Today (June 26, 2015), the Recording Industry Association of America (RIAA) announced that satellite radio company SiriusXM have settled a lawsuit brought by labels against the service for not paying royalties on older recordings.
The $210 million settlement is being touted as a win for labels, and potentially a resolution to an open legal question that has bedeviled the industry for a while now: whether recordings made before February 15, 1972 are eligible for royalties when “publicly performed” on digital radio.
As we’ve mentioned in previous posts, the reason this is even being debated is because when Congress established a copyright for sound recordings in 1972, they chose not to extend protections to recordings made before that date. The precise reason why is something of a mystery.
What is clearer—according to recent court rulings, anyway—is that protections for older recordings do exist under a patchwork of state statute and case law. Mostly, we’re talking about jurisdictions where there is an established music industry. This is why states like California and New York have been the primary focus of lawsuits such as those brought by rightsholders. But it’s hardly end-to-end coverage, which is why Future of Music Coalition—along with the United States Copyright Office—supports “full federalization” of these older records. We want all artists to be protected under law, not just some.
When a recording made after 1972 is “performed” on digital radio platforms like SiriusXM or Pandora, royalties are collected and distributed by SoundExchange, the nonprofit organization designated to pay artists and labels for digital transmissions. The best part of this arrangement is that the splits are equitable to artists, and the payment is direct (meaning the artists’ share isn’t held against their debt to a label). We love SoundExchange for this reason.
But our immediate question upon hearing about this settlement is how—or even whether—that $210 million will be apportioned to the performers whose music was being used without compensation. History gives us plenty of reasons to be skeptical. The major labels’ successful lawsuits against P2P filesharing sites certainly resulted in some hefty damages over the years, but did musicians ever see any of that money? Many of the artists and managers we’ve talked to aren’t so sure.
Will the labels that are party to this settlement—including Capitol Records, Sony Music Entertainment, UMG Recordings and Warner Music Group—divide the bounty by market share? How will they calculate retroactive payment to performers? And now that SiriusXM has agreed to pay under license through 2017, will SoundExchange be the designated royalty collection agent? We’d certainly prefer that. SoundExchange pays under a 50-45-5 split, where 50 percent goes to the sound recording owner (usually the label, but sometimes the artist), 45 percent goes to the featured performer (bands can decide how to divide this), and 5 percent goes to backing musicians and singers. As we previously mentioned, the artists’ share is paid directly.
So, while this settlement resolves one of the lawsuits involving SiriusXM, it doesn’t really fix the problem of not having broader protections for pre-’72s. We want older recording artists to enjoy their full scope of rights under law. Nor does this settlement guarantee direct and equitable payment to performers for the use of their work on digital radio going forward. Or at least we don’t yet have information about how payments will occur.
FMC wants all artists to be fairly compensated for the use of their work, and we also want services to be in a position to deliver or perform a diverse array of music for fans. We’ll be keeping a close eye on what this settlement might mean in terms of artist compensation and the future of radio.