SiriusXM can fight windfall for ’60s singers, judge rules

Music lovers finally caught a break this week as a federal judge ruled SiriusXM can appeal a jaw-dropping ruling that created a new type of copyright royalty, and that could oblige digital media companies to pay the likes of the Turtles additional money for songs they sang fifty years ago.

The issue concerns so-called “sound recording rights,” which are separate from songwriter rights, and are paid to musicians whenever a recording is sold. In recent years, record labels has been claiming that companies like Pandora and SiriusXM should pay again under state laws for pre-1972 songs — even though copyright law is federal, and that no one has received such payments before. The 1960s Turtles singers, known as Flo & Eddie, have been the face of the campaign through a series of class action lawsuits.

The Turtles’ legal argument is far-fetched but, perhaps due to the complexity of music copyright, some judges have swallowed it, including Colleen McMahon, who initially gave the Turtles permission to go forward with a class action on behalf of anyone whose pre-1972 song has been performed in public or the internet. If this transpires, it would amount to a huge financial punch not just for many bars, restaurants and AM/FM radio stations, but for every digital media company — including YouTube, Apple and Vimeo — that plays Oldies.

On Tuesday, however, Judge McMahon appeared to have second thoughts and told SiriusXM that it may appeal the ruling to the Second Circuit.

“There is indeed a critically important controlling question of law in this case. If the Court’s holding that they do have such a right is incorrect, then significant portions of this lawsuit — including the public performance copyright infringement and unfair competition claims — will have to be dismissed,” she wrote in a decision cited by the Hollywood Reporter, which provides some more legal nitty-gritty on Tuesday’s ruling.

McMahon’s words are a big relief. While there’s no guarantee that the Second Circuit will put a stop to this runaway royalty theory, which has already triggered copycat class actions, it is hard to see how it could do otherwise.

As I’ve pointed out repeatedly, the original decision (and a related one in California) should be reversed for two reasons. The first is that the rulings are just wrong as a matter of law: Santa Clara law professor, Tyler Ochoa, explained why in a mic-drop of a blog post in October.

The other season is that the music industry’s pre-1972 campaign is a cynical misuse of copyright that seeks to trick the public into paying new money for old rope, under the guise of “closing a loophole” (that phrase is industry’s explanation, but it has has unfortunately been taken up by some in the press).

While we do need a new royalty regime for the digital age, it should not involve raising rates in order to grant a windfall for 50-year-old songs. Instead, if everyone is to pay more for copyright (and perhaps we should), let the new money be directed to supporting the many young musicians who would like to earn a living like the Turtles did so long ago.

Apple is latest target in legal shakedown over pre-1972 songs

A controversy over who should get paid when songs are streamed on the internet is about to get a whole lot bigger as a company that claims to own the royalty rights to 1960s acts, including the Flying Burrito Brothers, has sued Apple’s Beats Music and other online radio services, including Rdio and Google Play.

According to a complaint filed in Los Angeles federal court, Apple’s subsidiary Beats Music owes at least $5 million for not paying performance rights over the older sound recordings.

The lawsuit was filed by Zenbu Magazines LLC, a New York holding company. It appears to be a copycat suit to the ones brought by former musicians from the band The Turtles, who are suing SiriusXM and Pandora over the same issue.

If the lawsuits gain traction, they could serve to wipe out large collections of pre-1972 music from the internet, since companies like Apple and Pandora will likely decide to simply stop playing the older songs rather than add yet another stack of royalty payments to the ones they already pay out. If this happens, consumers could lose access to millions of song recordings from before 1972.

As I’ve argued in the past, these lawsuits are simply a shakedown in which music lawyers are attempting to exploit the public’s sympathy for aging musicians and ignorance of copyright law in order to obtain a windfall.

The legal nitty-gritty is complicated but, in short, there is overwhelming evidence that performers, unlike songwriters, never had a right to be paid for public performances of sound recording in the first place — though they are paid when such recordings are sold. The songwriters, meanwhile, get paid in every case.

Here’s a copy of the lawsuit against Beats Music. Apple did not immediately respond to a request for comment.

Apple Pre-72 Suit

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SiriusXM hopes a legal blast from the past will fix Oldies mess

SiriusXM recently suffered a series of disastrous courtroom defeats that threaten to harm not just its own digital radio service, but other companies — from YouTube to FM radio — that also play oldies from before 1972. In response, SiriusXM is pinning its hopes on an oldie of its own, in the form of a 1940 copyright case.

The case in question concerns phonograph records, and SiriusXM is asking a New York judge to use it as a basis to reconsider her finding in November that based on state laws, performers from the band The Turtles deserve an unprecedented copyright payout when companies play their old songs.

According to Litigation Daily (sub. required), SiriusXM believes U.S. District Judge Colleen McMahon overlooked the phonograph decision’s significance. A further report, meanwhile, suggests the company scored a point when the judge this week said she hadn’t considered the case and that it “might require her to rethink the ruling.”

Penned by the famous jurist Judge Learned Hand, the 1940 decision concluded that a radio station did not have to pay an orchestra band leader, in addition to the song composer, each time it played a recording of his performance.

Learned Hand wrote that state law should not let performers, once a phonograph was sold, control how and when it was played:

we think that the “common-law property” in these performances ended with the sale of the records and that the restriction did not save it; and that if it did, the records themselves could not be clogged with a servitude.[my emphasis]

Now, 65 years later, the case could prove decisive in the high stakes dispute between SiriusXM and the music industry. If the 1940 rule does not stand, and the Turtles’ position prevails instead, it will mean bring higher music prices for everyone, and yet another expansion of U.S. copyright law.

Closing a loophole or imposing a tax?

The New York dispute over the phonograph ruling is just one piece of a greater game in which the Turtles and record labels are trying to pry more royalties from digital radio services like SiriusXM and Pandora.

So far, the Turtles won the first round in New York as well as two similar rulings in California. And already, they have tried to build on these victories by bringing a class action suit over pre-1972 recordings against the digital radio service Pandora.

The Turtles claims are also just the tip of the iceberg, since every other performer (or their heirs) will be in a position to make claims over unpaid per-1972 royalties too. This could represent a major financial blow to radio stations and to music websites like YouTube and Vimeo, and would likely lead them to simply pull most oldies music from their playlist altogether.

Consumers, meanwhile, would face the prospect of higher music rates and diminished access to their favorite songs. So far, however, the potential implications of the Turtles’ victories has not been widely recognized.

This may be due to the fact labels have portrayed the lack of performance payments for pre-1972 songs as a “loophole” rather than something, as the 1940 decision shows, that never existed in the first place. Also, in their public statements, the labels have also been careful to omit the fact that SiriusXM and others do pay royalties for these songs in the form of payments to the songwriter, and when they purchase the songs in the first place.

Overall, the call to create new pre-1972 payment obligations may be less about closing a royalty loophole, and more about imposing a new copyright tax. This is especially the case given that copyright is supposed to provide an incentive for artists to create new work — rather than offer new rewards for work performed more than four decades ago.

In the case of showing respect for the oldies, then, SiriusXM and the rest of us should hope that respect extends to judges like Learned Hand too.