Let Us Now Praise Flo and Eddie

I have been thinking a lot about Flo and Eddie (Mark Volman and Howard Kaylan a/k/a the Turtles) and their recent victories over Sirius XM Radio in California and New York.  Although subject to appeal, both these cases have established the principle of a digital public performance royalty available to the owners of sound recordings in those states which recognize these rights fixed in sound recordings prior to February 15, 1972. 

            What does this mean? 

            The U.S. Copyright Act provides for a public performance royalty (from digital transmission) to be paid to owners of sound recordings created after February 15, 1972.  This right led to the creation of Sound Exchange and all of those current arguments about how little Spotify, Pandora and the other streaming services are paying to recording artists..  For reasons that I cannot recall, the Act excluded those recordings created prior to February 15, 1972 but allowed the owners of those recordings to pursue common law remedies under state law against infringers.  This is one of the few areas not preempted by federal law under the Copyright Act.

            Historical trivia:  Neil Young's "Harvest" was released on February 14, 1972 – (one day before the law went into effect).

            Several states such as California, New York and Florida have laws on the books that give protection to owners of sound recordings (Tennessee is currently looking at updating its law).  California law is pretty clear.  The relevant section of California Civil Code § 980(a)(2) reads as follows:

                        The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972 has an exclusive ownership interest therein until February 15, 2047 as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly capture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording. 

 

            The court in the California case agreed that the language gave Flo and Eddie the right to pursue an infringement action against Sirius Radio for digitally transmitting the Turtles' recordings and accordingly gave them a summary judgment on this particular issue. 

            Note that this judgment applies to the State of California.  How that judgment works out on a national basis in practice is open to debate.  The plaintiffs have won a similar case in New York and my understanding is that they are pursuing a case in Florida as well.

            Shortly after the decision a friend of mine asked what ramifications this decision would have for other "heritage" artists such as classic country artists whose  recordings are played on other Sirius XM stations.  Ultimately, my gut feeling is that the effect will be minimal for the reason that the Turtles (unlike the vast majority of recording artists from that era) own their master recordings.  The master recordings of most other artists are owned by record companies – major labels and/or once independent companies who were absorbed by major labels.  I have no idea what is going on behind closed doors but I am going to assume that the majors don't have any interest in suing satellite radio – one of their de facto partners in promoting music.  The smaller independents or artists who might own their own back catalogs may not have the resources to take on such a battle on their own.

            Nonetheless, Flo and Eddie have won an impressive and important battle because they addressed  an issue that everyone knew was blatantly unfair and they have claimed a moral and economic victory.This is not the first time they have gone to Court  to take a stand for artist’s rights and we all owe them a debt of gratitude.  It seems absurd to treat artists and the owners of sound recordings different due to an arbitrary date.  I don't know if this will ultimately be resolved through Congress, the courts or a grand compromise but the issue is now unavoidable.  Congratulations to  Flo and Eddie for taking it on. 

Advice for (Truly) Independent Artists

survival guide for indie rockers.  Catchy idea.  I did a lot of preparatory work on the subject but for some reason could not pull it off.  After a lot of thought, I have decided to analyze why the concept was flawed.

            The reality was that I was trying to promote myself as an attorney to artists in an environment where the traditional record deal and publishing deal was rapidly changing. In essence, I was saying to artists, “even though you’re doing everything on your own, you still need a lawyer.”

            It’s a problem of classification. It’s hard to know how to define an independent artist these days. From what I see, artists who are signed to what we once called “independent labels” have the same problems as any artists who signs a record deal – except that the money is smaller these days and the terms more potentially more draconian.  .  What drove the point home to me was a recent article about the band Grizzly Bear in New York magazine.  This piece showed in dry economic terms what the business of being a moderately successful artist in 2012 is like. It’s really worth searching out.  So, of course, artists like this need lawyers; the game is the same.

           

            So what about artists who are not tied to one particular company or who are truly releasing everything on their own?  What do artists like these need from a legal standpoint.  I have come up with several ideas:

            1.         If you are in a band you need a band partnership agreement.  I have said it before and young bands hate to deal with these things – but they are extremely important in avoiding problems and potential lawsuits down the road.

            2.         You need to register with BMI, ASCAP or SECAC.

            3.         If you are touring it is a good idea to incorporate (and investigate umbrella insurance).

            4.         If you’re a band, trademark your name.

            5.         Don’t sign anything without having a lawyer review it.  These days I have seen that even the simplest agreements are taking on crazy unnecessary dimensions.  Spend a little money to educate and protect yourself.

            6.         Register with Sound Exchange

            7.         If you are working with outside producers and musicians, make sure you get an agreement or at least a release from each of them.

            8.         Listen to the Rolling Stones (I threw that in but it’s still a good idea).

Producers in Peril

I have noticed that a lot of my producer clients don’t call me to negotiate agreements as often as they used to. They are not calling my competitors either because I’ve talked to them about this. I can’t blame anyone for not wanting to pay legal fees to negotiate a contract where the advance is small and there is a fairly good chance that they will never earn royalties.

I am thinking that one of three things is happening:

1. The producers are actually negotiating the agreements themselves, in which case, more power to them.
2. They are not signing contracts at all, in which case the record company (or artist) and the producer are acting at their own peril.
3. The producer is just signing what is put in front of him—which is what I worry about.

While it is probably statistically most often the case that most albums won’t sell enough to recoup their recording costs, there are also numerous examples of records that yield a soundtrack master use or television commercial years after their initial release. Without an unambiguous binding agreement and (hopefully) a letter of direction the producer may not have the ability to collect their share of the future income. I have seen examples of master use licenses pushing recordings from unrecouped to recouped status years after their initial release and the producer relying on their ancient agreements to get paid. It’s a beautiful thing.

I also worry that producers may be ignoring their share of Sound Exchange royalties, which are becoming a not insignificant source of income (and which are not subject to recoupment).

Finally, I worry that without carefully reviewing the document, producers might be agreeing to such punitive clauses as controlled composition clauses for producer/writers and my pet peeve, the re-producing restriction (no, not a form of state mandated population control).

I would urge any producer reading this to have the lawyer of their choice at least read the next agreement they are presented with. I can’t help but think that even a quick review be a worthwhile investment.