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Has Radio’s Time to Pay Music Royalties Arrived?

Has Radio’s Time to Pay Music Royalties Arrived?

(Flo & Eddie v. Sirius XM Radio)

Copyright law treats the public performance of musical compositions and sound recordings differently. When radio stations publicly perform copyrighted musical compositions, they pay royalties. Performance Rights Organizations (ASCAP, BMI, SESAC) collect and distribute the majority of musical composition royalties. Owners of sound recordings do not receive royalties for terrestrial radio broadcasts of their works. They only receive royalties for public performances broadcast digitally.

Terrestrial radio’s days of royalty free access to music may be numbered. Two federal courts recently ordered Sirius XM to pay royalties for pre-1972 recordings, and a third federal court is currently considering the same claims. [1] All three cases involve Flo & Eddie, Inc. and Sirius XM Radio, Inc. Flo & Eddie own the copyrights to the Turtle’s [2] sound recordings.

The first case was in the Central District of California. In September 2014, the California court ruled that Sirius XM’s satellite and internet streaming services infringed Flo & Eddie’s exclusive right in the public performance of the Turtles’ sound recordings. Flo & Eddie licensed the masters [3] for records, television shows, and commercials; but never licensed the masters to any radio station for public performances. [4] Sirius XM publicly performed the subject songs when it broadcasts them over its satellite network and streamed them over the Internet.

The issue before the California court was whether exclusive ownership of a pre-1972 sound recording includes the public performance exclusive right. The court answered, “Yes.”

When Congress passed the Copyright Act of 1976, it carved out pre-1972 sound recordings as a limited area of copyright law unaffected by the federal law and left it within the domain of the states until February 15, 2067. Therefore, California law controlled the decision in this case. California law provides authors of original works consisting of sound recordings exclusive ownership of their works. Does this exclusive right include public performance of the sound recordings? To answer this question, the court applied the maxim that “where exceptions to a general rule are specified by statute, other exceptions are not to be implied or presumed.” In other words, the court presumed the legislature included all the exceptions it intended to create. The California law provides an exception for cover songs. Therefore, the court concluded exclusive rights included public performances.

The second case was in the Southern District of New York. In the New York case, Flo & Eddie alleged Sirius XM committed common law copyright infringement of Flo & Eddie’s copyright by publicly performing and reproducing the Turtles sound recordings. [5] The court found no issues of material fact and denied Sirius XM’s motion for summary judgment. The court ordered Sirius XM to show cause by December 15, 2014, why the court should not enter summary judgment in favor of Flo & Eddie. Otherwise, the court grants Flo & Eddie’s motion for summary judgment as to liability.

Like California, The New York court held that New York common law protects copyrights in public performances of pre-1972 sound recordings. In reaching its holding, the Southern District of New York found that acquiescence by recording artists and producers in not being paid royalties, while songwriters are, does not show they lack an enforceable right under the common law. It only shows that they failed to act on it in regards to terrestrial radio stations. This finding aligns with a recent Supreme Court decision that courts should not read too much into a lack of precedent for an issue. D.C. v. Heller, 554 U.S. 570, 625 (2008).

What does this say for the future of terrestrial radio stations? Will they continue to have access to pre-1972 sound recordings without paying a royalty? (i.e. How broad is the New York court ruling?) If they must pay royalties for pre-1972 sound recordings, then why not for post-1972 sound recordings?

The New York court did more than not read too much in to the fact that New York courts had never squarely addressed a particular feature of the state’s law. The court found the silence not to lead to the absence of an exclusive right in public performances, but rather to such a right. In other words, the silence gives credence to sound recordings having all the exclusive rights. [6]

Wrap it Up:

Terrestrial radio broadcasters benefit from an environment where they do not pay royalties for their performances of sound recordings.Flo and Eddie’s lawsuits threaten to upset the radio broadcasters’ environment.

What prevents the ramifications of these decisions from reaching post-1972 sound recordings? And artists receiving royalties for radio broadcasts of their songs?

Stay tuned for the upcoming Florida decision on a similar motion for summary judgment.

Contact our office with any comments or questions about this post.

Boaldin Law

The Pioneers’ Advocate

www.BoaldinLaw.com

solutions@boaldinlaw.com

405.305.1046

[1] Flo & Eddie Inc. v. Sirius XM Radio Inc., et al., CV 13-5693 PSG (RZx), Central District of California (9/22/2014); Flo & Eddie Inc. v. Sirius XM Radio Inc., and DOES 1-10, CV 13 Civ. 5784 (CM), Southern District of New York (11/14/2014); Flo & Eddie Inc. v. Sirius XM Radio Inc, CV 13 Civ. 23182 (S.D.Fla.).[2] http://en.wikipedia.org/wiki/The_Turtles

[3] Master is the original studio recording from which all copies are made.

[4] Public Performance is the right to perform a recording in public. The vast majority of licenses for public performance of songs are blanket licenses through one of the Performing Rights Organizations, e.g. ASCAP, BMI, SESAC.

[5] The case in California also addressed a claim of infringing the exclusive right to reproduction. The two courts came down differently on this issue. Contact our office for further information about this issue.

[5] 17 U.S.C. § 106. (1) reproduce, (2) prepare derivatives, (3) distribute, and (4) publicly perform.

 

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