Wednesday, May 2, 2018

Prepare to Pay More for Tunes

Due in large part to the active policing of performing rights organizations (PROs)—American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI), and Society of European Stage Authors and Composers (SESAC)—most businesses understand that music is protected by copyright, and using it for commercial purposes, even if only as background sound for a photography studio, likely requires the payment of royalties.
Music licensing is complicated. Copyright interests attach to the composition itself (notes and lyrics), as well as any sound recording of the composition. It is one license if you want to perform the work (maybe more if the composition was created by persons holding joint interests, or you want to perform a specific arrangement, etc.) and two licenses if you want to use/play a sound recording for commercial purposes. 

Identifying applicable copyright interests and negotiating individual licenses for even a limited playlist would be maddening—for both copyright owners and consumers. PROs have substantially eased that burden by creating a one-stop shop that both issues blanket public performance licenses and collects the public performance royalties on behalf of the copyright owners. Unfortunately, each PRO covers different music/artists, and although they have online searchable lists, it is rare that a business will be fully covered by the repertoire of a single PRO.  And while business owners have generally accepted (often grudgingly) that they probably need a license from all three mainstay PROs—ASCAP, BMI, and SESAC—a fourth is now actively on the scene.

Global Music Rights (GMR) was founded in 2013 by Irving Azoff (talent manager, founder of Full Moon Records and Giant Records, movie producer, CEO of Ticketmaster, and all-around entertainment industry giant) and Randy Grimmett (former ASCAP executive) in response to artist and publisher concerns about the low royalty rates of ASCAP and BMI. Bound by Justice Department consent decrees, ASCAP and BMI are restricted in how they negotiate user licenses, leading some to question the organizations’ capability to deal with technology advances that have given easy access to music by consumers.

Although GMR has been around for nearly five years, it has been pretty quiet—apparently focusing on building its talent book and waiting for its clients’ existing agreements with other PROs to expire, bringing and defending lawsuits, and tackling the bigger licensees (such as radio stations, concert venues, and online outlets). With Azoff’s artist management connections (his first client was Dan Fogelberg, and he continues to represent such artists as the Eagles, Joe Walsh, Stevie Nicks, Van Halen, Jimmy Buffett, Jon Bon Jovi, and Steely Dan) and the lure of higher royalties, GMR has developed a catalog including the Azoff talent and the likes of Bruce Springsteen, Bruno Mars, Pharrell Williams, and the estates of John Lennon, Ira Gershwin, and Prince. Although the GMR book is still much smaller than those of ASCAP and BMI, the prominence of its artists cannot be ignored.

In other words, a typical commercial enterprise would have a hard time not playing something that may be subject to GMR licensing. Unfortunately, for businesses that use recorded music (other than through a music streaming service, e.g., Spotify, Pandora, SiriusXM), this adds a fourth license requirement (assuming that the business is already licensed by ASCAP, BMI, and SESAC) for essentially the same music that the business enterprise has always played. As of this writing, the movement of artists from ASCAP, BMI, and SESAC to GMR has not resulted in any reduction in those organizations’ fees. 

As GMR works through the more substantial licensees—those from whom it intends to obtain the greatest royalties—it will no doubt get to the neighborhood bars and cafes, the hair and nail salons, the spas and fitness centers. While GMR gains momentum, it is unlikely to punish those who do not voluntarily seek out a license and cooperate when contacted, but consequences can be harsh for those who repeatedly ignore a PRO contact—likely much greater than the royalties under an applicable license.

As a side note—remember my post about the monkey selfie? On April 24, the Ninth Circuit Court of Appeals tossed a copyright lawsuit brought by PETA (People for the Ethical Treatment of Animals) on behalf of Naruto (the monkey) claiming that the photographer who published the photograph infringed the copyright interests of the monkey who took his own picture using the photographer’s equipment. The decision is particularly interesting because the parties settled the suit last fall, but the Court refused to dismiss the case even on the parties’ joint motion, instead issuing a ruling that PETA lacked status to bring the suit on behalf of Naruto, and that animals in general don’t have standing to sue under the Copyright Act.

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