Good News: Sirius XM Settles Pre-1972 With Turtles! Bad News: Settlement Slashes Sound Recording Royalty 50%

Listen to Music Tech Policy podcast with Chris Castle and Henry Gradstein 

This is a complicated one.  And I honestly don’t know how I feel about this.  I’m glad to see the Turtles win this case. Glad to see that Sirius is willing to pay on these pre-1972 recording,  not just for past plays but also going forward.  This was a tough fight for the the Turtles and lead attorney Henry Gradstein.   It’s rare to find artists and attorneys willing to take on a 3-5 year lawsuit like this without the backing of a major law firm.    All should be commended for their persistence.

However,  I also find what appears to be some bad news here.  About 2/3 the way through the podcast Henry Gradstein states:

“Everyone is gonna do very well with this settlement, just do the math”

Well I did the math and this is not necessarily true. I mean it is true in the sense that something for pre-1972 recordings  is better than nothing.  But what the proposed settlement does is apply a pro rata royalty rate of 5.5% of revenue to pre 1972 masters.   This  is kind of screwed up because the compulsory rate set by the Copyright Royalty Board (CRB) for post 1972 masters is 11%.  Maybe I’m misunderstanding something but it looks like now we have  two different royalty rates for pre and post 1972 recordings with the pre-1972 artists getting a raw deal.  Further what happens when Sirius turns this in as “evidence” at the next CRB rate court hearing for satellite rates?  The CRB could slash EVERYONE’s rate, including post 1972 recording.

This is not far fetched.  We watched Pandora use this exact same tactic on the low wattage  bunch over at MERLIN.  Essentially MERLIN cut a deal with Pandora for lower royalty rates for their independent labels in exchange for more airplay.   Then Pandora took this deal to the CRB and used that as a marker and set all rights holders  rates lower.  If you do the math on the Merlin deal it will cost ALL rights holders nearly $1 billion over 5 years. Read here:

Charles Caldas of MERLIN: Independent Labels’ Minus $15 Million Dollar Man

Billboard Finally Agrees the Pandora-Merlin Deal Could Cost Rights Holders A Billion Dollars in SoundExchange Royalties

This is where i’m deeply conflicted.   If you are the Turtles and Gradstein you are truly in a David and Goliath fight.  A company like Sirius could simply delay, delay and delay until your law firm runs out of money.   Gradstein may have spent millions of dollars at this point.  The legal fees and research that goes into gathering evidence for a case like this is shocking.  I myself spent three years doing research for  a class action against a music service.   Legal fees were the tip of the iceberg.  Hypothetically if one suspected a streaming service of illegally (peer to peer) copying, streaming and displaying your work without authorization one might have to hire forensic computer experts to “packet log” and otherwise document unauthorized copying, performance and display of 100s of tracks in dozens of US states and foreign territories.  This is not cheap!

So if you consider the fact that Gradstein was looking at the possibility of never recouping the money he spent on this lawsuit you can see why he might accept a less than perfect deal for the pre-1972 recordings.   Yet the fact remains, we are left with the troubling situation that post 1972 masters are worth 11% of gross revenue,  but pre 1972 masters are worth 5.5%.   This will not stand, Sirius would be stupid to not to use this to argue for a royalty rate reduction for all master recordings at current CRB hearings.  Further they have the fiduciary responsibility to their share holders.

I have a bad feeling about this.

 

MUST READ: Two Former U.S. Copyright Heads Defend Maria Pallante from Sacking by Rogue Librarian of Congress

This is quite an extraordinary statement by the two previous Registers of Copyright.  The call the dismissal unseemly and the ask the members of The Judiciary Committee  to Investigate!

“Two former heads of the U.S. Copyright Office sent the following letter to the chairs of the House and Senate Judiciary Committees in sharp criticism of the abrupt and possibly actionable sacking o…”

Source: MUST READ: Two Former U.S. Copyright Heads Defend Maria Pallante from Sacking by Rogue Librarian of Congress

Flo & Eddie Class Settlement with Sirius on Pre-72 Sound Recordings — Artist Rights Watch

Big congratulations to Flo & Eddie (aka The Turtles) and class counsel Henry Gradstein for a great settlement in their indie label class action against SiriusXM for pre-72 sound recordings. The settlement is a guaranteed $25 million payment against a 5.5% license for 10 years which is worth between $45.47 million to $59.2 million assuming Sirius continues to play the remaining class member’s recordings at the same play rate as the past.

via Flo & Eddie Class Settlement with Sirius on Pre-72 Sound Recordings — Artist Rights Watch

@musicbizworld: @SOUNDEXCHANGE PAID OUT $264M IN Q3 – ITS BIGGEST QUARTER IN TWO YEARS — Artist Rights Watch

[Editor Charlie sez: big 45.2% increase in the number of people getting royalty payments from SoundExchange!] SoundExchange just paid out more than quarter of a billion dollars to recorded music rights holders – its biggest three-month distribution in two years. According to the US company’s latest data, it delivered $263.5m to labels and artists in […]

via @musicbizworld: @SOUNDEXCHANGE PAID OUT $264M IN Q3 – ITS BIGGEST QUARTER IN TWO YEARS — Artist Rights Watch

@edchristman: Commercial Radio Group Files Antitrust Lawsuit Against Irving Azoff’s Global Music Rights — Artist Rights Watch

With ASCAP and BMI still under unaltered consent decrees and SESAC agreeing to rate-setting arbitration in a 2015 settlement, the Radio Music Licensing Committee (RMLC) is going for the grand slam with an antitrust lawsuit against boutique performance rights organization Global Music Rights.

via @edchristman: Commercial Radio Group Files Antitrust Lawsuit Against Irving Azoff’s Global Music Rights — Artist Rights Watch

@alexeheath: Facebook is doing a $6 billion stock buyback [But Nothing for Songwriters] — Artist Rights Watch

Facebook is buying back up to $6 billion of its stock from shareholders, the company announced in a SEC filing on Friday–and still no music licenses.

via @alexeheath: Facebook is doing a $6 billion stock buyback [But Nothing for Songwriters] — Artist Rights Watch

@DavidIsraelite: It’s Time for Facebook to Accept Songwriters’ Friend Request — Artist Rights Watch

With views in the millions, it’s time for Facebook to answer songwriters’ friend request and properly license their platform. Otherwise, it may find itself de-friended by the music industry.

via @DavidIsraelite: It’s Time for Facebook to Accept Songwriters’ Friend Request — Artist Rights Watch

How many Counterfeit CDs Does Amazon Sell? — Artist Rights Watch

A provocative question–of course knowing the answer precisely would mean that Amazon actually knew which CDs were counterfeit to begin with. That means we need to guess, but sometimes guesses are more accurate that we may give them credit for. And we guess it’s in the 2 million unit range–and absurdly high number for the smartest guys in the room.

via How many Counterfeit CDs Does Amazon Sell? — Artist Rights Watch

How President Trump Can Give Songwriters and Publishers Immediate Relief from DOJ and LOC Overreach — Music Tech Solutions

The Obama Department of Justice filed notice on November 11 that it intended to use the peoples money to appeal BMI Rate Court Judge Louis Stanton’s devastating ruling against the DOJ’s bizarre position on “100% licensing”. Professor Steve Winogradsky and I summarized the results of the ruling in this post. Aside from the terrible legal […]

via How President Trump Can Give Songwriters and Publishers Immediate Relief from DOJ and LOC Overreach — Music Tech Solutions