3

Artists win first ruling in pre-1972 royalty lawsuits; Sirius XM loses — impact unclear

copyright symbolA California judge has delivered a result in the Turtles vs. Sirius XM class action case, in which the oldies band sought damages for Sirius XM’s failure to pay royalties for use of pre-1972 music, under California law. The court issued a summary judgment in favor of the artists, striking a blow to Sirius XM and sending tectonic shock waves across the streaming music landscape.

Although the ruling is clear, its impact is not. The case centers on discrepancies between state and federal music-licensing laws, resulting in lack of clear and consistent regulation.

On the federal side, which has informed Sirius’ use of certain recordings, there is no copyright protection for music released before February 15, 1972 — the date when the current U.S. Copyright Act was put into law. In what could be considered a startling lack of hindsight, the law disregards sound recording rights for earlier work.

State laws are not as demarcated, but suffer from multiple interpretations, and the obvious problem of 50 states. Because state laws provide openings for argument, whereas the federal copyright law is clear-cut, the state courts have become venues for labels, artists, and lobbying groups to seek legal judgments in support of the larger cause of federalizing protection for oldies.

The California decision is ground-shaking for being the first clear judgment of pre-1972 music viability in the context of copyright, and the case is not yet complete. Damages will be set next month. The plaintiffs are asking for $100-million. In Sirius XM’s most recent quarterly earning report (Q2 2014), the balance sheet showed $1-billion in gross revenue, $120-million in net income, and a stock re-purchase plan that had spent $1.6-billion so far in 2014.

Those numbers make this a major-league case, and represent merely the starting point of speculation about this issue’s future. Other states have legal actions in progress, brought against both Sirius XM and Pandora by labels, and by SoundExchange, the agency which collects and distributes music royalties from digital services on behalf of labels and performers. The Turtles class action is simultaneously proceeding in Florida and New York.

As the wagons circle, it’s no surprise that Pandora and Sirius XM have both publicly stated that they favor establishing federal copyright protection for pre-1972 recordings, even as they fight potentially damaging assaults in state courts.

Michael Huppe, CEO of SoundExchange, unsurprisingly agrees. “It is clear now more than ever that Congress should quickly move to pass the RESPECT Act,” Huppe declared. The RESPECT Act is a proposed bill in the U.S. House of Representatives that would correct the pre-1972 oversight.

Brad Hill

3 Comments

  1. Can someone explain this better? Don’t Pandora and Sirius/XM pay a percentage of gross revenue to Soundexchange already? Don’t they submit what they played to sound exchange along with the check of their gross and soundexhcange gives the pieces out to the labels, who then give it to the artists. If sound exchange doesn’t give a piece to pre-1972, why is that Sirius’s problem? And also too – when it comes to satellite, who knows what’s being played? There is no way to know what the listener is listening to? And this pertains to satellite business music service – how would the PRO license at a location know who to give money to, what performers? They don’t know what channel the business is tuned to if they are using a satellite receiver?

    • Will, Sirius reportedly calculates a percentage of revenue attributed to pre-1972 music, and withholds royalties for that percentage. I have not seen reporting of how Pandora handles it.

Leave a Reply

Your email address will not be published. Required fields are marked *