Ben Sisario, Pandora Making Bid to Unruffle Music World (Feb. 23, 2015 New York Times, B1)
This article discusses how Pandora is trying to work with labels and artist managers by opening its performance data, and also by experimenting with artist promotions.
Showing posts with label Digital. Show all posts
Showing posts with label Digital. Show all posts
February 23, 2015
December 24, 2014
Copyright Royalty Board Royalty Rates For Performance Of Sound Recordings Affirmed
Music Choice v. Copyright Royalty Board, No. 13-1174/13-1183 (D.C. Cir. Dec. 19, 2014).
In 2013, the Judges of the Copyright Royalty Board (CRB) issued a determination setting royalty rates and defining terms for statutorily defined satellite digital audio radio services and preexisting subscription services. SoundExchange, which collects and distributes royalties, argued that the CRB arbitrarily set rates too low and that the CRB erred in defining "Gross Revenue" and eligible deductions. Music Choice, which provides music-only television channels, also appealed arguing that the Judges set the rates too high.
The Court of Appeals held that the CRB acted within its broad discretion to set rates for compulsory licenses of the digital performance of sound recordings, and therefore affirmed the determination of royalty rates. The appellate court found that the CRB did not exercise its broad discretion in an arbitrary or capricious manner when setting royalty rates for satellite digital audio radio services and preexisting subscription services.
For satellite digital audio radio services, the rate was set at 11%; in order to avoid disruption, the CRB adopted a staggered schedule beginning at 9% in 2013 and increasing by 0.5% annually until achievement of 11% in 2017.
For preexisting subscription services, the rate was set at 8.5% with an upward adjustment for Music Choice's planned channel expansion. The rate would start at 8% in 2013 and increase to 8.5% for 2014 through 2017.
In 2013, the Judges of the Copyright Royalty Board (CRB) issued a determination setting royalty rates and defining terms for statutorily defined satellite digital audio radio services and preexisting subscription services. SoundExchange, which collects and distributes royalties, argued that the CRB arbitrarily set rates too low and that the CRB erred in defining "Gross Revenue" and eligible deductions. Music Choice, which provides music-only television channels, also appealed arguing that the Judges set the rates too high.
The Court of Appeals held that the CRB acted within its broad discretion to set rates for compulsory licenses of the digital performance of sound recordings, and therefore affirmed the determination of royalty rates. The appellate court found that the CRB did not exercise its broad discretion in an arbitrary or capricious manner when setting royalty rates for satellite digital audio radio services and preexisting subscription services.
For satellite digital audio radio services, the rate was set at 11%; in order to avoid disruption, the CRB adopted a staggered schedule beginning at 9% in 2013 and increasing by 0.5% annually until achievement of 11% in 2017.
For preexisting subscription services, the rate was set at 8.5% with an upward adjustment for Music Choice's planned channel expansion. The rate would start at 8% in 2013 and increase to 8.5% for 2014 through 2017.
October 11, 2014
Apple Succeeds In Having Certain Audio Distribution Patents Deemed Unpatentable As Obvious
Apple Inc. v. Sightsound Technologies, LLC, Related Case Nos. CMB2013-00023 and CMB2013-00020 (PTAB Oct. 7, 2014) [Papers 101 and 105, respectively].
Apple succeeded in having the PTAB hold that certain claims in patents relating to a "system and associated method for the electronic sales and distribution of digital audio or video signals" are unpatentable. The PTAB concluded that certain claims would have been obvious based on existing publications by non-parties, pursuant to 35 USC 103(a). However, Apple did not succeed in establishing that the claims were anticipated under 35 USC 102(a).
Apple succeeded in having the PTAB hold that certain claims in patents relating to a "system and associated method for the electronic sales and distribution of digital audio or video signals" are unpatentable. The PTAB concluded that certain claims would have been obvious based on existing publications by non-parties, pursuant to 35 USC 103(a). However, Apple did not succeed in establishing that the claims were anticipated under 35 USC 102(a).
Toto Loses Breach Of Contract Claim Against Label For Digital Download Royalties
Toto, Inc. v. Sony Music Entertainment, No. 1:12-cv-01434-RJS (S.D.N.Y. filed Oct. 8, 2014) [Doc. 117].
In this breach of contract action concerning royalties for digital downloads (and master and ringtones) payable by the record label to the 80's band "Toto", the Court granted the record label summary judgment finding that the proper royalty rate had been paid. The Court applied New York law to interpret the relevant recording agreements, and found that one provision (the "Audiophile Provision" in 1986 and 2002 amendments) supplied the applicable royalty rate for the sale of downloads through digital retailers, regardless of whether the downloads were sold by the record company or unaffiliated third-party licensees. The dispute turned on the meaning of the terms "Licensee" and "lease", which had different royalty rates. Toto argued the term "lease" referred to a license to any party, regardless of whether that party is affiliated with the record company; the record company argued that the term "lease" referred to a special license whereby a third party incorporates the recordings into its own product, such as a compilation record. The Court found that the inclusion of the record company's affiliates in the contractual definition of "licensee" did not limit the scope of that term; the definition included the term "without limitation". Accordingly, digital retailers were licensees, and industry custom defined the term "lease" as a limited license to a third party to incorporate recording into their own unique product. However, the Court found that the record company did not have a declaratory judgment claim because the dispute was "far more hypothetical than real." The declaratory judgment dispute arose from Toto's threat to sue the label for breach of the implied covenant of good faith and fair dealing if the label ceased distributing Toto's records through certain retailers.
In this breach of contract action concerning royalties for digital downloads (and master and ringtones) payable by the record label to the 80's band "Toto", the Court granted the record label summary judgment finding that the proper royalty rate had been paid. The Court applied New York law to interpret the relevant recording agreements, and found that one provision (the "Audiophile Provision" in 1986 and 2002 amendments) supplied the applicable royalty rate for the sale of downloads through digital retailers, regardless of whether the downloads were sold by the record company or unaffiliated third-party licensees. The dispute turned on the meaning of the terms "Licensee" and "lease", which had different royalty rates. Toto argued the term "lease" referred to a license to any party, regardless of whether that party is affiliated with the record company; the record company argued that the term "lease" referred to a special license whereby a third party incorporates the recordings into its own product, such as a compilation record. The Court found that the inclusion of the record company's affiliates in the contractual definition of "licensee" did not limit the scope of that term; the definition included the term "without limitation". Accordingly, digital retailers were licensees, and industry custom defined the term "lease" as a limited license to a third party to incorporate recording into their own unique product. However, the Court found that the record company did not have a declaratory judgment claim because the dispute was "far more hypothetical than real." The declaratory judgment dispute arose from Toto's threat to sue the label for breach of the implied covenant of good faith and fair dealing if the label ceased distributing Toto's records through certain retailers.
August 27, 2014
SoundExchange/Sirius Royalty Dispute Belongs Before Copyright Royalty Board, Not Federal Court
SoundExchange, Inc. v. Sirius XM Radio, Inc., No. 1:13-cv-1290 (D.D.C. filed August 26, 2014).
Pursuant to the "primary jurisdiction" doctrine, a federal district court judge stayed a royalties dispute between SoundExchange and Sirius, saying that the dispute belongs before the Copyright Royalty Board. The parties already had met before the CRB in two prior proceedings, setting royalty rates for the digital broadcast of sound recordings on satellite radio SoundExchange brought an action in federal court alleging that Sirius underpaid royalties owed from 2007-2012 (the subject of the first CRB proceeding). The instant dispute centered on the meaning of the term "Gross Revenues" (a percentage of which are the royalties owed SoundExchange), and Sirius's alleged reductions/exclusions therefrom based on pre-72 recordings and Sirius' premiere subscriber package. The Court agreed with Sirius that the disputes "are best suited to review in the first instance by the CRB. ... [T]he technical and policy expertise of the CRB makes referral to that body appropriate." Because neither party was asking for a change in the royalty rates, only a clarification, the CRB was found to have continuing jurisdiction.
Pursuant to the "primary jurisdiction" doctrine, a federal district court judge stayed a royalties dispute between SoundExchange and Sirius, saying that the dispute belongs before the Copyright Royalty Board. The parties already had met before the CRB in two prior proceedings, setting royalty rates for the digital broadcast of sound recordings on satellite radio SoundExchange brought an action in federal court alleging that Sirius underpaid royalties owed from 2007-2012 (the subject of the first CRB proceeding). The instant dispute centered on the meaning of the term "Gross Revenues" (a percentage of which are the royalties owed SoundExchange), and Sirius's alleged reductions/exclusions therefrom based on pre-72 recordings and Sirius' premiere subscriber package. The Court agreed with Sirius that the disputes "are best suited to review in the first instance by the CRB. ... [T]he technical and policy expertise of the CRB makes referral to that body appropriate." Because neither party was asking for a change in the royalty rates, only a clarification, the CRB was found to have continuing jurisdiction.
August 18, 2014
Suit Against Kanye West Dismissed On "De Minimis" Grounds
Steward v. West, No. CV 13-02449 (C.D. Cal. Aug. 14, 2014).
In this copyright infringement action against Kanye West et al concerning a sample, the Court granted defendants' Rule 12(c) motion for judgment on the pleadings. On the motion, the Court considered the sound recordings and held that, while plaintiff's sound recordings were sufficiently original to be protectable, defendants' copying was de minimis. "The result of these distortions and the short length of the samples is that the average audience would not recognize plaintiffs’ Song in any of Defendants’ songs without actively searching for it. In the Ninth Circuit, digital sampling is de minimis when 'the average audience would not recognize the appropriation.'" Accordingly, the copyright infringement (and dependent contributory liability claims) were dismissed.
In this copyright infringement action against Kanye West et al concerning a sample, the Court granted defendants' Rule 12(c) motion for judgment on the pleadings. On the motion, the Court considered the sound recordings and held that, while plaintiff's sound recordings were sufficiently original to be protectable, defendants' copying was de minimis. "The result of these distortions and the short length of the samples is that the average audience would not recognize plaintiffs’ Song in any of Defendants’ songs without actively searching for it. In the Ninth Circuit, digital sampling is de minimis when 'the average audience would not recognize the appropriation.'" Accordingly, the copyright infringement (and dependent contributory liability claims) were dismissed.
December 16, 2013
EMI and Sony Permitted To Intervene In ASCAP/Pandora Rate Court Matter
In re Petition of Pandora Media, Inc. [related to US v. ASCAP]; No. 1941-cv-01395 (S.D.N.Y. filed Dec.13, 2013) [Doc. 733].
EMI and Sony moved to intervene in the Pandora rate-court proceeding (ASCAP) after the Court's summary judgment opinion issued on September 17, 2013 in which the Court held that the Second Amended Final Judgment ("AFJ2") prevented ASCAP from withholding from Pandora the rights to compositions in its repertory while licensing those compositions to other users. In re Pandora Media, Inc., 12 Civ. 8035 (DLC), 2013 WL 5211927 (S.D.N.Y. Sept. 17, 2013) (“September 17 Opinion”). The summary judgment practice was precipitated by putative publisher partial withdrawals of rights from ASCAP.
The Court analyzed Rule 24 of the Federal Rules of Civil Procedure. It considered whether the publishers' motion to intervene was timely (mixed finding), and whether the publishers possess an interest related to the subject of the action (yes). Ultimately, the Court granted the motion to intervene on the condition that the Publishers "may not raise new arguments on appeal that were not raised by ASCAP, with the exception of the Section 106 of the Copyright Act argument".
EMI and Sony moved to intervene in the Pandora rate-court proceeding (ASCAP) after the Court's summary judgment opinion issued on September 17, 2013 in which the Court held that the Second Amended Final Judgment ("AFJ2") prevented ASCAP from withholding from Pandora the rights to compositions in its repertory while licensing those compositions to other users. In re Pandora Media, Inc., 12 Civ. 8035 (DLC), 2013 WL 5211927 (S.D.N.Y. Sept. 17, 2013) (“September 17 Opinion”). The summary judgment practice was precipitated by putative publisher partial withdrawals of rights from ASCAP.
The Court analyzed Rule 24 of the Federal Rules of Civil Procedure. It considered whether the publishers' motion to intervene was timely (mixed finding), and whether the publishers possess an interest related to the subject of the action (yes). Ultimately, the Court granted the motion to intervene on the condition that the Publishers "may not raise new arguments on appeal that were not raised by ASCAP, with the exception of the Section 106 of the Copyright Act argument".
April 25, 2013
Congress To Review Copyright Law
The Chairman of the House Judiciary Committee, Bob Goodlatte (R-Va.), announced that the committee "will conduct a comprehensive review of U.S. copyright law over the coming months." Continuing, the Chairman stated: "The goal of these hearings will be to determine whether the laws are still working in the digital age." Press release here.
April 2, 2013
ReDigi Loses - Court Examines "Reproduction" & Distribution; Finds No "First Sale" For Digital Music
Capitol Records v. ReDigi, No. 1:12-cv-00095-RJS (S.D.N.Y filed 03/30/13) [Doc. 109].
The Court was faced with the question of whether the unauthorized transfer of a digital music file over the Internet – where only one file exists before and after the transfer – constitutes reproduction within the meaning of the Copyright Act. The Court holds that it does. "Because the reproduction right is necessarily implicated when a copyrighted work is embodied in a new material object, and because digital music files must be embodied in a new material object following their transfer over the Internet, the Court determines that the embodiment of a digital music file on a new hard disk is a reproduction within the meaning of the Copyright Act." Continuing, "the fact that a file has moved from one material object – the user’s computer – to another – the ReDigi server – means that a reproduction has occurred. Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is
created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created."
The Court also concluded that absent the existence of an affirmative defense, the sale of digital music files on ReDigi’s website infringes Capitol’s exclusive right of distribution.
The Court then considered ReDigi's affirmative defenses: fair use, and first sale. With respect to fair use, "On the record before it, the Court has little difficulty concluding that ReDigi’s reproduction and distribution of Capitol’s copyrighted works falls well outside the fair use defense". In sum, "ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods. Accordingly, the Court concludes that the fair use defense does not permit ReDigi’s users to upload and download files to and from the Cloud Locker incident to sale."
Turning to the first sale defense, the Court also disagreed. First, the court found that "first sale" does not apply to the reproduction right, but only to the distribution right. Second, the Court found that the music files were not lawfully made (they were unlawful reproductions) under the Copyright Act, and therefore not entitled to the first sale defense.
Third, the Court found that the first sale doctrine is limited to physical items. "Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era". The Court did note, however, that digital music on an iPod, computer or CD would be protected by the first sale doctrine ("Section 109(a) still protects a lawful owner’s sale of her “particular” phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded. While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd – the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined.")
Having made those determinations, the Court then found ReDigi directly and secondarily liable for copyright infringement of Plaintiff's reproduction and distribution rights. Summary judgment was granted in Plaintiff's favor, except on its claims relating to Plaintiff's performance and display rights and common law infringement.
The Court was faced with the question of whether the unauthorized transfer of a digital music file over the Internet – where only one file exists before and after the transfer – constitutes reproduction within the meaning of the Copyright Act. The Court holds that it does. "Because the reproduction right is necessarily implicated when a copyrighted work is embodied in a new material object, and because digital music files must be embodied in a new material object following their transfer over the Internet, the Court determines that the embodiment of a digital music file on a new hard disk is a reproduction within the meaning of the Copyright Act." Continuing, "the fact that a file has moved from one material object – the user’s computer – to another – the ReDigi server – means that a reproduction has occurred. Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is
created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created."
The Court also concluded that absent the existence of an affirmative defense, the sale of digital music files on ReDigi’s website infringes Capitol’s exclusive right of distribution.
The Court then considered ReDigi's affirmative defenses: fair use, and first sale. With respect to fair use, "On the record before it, the Court has little difficulty concluding that ReDigi’s reproduction and distribution of Capitol’s copyrighted works falls well outside the fair use defense". In sum, "ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods. Accordingly, the Court concludes that the fair use defense does not permit ReDigi’s users to upload and download files to and from the Cloud Locker incident to sale."
Turning to the first sale defense, the Court also disagreed. First, the court found that "first sale" does not apply to the reproduction right, but only to the distribution right. Second, the Court found that the music files were not lawfully made (they were unlawful reproductions) under the Copyright Act, and therefore not entitled to the first sale defense.
Third, the Court found that the first sale doctrine is limited to physical items. "Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era". The Court did note, however, that digital music on an iPod, computer or CD would be protected by the first sale doctrine ("Section 109(a) still protects a lawful owner’s sale of her “particular” phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded. While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd – the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined.")
Having made those determinations, the Court then found ReDigi directly and secondarily liable for copyright infringement of Plaintiff's reproduction and distribution rights. Summary judgment was granted in Plaintiff's favor, except on its claims relating to Plaintiff's performance and display rights and common law infringement.
February 13, 2013
Magistrate Recommends Sony's Motion To Dismiss Royalty Case Should Be Denied
Mahoney v. Sony Music Entertainment, No. 1:12-cv-05045 (S.D.N.Y. filed 02/11/13) [Doc. 39].
Plaintiff Edward Mahoney brought this breach of contract action against Sony Music Entertainment for damages arising from a dispute over the amount of royalties owed under the parties' contract. The parties' relationship is governed by a 1985 Agreement and 1991 amendment (collectively, the "Contract"). The Contract requires Sony to pay royalties to Mahoney in exchange for certain uses of Mahoney's musical recordings. Sony moved to dismiss Mahoney's third amended complaint, other than a digital downloads claim, alleging that Mahoney failed to comply with the Contract's notice-and-cure provision, a condition precedent to bringing a breach of contract claim.
The Magistrate Judge first discussed the standard on a Fed. R. Civ. P. 12(b)(6) motion to dismiss. Then, the Magistrate Judge discussed the proper circumstances to consider documents beyond those attached to the Complaint, and found that the Contract and the notice letters referred to in the third amended complaint and attached to the parties' motion papers may be considered on the motion to dismiss.
Turning to the merits, the Magistrate Judge found that plaintiff's breach of contract claims should not be dismissed for alleged noncompliance with the Contract's notice requirement. The Court found that Mahoney's third amended complaint expressly alleged compliance with the Contract's notice requirement. Further, the parties did not dispute that Mahoney sent and Sony received the letters, i.e., the two writings Mahoney proffered as notice letters. Rather, Sony's challenged the adequacy of the purported notice, i.e., whether Mahoney's letters identified the nature of Mahoney's objections to the royalty statements with sufficient specificity.
Thus, the Magistrate Judge considered the standards for evaluating the sufficiency of the notice. Applying those standards to the case, the Magistrate Judge found that the Contract's notice provision called for written notice of any alleged royalty deficiencies, but did not state what information must be contained in the notice. "The Court will not allow the Contract's notice provisions to require, in essence, an audit before suit when the Contract did not directly require an audit." Continuing, "this is not a case where the objecting party sent a vague notice and the allegedly breaching party (here, Sony) was precluded from curing because it could not obtain additional information; rather, Mahoney and Sony engaged in ongoing discussions of Mahoney's claims, during which they discussed the bases for Mahoney's objections and the potential for litigation in the absence of a resolution, and Sony had control of all of the royalty-related information." Thus, in this context, the Magistrate Judge found that Mahoney's notice was sufficient to serve the general purpose of the contractual royalty notice requirement. For these reasons, the Magistrate Judge recommended that Sony's motion to dismiss in part Mahoney's third amended complaint should be DENIED.
Plaintiff Edward Mahoney brought this breach of contract action against Sony Music Entertainment for damages arising from a dispute over the amount of royalties owed under the parties' contract. The parties' relationship is governed by a 1985 Agreement and 1991 amendment (collectively, the "Contract"). The Contract requires Sony to pay royalties to Mahoney in exchange for certain uses of Mahoney's musical recordings. Sony moved to dismiss Mahoney's third amended complaint, other than a digital downloads claim, alleging that Mahoney failed to comply with the Contract's notice-and-cure provision, a condition precedent to bringing a breach of contract claim.
The Magistrate Judge first discussed the standard on a Fed. R. Civ. P. 12(b)(6) motion to dismiss. Then, the Magistrate Judge discussed the proper circumstances to consider documents beyond those attached to the Complaint, and found that the Contract and the notice letters referred to in the third amended complaint and attached to the parties' motion papers may be considered on the motion to dismiss.
Turning to the merits, the Magistrate Judge found that plaintiff's breach of contract claims should not be dismissed for alleged noncompliance with the Contract's notice requirement. The Court found that Mahoney's third amended complaint expressly alleged compliance with the Contract's notice requirement. Further, the parties did not dispute that Mahoney sent and Sony received the letters, i.e., the two writings Mahoney proffered as notice letters. Rather, Sony's challenged the adequacy of the purported notice, i.e., whether Mahoney's letters identified the nature of Mahoney's objections to the royalty statements with sufficient specificity.
Thus, the Magistrate Judge considered the standards for evaluating the sufficiency of the notice. Applying those standards to the case, the Magistrate Judge found that the Contract's notice provision called for written notice of any alleged royalty deficiencies, but did not state what information must be contained in the notice. "The Court will not allow the Contract's notice provisions to require, in essence, an audit before suit when the Contract did not directly require an audit." Continuing, "this is not a case where the objecting party sent a vague notice and the allegedly breaching party (here, Sony) was precluded from curing because it could not obtain additional information; rather, Mahoney and Sony engaged in ongoing discussions of Mahoney's claims, during which they discussed the bases for Mahoney's objections and the potential for litigation in the absence of a resolution, and Sony had control of all of the royalty-related information." Thus, in this context, the Magistrate Judge found that Mahoney's notice was sufficient to serve the general purpose of the contractual royalty notice requirement. For these reasons, the Magistrate Judge recommended that Sony's motion to dismiss in part Mahoney's third amended complaint should be DENIED.
March 9, 2012
Settlement Reached In Class Action Over Digital Royalties
Shropshire v. Sony Music, 1:07-cv-02394 (S.D.N.Y. filed 03/07/12) [Doc. 120].
Record label Sony Music agreed to pay nearly $8 million to settle a proposed class action brought by Elmo & Patsy and members of The Youngbloods in which Plaintiffs alleged that the label failed to pay artists proper royalties on sales of digital recordings.
October 19, 2011
Label Fails To State Copyright Claim; Leave To Amend Granted
Tufamerica, Inc. v. The Orchard Enterprises, Inc., No. 1:11-cv-01816 (S.D.N.Y. filed Oct. 18, 2011) [Doc. 16].
Plaintiff is the owner of the record label Tuff City Music Group and owns the rights to thousands of musical recordings and compositions. In September 2006, TufAmerica licensed defendant's predecssor the right to market a large number of musical tracks by way of digital downloads (the “License”). The License obligated defendant's predecessor to pay TufAmerica various types of payments in exchange for digital distribution rights to hundreds of songs. In late 2007, defendant assumed its predecessor's obligations under the License. While TufAmerica received various payments from Digital and Orchard, it never received any payment of mechanical royalties.
Defendant argued that the License preempted plaintiff's copyright case. The Court agreed:
TufAmerica fails to state a facially plausible claim under the Copyright Act because it concedes that its copyright claim is governed by the License, not the Copyright Act. While TufAmerica subsequently argues that the License does not govern mechanical royalties, a “claim for relief ‘may not be amended by the briefs in opposition to a motion to dismiss.’” As a result, Orchard’s motion to dismiss is granted.
Because TufAmerica’s claim under the Copyright Act was dismissed, the court lacked pendent jurisdiction over the New York State common law claim of unjust enrichment.
However, because the License did not unambiguously preempt a claim under the Copyright Act's compulsory license provision, leave to amend the Complaint was granted.
March 21, 2011
Copyright Royalty Board Final Rule
37 CFR Part 380: Digital Performance Right in Sound Recordings and Ephemeral Recordings;
Final Rule. The Copyright Royalty Judges announced their final determination of the rates and terms for two statutory licenses, permitting certain digital performances of sound recordings and the making of ephemeral recordings, for the period beginning January 1, 2011, and ending on December 31, 2015. (Effective Date March 9, 2011).
For example, a Commercial Webcaster will pay a royalty of: $0.0019 per performance for 2011; $0.0021 per performance for 2012; $0.0021 per performance for 2013; $0.0023 per performance for 2014; and $0.0023 per performance for 2015. Depending on the number of "tuning hours," a Noncommercial Webcaster will pay an annual per channel or per station performance royalty of $500 in 2011, 2012, 2013, 2014, and 2015; or, $0.0019 per performance for 2011; $0.0021 per performance for 2012; $0.0021 per performance for 2013; $0.0023 per performance for 2014; and $0.0023 per performance for 2015. (Section 380.3).
February 28, 2011
Article: Investors Drawn to Digital Music
Article from the New York Times:
Investors Are Drawn Anew to Digital Music
The explosion in smartphone apps has given investors and entrepreneurs optimism that the digital music business is poised to finally become profitable
September 30, 2010
Downloads Not Public Performances; Fees Must Be Recalculated
US v. American Society of Composers, Authors and Publishers, 09-0539-cv (L), NYLJ [web_id_#], at *1 (Court, Decided September 28, 2010) [LINK]
"This case presents two distinct questions that arise from the transmittal of musical works over the Internet: First, whether a download of a digital file containing a musical work constitutes a public performance of that musical work; and, second, whether the district court, acting in its capacity as the rate court, was reasonable in its assessment of the blanket license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, "the Internet Companies") to publicly perform any of the millions of musical compositions in the American Society of Composers, Authors and Publishers ("ASCAP") repertory.
For the reasons set forth below, we affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings."
September 27, 2010
Bob Marley Recordings Are Works Made For Hire
Fifty-Six Hope Road Music Ltd. v. UMG Recordings, 08 CIV. 6143 (DLC), NYLJ 1202472502152, at *1 (SDNY, Decided September 10, 2010)
"This dispute concerns the ownership of the renewal term copyrights in certain pre-1978 sound recordings embodying the performances of Jamaican reggae artist, Bob Marley (the "Sound Recordings"). The Sound Recordings were created pursuant to exclusive recording agreements between Bob Marley and the predecessor-in-interest to defendant UMG Recordings, Inc. ("UMG"). The plaintiffs—Bob Marley's widow, Rita Marley, as well as nine of Bob Marley's children (together with Rita Marley, the "Adult Beneficiaries"), and their wholly-owned company, Fifty-Six Hope Road (collectively, the "Plaintiffs")—allege that the renewal term copyrights in the Sound Recordings reverted to them under the Copyright Act of 1909 upon Bob Marley's death in 1981. Plaintiffs also assert claims for underpayment of royalties against UMG. Plaintiffs and UMG have cross-moved for partial summary judgment. For the following reasons, UMG's motion is granted in part and Plaintiffs' motion is denied."
The Court analyzed Marley's recording agreements, distinguished a Copyright Act "author" from a common-dictionary-usage "author," and after considering various factors determined that Bob Marley's recordings are "works made for hire" under the Copyright Act of 1909.
The royalties claim concerns digital downloads - the Court found that contract ambiguities precluded summary judgment
January 14, 2010
2d Cir Finds Antitrust Suit Stated Against Record Labels For Online Sales
The United States Circuit Court, Second Circuit, holds that plaintiffs' antitrust complaint alleging a conspiracy by major record labels to fix the prices and terms under which their music would be sold over the Internet states a claim for violation of Section 1 of the Sherman Act under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The amended complaint contains "enough factual matter (taken as true) to suggest that an agreement was made," id. at 555, and therefore states a claim.
"The present complaint succeeds where Twombly's failed because the complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among defendants," Judge Katzmann said.
The defendants "agreed to launch MusicNet and pressplay, both of which charged unreasonably high prices and contained similar DRMs", and the entities did not "dramatically" drop "their prices for Internet Music (as compared to CDs), despite the fact that all defendants experienced dramatic cost reductions in producing Internet Music."
Starr v. Sony BMG, No. 08-5637-cv, NYLJ 1/14/2010 "Decision of the Day" (2d Cir. decided Jan. 13, 2010).
March 4, 2009
Buy Concert Ticket, Get Full Catalog
The band No Doubt is offering purchasers of full-priced concert tickets a free download of the band's entire catalog. [Rolling Stone article.]
Assuming a band has not signed a record deal with a major ticket company (e.g., Ticketmaster), how is the deal between the band's record label and the concert promotor structured? In other words, how does the record company collect revenue for download of sound recordings?
Assuming a band has not signed a record deal with a major ticket company (e.g., Ticketmaster), how is the deal between the band's record label and the concert promotor structured? In other words, how does the record company collect revenue for download of sound recordings?
January 6, 2009
iTunes Goes DRM-Free on Remaining Majors
Apple reportedly has signed a deal with three more major labels (Sony, Universal and Warner Music) to bring more DRM-free MP3s to iTunes.
As part of the deal, Apple will reportedly be more lax on their strict price fix, breaking MP3s into three tiered pricing: Older catalog tracks,79-cents; newer songs, 99-cents; and hit songs, more.
[Rolling Stone]
As part of the deal, Apple will reportedly be more lax on their strict price fix, breaking MP3s into three tiered pricing: Older catalog tracks,79-cents; newer songs, 99-cents; and hit songs, more.
[Rolling Stone]
December 24, 2008
First Sale Doctrine & MP3s: Bopaboo
Bopaboo.
A new digital music service is getting lots of attention for proposing to help consumers sell their used MP3s in much the same way people once unloaded second-hand albums.
Bopaboo has generated splashy headlines recently for coming up with what on the surface seems like a good idea. Music fans have always exercised their first-sale rights, which under copyright law, allows them to sell their unwanted CDs, tapes, and albums without permission from the copyright owner. Why can't they do the same with digital music?
Cnet article.
A new digital music service is getting lots of attention for proposing to help consumers sell their used MP3s in much the same way people once unloaded second-hand albums.
Bopaboo has generated splashy headlines recently for coming up with what on the surface seems like a good idea. Music fans have always exercised their first-sale rights, which under copyright law, allows them to sell their unwanted CDs, tapes, and albums without permission from the copyright owner. Why can't they do the same with digital music?
Cnet article.
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