SoundExchange has filed a lawsuit against Muzak on charges that it is underpaying artists. The suit alleges that Muzak, a subsidiary of Mood Media Corporation, has used outdated music-licensing regulations to pay for recordings at below-market rates.
Muzak was grandfathered into a group of pre-existing services when the Digital Millennium Copyright Act of 1998 passed. Licensing rates for that group were outdated, and frequently resulted in lower-than-normal payments to artists and labels for use of their recordings. At that time, Muzak provided programming to DISH Network.
Muzak and its contracts were purchased by Mood Media in 2011. Mood Media also acquired DMX, which, like Muzak, provided music programming to cable and satellite companies, using current licensing regulations. The status quo proceeded until Mood Music (according to SoundExchange) bundled DMX content provision agreements into Muzak, and its older set of regulations. Doing that “dramatically slashed” its royalty payouts, says SoundExchange.
“Muzak is playing a shell game to cheat artists and rights holders out of royalties,” claimed Michael Huppe, SoundExchange CEO.
“Muzak’s attempt at gaming the system highlights the ineffectiveness of having different rules and rate standards for music service companies,” Huppe said. “It gives older companies an unjustified competitive advantage, and leaves the door wide open for attempts at abuse.”