Since then there have been several lawsuits—first with a case against Spotify from David Lowery of the bands Cracker and Camper Van Beethoven, followed by Flo & Eddie of vintage pop act The Turtles, who earlier sued digital radio services for not paying royalties on pre-’72 sound recordings. Then came a suit against Spotify by singer-songwriter Melissa Ferrick. And just this week saw an infringement claim from Yesh Music LLC and John Emanuele, who allege nonpayment from several music services, including Tidal, Beats Music (now Apple Music), Google Play, Slacker, Deezer, Microsoft and Rdio (the latter’s assets now owned by Pandora, pending successful Rdio bankruptcy).
What the heck is going on here?
To answer that question, we’ll need to back up a bit. First, you should probably check out our original post. If you don’t have time for that, here are a few basic points to understand:
1. There are two copyrights in a piece of music: the sound recording (imagine performances captured on tape or hard drive) and the musical work (imagine notes on paper and lyrics). A music service like Spotify must license both “sides” of the musical copyright in order to run their business.
2. Under U.S. law, anyone can obtain a license to make a reproduction or distribution of an underlying composition without having to directly negotiate permission with the copyright owner(s), provided they follow the guidelines laid out in Section 115 of the Copyright Act. To be eligible for a compulsory license, a user has to send a Notice of Intent (NOI) to at least one of the publishers of a musical work no later than 30 days before making the reproduction/distribution (for streaming, the understanding is that the reproduction and distribution happens at the time of transmission). The compulsory license—which you may hear people refer to as just “the compulsory”—also lays out specifics for reporting and royalty distribution. The user has to send monthly accounting statements and pay on a 30-day schedule. If a user cannot locate one of the publishers to serve, they can file notice with the US Copyright Office, which, for a small fee, will publish the until a publisher comes forward. Failure of a licensee to comply with any of these provisions renders them ineligible for the license and potentially liable for infringement.
It has come to light that not all of the mechanical royalties owed for songs played on digital music services like Spotify have been paid out to rights holders, a fact uncontested by several of the services. In Spotify’s case, the amount owed is allegedly anywhere from 16 to 25 million dollars. Lowery had been pointing to discrepancies in licensing and royalty distribution well before it came to the attention of NMPA, the trade industry group that representing music publishers. Rather than waiting around for the matter to be settled by the large corporate players, on December 28, 2015, Lowery filed a lawsuit against Spotify seeking class status so that other songwriters could be awarded damages should the case for infringement prevail. Since then, we’ve seen a flurry of litigation, though it remains to be seen where these cases end up.
Think of your favorite song. Now think of how often you keep change in your pockets. Besides buying a record at retail, on-demand listening used to mean plunking cash money into a special machine called a jukebox. This bulky device, still found at dive bars and themed restaurants, would play your selection based on a combination of letters and numbers. These days, you can dial up music on-demand and on the go from the likes of Spotify, Rhapsody, Google Play, Apple Music and Tidal. These services offer huge catalogs of music, some of them for free, depending on whether a service has an ad-supported tier. This all sounds amazing, but it’s completely reshaped the way artists get paid.
Fully licensed, on-demand streaming (also known as “interactive”) has been around since 2006, when Rhapsody came online. As is often the case with experimental formats, at that point, no one was completely sure how adoption and economics would play out. Some predicted a new golden age for recorded music revenue; this may end up being the case for copyright owners with sizable catalogs (like major labels and some independents), but things look a lot different at the individual creator level. It’s not that the services are not paying out—according to Spotify, they deliver approximately 70 percent of their total earnings to copyright owners, which mirrors the percentages of most download stores—it’s more about deal structures, how pricing works, how it impacts other revenue streams, and how royalties are distributed.
If you had told me ten years ago that in 2015, new releases by the world’s biggest artists would be issued on vinyl, and that chain stores—and not just boutique record shops—would stock them, I would’ve called you crazy. read more
You may have heard about controversies over unpaid mechanical royalties on the interactive streaming service Spotify. For us, the bottom line is that songwriters must be properly paid when their music is played on any service. In this post, we’ll examine the reasons this isn’t happening across the board.
First, it might be helpful to understand a bit more about what a mechanical royalty is, how it is licensed and whom it pays. read more
In February 2014, 19 Recordings—a record label representing artists from the TV show “American Idol” like Kelly Clarkson and Carrie Underwood—sued Sony Music for allegedly withholding royalty payments totaling $7 million. In March of this year, U.S. District Court Judge Ronnie Abrams issued a ruling allowing some of these claims to go to trial. The upshot is that, while some components of the case will move forward, the court decided that others don’t hold water. Even more recently, Sony swung back with allegations of fiduciary mismanagement at 19.
Every so often your pals at FMC take the weekend to do stuff like… make music. Seems like whenever we do, a major industry story breaks.
To wit: Taylor Swift’s open letter to Apple regarding the “free trial” period for Apple Music, during which the 12th largest company in world decided it would not be paying royalties to artists and rightsholders.read more
As expected, Apple announced its forthcoming music streaming service on Monday at its annual WorldWide Developers Conference. The service is scheduled to launch at the end of June, and naturally, our primary focus is on how the new offerings will impact musicians. The presentation was short on details, but here are some of the questions we’ve been wrestling with (and some partial answers)
Assuming the contract’s authenticity, there’s not a lot in there that’s particularly revelatory for those of us who’ve been closely following the ongoing debates over on-demand streaming services. However, it does offer confirmation of certain controversial practices, and a snapshot of some of the dynamics associated with service design. Here are some key points to keep in mind.
It’s no secret that debates over the role and structure of on-demand streaming services continue to be a source of ongoing controversy. Unfortunately, too often, these debates are framed in terms of the impacts on the largest commercial players or net industry revenues. This can be valuable as an entry point, but it can also be flattening; streaming critics and supporters alike may have a diverse range of reasons for the opinions they hold. Part of what we try to do at FMC is encourage a deeper understanding of the full breadth of independent perspectives, and to that end, we’ll be hosting a series of guest posts exploring the streaming issue from multiple angles. To kick it off, here’s some thoughts from Joe Steinhardt, owner of independent label Don Giovanni Records and a PhD Candidate in Communication at Cornell.