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A Peek at the Congressional Briefing Book on the Music Business

On September 22, the Congressional Research Service (“CRS”) of the Library of Congress, released a report, Copyright Licensing in Music Distribution, Reproduction and Public Performance (the “Report”). The Report states its purpose as follows:

This report provides an overview of the complexities of the Copyright Act’s provisions concerning music licensing. It also discusses four issues involving copyrights in musical works and sound recording that have been the subject of recent congressional and judicial consideration: (1) extending copyright protection to pre-1972 sound recordings; (2) requiring radio broadcasters to compensate recording artists; (3) changing the standard used to calculate royalties for digital music transmissions; and (4) modifying antitrust consent decrees governing songwriter performance royalties.

For those of you unfamiliar with CRS, this is what it does, according to its website:

The Congressional Research Service (CRS) works exclusively for the United States Congress, providing policy and legal analysis to committees and Members of both the House and Senate, regardless of party affiliation. As a legislative branch agency within the Library of Congress, CRS has been a valued and respected resource on Capitol Hill for more than a century.

The CRS defines its mission as follows: “CRS serves the Congress throughout the legislative process by providing comprehensive and reliable legislative research and analysis that are timely, objective, authoritative and confidential, thereby contributing to an informed national legislature.” Accordingly, the Report provides a briefing book for members of Congress – or at least their staffs – on the current statutory and regulatory issues shaping the music industry. So it might be interesting to  know what’s in it.

The 41-page report provides a dense, but useful summary of much of the statutory framework of the current music licensing landscape, including a discussion of recently introduced legislation. If this sounds somewhat familiar, it’s because the Copyright Office traversed this terrain earlier this year in its comprehensive 202-page report, Copyright and the Music Marketplace, and which I summarized here. And of course, the Copyright Office, like the CRS, is also a division of the Library of Congress, although perhaps may change, as the Register of Copyrights has proposed that the Copyright Office leave the Library of Congress and become an independent agency.

In keeping with its stated purpose, the CRS Report (as well as the Copyright Office’s earlier iteration) covers several key issues, including:

  • The Justice Department’s ongoing review of the ASCAP and BMI Consent Decrees, including the issue of “partial withdrawal” of works from their respective repertoires;
  • The background to the Fair Pay Fair Play Act of 2015, which would mandate that traditional AM/FM radio stations pay public performance royalties on sound recordings, just like their internet streaming counterparts do, as is done in virtually every other country in the world; and
  • The Songwriter Equity Act of 2015, which would modify regulatory standards to have all licenses fees set by statute, as  under the ASCAP and BMI Consent Decrees, to be under a “willing buyer / willing seller” standard.

The Report also refers to the Copyright Office’s prior music licensing survey and its various recommendations, but does not contain any of its own.

The CRS Report provides a particularly detailed history of the current statutory framework, including case law and legislative developments, something one would expect in a Congressional briefing memo. However, in attempting to educate Congress about the relevant issues facing the music industry, the Report falls somewhat short in that there is no discussion of the music marketplace as a whole, as opposed to the particular statutory and regulatory scheme currently in place. One might think that putting the various legislative and consent decree proposals in context with the overall music marketplace would be highly relevant to Congressional consideration.

For example, there is no discussion about synchronization or “synch” licenses, which are the permissions required from both the copyright owner of the song (the music publisher(s)) and the copyright owner of the particular recording (the record label) to use a piece of recorded music in film, TV, advertising and other audio-visual uses. This significant portion of the music business is a free market, unregulated by statute or consent decree. Typically, music publishers and record labels command the same fees for synch licenses.

This is in stark contract to license fees for the distribution or downloading of  recordings or the streaming of them over the internet. Both of these areas are regulated and there is a large disparity between the fees labels and artists receive as opposed to those received by publishers and songwriters.   It is critically important that Congress understand the overall music licensing marketplace when considering any change in music licensing policy, including the pending legislation.

 

Stax of Songs in Competing Claims to Produce a Jukebox Musical

Some of the most successful recent Broadway shows have been “jukebox” musicals. You know, shows that consist of taking a well-known recording artist’s hits and then staging them with a strung-together story. Think Jersey Boys, Motown: The Musical and Beatiful:The Carole King Musical. Shows like these are popular with producers because of the perceived minimized risk in promoting known musical quantities with a built-in audience.

However, producing such shows are not without risk, particularly when it appears that somebody may have either forgotten or conveniently ignored the distinction between copyright in a sound recording and copyright in the underlying song that’s embodied in the sound recording. I’ve previously written about these two separate copyrights in the synch licensing context:

To use pre-recorded music in an audio-visual work, whether it’s a feature film, TV show, video game or a video on a web site, like YouTube, you need the permission of both the copyright owner of the recording (typically a record label) and the permission of the copyright owner(s) of the underlying song that’s embodied in the recording (typically one or more music publishers).  Why? Because the Copyright Act says so.  The permission that you need is called a “synchronization” license – as you’re synchronizing music to picture – or a synch, for short.

So, for example, if you wanted to put the classic Otis Redding recording of (Sittin’ on the) Dock of the Bay in your next feature film, you’d need to get the permission both from the copyright owner of the song (Irving Music) and the permission of the record label (Stax). However, if you simply want to cover the song (as many artists, such as Sara Bareilles, have done), either live or on a recording, you only need the permission of the publisher, here obtained through BMI for a live gig or through Harry Fox to release a cover record.

This brings us to Evergreen Media Holdings, LLC v. Wood Creek Capital Management, LLC, a lawsuit that was recently filed in federal district court in Connecticut. This action involves competing plans to create a jukebox musical from megahits recorded on the legendary Stax label, such as songs written and recorded by Otis Redding and Isaac Hayes. The plaintiffs allege that they have obtained exclusive rights to create a stage show of songs recorded on Stax from the music publisher, Rondor Music, which controls the copyrights to the songs.

Defendants are alleged to have made a deal for both a live stage show and a film musical with Concord, which apparently owns the rights to many of the master recordings originally released on Stax – but not with Rondor. Defendants issued a press release touting their upcoming project and plaintiffs were naturally none too pleased by this.

Although the right to use copyrighted works are at the core of the dispute, the lawsuit is not a copyright infringement action as no theatrical production has yet been created or produced. Rather, the complaint alleges tortious interference by defendants, violations of the Connecticut Unfair Trade Practices Act and seeks a declaratory judgment that plaintffs have the sole right to create a Stax musical .

Taking the complaint at face value, it appears that with respect to the creation and performance of a live show, plaintiffs have obtained the rights to the songs (but not to any recordings of the songs) while defendants have permission to use the recordings but not the songs embodied in them. The creation of a book musical requires that the producers obtain so called “grand” or dramatic public performing rights to the songs. Such dramatic rights are controlled and licensed directly by the copyright owners of the songs (music publishers) and not through ASCAP, BMI or SESAC, which license only “small” or non-dramatic public performing rights. Small rights licensing by performing rights organizations include performing songs in concert or by way of broadcast or internet transmission. No permission from the record label is needed.

So, it would appear that plaintiffs have a pretty strong case as it looks like they have the necessary rights to put on a show and defendants don’t. However, defendants would not be without their own bargaining chips. Concord may well control the right to use the Stax name and logo and plaintiffs would be hard-pressed to market their musical without reference to the label. It’ll be interesting see if these parties can ultimately reach a harmonious accord.