Post authored by FMC Legal Intern Satie Munn

Acclaimed singer-songwriter Aimee Mann is the latest artist to enter the digital royalties battle. Mann recently filed a lawsuit against the company MediaNet, demanding statutory damages for copyright infringement of around 120 songs. If she wins, Mann could be awarded up to $18 million dollars in damages.

MediaNet was founded in 1999 as a venture backed by big music and technology concerns EMI, AOL, BMG and Real Network, but was later sold to a private equity firm in 2005. Although many probably haven’t heard of the company, MediaNet’s website claims that they have a catalog consisting of more than 22 million songs, and serve more than 40 million customers, which include Ebay, Yahoo!, Zune, MOG, FYE and others. The company’s service provides access for interactive and non-interactive streaming platforms, as well as the option to buy digital copies of songs for $.99 to $1.29.

Mann’s lawsuit alleges that around 120 of her songs are being provided to various online radio sources by MediaNet, but the company does not have the rights to her songs, and has not compensated her for plays since September, 2005. Mann admits that in 2003 she entered into a license agreement with MediaNet, but she sent a termination notice in 2005. After her attempt to terminate the agreement, MediaNet allegedly continued to distribute her music, sending only a $20 advance in March 2013 for the last eight years, which Mann promptly returned.

Into the Legal Weeds
The lawsuit opens with a standard “willful infringement” copyright claim. Mann claims that since 2005, MediaNet has intentionally reproduced and distributed her music in the absence of a lawful direct license for each composition. She also alleges that MediaNet failed to obtain a proper compulsory license for her music because the company never provided her notice of its intent to distribute, a requirement of Section 115 of the Copyright Act.

However, beginning on page 7, the complaint takes an interesting turn. Seemingly unprecedented for an artist-issued suit, Mann makes two other claims under theories of “contributory copyright infringement” and “vicarious copyright infringement.” For MediaNet to be guilty of contributory infringement, Mann must prove that the company “knowingly aided, induced, or contributed to copyright infringement by another.” If Mann can prove that MediaNet induced or contributed to end-user copyright infringement by knowingly distributing unlicensed copies of Mann’s songs to clients such as Ebay and Yahoo!, then her second claim will have merit. Whether or not MediaNet’s customers knew that the music was being used unlawfully is irrelevant. MediaNet could additionally be held liable for vicarious infringement if Mann can show that the company had the “ability to control the infringing acts (of its customers) and had a direct financial interest in such activities.”

So, is MediaNet really the rights-theiving company that Mann’s lawsuit suggests? Well, MediaNet is no stranger to infringement lawsuits. After the company was sold to a private equity firm, MediaNet continued to distribute music and was forced to defend its practices in a 2008 action brought by song licensing company Harry Fox Agency. That matter was promptly settled, but MediaNet was again the subject of a 2011 suit brought by various song publishers. In that case, plaintiffs claimed that, about a decade ago, MediaNet attempted to seek compulsory licenses for much of its catalog. However, the notices sent by the company were “facially defective” and therefore the licenses were invalid. The suit further asserted that by 2012, “23 percent of MediaNet’s catalog remains unlicensed.”

Despite the company’s history of being sued for copyright kerfuffles, MediaNet denies liability in response to Mann’s case. Frank Johnson, CEO of MediaNet, issued the following statement:

This claim on behalf of Aimee Mann is without merit. MediaNet has had a license for her music since December 2003. We have been paying royalties regularly to her agents on her behalf.  MediaNet is a supporter of artist rights and copyright and has been since we launched in 2001. We expect this matter will be resolved.

This lawsuit highlights the muddled laws and licensing arrangements that cover streaming music in the United States. Aimee is not the first to declare that companies making money out of the digital music revolution are shortchanging artists. Yet the fact that Mann’s lawsuit seeks relief based on contributory and vicarious liability reminds us that there are many legal implications related to streaming music and artist royalties that have yet to be addressed by statute or the courts. Payments are divvied out at many collection levels, and each one involves separate transaction costs (and potential for abuse). Artists may argue that streaming services should pay higher royalties, but it’s also clear that more discussion is needed to address the incredibly complex system of digital royalty payments, period.

Ignorance of the law or incompetence is hardly an excuse for a digital music service to not uphold its compensation obligations. But what we seem to encounter time and again is a need for greater transparency and accuracy in the collection and distribution of royalties. The question we think that needs to be asked is, “how do we make it easier to pay artists for the use of their work?” We’ll have to see if this lawsuit brings us any closer to an answer.