Record Business

It's time to pass the Music Modernization Act.

The Music Modernization Act (MMA), a collection of changes and updates to laws governing copyright and other music business-related practices, is tantalizingly close to becoming law. Final passage would be a great step forward for recording artists, songwriters, producers, and and engineers.

Applauding the Fair Play Fair Pay Act

There was very exciting news for creators this week as on Monday, Representatives Jerrold Nadler (D-NY) and Marsha Blackburn (R-TN) introduced the Fair Play Fair Pay Act of 2015. This bill proposes a number of updates to existing legislation that would serve to correct antiquated provisions in the copyright act and bring modernization and fairness to the way performing artists and songwriters are paid.

Most importantly, the bill proposes to finally grant a public performance right for terrestrial radio broadcasts and to ensure that royalty payments are made in connection with streaming of recordings made prior to February 15, 1972.

The current system is antiquated and broken. It pits technologies against each other, and allows certain services to get away with paying little or nothing to artists. For decades, AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses, growing into a multibillion dollar business on the back of an illogical ‘grandfathered’ royalty standard that is now almost two decades old.
— Congressman Jerrold Nadler

The United States does not currently grant a public performance right for radio broadcasts. (A surprising fact when you consider that the other nations that don't are China, Iran and North Korea.) This means that when a song is played on terrestrial radio, neither the singer nor the record company get paid (while the songwriter does). The Fair Play Fair Pay Act would grant that right, allowing artists to make money when their performances are broadcast. 

A side benefit of this could also mean that US performers would become eligible to collect public performance royalties from foreign broadcasts. Currently they do not collect these neighboring rights, as foreign governments don’t allow their PROs to pay on broadcasts of US recordings, their rationale being, “why pay US performers if the US doesn't pay ours?” (This would also require the US signing The Rome Convention, but passage of the Fair Play Fair Pay Act would certainly pave the way.)

Granting a public performance right would finally end a long-standing record business tradition originating from the idea that radio equals free promotion and that performers are ultimately paid through increased record sales. While that may have been true once, as consumers transition from purchasing music to streaming it, that free promotion will no longer mean increased revenue.

Under current law, internet and satellite radio stations are paying a digital public performance royalty. By ensuring terrestrial broadcasters make these payments too, the playing field for terrestrial radio stations and internet and satellite broadcasters will leveled, allowing greater competition and standardization of rates and payments.

To answer critics that suggest the bill will make it difficult for radio stations to make money, it attempts to mitigate the expense by putting in place caps on their royalty payments. Stations with less than one million dollars in annual revenue would not pay more than $500 per year. For non-commercial stations that amount would be $100 per year, and religious stations or incidental uses of music would need no royalty payment at all.

The other very important aspect of the bill is implementing royalty payments for so-called pre-1972 recordings. These recordings are not covered by federal law, and as a result, some digital broadcasters have not been paying any royalties when the recordings are streamed. Several lawsuits are working their way through the courts on this issue, with an important decision rendered against SiriusXM, and a similar lawsuit pending against Pandorabut it remains to be seen as to what the final outcome will be.

While the Register of Copyright’s February 2015 report entitled Copyright and the Music Marketplace [PDF] suggested that the law be changed such that pre-1972 recordings receive protection under federal law, Nadler's and Blackburn's bill would at least insure that uses of those recordings will generate the same royalty payments, even if they don’t get full copyright protection.

A couple of other changes proposed include provisions protecting songwriters and publishers from companies trying to lower rates, as well as streamlining the process of paying producer royalties, and allowing artists to receive direct royalty payments despite how their labels may wish to handle them.

In all, this is a very important step in protecting the rights of performing artists. It will not face easy passage however, as the National Association of Broadcasters will undoubtedly fight it, expressing their resistance to it before the bill was even announced.

"Blurred Lines" Indeed: Jury tells Pharrell Williams and Robin Thicke they "Got To Give It Up"

Copyright lawsuits don't make it to court; they get settled. It's just too dangerous to put copyright law in the hands of a jury.

Unfortunately for producer Pharrell Williams and performer Robin Thicke, this lesson is being learned the hard way with news that their song, "Blurred Lines" has been found to have infringed upon the Marvin Gaye song "Got To Give It Up." The loss means they owe Gaye's family a whopping $7.3 million as damages for copyright infringement.

It should be noted that the infringement was not found to be "willful", and rapper T.I. (Clifford Harris, Jr.), who also contributed to the song, was not found to be liable.

The jury was instructed to compare only the sheet music versions of the two songs in making their decision, so much of the case centered on the testimony of musicologists who dissected passages as short as four notes. It turns out that the jurors also heard audio of parts of both songs, thereby increasing the chance that their judgment would be blurred.

Are four notes sufficient to constitute a claim of infringement? Obviously Williams and Thicke disagreed. And because settlements are costly, they can feel like extortion. To avoid that, Williams and Thicke actually brought suit against the Gaye family at the start, seeking to have any potential claim tossed out well before the case even went to court. That resulted in a counter suit, with Williams and Thicke ultimately deciding to allow the case to be decided by a jury. Unfortunately, doing so resulted in their characters being put on trial, with Thicke having to admit to being high during the time as well as taking credit from Williams.

While I was not in court, I don't think that there is sufficient evidence of infringement. Were they trying to recreate the vibe of a late-1970s Marvin Gaye tune? Yes. Did they do that by stealing his copyrighted work? No.

Music—all art—is a constantly changing medium where the past and present come together to create the future. Musicians are indebted to everything that they hear, conscious or not, and regardless of whether the dialogue they carry on with their influences is explicit in whatever new work is created. Some of what is created will be good. Some won't. Some of it will be timeless. Some of it will be disposable. But it will all eventually get recycled and remade as artists create and tastes shift. Sometimes work that didn't get sufficient interest when originally released will resurface later to lavish praise. Sometimes work will continue to exert influence beyond its creator's lifetime. There is an inherent beauty in this process, as each musician moves the art form forward, synthesizing what has come before while creating new avenues of examination and expression.

This process should not be hindered in any way; it is already a difficult one that moves in fits and starts. Copyright law should be written in a way that protects creators, encouraging them to explore, ensuring they get paid. It should not however curb that exploration.

This verdict is a sign of the later. That Williams and Thicke lost this case will make it harder for artists to create in the future. Instead of being free to do so (without actual infringement), they will now be forced to look over their shoulders, increasingly concerned about whether their work will put them at financial risk. Art is already a risky business. We can't make it more so.

Aereo: Streaming into the future.

As I watch the lawsuit over the startup Aereo unfold, I can't help but notice the likelihood it will disrupt the television business in the same way that streaming services are disrupting the record business. The company's model has major implications for television broadcasters, and its fight has many similarities to others occuring in the music business.

If you're unfamiliar with the service, Aereo lets users rent a TV antenna (maintained by Aereo) and receive over-the-air (OTA) television signals. These signals are then streamed to the users' Internet-connected device or recorded to a DVR so they can be watched at a different time.

The premise may sound odd (Rent an antenna?), but it is rooted in several long-standing concepts. The first is that the FCC licenses public airwaves to television broadcasters on the basis that they transmit their signals over-the-air for free. Therefore, these transmissions are available to any user who has the equipment to receive them. (Before cable TV, using a "rabbit ears" antenna was the only way to receive television signals at all.) The second is that recording such broadcasts for non-commercial, home use is legal (technically, "fair use" under the Copyright Act, and decided as part of the US Supreme Court's landmark 1984 "Betamax" decision in Sony Corp. of America v. Universal City Studios [PDF]).

Taken together, this means that users can now easily receive and record live television broadcasts, allowing them to watch anywhere and at anytime they want. This may seem perfectly normal, but remember that live television has not had a big impact on the Internet because such use would be considered a "rebroadcast" or "public performance" that needs to be explicitly licensed.

Broadcasters are suing to prevent Aereo from offering their service, saying that Aereo's distribution of these broadcasts infringes on their copyrights. This will not be a short fight, but Aereo recently won an early battle as the Second Circuit upheld a denial of a preliminary injunction against them [PDF]. This poses a major problem for broadcasters, one big enough that Fox has threatened to remove their broadcasts from the airwaves if Aereo wins.

Why such a major disruption?

The money to be made in the content business oftentimes comes from interactions that are not seamless, when tollbooths are placed in the road between the content and the end user. For a long time, construction of these tollbooths was aided by the lack of technology or the cost of distribution. Yet companies are now increasingly able to build businesses based on technological innovations that remove these tollbooths or lower the cost of distribution. For broadcasters, Aereo represents a way around the traditional relationship between content provider and consumer, one that threatens the financial and distribution models they have in place.

The change in user acceptance of streaming content has to do with smartphone market penetration. We are becoming more and more comfortable with our phone being an entertainment device. As that idea becomes more and more prevalent, users will demand even more seamless operation from all content providers, and that will extend beyond phones to any device that people use to enjoy entertainment. Spotify's Daniel Ek was recently profiled on CNET talking about this as it relates to music.

The bottom line is that, as consumers come to expect a certain kind of experience on their phone, they will see all devices similarly. With TV, consumers haven't previously had this kind of flexibility, but Aereo makes it possible. This represents a threat to broadcasters, one they will have to meet head-on if they wish to stay in business.