SiriusXM Finally Wins A Case Over Pre-1972 Music… And Promptly Settles With Sony For $201 Million
SiriusXM has settled one of several pending lawsuits over payments for pre-1972 recordings with Sony Music for $210 million. It's unclear how much of this will trickle down to artists, but Mike Masnick of Techdirt offers some important background and context.
By Mike Masnick from techdirt.
We've written plenty about the mess around pre-1972 sound recordings and online streaming services. Technically, federal copyright law does not apply to sound recordings from before 1972. And while that might make you think they're in the public domain, that's not true at all. First, the compositions are still under copyright and much more importantly, a jumble of state laws didprotect some aspects of those sound recordings — and that's made a huge mess, including locking up some recordings for way, way longer than would be possible under today's federal copyright. On the flip side, however, it meant that certain aspects of federal copyright law that were not covered by state copyright law were fair game — or so people thought.
This included in music streaming services. It had long been believed that you could publicly perform such pre-1972 songs without a license because, even under the various state and common law copyrights, there was really no concept of a "public performance" right anyway. Thus, services like SiriusXM and Pandora did not need to pay a performance fee to play those songs (for post-1972 recordings, both pay compulsory rates — which are for different reasons that have to do with lobbying power). This whole mess could be settled by just moving pre-1972 sound recordings under federal copyright law — which would make them subject to the same compulsory license fees as modern songs, but would also free up those old songs that state copyright law has locked up. It's a tradeoff, but probably the best result. However, the RIAA has fought very hard to block this.
Instead, it wants to have things both ways. It wants to keep those songs locked up for as long as possible, but still wants to get the benefits of federal copyright rights, such as public performance exclusivity. The reason, of course, is that it wants a big weapon — to force SiriusXM, Pandora and others to pay much larger fees by not allowing them to rely on compulsory rates, but rather to have to come to a negotiated deal.
In order to make this happen there have been a series of lawsuits in different states. In both California and New York, courts ruled against SiriusXM, saying that the state law in California and the common law in NY could be seen to cover performance rights, and thus SiriusXM had to pay up.
However, just a few days ago, a court in Florida went the other way entirely, saying there was no such right in Florida. The state law had nothing and the common law was not established in that area, thus ruling against SiriusXM (and in favor of Flo & Eddie, the organization that brought the suit) would be creating a new right out of thin air (something some copyright experts noted that the other courts had done).
So…. that started to make things interesting. Except… just a few days later, the RIAA and SiriusXM have announced a massive settlement over pre-1972 recordings with SiriusXM agreeing to fork over $210 million. This is going to put enormous pressure on Pandora to come up with a similar settlement. But it's not actually going to answer many of the questions here. First, the settlement only covers the cases brought by the big labels (so not the Flo & Eddie cases…). Second, it only covers through the end of 2017, at which point, it's right back to the negotiating table.
Oh, and in case you're wondering, this line in the Hollywood Reporter story is probably the most important one:
The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists.