SiriusXM Finally Wins A Case Over Pre-1972 Music... And Promptly Settles Such Cases With RIAA

from the well-how-about-that... dept

We've written plenty about the mess around pre-1972 sound recordings and online streaming services. Technically, federal copyright law does not apply to sound recordings from before 1972. And while that might make you think they're in the public domain, that's not true at all. First, the compositions are still under copyright and much more importantly, a jumble of state laws did protect some aspects of those sound recordings -- and that's made a huge mess, including locking up some recordings for way, way longer than would be possible under today's federal copyright. On the flip side, however, it meant that certain aspects of federal copyright law that were not covered by state copyright law were fair game -- or so people thought.

This included in music streaming services. It had long been believed that you could publicly perform such pre-1972 songs without a license because, even under the various state and common law copyrights, there was really no concept of a "public performance" right anyway. Thus, services like SiriusXM and Pandora did not need to pay a performance fee to play those songs (for post-1972 recordings, both pay compulsory rates -- which are for different reasons that have to do with lobbying power). This whole mess could be settled by just moving pre-1972 sound recordings under federal copyright law -- which would make them subject to the same compulsory license fees as modern songs, but would also free up those old songs that state copyright law has locked up. It's a tradeoff, but probably the best result. However, the RIAA has fought very hard to block this.

Instead, it wants to have things both ways. It wants to keep those songs locked up for as long as possible, but still wants to get the benefits of federal copyright rights, such as public performance exclusivity. The reason, of course, is that it wants a big weapon -- to force SiriusXM, Pandora and others to pay much larger fees by not allowing them to rely on compulsory rates, but rather to have to come to a negotiated deal.

In order to make this happen there have been a series of lawsuits in different states. In both California and New York, courts ruled against SiriusXM, saying that the state law in California and the common law in NY could be seen to cover performance rights, and thus SiriusXM had to pay up.

However, just a few days ago, a court in Florida went the other way entirely, saying there was no such right in Florida. The state law had nothing and the common law was not established in that area, thus ruling against SiriusXM (and in favor of Flo & Eddie, the organization that brought the suit) would be creating a new right out of thin air (something some copyright experts noted that the other courts had done).

So.... that started to make things interesting. Except... just a few days later, the RIAA and SiriusXM have announced a massive settlement over pre-1972 recordings with SiriusXM agreeing to fork over $210 million. This is going to put enormous pressure on Pandora to come up with a similar settlement. But it's not actually going to answer many of the questions here. First, the settlement only covers the cases brought by the big labels (so not the Flo & Eddie cases...). Second, it only covers through the end of 2017, at which point, it's right back to the negotiating table.

Oh, and in case you're wondering, this line in the Hollywood Reporter story is probably the most important one:
The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists.
Because of course it doesn't.

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  1. icon
    That One Guy (profile), 26 Jun 2015 @ 4:30pm

    'If'?

    The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists.

    'If' is exactly right. If any actual artists see so much as $1 from that $210 million settlement I will be incredibly surprised. At most a few higher profile artists may get some pocket change for PR reasons, but I'm sure the vast majority of that amount is going straight to the lawyers or label execs.

    As for any ongoing future licensing payments, you can expect the labels to do what they do best, and screw the artists as much as they think they can get away with.

    reply to this | link to this | view in thread ]

  2. icon
    vegetaman (profile), 26 Jun 2015 @ 4:32pm

    My favorite quote...

    Quote from the article on ArsTechnica: "This is a great step forward for all music creators," said Recording Industry Association of America Chairman and CEO Cary Sherman. "Music has tremendous value, whether it was made in 1970 or 2015. We hope others take note of this important agreement and follow SiriusXM's example."

    Well, that sounds like the typical slimeball MPAA/RIAA speak we've come to expect. Basically some form of: 'Just look at all the money it has made us! And look at how little we've passed on to the people that wrote it! I mean, we said it had tremendous value -- we never said that value was for the artists! Hahaha, suckers!'

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, 26 Jun 2015 @ 4:36pm

    It gets worse.

    Beyond the fact that the settlement may not distribute anything to the artists, here's the really messed up thing: The major labels just screwed every single independent label and musician that owns their own pre-1972 recordings. And even more brazenly, it was done with the express consent of the RIAA.

    The whole point of the Flo & Eddie class action was that every qualifying label and musician would get a piece of what Sirius XM was withholding for playing their music, and for about a month, they had that. The District Court in California certified Flo & Eddie's class action, and things were looking bad for Sirius XM. And the majors knew they were in a position to swoop in and make the most of it.

    By cutting their own side deal, the majors just took away most of Flo & Eddie's bargaining power. Sirius XM can keep litigating against the remainder of the class, knowing that the bulk of damages they were facing have just disappeared (since the majors claim to control 80+% of the pre-1972 recordings at issue). When you consider that the nationwide damages for the class, if the majors had stayed in the game, could have crept into the *billions* (depending on which states actually recognized the performance right), settling for $210 million is actually a pittance. And the RIAA, which is supposed to represent the whole industry, just threw all but four or five of its members to the wolves by signing off on the deal.

    Just another day in the music business, right?

    reply to this | link to this | view in thread ]

  4. icon
    That One Guy (profile), 26 Jun 2015 @ 4:42pm

    Re: My favorite quote...

    Yeah, if they cared in the slightest about musicians getting paid, they'd be pushing for, rather than against, older works being covered by federal rather than state copyright law, which would have guaranteed payments and made it easy for companies to make them.

    But no, the greedy parasites want it both ways, all the 'good'(required payment for broadcast) from the federal laws, with none of the 'bad'(shorter copyright duration, no 'negotiation' needed to set rates as they're fixed) getting in the way.

    reply to this | link to this | view in thread ]

  5. identicon
    Anonymous Coward, 26 Jun 2015 @ 4:43pm

    One hen
    Two ducks
    Three squawking geese
    Four Limerick Oysters
    Five corpulent porpoises
    Six pairs of Don't Alverzos Tweezers
    Seven thousand Macedonian's in full battle array
    Eight brass monkeys from the ancient sacred crypts of Egypt
    Nine apathetic, sympathetic, diabetic old men on roller skates, with a marked propensity for procrastination and sloth
    Ten lyrical, spherical, diabolical denizens of the deep who haul quo around the quay of the quivvy of the quarry all at the same time

    From Illegal, Immoral, and Fattening by Flo and Eddy, at least as I remember it.

    reply to this | link to this | view in thread ]

  6. icon
    That One Guy (profile), 26 Jun 2015 @ 4:45pm

    Re: It gets worse.

    And what exactly makes you think that wasn't by design? The major labels loathe competition, if they have a chance to screw indie labels and musicians, you can be sure they'll take it.

    reply to this | link to this | view in thread ]

  7. identicon
    Guardian, 26 Jun 2015 @ 4:47pm

    in canada

    in canada we have a cdr levy about 45 million a year and after ten years of collecting money the riaa up here got sued cause they never gave one pennny they were supposed to to artists....

    they lost 100% of the cash of a single year despite having done it for ten years....

    nice scam....screw actors and musicans BUT MORE importantly there lawyers and the suits of the labels

    reply to this | link to this | view in thread ]

  8. identicon
    Anonymous Coward, 26 Jun 2015 @ 4:51pm

    Great. When my Sirius bill goes up I can thank those greedy assholes in the RIAA.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 26 Jun 2015 @ 4:54pm

    Re: It gets worse.

    (since the majors claim to control 80+% of the pre-1972 recordings at issue).

    SiriusXM should have asked for discovery to prove that, the RIAA reaction might have been interesting.

    reply to this | link to this | view in thread ]

  10. This comment has been flagged by the community. Click here to show it
    identicon
    Non-chiseler, 26 Jun 2015 @ 4:54pm

    $210 million, eh? Plus lawyers while trying to dodge paying. If your business model relies on "free", it's criminal and will fail.

    Look, if a business is getting income from entertainments, then whoever created that value is due a token payment. Start arguing for reasonable rates and being routed to the actual creators, away from fat cats who do nothing but shuffle papers in between drug-induced comas, including the new gate-keepers at Spotify and Sirius.

    How about Techdirt's writers just give up on the notion that any content is or should be free? That's as reasonable a call as the many that Techdirt makes to settle disputes by way of definitions.

    Probably shouldn't even be a "public domain"! That means sleazy corporations are going to get money without any more intellectual effort than copying a DVD onto their servers. It's long been ruled unfair competition precisely because costs almost nothing to copy the intellectual products paid for by direct competitors. Sleazy grifters like Kim Dotcom and Megaupload shouldn't get a cent, let alone millions, for mere hosting of works that in total cost billions to make.

    Let's have "public domain" works be effectively taxed by requiring fees paid to the owner, the public. Corporations are not persons and not entitled to use public property. -- Just ask any taxi company (besides the known criminal Uber) whether it can use public roads for free. -- NO. Anyone using public property for business purposes must fill out the forms and pay the fees.


    Know how to handle orphan works? Put a notice like: "If you are the owner of this work, I have attempted to locate you and failed. Have placed what I believe are appropriate copyright fees in escrow. Communicate to me at:" -- Of course, the REAL problem is as with Sirius, people are trying to gain money from old works but DODGE PAYING.

    reply to this | link to this | view in thread ]

  11. This comment has been flagged by the community. Click here to show it
    identicon
    Non-chiseler, 26 Jun 2015 @ 4:59pm

    Re: $210 million, eh? Plus lawyers while trying to dodge paying. If your business model relies on

    To try and forestall some, here's where to focus on that we agree:
    Start arguing for reasonable rates and being routed to the actual creators, away from fat cats who do nothing but shuffle papers in between drug-induced comas, including the new gate-keepers at Spotify and Sirius. (And Pandora.)

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, 26 Jun 2015 @ 5:07pm

    Re: 'If'?

    To be completely fair, this is actually money that's probably specifically owed to the labels rather than the musicians. There are two property interests at issue any time a song gets broadcast: the actual sound recording and the underlying musical composition. The way the baby gets split in the industry is that the musician owns the composition (since he wrote it), while his record label owns the recording of it (since they paid for it). And the musician already gets paid on the composition when it gets played by Sirius XM, since it's covered by federal copyright. It's the labels who weren't getting paid for their half of the deal (the sound recordings). So there's no obvious reason why the money from this settlement would go to the artists. Their rights weren't at play.

    reply to this | link to this | view in thread ]

  13. identicon
    Anonymous Coward, 26 Jun 2015 @ 5:13pm

    Pandora

    Pandora will likely settle for a lot less than $210 million if they settle at all. But it will hurt a lot worse. SiriusXM has a healthy cash flow. Pandora doesn't.

    Unfortunately for Pandora this isn't even the biggest threat they face. That would be the royalty rate changes for 2016-. No one knows the outcome yet but most everyone is expecting the worst. It could very well be >100% of their revenue.

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, 26 Jun 2015 @ 8:49pm

    I don't understand. Why would Sirius have any say in how the money would be dispersed to artists? So of course there was no mention of it in the agreement.

    reply to this | link to this | view in thread ]

  15. icon
    Chris in Utah (profile), 27 Jun 2015 @ 4:15am

    Psst. Hey. Over here.

    Ever heard of support people not rights. Your in it, its called the matr... I mean internet.

    reply to this | link to this | view in thread ]

  16. This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 27 Jun 2015 @ 8:55am

    Re: Re:

    out_of_the_blue just can't stand it when due process is enforced.

    reply to this | link to this | view in thread ]

  17. identicon
    spodula, 27 Jun 2015 @ 10:24am

    "The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists. "

    Because there is no need. They will share it the same way they usually do. Grudgingly, and only in full after the Artist's lawsuit.

    reply to this | link to this | view in thread ]

  18. identicon
    Anonymous Coward, 27 Jun 2015 @ 2:11pm

    Re: Re: Re:

    To be fair, the tl;dr is something I agree with - that the money is really being stolen from the backs of the actual content creators by arguably soulless 'investor-class' people.

    reply to this | link to this | view in thread ]

  19. identicon
    Anonymous Coward, 28 Jun 2015 @ 5:31pm

    Re: Re: Re: Re:

    It is - but you'll never catch out_of_the_blue admitting this until after he's gone on a massive tirade about how immoral search engines and VPN-using Australians are.

    reply to this | link to this | view in thread ]

  20. icon
    Ninja (profile), 29 Jun 2015 @ 4:21am

    Re: 'If'?

    Well, it is going to be interesting how the dead artists will receive the money. Maybe if you burn bills with sacred fire they'll get them in heavens or something?

    reply to this | link to this | view in thread ]

  21. icon
    Ninja (profile), 29 Jun 2015 @ 5:48am

    Re: Pandora

    Well, it is some sort of miracle that Pandora is still afloat considering how hard the music industry is trying to kill them so they should simply drop such recordings if the labels ask for unreasonable rates.

    The ugly about this system is that if you don't pay what they want you can't go for another source If company X sells a product for outrageous price there will be another one to step in and offer sane prices (with exceptions, courtesy of another broken part of the IP system) but in this case you can't simply go elsewhere. Royalties should be standard and heavily regulated. Anybody that wanted to use any song should be able to go, pay a fee based on standardized factors and just compete on who offers the best/most financially efficient service. Other than that it's either pay and die or die without paying. Sounds a lot like organized crime.

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, 16 Sep 2015 @ 10:25am

    Re: $210 million, eh? Plus lawyers while trying to dodge paying. If your business model relies on "free", it's criminal and will fail.

    "Probably shouldn't even be a "public domain"! That means sleazy corporations are going to get money without any more intellectual effort than copying a DVD onto their servers. It's long been ruled unfair competition precisely because costs almost nothing to copy the intellectual products paid for by direct competitors. Sleazy grifters like Kim Dotcom and Megaupload shouldn't get a cent, let alone millions, for mere hosting of works that in total cost billions to make."

    Lets not forget it's sleazy corporations are the ones that lobbied for the existence, extension, and expansion of IP laws and that they negotiate them in secrecy. No one is fooled, it is very sleazy corporations that are the ones that benefit from the existence of IP laws not the artists or the public.

    reply to this | link to this | view in thread ]


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