Tag Archive for: copyright

The Broad Comedy and Broader Parody of Three’s Company

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What’s worse than sitting through seven episodes of Three’s Company? Reading a federal district judge’s summaries of them. And yet that CliffsNotes analysis, including delving into the cultural significance of the fluffy sitcom, takes up much of the 56-page opinion recently issued by Loretta Preska, Chief Judge of the Southern District of New York. In Adjmi v. DLT Entertainment, Ltd., the court held that plaintiff’s Off-Broadway play, 3C, is a fair use parody of the entire TV series.

Although styled as a Rule 12(c) motion for judgment on the pleadings, the voluminous exhibits to those pleadings included DVDs of all 9 seasons of the series (owned by DLT) as well as Adjmi’s script to 3C, curiously referred to as the “screenplay” throughout the opinion. Judge Preska is no stranger to parody cases, having written the opinion that was affirmed by the Second Circuit in Liebovitz v. Paramount Pictures, which held that a photo of a seemingly pregnant Leslie Nielson of The Naked Gun fame was a fair use parody of the famous Vanity Fair cover of a nude and pregnant Demi Moore.

For you younger readers, Three’s Company, which aired from 1977-1984, focused on Jack Tripper (John Ritter), who pretends to be gay so he can share an apartment with sensible brunette, Janet Wood (Joyce DeWitt) and ditzy blonde, Chrissy Snow (Suzanne Somers, the current TV twirler and former Mistress of the Thighmaster). Rounding out the cast were the nosy neighbor landlords, Mr. and Mrs. Roper.

The Court began its discussion, stating: “[t]he parties agree that 3C copies the plot, premise, characters, sets and certain scenes from Three’s Company.” The parties also agreed that, as in the TV series, the male lead in 3C is an aspiring chef, the blonde is the daughter of a minister and the brunette is a florist. At least the characters’ names are different in plaintiff’s play, although the Court sometimes mistakenly refers to the names of Three’s Company characters in its discussion of 3C. So, there’s undoubtedly access and an awful lot of substantial similarity, the basic elements of a copyright infringement action.

In ruling on the Rule 12(c) motions (plaintiff’s for declaratory judgment and DLT’s on its counterclaim for infringement), the Court stated that discovery, which had been stayed, would not be necessary. Indeed, the decision reads like one for summary judgment as Judge Preska took pains to point out that her opinion is based not so much on the pleadings themselves but on the “raw materials” of the Three’s Company DVDs and the 3C script.

As with any parody case, the Court’s analysis started with the seminal 1994 Supreme Court case, Campbell v. Acuff Rose, which held that 2 Live Crew’s use of a portion of the Roy Orbison hit, Oh, Pretty Woman in the band’s similarly titled song, Pretty Woman, constituted a fair use parody of the work as it only used so much of the original work as was necessary to comment on it. Following Campbell, the Court here went through a fairly rote review of the four fair use factors of Section 107:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.

And as in Campbell, the Court focused most on the first factor and whether or not Adjmi’s use of the sitcom’s material was “transformative,” citing Judge Leval’s influential 1990 Harvard Law Review Article. As the Supreme Court stated, a use is transformative when “it adds something new, with a further purpose or different character, altering the first with new expression, meaning or message.”

However, as I’ve written, the Seventh Circuit recently rejected the “transformative” analysis in fair use cases. In that case, Judge Easterbrook noted that any transformative use would constitute a derivative work, the authorization of which is the right of the copyright owner under Section 106(2) and that it’s best to stick with the four statutory factors.

So, how, exactly is 3C a transformative protected parody of Three’s Company? The main distinction is that in 3C, Brad, the male roommate, is really gay. He’s a gay man pretending to be a straight man who’s pretending to be gay. Got that? Moreover, the Court distinguishes 3C from Three’s Company by focusing on the play’s “heavy” tone, which features drug abuse and Mamet-like use of expletives, including gay-bashing slurs:

There is ample evidence to discern the tone of Three’s Company. It can be described as a happy, light-hearted, run-of-the-mill, sometimes almost slapstick situation comedy…. As demonstrated by select quotations…, 3C proceeds in a frenetic, disjointed and sometimes philosophical tone. It is often difficult to follow and unrelentingly vulgar. The same cannot be said of any episode of Three’s Company.

In other words, 3C is as dreary as Three’s Company is cheery. The Court concludes that “[t]he play is a highly transformative parody of the television series that, although it appropriates a substantial amount of Three’s Company, is a drastic departure from the original that poses little risk to the market for the original.” Fair enough. And having recently failed to sit through a single episode of Three’s Company, even one featuring Loni Anderson, it’s clear to me the show deserves to be parodied.

However, in reaching its conclusion, the Court seems to allow 3C to incorporate far more of Three’s Company than is needed to conjure up the original. In particular, the Court’s view of unprotectable elements like “stock characters” such as a ditzy blonde to include the character’s specific biography — as well as entire scenes lifted from several episodes of the series —  seems unnecessarily broad. The Court also closed with some seemingly “copy-leftist” dicta: “The law is agnostic between creators and infringers, favoring only creativity and the harvest of knowledge.” Say what? The Copyright Act imposes pretty stiff penalties against infringers.

Under this analysis, anything short of pure plagiaristic pilfering of prose would appear to be protected parody so long as the new work somehow “commented” on the prior one. This could have broad implications for other valuable series and their characters, from feature films to fan fiction. Think about applying this standard to the Star Wars franchise, although The Phantom Menace is its own parody.

The Art of the Bankruptcy Bluff

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Bankruptcy. A word that provokes more fear, loathing and foreboding failure than “world premiere” does to certain silver-haired symphony subscribers hoping to snooze again to Brahms. And no wonder when even venerable performing arts companies from the Philadelphia Orchestra to New York City Opera have gone through the reorganization wringer – and not always successfully.

But if you’re a financially troubled arts organization, one way to keep the wolves at bay may be bankruptcy — or at least playing poker with your creditors over possibly filing. To help me explain the potential benefits of pre-bankruptcy negotiations, I had my brother, New York bankruptcy Super Lawyer, Alec P. Ostrow, change from his cape and tights to a suit and tie and run his red pencil through my draft discourse on red ink.

Let’s say you’re the CEO of Washegon Opera and your company is nearly washed up and gone because attendance, fundraising and grant revenues are way down. And let’s say you think you can turn things around but you’re bleeding red ink and the sharks are circling. The time to talk about bankruptcy is well before Snidely Whiplash comes to padlock the door and cart away your costumes. But a Classic Comics digression into the bankruptcy process, with its own federal code and courts, is needed to understand why the “B” word bluff may be a helpful negotiating tactic.

Bankruptcy Basics

Washegon Opera’s pre-bankruptcy tango will revolve around the prospect of filing for reorganization under Chapter 11 of the Bankruptcy Code (as opposed to a Chapter 7 liquidation case where everything is sold off and the business is shuttered). Reorganization is premised on an entity, whether a for-profit or not-for-profit business, having at least a chance of being viable once the bankruptcy case is closed.

And post-bankruptcy viability is tested throughout the bankruptcy process, from the filing of the case and continuing after the approval of a plan of reorganization. This plan is essentially a very detailed post-bankruptcy business plan that once submitted, is then negotiated with (and sometimes challenged by) the creditors and is ultimately approved by the court.

If the bankruptcy debtor successfully emerges from this process like a phoenix from the ashes of its pre-bankruptcy pyre, the bankruptcy judge will give his blessing to the now-reorganized red inkster by granting a discharge of its debts in accordance with the reorganization plan. A typical plan is one where creditors get pennies on the dollar for their pre-bankruptcy claims – and sometimes nothing at all. Moreover, claims are often paid over a much longer period time and at a lower interest rate than had been previously agreed to. This is pretty powerful stuff for a creditor to swallow.

But there’s more. In order for all similarly situated creditors (e.g., secured creditors like lenders as one group, and trade creditors like vendors of costumes and office supplies as another) to get a fair deal from a clean deck, there are provisions in the Bankruptcy Code that are designed to give the reorganizing debtor breathing room to deal with them evenhandedly. Other Code sections prevent some creditors from having an unfair advantage over others. Let’s look at a few.

Bankruptcy Benefits – Four Examples

First, let’s assume you commence Washegon Opera’s case by filing a Chapter 11 petition in the local bankruptcy court. As soon the petition is filed, an automatic stay kicks in. Think of it as the big, clear dome from the TV series, Under the Dome dropping down on your business and preventing any creditors from clawing at you. This means that absent the court’s permission, a lender can’t foreclose on a loan, a landlord can’t commence or proceed with an eviction and trade creditors can’t repossess equipment or pursue a lawsuit or a lien against you. But, like the denizens of the dome, a bankruptcy debtor is under glass: it pays a price for the stay’s protection as its actions are closely scrutinized by the court and creditors – and sometimes subject to their approval – through intrusive mandatory disclosures and other provisions of the Bankruptcy Code.

Second, the Bankruptcy Code allows a debtor to reject a burdensome executory contract which is an agreement where there are continuing obligations by both parties. Some examples are rent under a lease, payments under office equipment leases and salaries under an employment contract – even if it’s a collective bargaining agreement. Where an executory contract is rejected by the debtor, the rejected party is relegated to a pre-bankruptcy claim for damages. This means that the creditor under a rejected contract will probably be paid peanuts for what it’s owed, just like the others.

Of course, Washegon Opera can’t continue to reap the benefits of any contract it rejects. For example, if these contracts were rejected, Snidely Whiplash could padlock the door, you’d have to scratch the diva’s guest performance and the copiers and computers could be carted away under a canceled contract. For any agreements that are “assumed” and not rejected, Washegon would not only pony up past-due obligations but also pay these creditors full freight on a going-forward basis.

Moreover, most executory contracts are assignable, even those that have anti-assignment clauses, which are generally unenforceable. (Boilerplate provisions in contracts voiding the agreement or imposing other nasty consequences if you file for bankruptcy are also unenforceable). Contracts that aren’t assignable typically include personal services contracts and copyright licenses, both of which would require consent of the affected assignee.

Third, the Bankruptcy Code provides the debtor with the ability to prosecute “clawback” actions against certain pre-bankruptcy payments or other transfer of assets to creditors. There are two main types. A preference action is a lawsuit in the bankruptcy court where the debtor had paid some creditors prior to bankruptcy, but not others who are similarly situated. The ones who got paid, the “preferred” creditors, are required to give back the payments so that all similarly situated creditors get their proportionate share of the pot.

A fraudulent transfer is one where a financially strapped debtor makes a deal to transfer property with the intention of keeping those assets from creditors’ clutches. Regardless of intent, the debtor can reclaim these transferred assets (or the cash value of them) where the presumably insolvent debtor didn’t receive equivalent value in the exchange (e.g., a sweetheart deal like selling your Steinway to your sister for sixty bucks).

Fourth, a Chapter 11 debtor is often able to have better access to credit by offering lenders a statutory “superpriority” which means that the lender would be repaid first from estate assets that aren’t already collateral for secured loans. Moreover, they may also be able under certain circumstances to offer a lender a first priority or “priming” lien on collateral, thereby demoting the priority of an existing secured creditor’s lien. So, it’s possible that Washegon Opera may have better luck getting a loan against anticipated ticket sales to finance that new production of Aida after filing for bankruptcy.

This all sounds good for a debtor but there are many safeguards in the Bankruptcy Code to protect creditors and prevent abuse. For example, a company’s management can be kicked out and a bankruptcy trustee can be installed to manage the company in the best interests of the creditors.

And bankruptcy, like any legal proceedings, especially ones that may include side litigations like preference and fraudulent transfer actions, can be lengthy and expensive. Larger creditors will obtain their own counsel and various creditors may participate in unsecured creditors’ committees as part of the process. And the debtor’s lawyers and any court-appointed trustee get paid prior to the creditors.

All the Fun without the Fuss

Because of the extensive protections a bankruptcy proceeding provides debtors, hiring a bankruptcy lawyer to work out deals with creditors can be an expedient and cost-effective way to get the breathing room needed to survive. You could wind up with better terms with lenders, vendors, contractors, employees and other creditors. From their viewpoint, why go through the aggravation of a lengthy and costly reorganization where you’ll only wind up in the same place – or worse – than through a pre-bankruptcy settlement?

And these principles are applicable to any individual or entity, including arts-related ones like labels, recording artists and songwriters as well as dancers, painters, poets and photographers. But this post only scratches the surface. For example, the interplay between bankruptcy and the status of various copyright and other IP assignments, royalty streams and licenses can get pretty thorny. And my Super Lawyer sibling reminds me that some of the bankruptcy principles were simplified for illustrative purposes.

Bankruptcy counseling, like a symphonic world premiere, may be new and unfamiliar but need not be feared. But a pre-bankruptcy workout isn’t for everyone. If there’s no realistic prospect of a viable business or your idea of fundraising is a bake sale, it likely makes more sense just to fold your cards and walk away from the table. To paraphrase Jackie Mason, you probably can’t afford to go bankrupt. Or your creditors may call your bluff and force you into bankruptcy proceedings. But your attorney should be able to tell if potentially playing the bankruptcy card is for you.

The Terminator: Where Copyright Meets Marriage Equality

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The “Copyright and Marriage Equality Act,” as set forth in S.23 and H.R. 238, was sponsored in the Senate by Sen. Leahy (D-VT) and in the House by Rep. Kilmer (D-WA) right after New Year’s. You might ask what does marriage equality have to do with copyrights? After all, if I’m a songwriter, novelist, photographer or any other creative artist, can’t I make a will and leave my work to whomever I want?

Well yes, and Section 201(d) of the Copyright Act states in part:

The ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law, and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession.

But leaving your life’s work to a loved one assumes that you, the creator, actually own the copyright in that work. And that’s often not the case. To illustrate, let’s assume you’re a songwriter and you wrote both the music and lyrics to a hit tune we’ll call “The Marriage Equality Blues” or “MEB” for short.

To keep the example simple, let’s say you then ink a traditional music publishing deal where you assign the worldwide copyright in MEB to a music publisher, MP, who then owns the work for the life of that copyright, which for works written since 1978 is your life plus 70 years. The songwriter agreement also states that you and MP split the royalties from MEB 50/50. MP’s share covers its overhead, including rent, staff and equipment and hopefully, some profit.

Now, even though you no longer “own” MEB, you can still sign a will leaving your royalties to whomever you want. So what’s the fuss about? It has to do with the provisions of the Copyright Act that deal with terminations of grants, such as your assignment of the copyright in MEB to MP. The rationale behind the termination provisions is that a fledgling artist often lacks the bargaining power and/or knowledge to make a good deal regarding the exploitation of his work. Or in other words, newbie artists (and even mature ones) often get ripped off and deserve a second bite at the apple – but only after they’ve potentially been taken advantage of for 35 years!

Let’s say you made a bad deal assigning your rights in MEB to MP. Assuming you wrote the song in or after 1978, Section 203 of the Copyright Act gives you the right to terminate your assignment of the U.S. copyright in MEB. However, the termination, which will be effective no earlier than 35 years after you signed that bum songwriter contract, must happen during a specified window of time and under certain picayune conditions. There are similar, but not identical provisions under Section 304 of the Copyright Act for pre-1978 works.

Thirty-five years is a long time. So let’s assume that when it comes time to exercise your termination rights, you’re dead. Here’s where “marriage equality” comes into play. Both Sections 203 and 304 provide that where an author (creator) is dead, his termination right is controlled by the author’s “widow or widower” unless there are also children and then the widow owns half of the author’s termination interest.

The problem is that Section 101 of the Copyright Act currently defines “widow or widower” as:

the author’s surviving spouse under the law of the author’s domicile at the time of his or her death, whether or not the spouse has later remarried.

Let’s now assume that your surviving spouse is the same sex as you. Regardless of whatever may be in your will, federal copyright law, including Sections 101 and 203 (or 304), defines who controls your termination rights in MEB. For example, if you and your same-sex spouse were married in Maine, which recognizes the validity of your same-sex union, but at the time of your death you two made your home in Missouri, a state that does not recognize same-sex marriages, then regardless of the validity of your Maine marriage or any attempt to assign your termination rights under your will, your surviving spouse has no statutory termination rights.

The Copyright and Marriage Equality Act would correct this. In somewhat convoluted language, the proposed legislation amends Section 101 to provide that a surviving spouse is the “widow or widower” for purposes of the copyright law if they were married in a state or other jurisdiction that recognizes the validity of that marriage. So your Maine marriage to your same sex partner would be valid for copyright termination purposes, even if you two were living in Missouri at the time of your death. Whatever one thinks of same-sex marriage, policies regarding marriage equality should not be determined by arcane provisions of the Copyright Act.

Please note that, unlike a copyright registration, which is often easy to do without lawyerly assistance, the termination provisions are deliberately difficult to comply with and the complexities of how and when to serve a termination notice and the specific rights you recapture go beyond the scope of this article.

Finally, as with the proposed Songwriter Equity Act, it’s not likely that this bill will pass the first year it’s introduced. So if you’re in favor of marriage equality you should consider contacting your local Congressman to express your support for this bill.

 

Blurred Lines in the Difference between Copyright in a Song and in a Recording

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There’s been a blizzard of articles regarding the jury decision finding that Robin Thicke and Pharrell Williams’ 2013 megahit, “Blurred Lines,” infringed upon Marvin Gaye’s song, “Got to Give It Up.” I’ll leave it to you, gentle reader, to judge how similar the recordings of two songs are to each other. While most of my musician friends were pleased with the decision and the jury’s $7.3 million award, my copyright law colleagues and I are somewhat skeptical that it will be upheld on appeal. Here’s why.

As I’ve recently written, when one is dealing with recorded music, there are two distinct copyrights involved. One is the copyright in the musical composition or song and the other is the copyright in the particular recording of the song. This is best illustrated in connection with “cover” recordings. Some of us are old enough to remember that The Bangles had a hit around 1987 with a cover of Paul Simon’s song, “Hazy Shade of Winter,” which was originally recorded by Simon & Garfunkel in 1968. The copyright in the song is owned either by the songwriter(s) or their music publisher(s). The particular recording of the song is usually owned by the artist’s record label.

In the “Blurred lines” case, Marvin Gaye’s heirs sued on the basis of copyright in the song, only, not in his original recording of “Got to Give It Up” as they presumably had no copyright ownership in the recording. This leads to the question as to what the song is, separate from the recording of it. Although it’s no longer required for copyright protection, in order to obtain a copyright registration in any work, the copyright owner has to file an application with the Copyright Office. This consists of the application form, which includes the title and writers of the work as well as a “deposit copy” of what the work is. Back when Gaye wrote “Got to Give It Up” in 1977, copyright registration was mandatory to obtain copyright protection for the song.

And back when “Got to Give It Up” was registered for copyright, the only music that was often filed as a deposit copy was a “lead sheet” for the song. As anyone who’s ever played out of a fake book knows, a lead sheet consists only of the song’s melody line, lyrics and the chord symbols that represent the song’s harmonies. I’ve posted a handwritten lead sheet here. Sometimes the deposit copy consists of slightly more elaborate sheet music: the melody line and chord symbols with piano accompaniment. Deposit copies still need to be filed with a copyright registration but these days you can upload a MP3 recording of the song with your online registration, which, of course, provides a richer, more fully realized rendition of a song than can be conveyed in simple lead sheet or even a full score.

So, for copyright purposes, the song, “Got to Give It Up,” is likely at best, a piece of piano/vocal sheet music and at worst a lowly lead sheet. That’s why the judge instructed the jury to only consider the sheet music, not Marvin Gaye’s recording, a copyright that Gaye’s family doesn’t own. It would be very difficult to convey the “groove” of the “Got to Give It Up,” including the beat and other elements in the sheet music to the song as opposed to the recording of it. It’s far more likely that the deposit copy of the song, “Blurred Lines,” is in fact, the recording (which is now permitted) or at least some demo version of it.

Moreover, not every element in a song (whether in the form of sheet music or in a recording), is copyrightable. You can’t copyright “ideas” but only “expression” of ideas. For example, chord progressions such as a “falling thirds” (think of the C, Am, F, G chords of hundreds of 1950s songs) are not copyrightable. So, ultimately, for purposes of this lawsuit, the issue on appeal will be whether the song or the recording of “Blurred Lines” infringed original, copyrightable expression in the song “Got to Give It Up,” as represented by the sheet music. And that’s hard to prove.

And that’s why the jury verdict may be overturned on appeal. In other words, one can’t blur the line between the copyright in the song and the copyright in the recording. In terms of content (as opposed to ownership) it’s less of a distinction now since deposit copies of songs can be recordings of them – but that’s not what the practice was when “Got to Give It Up” was registered for copyright protection.

So, What’s The Songwriter Equity Act About?

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Update: I originally published the post below on May 14, 2014, shortly after the Songwriter Equity Act was introduced last year. The bill has was re-introduced in both houses of Congress on March 3, 2015 by the same sponsors as before, led by Sen. Hatch (R-UT) and Rep. Collins (R-GA), who posted the bill on his website. In addition to my original piece below, I also discuss the background underlying the rate-setting for songwriter royalties from the sale of recordings (“mechanical” royalties) in my post on the Copyright Office’s recently-released music licensing study, which advocated for the changes incorporated in the proposed legislation.

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Given the continuing Congressional deadlock, I generally don’t pay too much attention to the mere introduction of bills relating to copyright and music.  So, I didn’t pen a post when Rep. Doug Collins (R-GA) introduced H.R. 4079, the “Songwriter Equity Act” at the end of February. This bill, it were somehow to pass, would amend the Copyright Act with respect to how songwriters’ statutory “mechanical” royalties and certain public performance royalties are determined. It has 14 co-sponsors, including Representatives Steve Cohen (D-TN) and Steve Cooper (D-TN).

But now Senators Lamar Alexander (R-TN), Bob Corker (R-TN), the senators who represent Songwriter City (a/k/a Nashville) and Orrin Hatch (R-UT), himself a songwriter, have announced that they will be introducing their own version of the “Songwriter Equity Act” in the Senate. This, along with the Copyright Office’s extending their public comment period for their Music Licensing Study until May 23, makes me think that there may be some real momentum to make changes in the laws affecting those who create and license music.

Any tunesmith will tell you that their two biggest income streams are royalties from the public performance of their works and royalties from the sales of recordings of their songs. Unlike most creators of copyrighted works, songwriters’ ability to earn a living is heavily regulated by the federal government. Let me explain, starting with royalties from recordings.

Section 115 of the Copyright Act essentially provides that once a song has been recorded, anyone can do a “cover” of that song, under a compulsory license from the copyright owner(s), i.e., music publishers, provided they are paid the statutory royalty known as a “mechanical” royalty, which has applicable first to piano rolls, then to 78s, to LPs, 45s, cassettes, CDs and now, downloads. Under authority of the Copyright Act, a  tribunal called the Copyright Royalty Board sets this statutory rate, which is currently 9.1 cents per recording distributed for a recording that is 5 minutes or less. This statutory rate serves as a benchmark, even for voluntarily negotiated “mechanical” licenses, such as those issued by The Harry Fox Agency.

Let’s move on to performance royalties. The majority of songwriters belong to ASCAP or BMI, which are private entities known as performing rights organizations (PROs). PROs are collectives that issue licenses to publicly perform music on radio, TV, in live music venues, over the Internet and elsewhere. ASCAP and BMI issue “blanket” licenses of all the works they control to users and distribute the royalties they collect to songwriters and music publishers.

However, since the 1940s, ASCAP and BMI have operated under Department of Justice Consent Decrees which were last amended in 1994 (BMI) and 2001 (ASCAP), long before the advent of digital download and streaming services. The ASCAP and BMI Consent Decrees are each overseen by a federal District Judge in the Southern District of New York. When a user (e.g., Pandora) or group of users (e.g., the radio broadcasters) can’t agree with ASCAP or BMI on an appropriate license fee, the parties can have a “Rate Court” proceeding before the judge overseeing the ASCAP or BMI Consent Decree. The Rate Court judge then must determine a “reasonable rate” for the particular user. However, there are certain limitations placed on the judge by the Copyright Act as to how to determine a “reasonable rate” for the user(s) in question.

The ASCAP and BMI Consent Decrees were entered into as part of a settlement of anti-trust litigation. At the time, it seemed like the PROs had a certain amount of market power when dealing with radio and later,TV stations. The PROs now argue that the playing field has dramatically changed in the ensuing decades and it’s new players like Apple (iTunes) and Google (YouTube) and telecommunications companies like Verizon and Comcast that have the real power and that therefore the Consent Decrees should either be amended or scrapped because of this and other shifts in the marketplace. And by including the functioning of the Consent Decrees in its music licensing study, the Copyright Office may ultimately share the PRO’s view.

So, what does this all have to do with the proposed “Songwriter’s Equity Act”? As David Israelite, President of the National Music Publishers Association (NMPA) put it: “Roughly two-thirds of a songwriter’s income is heavily regulated by law or through outdated government oversight,” which results in devalued intellectual property rights.” The bill would change the standard of how the CRB sets mechanical rates and the criteria under which ASCAP and BMI Rate Court judges determine a “reasonable rate” for public performances.

Specifically, the bill would amend Section 114(i) of the Copyright Act to allow introduction of sound recording royalty rates in a Rate Court proceeding. It would also amend Section 801(b)(1) of the Copyright Act to direct the Copyright Royalty Board to set the statutory mechanical rate under Section 115 based upon a fair market rate, or what a willing buyer and seller would negotiate, including looking to comparable rates and agreements, rather than “reasonable” rate based on factors other than market conditions.

Advocates argue that songwriters would greatly benefit from these revised rate-setting standards and songwriter royalties would more closely align with those for the use of the sound recording, which are often many times higher than the comparable songwriter royalty. In short, this bill, should it become law, would be sweet music to songwriters’ ears. This bill, along with one granting labels and recording artists royalties when records are played on the radio  that was introduced last year (and the U.S. is one of less than a handful of nations that don’t already have this), would create a more level music licensing landscape.

All You Need To Know About The Copyright Office’s 202-Page Music Licensing Report

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On Friday, February 6, the Copyright Office issued a 202 page comprehensive report (plus appendices) on the music licensing business, “Copyright and the Music Marketplace.” The Report is the culmination of a nearly year-long process of soliciting and evaluating input from interested parties on how to fix what everybody agrees is a broken system.

Anyone with an interest in the music business should read the full report – or at least the 11-page executive summary. But in case even that’s too much, here’s all you need to know, in layman’s terms and with analysis, in little more than half the length of the executive summary:

The Report starts with four guiding principles:

– Music creators should be fairly compensated for their creations
– The licensing process should be more efficient
– Market participants should have access to authoritative data to identify and license sound recordings and musical works
– Usage and payment information should be transparent and accessible to rights holders.

Like Mom and apple pie – it’s kind of hard to argue with these. But before we get to the Report’s recommendations as to how to implement these principles, including four subsidiary principles, we need some background on the current music licensing framework. So instead of the Report’s 50-page primer (which is quite readable and mostly correct), here’s a roughly three-page summary of the current music licensing landscape, rocky as it is.

The Report is primarily concerned with the distribution of recorded music, whether through sales of physical product like CDs and downloads or public performances, whether over the radio or by streaming services on the Internet. This means that unless it’s a recording of public domain music, like Beethoven, most recordings consist of two distinct copyrights: (1) the copyright in the musical work, which is typically controlled by one or more music publishers; and (2) the copyright in the recording of that work, which is typically controlled by a record label. This is best illustrated with “cover” records. For example, I prefer the Carole King version of “You’ve Got a Friend” to James Taylor’s. Same song, two different recordings; two separate copyrights for each recording.

Let’s deal with the songwriter/publisher side first. ASCAP, BMI and SESAC are performing rights organizations (PROs) that license the public performing right (and only that right) in musical compositions (i.e., songs, but not the recordings of them) when they are performed live in stadiums, concert halls and clubs, broadcast on radio and TV or streamed over the Internet. PROs typically issue “blanket licenses” to users, meaning for a set fee (either a flat fee or percentage of the user’s revenue, depending upon the license), the user has an all-you-can-eat buffet of the music in that PRO’s repertoire allowing the user, such as a radio station, to play any song in the PRO’s catalog as often as it likes. The PROs pay 50% of the licensing revenue to the writers and 50% to the music publishers after deducting their operating costs.

ASCAP and BMI, according to the Report, represent more than 90% of the domestic music market while SESAC and another recently-formed entity represent most of the remainder. ASCAP and BMI (but not SESAC) have been operating under Department of Justice Consent Decrees since World War II. And they haven’t been amended since the dawn of the Internet. Think about that. These decrees were instituted to settle alleged anti-trust violations when 78s were the dominant recording format. Under DOJ regulations in place since 1979, most consent decrees are supposed to terminate within 10 years – not 75!

The Consent Decrees for ASCAP and BMI are overseen by two different federal judges in the New York City. When either PRO can’t reach an agreement as to a license fee either with an individual user (e.g., Pandora) or an entire industry (e.g., radio), the parties may have a “Rate Court” proceeding before the judge. Like all federal litigation,  a Rate Court case is very time consuming and costly. Both Consent Decrees state that the judge must determine a “reasonable” fee, which has been interpreted to approximate what a willing buyer and a willing seller would pay for a license in a free, open market.

Most important about these Consent Decrees is that they require ASCAP and BMI to grant a license to anyone who requests one, making the process a de facto compulsory license regime. What’s more, users often pay nothing – sometimes for months or even years at a time – while the parties either negotiate or litigate what a “reasonable” fee should be. Songwriters and publishers have long maintained that users, availing themselves of a compulsory license with the ability to use the “product” while negotiating a fee, are at a significant bargaining advantage.

Still sticking with songs (as opposed to recordings), when a song is covered by another artist, the Copyright Act provides the label with a compulsory license whereby the label pays a statutory rate to the owner of the song. This is how Carole King the songwriter gets paid for James Taylor’s cover recording. The statutory rate is currently set every five years by the Copyright Royalty Board (CRB) in Washington, DC. This three-judge panel sets the fee, not based upon a market rate standard, but in accordance with a separate statutory provision requiring a “fair return” to the work’s creator, while balancing certain public policies, such as maximizing availability of works and minimizing a disruptive impact on businesses and industry practices. The Report indicates that this standard results in lower rates than a fair market standard. Although designed to be solely a license for cover recordings with first recording rights reserved to the copyright owner, most recording contracts have provisions tying the release and payment of all songs to the statutory scheme (often at a lower payment rate). Songwriters and publishers have long maintained that this compulsory scheme, as with performing rights, provides artificially low rates.

This statutory compulsory license (meaning music publishers and songwriters are subject to an “offer” they can’t refuse) is called a “mechanical” license due to the mechanical reproduction of the music and is a term dating back to the days of piano rolls when the license provision was first enacted. But the mechanical license applies solely to audio-only recordings – there is no compulsory license for film, TV, videos, games and other AV uses. Although many music publishers issue mechanical licenses directly, a licensing collective, the Harry Fox Agency (HFA), issues these licenses for probably more than half of the market. However, unlike the performing rights licenses issued by PROs, there are no “blanket” mechanical licenses and they are issued on a work-by-work basis, something that online music services find particularly inconvenient and impractical.

As for audio-visual uses, a “synchronization” (or “synch”) license is required from both the owners of the song and the recording of that song. So, if you want to use Tony Bennett and Lady Gaga’s recording of “Cheek to Cheek” in a movie, you need to get permission from Irving Berlin’s music publisher and also permission from the artists’ label for that particular recording of the standard. Synchronization licenses, unlike mechanical licenses, are typically negotiated and issued directly by the copyright owners, the labels and publishers.

The Report states that between public performance and mechanical income, about 75% of a songwriter’s (and therefore a music publisher’s) income is subject to government regulation (compare that to a novelist whose income isn’t regulated at all). So, that means that the majority of a songwriter’s income can be determined by four judges – one in New York and three in DC. By contrast, a label’s income (and therefore a recording artist’s income) consists mostly of sales of recordings (e.g., CDs and downloads) and licensing of those recordings, such as “synchronization” usage as discussed above. There are no compulsory licenses or consent decrees for these uses so it’s a pure, free market negotiation between labels and users for these rights. And music publishers, who can negotiate synch licenses in a free market unshackled by consent decrees and compulsory licenses, are usually able to get about the same fee for their rights as the label gets for theirs.

But not all restrictions disadvantage the songwriter. With respect to performances, the United States, except in very limited circumstances discussed below, does not grant a public performing right in a sound recording. For example, when Sinatra’s recording of “New York, New York” is played on oldies radio (or over loudspeakers at Yankees games), the songwriters, Kander & Ebb, and their music publisher, get paid through their PRO. What do Sinatra’s heirs and his label get? Nothing! As the Report points out, the United States is one of less than a handful of industrialized nations, including Iran and North Korea, which do not have a public performing right in a sound recording for radio.

Why? There are historical reasons in that the radio stations felt that they were providing the labels with promotion for the sale of recordings. Also, every Congressional district has at least one or more radio and/or TV stations. As the Report points out, with the recent shift in consumer preferences from purchases (e.g., CDs and downloads) to streaming (e.g. YouTube), the promotional value of radio probably isn’t what it used to be.

However, because of laws enacted in the 1990s, there is a limited public performing right in a sound recording for digital transmissions, basically, streaming over the Internet, whether through YouTube, Spotify, Pandora or another service. And there is a compulsory license for non-interactive streaming services, which like the mechanical license, has a rate that’s determined by the CRB. The royalties for the compulsory streaming licenses are administered by a collective that’s similar to the PROs, SoundExchange, which distributes this income to labels (50%), featured artists (45%) and side artists (5%). As for “interactive services” (and the Report spills much ink over the lengthy statutory provisions about what is and is not “interactive”), these license fees are determined in market negotiations by the parties.

Our discussion began with the notion that there are two copyrights in a recording: one in the underlying song and one in the actual recording or “master.” However, for historical reasons, recordings that were made prior to 1972 are not covered by the federal Copyright Act, unlike the songs embodied in them. Rather, these recordings, which are still purchased and performed all the time, are governed by state law.

Recent well-publicized lawsuits in New York and California have determined that, at least in those two states (and likely in many others), there is a state-based public performance right in a sound recording, the contours of which remain largely unknown. For example, it’s possible that in some states, this performing right for pre-1972 recordings could be even broader than the one granted under federal law for later recordings in that there conceivably could be a performing right in the older recordings played over the radio under various state, but not federal laws. This could lead to a quagmire of uncertain and inconsistent  treatment.

The Report also contains a lengthy discussion of recent ASCAP and BMI Rate Court decisions, both of which held that publishers could not partially withdraw certain rights from ASCAP and BMI while leaving others. For example, Sony/ATV, one of the three major publishers, felt that it could negotiate better deals regarding digital performances than what it could get through ASCAP and BMI because of the constraints imposed on those PROs by the Consent Decrees. Reaching the same conclusion albeit under slightly different reasoning, both the ASCAP and BMI Rate Court judges determined that a publisher had to be either “all in” or “all out” and that it couldn’t cherry pick certain aspects of the performing right. These decisions figure prominently in the Report’s recommendations.

Why would a major publisher feel they could get a better deal by itself? As we’ve seen in the synch license arena, where there’s a free market, song copyright owners get paid about the same as recording copyright owners in most instances. Contrast that to the download situation where the publisher gets paid 9.1 cents for the download (the compulsory statutory rate) while the label gets about 70% of the sale price on iTunes (a market negotiation).

The Report also contains lengthy and detailed descriptions of the lack of uniformity in data associated with both musical works and sound recordings. Without going into detail about ISWCs, ISRCs, ISNIs and DDEX standards, suffice to say there is currently no consistent, uniform, international process for assigning codes to musical compositions, albums or individual tracks, writers or artists. And there’s no centralized database for this necessary information. This leads to inefficiencies and delayed licensing and payment for creators.

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With the foregoing background, here are the Copyright Office’s four subsidiary principles regarding implementation of their four Guiding Principles:

– Government licensing should aspire to treat like uses of music alike
– Government supervision should enable voluntary transactions while supporting collective solutions
– Rate-setting and enforcement of anti-trust laws should be separately managed and addressed
– A single market-oriented rate-setting standard should apply to all music uses under statutory licenses

So now let’s look at the Report’s most significant recommendations to implement its eight principles:

– Regulate musical works and sound recordings in a more consistent manner. (As we’ve seen, song and master recording rights are often treated differently, with more restrictions on songwriters and publishers than on recording artists and labels.)
– Extend the public performance right for recordings to traditional “terrestrial” radio. (This fosters the first goal and the Report recommends that non-interactive radio be subject to the same compulsory license scheme as are non-interactive streams.)
– In keeping with similar treatment for similar rights, the Report also recommends full federal copyright protection for pre-1972 recordings. (Besides being fair to older artists, this avoids the potential legal chaos discussed above).
– The Copyright Office further suggests that all rate-setting for both recordings and the underlying musical works should (a) be subject to the same “willing-buyer / willing seller” or “fair market value” standard and (b) that all rate setting, even for music performance rights, should be done by the CRB. (This would remove rate-setting for music performance rights from a single, life-tenured federal judge in New York and place it before a tribunal with a specific mandate and expertise. It also fosters the goal of uniform treatment for songs and records.)
– The Report also states that the CRB should only meet as needed and that procedures for setting interim rates, as well as for the overall process, should be streamlined. (This should foster voluntary negotiations and make rate-setting proceedings faster and cheaper).
– The Report also suggests that detailed provisions, such as what constitutes an interactive streaming service, should be put into regulations rather than in the copyright statute, so that they can be more easily modified to adjust to changes in the marketplace.
– The Report stopped short of stating that the ASCAP and BMI Consent Decrees should be repealed. (This position is undoubtedly in deference to the Justice Department’s ongoing review of those decrees, but is clearly supportive of relaxing restrictions, as discussed below.)
– Allow for audit rights under the compulsory mechanical license and allow SoundExchange to terminate licensees who avail themselves of a compulsory license but do not pay. (These are obvious legal loopholes that need to be plugged. If creators are subjected to a compulsory licensing regime, they should at least have the ability to ensure they’re being properly paid and that deadbeats don’t keep the benefits of the license).

The Report also recommended that, as the Copyright Office had previously, licensing collectives be permitted to expand their role and become Music Rights Organizations (MROs) that would license both performing and mechanical rights and possibly other rights as well. ASCAP’s Consent Decree forbids it from licensing mechanicals and other rights and BMI has voluntarily refrained from doing so to date. However, the CEOs of both organizations have indicated that expansion of their licensing capabilities is in their business plans and users should welcome the availability of multi-use licenses.

For example, if ASCAP, BMI, SESAC, Harry Fox and Sound Exchange all became MROs and licensed performing rights and mechanical rights, there would be six MROs competing for business. The Report also recommended congressional overrule of the Rate Court decisions, to the extent of allowing publishers to withdraw digital rights for interactive streaming so that publishers are on parity with the labels in the ability to negotiate for these rights. Although not mentioned in the Report, I think that the MROs should also be able to license the posting of lyrics, as HFA currently offers this service. The PROs and HFA currently allow for a music publisher to issue a direct license and not go through the collective. This should be maintained to both ensure free competition and allow copyright owners to handle individual negotiations where warranted.

If there are six competing MROs offering a variety of bundled licensing services, which would include the right to withdraw certain rights and directly license all rights, it would seem that the ASCAP and BMI Consent Decrees would not be needed (at least not in their present form) as there would be ample competition. As the Report indicated, there are currently only three major labels and three major publishers. They aren’t subject to Consent Decrees. While the US currently has three PROs, most other nations have only one, and that PRO often is able to bundle mechanical rights. The time has come to recognize that the public doesn’t need excessive government protection from the collective licensing by songwriters.

The Report also recommended that membership in MROs be mandatory and that there be a “general” MRO, the GMRO that would act as a stop-gap for certain unrepresented parties and would standardize data formats and create a global rights database for users. I believe neither mandatory membership in a MRO (given that membership in licensing collectives is currently voluntary), nor the creation of a GMRO, another level of governmental involvement, is necessary. First, if a MRO were able to offer more comprehensive services and there was competition for members, there would be enough incentive for all writers, publishers, artists and labels to join one.

Second, as the Report acknowledges, the various interested parties, including the PROs, have been working on various projects to facilitate the uniformity and transparency of data. If, for example, the PROs were to offer mechanical licensing, they would be strongly incentivized to synch their works registrations with recording and artist information. Similarly, if HFA were to offer performing rights, they would be incentivized to ensure that their recording information is coordinated with works information. Third, with MROs having both data for songs and recordings, they could create an aggregate portal for users to look up who controls which rights to songs and recordings. Finally, I also don’t think that a GMRO is necessary to address the problem of unlicensed or unaccounted for shares in works and other missing data. The MROs can license based upon partial representation and hold reserves until such time other interested parties properly register their works and shares.

The Report attempts to address the issue of transparency of licensing and royalty information. Standardizing works and recording codes will help. So will the elimination of the “pass through” mechanical license for downloads in that publishers have to be paid through the labels and not directly by the download services like iTunes. And while the issue was raised regarding equity stakes in and advances from, streaming services like Pandora, no real solutions regarding creators sharing in the wealth were offered. Similarly, the Report alluded to the “whack-a-mole” problem under the DMCA of dealing with rampant infringement on services like YouTube but did not offer any recommendations, an area where the balance between the services and creators, especially individual artists, should be adjusted .

Although the Copyright Office had previously suggested that the compulsory mechanical license be repealed, the Report stops short of advocating it. Instead, it suggests that publishers have limited opt-out rights for interactive streaming and downloads. It further recommends that mechanical licensing should be done on a blanket license basis, like the PROs. The Report’s recommendation that an artist may obtain a compulsory license for a cover recording released as a CD but not as a download makes no sense to me as it is a needless discrimination in format (e.g., LP versus cassettes in the analog world) rather than means of distribution (e.g., purchases versus performances).

I also believe that the song-by-song mechanical license should still be available as an option. For example, an artist making a self-produced recording that include covers should be able to obtain only the licenses needed. And those licenses should be available for both physical copies and downloads. Finally, I think that if the mechanical licensing regime remains compulsory, the CRB should set rates for different tiers of usage. Three should suffice. In the synch market, for example, a Rolling Stones song will command a higher fee than one by an unknown writer. The publisher can select which tier it wants its song priced at and if the user market balks, the publisher can then change to a lower tier.

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In sum, the Report offers some solid recommendations as to changes to the legal and regulatory aspects of music licensing. Other suggestions such as creating a new agency, the GMRO, and mandating coding standards are probably unnecessary if private parties are better incentivized through revised laws and regulations. But the Report contains far more detail and nuances, both regarding the current licensing landscape and its recommendations, than can be covered in my brief summary. Songwriters and composers, whose income is currently regulated the most, would likely benefit most from the Report’s recommendations, although recording artists could also receive a significant boost to their income with the adoption of a performing right for radio and TV airplay.

Undoubtedly, major players in the user community, such as streaming services, will object to some of the proposed changes to the music licensing landscape, such as relaxing Consent Decree restrictions and having all compulsory licenses subject to a fair market standard. However, as the Report points out, music creators should not have to subsidize any particular business model. But as the Report also notes, it is ultimately up to Congress, rather than the Copyright Office or the Justice Department to make most of the needed changes. Given Congress’ recent history, it’s hard to be optimistic about legislative fixes happening anytime soon. But one can hope….

Estate Planning for Composers: 10 Things to Do Before You Die

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Making preparations for your eventual demise isn’t fun. But there are far more important things you can do for your musical legacy than writing a requiem, according to estate planning lawyer located in Highland, IN. Proper planning for your death or incapacity is important even if you don’t have a spouse or kids and involves more than just making a will. Besides, what better time than in the dead of winter to deal with these issues?

So here’s a bucket list of ten things composers and other musicians should do before they die. You don’t have to do everything all at once and some steps are more important than others. But get started! Spoiler alert: it all boils down to organizing your musical life, deciding who you want to be in charge of it once you’re gone, and then working with professionals to ensure a smooth hand-off. Here are the benefits of having a trust and knowing how you can protect your assets.

1. Organize your files. All contracts, royalty statements and other important documents should be kept together and clearly organized. Get a filing cabinet and a bunch of manila folders. You should know that planning for the legal aspects of your life is a very crucial thing to do.

Create clearly labeled physical files for:

– PRO (ASCAP, BMI or SESAC) membership agreements both as a writer and, if applicable, as a publisher

– your publishing company documents (e.g., d/b/a certificate, operating agreement, bylaws)

– songwriter, composer or other music publishing agreements for any works represented by other publishers

– copyright registration certificates

– agreements with collaborators and/or owners of copyrighted text, including royalty splits/payment information

– recording contracts if you’re a recording artist or have self-produced any recordings

– mechanical licenses from record labels or Harry Fox for any recordings of your works

– all commissioning agreements, particularly if there are any unexpired exclusivities

– film, TV, advertising, videogame, corporate and other scoring agreements

– copies of recent royalty statements (e.g., past 3-5 years) from performing rights organizations (PROs), music publishers,     record labels, Harry Fox (HFA) and other entities that are supposed to pay you for the use of your music

Organize your digital files, too:

– clearly label all your Sibelius, Finale, PDFs, audio and other digital files in specific folders

– back them up onto a thumb drive and/or cloud storage

– organize, label and back-up PDFs of physical documents listed above

2. Create an easily accessible master list for the passwords to:

– your computer(s)

– your PRO and SoundExchange account(s)

– your web site and web hosting account(s)

– your email and social media account(s)

– any online services where you’ve posted your music

– any password service for any of the above

3. Make sure all your works have been registered with ASCAP, BMI or SESAC. You need to do this regularly in order to get paid public performance royalties. Also, if you are self-published, it’s the easiest way for potential licensees to find your music other than Googling you to find your web site. And periodically check to make sure works represented by other publishers are properly registered, too. (If you’re a recording artist or have self-produced recordings you should also sign up with SoundExchange and register your works there as well).

4. Assign the copyrights in your works to your publishing company if it’s a corporate entity. If you don’t have a publishing company or it’s merely a sole proprietorship (e.g., Jane Doe d/b/a Jane Doe Music) this is not an issue – there’s no need to assign something to yourself. However, if your publishing company is some other form of business entity (e.g., S Corp., LLC, LLP) you probably should do this. Since PROs only track payees, not owners, merely registering your works in the name of your publishing company with your PRO may not be sufficient when it comes to any sale or transfer of your publishing company. A one-page assignment of copyright with a schedule of works may be all that’s needed.

5. Register your works with the Copyright Office. While registration is permissive, rather than mandatory, there are many benefits to registration, including proof of authorship, the existence of deposit copies of your work and availability of statutory damages if your work’s infringed. You can do a group registration under certain conditions and you can do it online at www.copyright.gov.

6. Make a list of works represented by other publishers. It can be a simple Excel spreadsheet with columns for the title of the work, instrumentation, the publisher’s name and contact information.

7. Let someone know where all the above information is kept. Any master list and instructions should be in a separate document kept with your will and other estate planning documents and insurance policies.

*****

While you’re organizing your files and making sure your works registrations are up to date, here are some things to think about regarding estate planning for your music and other creative properties:

8. First, find a local trusts and estates (T&E) attorney. While the Copyright Act is federal law, T&E law is largely governed by state laws, which can vary greatly. Moreover, you want to meet with a local T&E lawyer about drafting important documents such as your will, living will, health care proxy and any trusts for the benefit of loved ones. Your T&E attorney, along with law firm know for civil litigation located in Kingston, will ask you all the right questions about how you want to deal with your estate, including tax issues, and will customize an estate plan for you in accordance with your state’s and applicable federal laws.

9. But, also consider working with an entertainment lawyer, too. While there are T&E lawyers who are well-versed in copyright and the music business, most are not, especially if you live in an area that’s not a big arts hub. So, it may be helpful to have an entertainment lawyer work with your T&E attorney. The entertainment lawyer need not be local, but should be someone with copyright and music business expertise, including things that are specific to “new music.” The pitfalls avoided will be well worth the modest additional cost.

An experienced music lawyer can be helpful because this attorney can:

– assist your T&E lawyer in ensuring that the applicable provisions in any will, trust or assignment documents are appropriately drafted. This way, copyrights, royalties, scores and other aspects of your creative life will not merely be vaguely lumped together with other personal property or financial assets – especially if you want to divide up ownership of individual works or royalty streams or you want specific instructions as to the disposition of individual scores, instruments and mementos.

– ensure that appropriate documentation is supplied to PROs, publishers, labels and other entities so that your beneficiaries will have their rights promptly recognized and royalties will continue to be paid, rather than placed on hold.

– determine whether royalties are being properly paid and whether certain agreements may be terminated either through contractual provisions or by the termination provisions of the Copyright Act.

– perform a valuation for your works or assist an estate appraiser so that any deals your estate makes with respect to the sale or administration of your catalog will be a fair one for your loved ones.

– negotiate an agreement for the sale and/or administration of your music as part of your estate plan that would only take effect upon your death so as to avoid your executor or your loved ones having to deal with arcane areas where they lack expertise. Any agreement would have to address financial terms, such as acquisition fees, advances, royalty splits and other contingencies, such as the ability of an executor to back out of a deal and/or make alternative arrangements if the publisher/administrator ceases to exist or is otherwise unable to comply with the terms of the agreement.

10. Consider having a separate music or arts executor. The person you choose as the executor of your overall estate should be the person you trust the most to deal with your home, your finances, the care of your loved ones and most of your other physical possessions. However, that person may not be the best one to deal with your music and any other literary or creative properties (e.g., did she really mean to put that C# in the horn part?). So, just as you may consider consulting an entertainment lawyer as part of your estate planning, you may want to consider naming a friend or colleague who is familiar with your music to serve as a special music or arts executor to deal with your compositions and other creative works. You should discuss your choice of executor(s) with the individuals you choose and should have back-ups. Executors can decline to serve – or may even predecease you.

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As with other aspects of your estate planning, paying attention to issues relating to your music now, before you either die or are incapacitated, will not only give you peace of mind but will spare your loved ones unnecessary cost and anxiety. It’s the best way to protect your creative legacy.

Five Things Composers Should Ask About Working With a Publisher

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In December, I was invited by Jennifer Higdon to speak about various aspects of the music business to the Curtis Institute’s Composers’ Forum. I was peppered with some very pointed questions about the music publishing prospects for emerging composers. The students were justifiably skeptical because a publishing deal isn’t for everyone. But there are also alternatives besides signing your works away to a publisher or doing everything yourself.

Here are five questions a composer should ask to determine whether a publishing deal makes sense:

1. What exposure do you already have? Just as a record label won’t sign a band that doesn’t already have a following and a self-produced album, publishers need to see that you are worth the investment of their resources. So, if you already have a resume that includes performances, awards, commissions and residencies (not all boxes need be checked) that’s a foundation a publisher can build upon. It also shows that you’re serious about your career and are willing to work at it.

2. What kind of works do you mostly write? Publishers are best when dealing with large-scale works such as orchestral works or operas. And even if a composer submits a Sibelius or Finale “manuscript” it’s still very costly and time-consuming to produce performance materials acceptable to professional orchestras and opera companies. Because they are voluminous and expensive to produce, performance materials for symphonic and operatic works are rented rather than sold. Publishers make the most money, both for themselves and the composers they represent, from the rental and performing rights income.

Works for smaller ensembles, such as string quartets, works for solo piano, piano and voice and other ensembles of say, eight players or fewer, are mostly sold rather than rented. After deducting print costs, publishers make much less money off of these works. Public performance income is also typically much lower than a larger-scale work of comparable length. Similarly, works for concert band or chorus are also sold rather than rented. These will be “new issued” like books and will generate sales in the first year or two. After that, unless the composer continues to supply new product, i.e., new band or choral pieces, a single work will likely languish – as far too many composers have found out the hard way.

3. Who’s performing your music? If you’re a member of an ensemble and you write for that group there’s no need for a publisher intermediary. You also have to ask yourself if you really want other groups to perform your music. And even if you do, if your ensemble has unique instrumentation it’s less likely that other groups will program your works.

4. Will a publisher promote my music? Publishers have long-established relationships with artistic administrators at orchestras, opera and ballet companies, as well as domestic and international music festivals, individual conductors and soloists. However, all publishers have an existing roster of composers that need care and feeding. For example, at Boosey & Hawkes, where I used to work, not only do they have living composers like Adams, Reich and Rouse, but the heirs of Bernstein, Carter, Copland, Stravinsky and many others still want these composers’ works programmed as much as possible. Classical publishers haven’t been immune from the ills that have plagued the music industry for more than a decade. And everyone’s promotion staff is stretched thin. That said, some publishers do a better job than others. Ask around.

5. Do I really want to handle the business of being a composer? This includes photocopying and shipping scores and parts, negotiating commissions and license agreements, managing expenses and being your own publicist. Some composers are good at this and enjoy it. Others, not so much.

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In short, if you are a composer that writes mostly smaller-scale works, particularly if it’s for your own ensemble, you may well be better off selling downloads from your own web site.

However, if you:

– want to write large-scale works
– have an existing catalog that’s generating some income
– are getting commissions and performances
– have gotten some awards and/or a residency or two

Then, a publishing deal may be something to consider.

However, publishers sign very few composers. Boosey, Schirmer, Presser, Peer, Peters, Schott, Subito and any others will sign only about a handful of composers a year combined – not each. That’s less than a composer per publisher per year. Why? Because it’s a very expensive, long-term commitment and each of these publishers has continuing obligations to its existing composer roster.

Bonus Question: What should I ask if a publisher’s interested in me?

Here are five basic questions to ask:

– Will they pay an acquisition fee for my “back catalog” of pre-existing works?

– Will they pay an advance on royalties for works written during the term of the contract?

– Will I retain ownership of any portion of the copyrights to my works or will the publisher own them outright? In other words, am I being offered a publishing, co-publishing, administration or distribution deal – or some combination of them?

– What are the royalty splits for various income types (print, rental, grand rights, synch, etc.)?

– How will they promote my works, including increasing my income and getting commissions for me?

Those are just the preliminaries. A typical publishing contract has many other terms that need to be understood and often negotiated. Entering into a publishing agreement can be the most important career decision a composer can make. Any composer contemplating signing up with a publisher should consult with a knowledgeable attorney. And a good lawyer can also suggest and negotiate possible alternatives to a pure publishing or pure DIY relationship, such as hiring a publicist, administrator or music distributor.

Fat Chance for Skinny Puppy’s Guantanamo Claim

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Yesterday, my astrologer friend, Elisabeth Grace, asked me to make a prediction of my own. She forwarded this article in The Guardian and inquired as to whether I thought the band Skinny Puppy has a case. As the article points out, the band’s music apparently was used as part of the “enhanced interrogation techniques” on “detainees” at the Guantanamo Bay facility operated by the US government on the grounds of the naval base there. The band is now demanding payment from the US Department of Defense in the amount of $666,000 for the unauthorized use of their music in this manner. Although I’m sympathetic to Skinny Puppy’s plight, I’m skeptical as to whether they have a cognizable claim.

Let’s assume that one of the guards got his hands on a Skinny Puppy CD and that he and his buddies thought it would be “persuasive” to blast the music at high volume on the prison grounds. Could Skinny Puppy have objected to this usage and can they now demand payment from the US government? Although Gitmo is on the island of Cuba, it is United States territory, so presumably, US law applies. The US Copyright Act grants copyright owners the exclusive right of public performance in Section 106.

However, this right does not apply to the public performance of a sound recording, such as a CD, LP or download when played over loudspeakers or broadcast by radio or TV. There is only a public performing right in a sound recording when it’s performed by means of a digital transmission, such as by streaming over the Internet. The US is one of less than a handful of countries (including North Korea and Iran) that does not have a broader public performing right in sound recordings.  So, neither the band nor its label can sue for the unauthorized blasting of the Skinny Puppy tracks over loudspeakers at Gitmo.

And that’s even assuming that such a broadcast constitutes a “public” performance under the US Copyright Act. Although there is no public performance right in a sound recording, there has long been such a right in the underlying musical compositions. It is this right that performing rights organizations (PROs) like ASCAP, BMI and SESAC have been licensing for decades. The songwriters and music publishers of the songs embodied in recordings that are played over loudspeakers at stadiums and nightclubs and other public venues are paid for this use by the PROs that license these facilities.

Section 101 of the Copyright Act defines a public performance as  a performance that is “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” I’ve not researched this issue, but performance at a federal detention center or any other prison probably isn’t a “public” performance. For example, ASCAP and BMI license local – but not federal – governments and prisons don’t seem to be covered by these licenses.

To further illustrate the distinction between a public performance, over which the songwriters of the Skinny Puppy works could have a claim and a private one where they would not, consider this example: If I were to blast a Skinny Puppy CD in my apartment, that’s a private performance and neither the band, the label, the songwriters, SoundExchange, nor ASCAP or BMI could come after me. However, my neighbors could call the cops for creating a nuisance – but that’s not a copyright claim or one that the band would have standing to bring.

And while there isn’t a blanket government use exemption, the feds would likely argue, somewhat ironically no doubt, that even assuming there is a “public” performance of the Skinny Puppy songs at the prison, the use by the government was “fair use” as it was in the course of lawful governmental activity (at least according to Justice Department memos) and not for commercial gain. If the government can claim “fair use”, it’s as if they had permission. For example, if a local fast food joint had ASCAP and BMI licenses and used certain music to deter teen loitering, the songwriters would have no say as to this particular use or the volume of the playing,  although the neighbors — but not the songwriters or the recording artist —  might object as a nuisance.

Any other claims the band might have may well be pre-empted under the Copyright Act. But as quoted in The Guardian article, the band’s keyboardist acknowledges that their point isn’t financial gain. It’s just one more more in a litany of public  moral outrages associated with Guantanamo. Unfortunately for Skinny Puppy, they can’t sue based on any such moral rights.

 

Back to the Future: Will the Seventh Circuit Transform Fair Use?

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Last month, the Seventh Circuit in Kienitz v. Sconnie Nation signaled what may be a seismic shift in how “fair use” cases are judged. In order to see why, let’s briefly review the statutory and judicial framework.

First, fair use is not a “right” as some “copy-left “ advocates would argue, but is a defense to copyright infringement codified since 1978 in Section 107 of the Copyright Act. And contrary to popular belief, there are no bright line rules as to what is and is not a fair use. For example, there’s no magic number of bars of music you can borrow or any certain number of seconds of a clip you can post or, as we’ll see, a prescribed portion of a photographic portrait that one is automatically free to use.

Rather, as the Supreme Court reiterated in the 1994 case Campbell v. Acuff-Rose Music, fair use is determined by the courts on a case by case basis using the four factors of Section 107:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.

In Campbell, the Supreme Court held that 2 Live Crew’s use of a portion of the Roy Orbison hit, Oh, Pretty Woman, in its similarly titled song, Pretty Woman, constituted a fair use parody of the Orbison song in that only so much of the original work as was necessary to comment on that original work was used in the 2 Live Crew recording. In its analysis of the first statutory factor, the Court cited with approval Judge Pierre N. Leval’s influential 1990 Harvard Law Review article, Toward a Fair Use Standard, as to whether the use of the Orbison in the 2 Live Crew work was “transformative,” in that “it adds something new, with a further purpose or different character, altering the first with new expression, meaning or message….” The Court, noted, however, that “transformative use is not absolutely necessary for a finding of fair use” but that “the goal of copyright, to promote science and the useful arts, is generally furthered by the creation of transformative works.”

Since Campbell, the Second Circuit, historically the nation’s second most important copyright court, took the “transformative use” ball and ran with it. Recent cases, such as the Google Books decision and Cariou v. Prince, held that copying of entire works constituted fair use on the basis that the use was “transformative.” Cariou, for example, involved Richard Prince’s alteration of entire photographs taken by Cariou. The Second Circuit held that the use was “transformative” and therefore a fair use, even though Prince’s works did not comment on Cariou’s, as was the case in Campbell. Any cursory Google search will yield a plethora of articles critical of Cariou.

This leads us to the Seventh Circuit and Kienitz. The case concerns a photo of the Mayor of Madison Wisconsin, Paul Soglin, taken by Kienitz. Soglin, with Kienitz’s approval, posted the portrait on the city’s website. The controversy arose because Soglin wanted to shut down an annual street party that he had once attended as a student many years before. Sensing some irony, defendant Sconnie Nation downloaded the headshot from the website, removed the background, changed the coloring and shading and added the slogan, “Sorry for Partying.” You can see the before and after pictures in the Court’s opinion. Sconnie Nation sold a total of 54 shirts, clearing a modest profit, and engendering the infringement action by Kienitz. Relying on Cariou, the parties argued whether or not defendant’s use of plaintiff’s photograph was “transformative”, with the District Court deciding that it was. Writing for the Seventh Circuit in his typically pithy manner, Judge Easterbook took a cynical view of this:

Fair use is a statutory defense to infringement. The Copyright Act sets out four non-exclusive factors for a court to consider. The district court and the parties have debated whether the t-shirts are a “transformative use” of the photo – and , if so, just how “transformative” the use must be. That’s not one of the statutory factors, though the Supreme Court mentioned it in Campbell v. Acuff-Rose Music, Inc. The Second Circuit has run with the suggestion and concluded that “transformative use” is enough to bring a modified copy within the scope of §107. Cariou applied this to an example of “appropriation art,” in which some of the supposed value comes from the very fact that the work was created by someone else.

We’re skeptical of Cariou’s approach, because asking exclusively whether something is “transformative” not only replaces the list in §107 but could also override 17 U.S.C. §106(2), which protects derivative works. To say that a new use transforms the work is precisely to say that it is derivative and thus, one might suppose, protected under §106(2). Cariou and its predecessors in the Second Circuit do not explain how every “transformative use” can be “fair use” without extinguishing the author’s rights under §106(2).

We think it best to stick with the statutory list, of which the most important usually is the fourth (market effect). [Citations omitted]

In the remainder of its 7-page opinion, the Court went through each of the four factors and affirmed the District Court’s finding of fair use, noting that while non-copyrightable elements, such as the Mayor’s face, were used in the Sconnie Nation shirts, the copyrightable expression in Kienitz’ photo was largely expunged: “Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains.”

Despite its rejection of the Second Circuit’s approach, the Seventh Circuit reached the same conclusion as under a transformative use analysis. It remains to be seen whether any other courts will adopt the Seventh Circuit’s retro approach in eschewing “transformativeness” as the touchstone of fair use. And if so, will they then find against fair use in cases, as in Author’s Guild v. HathiTrust and Cariou, where far more copyrightable expression was retained in the wholesale copying of works? In sum, adoption of this “new” approach may not necessarily signal a reversal of the trend to expand fair use.

Finally, it would be interesting to see what the Court would have done if Soglin, a public figure, had filed suit for violation of his right of publicity in the unauthorized commercial use of his likeness, albeit one with political overtones.