-broadcasts and on-demand watching. Watching videos and channels on Twitch is free and publicly accessible to anyone with an Internet connection. Anyone can become a Twitch broadcaster for free and earn money directly from viewers. Broadcasters that contract with Twitch to become a partner or affiliate will earn money from Twitch directly, as well as from viewers. All revenue streams are described in the next two sections.

Income Earned by Twitch and Twitch Partners/Affiliates

  1. Ad Revenue: Twitch serves ads on all video content, which includes video-on-demand and pre-rolls, and collects ad revenue from showing these ads.
  2. Subscriptions: Viewers can subscribe to a particular broadcaster’s channel at pricing tiers of $4.99, $9.99, and $24.99, with these charges recurring monthly.These subscriptions allow viewers to support broadcasters and use special emotes (chat icons like emojis) that are accessible only to subscribers of a particular broadcaster’s channel.
  3. Bits: Viewers can contribute “bits” to a broadcaster during a stream. Bits are a digital currency within Twitch bought by users for real money, and contributing these bits to a broadcaster is basically like adding money to that broadcaster’s tip jar.
  4. Amazon Prime: Because Twitch is owned by Amazon, Prime members can use “tokens” from their Prime membership to subscribe to broadcaster channels on Twitch. Tokens renew every month, so a Prime member can re-subscribe to a broadcaster’s channel on a monthly basis using Prime tokens.

Twitch and the broadcaster split all income from subscriptions, bits, and Prime tokens, usually on at least a 50/50 basis.

Income Earned Directly by Broadcasters

  1. Donations:Viewers can contribute money directly to a broadcaster through third party services like StreamLabs, Muxy or StreamElements without buying bits.
  2. Media Share: Viewers can make “media share requests” through StreamLabsand StreamElements, meaning viewers can request a broadcaster to play a certain song, YouTube video, or other media within a live stream (hereinafter “Media Share(s)”). Prices for Media Shares are set by the broadcaster, and some broadcasters will start their pricing at $5 per request.

A Twitch Broadcaster’s Earnings

Twitch’s most popular broadcaster is 26-year old Tyler Blevins, known on Twitch as “Ninja.” Ninja reportedly earns over $500,000 per month on Twitch revenue alone, not counting his recent sponsorship deals by Red Bull and Uber. A recent Forbes article reported Ninja’s earnings calculation: “160,000 subscribers at a higher $3.50 rate per sub means he’s pulling in $560,000 a month from that revenue stream alone. Not counting Twitch bits. Not counting donations. Not counting 4 million YouTube subscribers.”

Ninja and most other broadcasters also use music in their streams. None of this music is licensed and none of this money is going to the music creators or rights’ owners.

Music Licenses Required

Platforms with user-generated audiovisual content require performance licenses for the compositions from performance rights organizations ASCAP, BMI, SESAC and GMR. Music users must obtain synchronization and master use licenses from the music publishers and record labels, respectively, along with paying negotiated fees to “synchronize” the audio with the visual elements. Also, rights’ owners may share in ad revenue in addition to or in lieu of those fees.

It should also be considered whether a broadcaster who repeatedly uses a particular song as a theme song or channel staple (like when Ninja does a victory dance at every game win to the song, “Pon Pon Pon”, performed by Kyary Pamyu Pamyu) is implying an association with or (false) endorsement by an artist, similar to when political candidates use certain songs in their campaigns.

How Music Rights are Being Violated

First, there is no evidence that Twitch has valid performance licenses in place from ASCAP, BMI, SESAC, or GMR (although they may be working on it). Therefore, Twitch is not paying for the repeated performances of music to audiences of millions.

Second, it is not known that any broadcaster using music on Twitch obtains synchronization or master use licenses, or pays any fees for the use of music. Also, neither Twitch nor the broadcasters are sharing ad revenue with rights’ owners.

Third, Twitch does not have its own content ID system like YouTube to track and claim uses of music. Twitch leverages Audible Magic to track audio uses after a live stream is over and will mute infringing content in the on-demand re-broadcasts, but not all content is recognized and removed. Also, there is no system to flag these infringing uses or mute them during a live stream.

All of the money earned by Twitch and its partner/affiliate broadcasters for subscriptions, bits, and Prime membership is retained entirely by Twitch and its partners/affiliates, and money earned from donations and Media Share song requests is kept entirely by the broadcasters. None of these funds are allocated to music creators and rights’ owners whose music is being used in these broadcasts.

Current State of Affairs

On June 22, 2018, the Twitch community received a shock when a group of its most popular broadcasters were banned from Twitch for playing a leaked version of a new song by rapper Juice Wrld that was initiated via Media Share song requests. Interscope Records issued DMCA takedown notices, and per Twitch policy, each infringer was banned for 24-hours.

This incident has shed a light on the use of uncleared music by Twitch broadcasters, but many have either continued with playing uncleared content or will not include certain music in the broadcasts. Ninja has turned off music content so he can then repost videos to YouTube in order to avoid YouTube claims by rights’ owners and keep his YouTube ad revenue. Ninja has publicly stated, “I’ve already reached out about getting rights to music … you can still get screwed over for playing music that doesn’t belong to you. … It’s such a nightmare, that it’s just not worth it.”

Interscope later supposedly stated the DMCA takedowns were an accident and Juice Wrld apologized to the Twitch broadcasters, saying “I will do what I can to prevent it from happening again.”

The National Music Publisher’s Association (NMPA) is rumored to be in negotiations with Twitch for licensing, but has not confirmed or commented as to the details.

Furthermore, Twitch isn’t the only site on the market. There are other, similar sites such as Mixer (owned by Microsoft), Facebook Gaming, YouTube Gaming, and Caffeine. There are also other music-centric sites, like Smule, using music in audiovisual content purportedly without permission or payment. More of these websites, as well as phone apps, with user-generated content, continue to emerge and the rate at which more new platforms are introduced is unlikely to slow due to the prevalence of streaming.

The Real Problems

First, rights’ owners are not enforcing their rights and making sure they receive payment for uses of their content. As stated at the beginning of this article, many creators and rights’ owners do not even know about these infringements. Those rights owners’ that are aware, like Interscope, have allowed the rumors of “accidental” takedowns to be the last word on the subject instead of taking a stand to protect their rights.

Second, Juice Wrld is an example of at least one artist condoning the Twitch broadcasters’ unauthorized use of his work instead of getting paid. Artists and songwriters can and should benefit from these uses, and condoning the infringing behavior allows for more of it, as well as a further loss of income to the creators and rights’ owners.

Third, streamers are often ignorant of how to obtain permission. Noah Downs, a video game lawyer at McDonald, Sutton & DuVal in Richmond, VA observes, “Some broadcasters reach out to artists directly, thinking that if the artist tweets ‘Sure, use my music!’ then it must be okay to use. It does not matter if a broadcaster has that kind of permission from the artist – generally the decision is up to the label.”

Fourth, many streamers feel entitled to play music without permission under the belief they are actually helping artists by giving them exposure. Famous artists and songs do not need free promotion from Twitch broadcasters – they are already famous. While exposure might be helpful for new artists to gain fans, it still doesn’t need to be for free.  For example, music service Pretzel Rocks and music company Monstercat have agreements with artists allowing music to be played legally on Twitch broadcasts with compensation being paid to the artists and songwriters.

In an ironic twist, Twitch viewers and broadcasters frequently use and repurpose clips of other Twitch broadcasters’ content without permission. The broadcasters complain about this practice and will submit content claims when their content is used without permission, but they fail to realize that they are doing the same thing to music creators and rights’ owners. Downs agrees, stating, “In many ways, broadcasters and musical artists are the same, and both deserve to be paid fairly.”

The bottom line is that allcreators and rights’ owners need to be properly compensated for uses of their work. Rather than ignoring or condoning infringing behavior, creators and rights’ owners need to keep up with new uses of music and take a stand to protect the value of their music and their livelihoods.

It’s time creators stopped feeling entitled to steal from and deprive each other of the fruits of their labor. It’s time people realized that using music without permission or payment not only cheats the creator or performer, but also impacts everyone that works for them or with them. It’s time the culture of all creators shifts to one of respecting one’s own work enough to get paid for it and respecting the work of others enough to get the proper permissions and pay the proper compensation. It’s time that everyone gets serious about valuing music.

 

*This article does not constitute legal advice.

Click here to contact Erin M. Jacobson, Esq. if she can assist you in your career with this issue or other music industry issues. (Ms. Jacobson does not shop, litigate, or accept unsolicited material.)

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Music Industry Cases And Issues To Watch In 2018

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Categories: Articles, Legal Disputes, Legal Issues, Music Industry, Music Industry Interviews, Music Publishing, Royalties, Streaming, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was first posted on Forbes.com.

It’s been a year since I wrote about Music Industry Cases to Watch in 2017 and, unfortunately, not much has changed. Here’s an update on what’s happening in the music industry and what to keep an eye on for 2018.

The Department of Justice v. ASCAP and BMI

Background: I previously wrote about this issue here and here, and there hasn’t been much forward movement. To briefly recap, performance rights organizations ASCAP and BMI asked the Department of Justice (“DOJ”) — which oversees the consent decrees governing ASCAP and BMI — to reform the decrees based on today’s digital age. The DOJ responded by ignoring the music industry’s requests for reform and instead mandating a model of 100% licensing, which restricts a performance rights organization to license rights to perform a work only if the organization has the right to license 100% of that work. BMI appealed the decision and got an immediate verdict in BMI’s favor. The DOJ appealed and oral arguments on the case were just heard. (More info here as well.)

What You Might Expect: It could go either way.

How It Could Affect the Industry: If the DOJ wins, then the music industry might need to change its business model and overhaul all of its longstanding licensing practices. If ASCAP and BMI win, then the music industry will be able to proceed with doing business as it has been for decades and continue making efforts to improve the existing system.

Potential Reform of Royalty Rates by the Copyright Royalty Board

Background: As I previously explained here, the Copyright Royalty Board (“CRB”) held hearings to potentially update the mechanical royalty rates paid to songwriters and publishers for reproductions of compositions. The current mechanical royalty rates for physical products and digital downloads are 9.1¢ for compositions five minutes or less in length, and streaming rates are at fractions of a penny. The National Music Publisher’s Association argued for rate increases on behalf of songwriters and publishers, while digital service providers (like Google, Spotify, Pandora, Amazon and Apple) offered alternative rate structures that may lower rates overall. The CRB recently raised some rates for master recording owners, but the determination on mechanical royalties has not yet been revealed.

What You Might Expect: Hopefully this first determination for master owners will predict a raise in mechanical royalties as well. Whether mechanical royalties are raised still remains to be seen, but any increases that are granted would probably not be enough to remedy the music industry’s struggle with the value gap. David Israelite, President and CEO of the National Music Publisher’s Association (NMPA), graciously provided some exclusive quotes for this article, saying: “We are cautiously optimistic the CRB will return a rate structure that values appropriately the contribution of songwriters to digital music services. This is a very important decision as interactive streaming services become the dominant format for the enjoyment of music.”

How It Could Affect the Industry: If the CRB maintains or lowers the rates in favor of the digital service providers, the music industry would continue struggling with low rates of payment. If the CRB increases the rates, it would help the music industry’s cash flow issues, but probably still not support the music industry at the level it needs. Israelite also commented to us, “Regardless of the decision, the time has come for the government to get out of the business of setting rates for songwriters and to let the free market determine the value of songs.”

Many Lawsuits Against Spotify

Background: Spotify is an interactive streaming service required to pay both mechanical and performance royalties. As detailed here, Spotify has already agreed to several settlements for failure to properly pay mechanical royalties and has been sued several times for the same reason, with those cases still pending. Spotify made the argument that it shouldn’t have to pay mechanical royalties, despite previously admitting that it needed to do so.

What You Might Expect: Spotify’s argument is flawed in many ways, but their $16 billion valuation may hold some clout, or at least the funds to continue pushing their position. The music industry hopes to quash their arguments, but acknowledges that the lawsuits are just Band-Aids, and is striving to implement a more efficient system.

How It Could Affect the Industry: A legal decision set in Spotify’s favor could mean massive losses of income to songwriters, music publishers, and the music industry as a whole.  Hopefully, the streaming giant and the music industry will find a way to work together for their mutual benefit.

Many Music Catalogues Being Sold

Background: It’s old news for music industry folks that a large number of record labels are owned by just a few major corporations. However, acquisitions of composition catalogues are now hitting the spotlight after traditionally not garnering much attention. The catalogue purchase and sale market is booming, and those of us in this space (like me) are regularly looking at either buying or selling catalogues, depending on who we are representing. Many music publishing companies are also raising a lot of money from outside investors in order to gobble up other substantial catalogues. There are even rumors of music publishing giant EMI for sale at a $3 billion valuation.

What You Might Expect: There will be a lot more of these deals happening in 2018.

What It Means for the Industry: The majors will continue to buy the indies, and the larger indies will buy competitors and smaller companies. The music publishing world might get smaller, but there will always be more copyrights to go around. The downside is that the investors coming in with the funds are usually not in the music industry, meaning that the music publishing industry may now have to answer to venture capitalists, which has been a problem for years with major record labels. The good news is that these non-industry investors will need current industry experts to manage the catalogues they have purchased, continuing jobs and revenue flows throughout the industry.

*This article does not constitute legal advice.

Special thanks to David Israelite, President and CEO of the National Music Publisher’s Association (NMPA) for graciously providing quotes exclusive to this article.

Erin M. Jacobson is a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogs, 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. Ms. Jacobson also serves on the boards of the California Copyright Conference (CCC) and Association of Independent Music Publishers (AIMP).

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Spotify May Have To Pay Songwriters $345 Million

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Categories: Articles, Business, Infringement, Legal Disputes, Legal Issues, Music Industry, Music Publishing, Royalties, Streaming, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was previously published on Forbes.com.

When you stream music on Spotify, are you aware that as you are enjoying your favorite song, Spotify might not be paying the person who wrote that song?

Spotify has been sued for upwards of $345 million by Bob Gaudio and Bluewater Music Services Corporation for failure to pay mechanical licenses when their compositions are streamed on Spotify. Gaudio, a former member of Frankie Valli and The Four Seasons, wrote and publishes some of the group’s biggest hits including “Sherry,” “Big Girls Don’t Cry,” and “Walk Like a Man,” as well as Valli’s solo hit “Can’t Take My Eyes Off of You.” Bluewater administers the publishing for compositions like Player’s “Baby Come Back,” Miranda Lambert’s “White Liar,” and Guns ‘N Roses’ “Yesterdays.”

Streaming requires several licenses –sound recording licenses from the record labels; performance licenses for the compositions from performance rights organizations such as ASCAP and BMI; and mechanical licenses for the reproduction of the compositions. While Spotify has deals with the major labels, and blanket licenses with ASCAP and BMI, Spotify has not complied with the requirements for mechanical licenses and payments for all compositions streamed on its platform. Obtaining a mechanical license in the United States is compulsory, meaning that a person or company wishing to reproduce a composition must follow the guidelines in Section 115 of the United States Copyright Act to serve a “Notice of Intent” on the copyright owner and pay said owner the compulsory license fee. Spotify has followed this procedure for compositions affiliated with the Harry Fox Agency (the closest body the United States has to a mechanical rights society), but there are many compositions not affiliated with the Harry Fox Agency that Spotify would need to contact and pay directly – and Spotify largely has not done so.

This is not the first time Spotify has come under fire for its inadequate licensing practices. In 2016, Spotify reached a $30 million dollar settlement with the National Music Publisher’s Association (NMPA) for unpaid mechanical royalties, and Spotify just settled another class action suit for $43.4 million dollars. While maximum statutory damages rates are $150,000 per infringed composition, Bluewater claims that Spotify will only have to pay songwriters $4 per infringed composition after litigation fees are paid. Per the previous settlements, Spotify must also implement a better system to properly track and pay mechanical royalties, and Bluewater asserts this has not yet happened.

The attorney for both Gaudio and Bluewater is Richard S. Busch, most recently in the news for his representation of Marvin Gaye’s estate in the “Blurred Lines” case. Echoing my previous sentiments, a press release citing Busch’s complaint sums up the issue in a single sentence: “Songwriters and publishers should not have to work this hard to get paid or have their life’s work properly licensed, and companies should not be allowed to build businesses—much less billion-dollar businesses—on the concept of ‘infringe now and ask questions later.’”

*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 catalogs, 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. Ms. Jacobson also serves on the boards of the California Copyright Conference (CCC) and Association of Independent Music Publishers (AIMP).

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