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Oak View Group (OVG) has appointed Ade Patton as CFO, effective immediately, the global venue development, advisory and investment company announced on Tuesday (Aug. 15). In his new role, Patton will direct and oversee the global financial and accounting activities of the firm. He lives in Denver and will report to OVG chairman/CEO Tim Leiweke. […]
This is The Legal Beat, a weekly newsletter about music law from Billboard Pro, offering you a one-stop cheat sheet of big new cases, important rulings and all the fun stuff in between.
This week: Record labels sue the Internet Archive over a project to digitize old records; Dua Lipa loses a bid to dismiss one of the “Levitating” copyright lawsuits; a federal judge questions the fairness of Live Nation’s arbitration agreements with ticket buyers; and much more.
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THE BIG STORY: Historical Preservation or Blatant Infringement?
Like almost anything implicating copyright law, the Great 78 Project is something of a Rorschach test.
To the Internet Archive, it’s a project of “preservation, research and discovery,” aimed at creating a “digital reference collection of underrepresented artists and genres.” Digitizing hundreds of thousands of old 78rpm records is a much-needed effort to “ensure the survival of these cultural materials for future generations to study and enjoy.”
But according to a new lawsuit filed last week by Universal Music, Sony Music and Concord, the Great 78 is nothing more than “blatant” copyright infringement under a “smokescreen” of preservation.
“The Great 78 website is a massive, unauthorized, digital record store of recordings,” lawyers for the music companies wrote in the massive lawsuit this week, which claims the Internet Archive infringed more than 2,700 songs and potentially owes as much as $412 million in damages.
“Although Internet Archive describes the Great 78 Project’s goal as ‘the preservation, research and discovery of 78 rpm records,’ the Great 78 Project is actually an illegal effort to willfully defy copyright law on an astonishing scale,” the labels wrote.
At issue in the case are so-called pre-1972 songs — a category of music that was, when the Great 78 Project launched in 2006, not covered by federal sound recording copyrights. But in 2018, federal lawmakers extended such protection to the old records as part of the Music Modernization Act.
While the new law contained carveouts that allowed “non-commercial” uses of certain old records, the labels say the Internet Archive simply “ignored the new law and plowed forward as if the Music Modernization Act had never been enacted.”
For more, go read our full breakdown of the lawsuit, including access to the actual legal complaint filed against the Internet Archive.
Other top stories…
10 YEARS FOR TORY LANEZ – The rapper was sentenced to 10 years in prison for shooting Megan Thee Stallion in the foot, capping off three years of legal drama over the violent 2020 incident. The sentence was much harsher than the penalty sought by Lanez’s lawyers (just probation) but less than the 13 years that prosecutors had requested.
DUA LIPA CAN’T BEAT DISCO CASE – A federal judge ruled that Dua Lipa must face a copyright lawsuit accusing her of copying “Levitating” from a 1979 disco song, refusing the star’s early bid to end the case. Though she ruled that Lipa’s accusers had failed to show that the pop star had ever heard the song she was accused of copying, the judge said they had shown “just enough” to proceed on their claim that the song was so “strikingly similar” that it constitutes infringement.
TWITTER FIRES BACK AT PUBLISHERS – Twitter filed its first real response to a lawsuit from music publishers alleging widespread copyright infringement on the platform, arguing that it cannot be held liable for the actions of its users. The case claims that Twitter infringed over 1,700 different songs from writers like Taylor Swift and Beyoncé, but in a motion to dismiss the case, lawyers for the Elon Musk-owned site (now rebranded to X) said the company itself was not on the hook for illegal posts by its users.
The 1975 KISS FALLOUT CONTINUES – The organizers of a Malaysian music festival are seeking 12.3 million ringgit ($2.7 million) in losses from British band The 1975 after lead singer Matty Healy’s on-stage protest of the country’s anti-gay laws prompted authorities to shut down the festival.
NO ARBITRATION FOR LIVE NATION – A federal judge ruled against Live Nation in an antitrust lawsuit over allegations of inflated ticket prices, declaring that the case should proceed as a federal class action rather than via private arbitration. Concertgoers opt into that out-of-court process when they buy tickets, but the judge ruled that the arbitration process posed a “serious risk of being fundamentally unfair” to consumers: “Because Defendants are often in effect the only ticketing game in town, would-be concertgoers are forced to accept Defendants’ [arbitration agreement] in full, or else forego the opportunity to attend events altogether.”
A former associate of Kanye West and R. Kelly is listed among the 18 names in the 41-count indictment against former President Donald Trump that was unsealed in Fulton County, Ga., Monday night (Aug. 14). Trevian C. Kutti is facing three charges under the state’s Racketeer Influenced and Corrupt Organizations (RICO) law — a statute typically associated with organized crime — wherein prosecutors claim the former president and his compatriots ran a “criminal enterprise” to keep Trump in the White House after his 2020 presidential election loss.
Kutti was associated with West for a period of time following his own failed 2020 presidential run, according to a source formerly close to West’s team.
Previously, Kutti worked with disgraced singer R. Kelly as his publicist until 2018, according to a 2020 Chicago Sun-Times article covering her work as a lobbyist to legalize marijuana in Illinois. Kelly is currently serving a 20-year sentence in Chicago after convictions on child pornography and enticement of a minor charges.
Kutti, whose unverified Instagram bio lists her as a “solutionist… equal opportunity capitalist… media manipulator,” is facing charges of conspiracy to commit solicitation of false statements and writings and influencing witnesses. She did not respond to Billboard‘s request for comment on the charges at press time.
The latest indictment against Trump includes 41 criminal charges against 18 Trump associates alleging acts aimed at trying to reverse his election loss, including Trump famously calling Georgia’s Republican secretary of state in a bid to have him “find” enough votes to help him win the pivotal state, as well as harassing an election worker with false claims of fraud and trying to persuade Georgia lawmakers to ignore the state’s citizens and appoint their own slate of pro-Trump electors. In one of the most shocking claims, the indictment says the Trump team allegedly attempted to gain access to voting machines in a rural county in order to steal data from the voting machine company.
Reuters reported that Kutti’s online biography from 2021 identified her as a member of the “Young Black Leadership Council under President Trump,” while also claiming that beginning in Sept. 2018 she was “secured as a publicist to Kanye West” and served as his “director of operations.” In Dec. 2021 a spokesperson for West said that Kutti was not “associated” with the rapper at the time she is accused of pressuring a Georgia election worker to confess to false allegations of committing voter fraud.
A spokesperson for Ye could not be reached for comment at press time.
Trump is facing 13 charges in the case, which contains the most potential legal jeopardy for the twice-impeached MAGA real estate mogul who was indicted in March in a New York case tied to hush payments to porn actress Stormy Daniels. He was indicted again in June by a federal grand jury in Miami in his classified documents case and earlier this month by special counsel Jack Smith in a federal probe into Trump’s attempts to overturn the 2020 election.
While Kutti is not well-known, some more familiar names were in the Fulton County indictment, including former New York mayor Rudy Giuliani, Trump lawyer (and the mastermind of the bogus elector scheme) John Eastman, another Trump attorney, Sidney Powell, and former White House chief of staff Mark Meadows.
“I believe that the charges that were filed on me are for a lack of better words baloney,” Kutti reportedly said in a text to the Wall Street Journal. “I completely stand by what I said to the election worker that I was simply a crisis manager.”
Forbes reported on Tuesday that leading up to the 2020 election, Kutti worked as a campaign manager for QAnon conspiracy supporter Angela Stanton King, who lost an election for the congressional seat of late civil rights icon John Lewis.
Kutti also made headlines as the person who Reuters said was caught on video trying to convince frightened Georgia election worker Ruby Freeman — whom Trump had attacked in public and who later faced death threats — to confess to Trump’s false voter fraud allegations by saying that if she didn’t she would be hauled off to jail.
Count 30 of the indictment says that Kutti and two others, “unlawfully conspired to solicit, request, and importune Ruby Freeman, a Fulton County, Georgia, election worker, to engage in conduct constituting the felony offense of False Statements and Writings, O.C.G.A. § 16-10-20, by knowingly and willfully making a false statement and representation concerning events at State Farm Arena in the November 3, 2020, presidential election in Georgia.” It also claims that Kutti “traveled to Fulton County, Georgia, and placed a telephone call to Ruby Freeman while in Fulton County, Georgia, which were overt acts to effect the object of the conspiracy, contrary to the laws of said State, the good order, peace and dignity thereof.”
Count 31 alleges that around Jan. 4, 2021, the trio, “knowingly and unlawfully engaged in misleading conduct toward Ruby Freeman, a Fulton County, Georgia, election worker, by stating that she needed protection and by purporting to offer her help, with intent to influence her testimony in an official proceeding in Fulton County, Georgia, concerning events at State Farm Arena in the November 3, 2020, presidential election in Georgia, contrary to the laws of said State, the good order, peace and dignity thereof.”
While Trump continues to be the Republican presidential front-runner by a wide margin despite his multiple layers of legal jeopardy, CNN noted that Fulton County DA Fani Willis’ case is insulated from any potential Trump meddling if he is re-elected in 2024 because he would be unable to pardon himself or any of his allies on the state charges or dismiss Fulton County prosecutors who brought the charges.
In a predictable pattern, Trump described his latest indictment as part of a politically motivated “witch hunt” while labeling DA Willis as “racist and corrupt.” Giuliani, who famously used RICO statutes to combat organized crime in New York, called the charges “an affront to democracy.”
Twitter has filed its first formal response to a lawsuit from music publishers alleging widespread copyright infringement on the platform, arguing that it cannot be held liable for the actions of its users.
The filing came two months after dozens of music publishers sued the Elon Musk-owned site, claiming its users had infringed over 1,700 different songs from writers like Taylor Swift and Beyoncé — a claim that, if proven, could put the social media giant on the hook for $255 million in damages.
In a motion to dismiss the lawsuit filed Monday, lawyers for Twitter (now re-branded to X) argued that the company itself was not on the hook for illegal posts by its users. Among other things, they cited the Supreme Court’s high-profile 2005 ruling on the filing sharing service Grokster, which said that digital services cannot be sued unless they take active steps to encourage infringement by users.
“In this case, plaintiffs do not allege that X encouraged, induced, or took affirmative steps with the intent to foster the infringement of plaintiffs’ works,” wrote the company’s lawyers, hailing from the law firm Quinn Emanuel. “To the contrary, X’s anti-infringement policies and practices … belie any reasonable assumption that X has induced its users to infringe any copyrights.”
The case against Twitter was organized by the National Music Publishers’ Association, which has long argued that the site is the last major social media service refusing to license music. TikTok, Facebook, Instagram, YouTube and Snapchat have all allegedly entered into such deals with publishers, providing a library of licensed music for users to legally add to their posts.
“Twitter stands alone as the largest social media platform that has completely refused to license the millions of songs on its service,” said NMPA president/CEO David Israelite when the case was filed in June. “Twitter knows full well that music is leaked, launched and streamed by billions of people every day on its platform.”
But in Monday’s response, Twitter’s lawyers argued that even if such licensing deals were the NMPA’s preferred outcome, they are not legally required to avoid a copyright lawsuit – and that the failure to secure one was irrelevant to the infringement case against it.
“The allegation … is just another way of saying that X could do more to address the unauthorized use of music on the site by purchasing licenses from Plaintiffs on behalf of X’s users,” Twitter’s attorneys wrote. “Whether X sought music licenses for users or elected not to do so has no bearing on this inquiry; it is not evidence of an intent to encourage infringement.”
Notably, this week’s filing from Twitter did not delve into the thorny issue of the Digital Millennium Copyright Act, a federal law that limits how websites like Twitter can be sued over copyright infringement by their users.
The DMCA provides sites like Twitter with immunity — a “safe harbor” — from litigation over material uploaded by their users, so long as they promptly remove infringing content and ban repeated violators from the platform. The publishers’ lawsuit goes to great lengths to argue that Twitter failed to do either of those things, meaning the site has legally forfeited the DMCA’s protections.
Twitter heavily refutes that point and, though they did not do so on Monday, its lawyers will undoubtedly invoke the DMCA’s protections at a later stage of the case if their current motion is denied.
The case against Twitter was filed by Concord, Universal Music Publishing Group, peermusic, ABKCO Music, Anthem Entertainment, Big Machine Music, BMG Rights Management, Hipgnosis Songs Group, Kobalt Music Publishing America, Mayimba Music, Reservoir Media Management, Sony Music Publishing, Spirit Music Group, The Royalty Network, Ultra Music Publishing, Warner Chappell Music and Wixen Music Publishing.
A rep for NMPA did not immediately return a request for comment on Twitter’s new filing.
Damien Scott has been named Billboard‘s new deputy editorial director, the music media brand announced Monday (Aug. 14). In his New York-based role, Scott will work to expand Billboard’s audience through news coverage, video, social content, live events and more, all with a special focus on hip-hop and R&B. “We are so happy to have […]
Elektra Entertainment has promoted Jacob Fain to executive vice president and head of A&R at the Warner Music-owned label unit. The Los Angeles-based Fain joined Elektra in late 2020 and was most recently senior vp of A&R and head of the label’s data and analytics team. He’ll continue to report directly to Elektra president Gregg […]
Rock-country artist Riley Thomas has signed with Elektra/DBLBLK Records, which will release his new single, “I’ll Be Damned,” on Friday (Aug. 18). Thomas scored a sleeper success with his debut single, “Cowboys Did Cocaine,” which has racked up nearly 14 million streams on Spotify since its release in June.
“I’ve had the pleasure of knowing and watching Riley develop as both a writer and artist for years,” said DBLBLK Records founder Jameson Roper in a statement. “It’s always been a question of when — not if — his moment would arrive. I am beyond thrilled to lock arms with my true partners at Elektra. They have always identified great music and supported our artists fully. For Riley, the music may be dark, but the future is bright.”
Thomas added, “As an artist focused on the reach of my music, I knew I wanted to be with Elektra after meeting the team. I’ve long admired Gregg Nadel, Johnny Minardi, and the staff’s ability to develop and sustain career artists. Moreover, their respect for good music and commitment to fostering growth gave me confidence that this is the place for me. With the addition of a tenacious Jameson Roper and DBLBK, I’m looking forward to a long ride with this family.”
Thomas is managed by Mike Easterlin at Glen West Entertainment and Jameson Roper at DBLBLK Management. His booking agent is Nate Towne at WME.
Daughtry signed with Big Machine Records, which released the band’s latest single, “Artificial,” on Aug. 11. Fronted by Chris Daughtry, the band has released a total of six albums to date.
Country singer-songwriter Walker Hayes announced a new partnership with Monument Records and RCA Records. Under the deal, Hayes recently released a new two-track bundle titled Strait Two Stepping featuring “Stetson” and “Show Me The Country.” Hayes is managed by Robert Carlton at SMACKSongs and represented by Aaron Tannenbaum at WME.
Nashville-based alternative singer-songwriter Max Frost signed to Nettwerk, which will release his new single, “Creep Back,” on Friday (Aug. 18.) Frost is represented by Ron Shapiro and Joe Hegleman at Have Fun Management and Marsh Vlasic and Craig Bruck at IAG for booking. He was formerly signed to Atlantic Records.
CMW Entertainment struck a partnership with Sony Music’s AWAL Recordings for CMW’s flagship artist, Mudrigo, whose latest single, “UH HUH,” was released under the pact on Aug. 2. The companies will collaborate to support Mudrigo with a full suite of services globally; AWAL will support his development by offering services including A&R, global marketing, creative, synch, brand partnerships, distribution and access to real-time analytics.
Mette signed to Since ’93 and RCA Records in the United States. The labels will release her upcoming EP, METTENARRATIVE, on Sept. 22, preceded by Mette’s new single, “VAN GOGH.” She is managed by Caron Veazey at ThreeSix Zero; booking is handled by Mary Hannon and Craig D’Souza at WME for the United States and United Kingdom, respectively.
SMACK has launched SMACKRecords, adding a label branch to the company and announcing its first signing, singer-songwriter-actress Jenna Davis. SMACKRecords marks the fourth enterprise to launch under SMACK, following publishing company SMACKSongs, SMACKManagement (which reps Walker Hayes and Kylie Morgan) and digital marketing company SMACKTok. Davis will also be represented by Marissa Turk at SMACKManagement. Her debut single, “DiCaprio,” was co-written by Hayes, Kelsea Ballerini and Ross Copperman. Davis also recently voiced the main character in the horror-thriller M3GAN. – Jessica Nicholson
Rock band Sheer Mag signed with Third Man Records, marking the group’s first partnership with a larger independent label. Under the deal, Third Man will physically and digitally re-release Sheer Mag’s entire back catalog — including EPs I, II and III as well as albums Need To Feel Your Love and A Distant Call — on Oct. 27. Third Man just released the band’s latest single, “All Lined Up.” Sheer Mag is represented by manager Mike Sneeringer at Another Management Company and booking agent Timmy Hefner at Ground Control Touring.
Country duo Neon Union signed with CAA. The duo, which has played over 50 tour dates so far this year, is signed to Red Street Records and managed by Tristan Kirkbride.
Country singer-songwriter Annie Bosko signed a joint-venture management deal with Randy Bernard and Brown Sellers Brown (BSB) Management; she will be represented at the latter by Benny Brown, Jason Sellers and Angela Wheeler. Bosko also signed a label deal with Brown’s Stone Country Records and is now represented by CAA for booking.
Emerging country singer-songwriter Eli Winders signed to Atlantic Records/Bad Realm Records, which released his debut single, “Pack My Hometown,” on Friday (Aug. 11). He is managed by Layne Lindroth at C3.
Morgan Myles, the country singer-songwriter who was formerly a contestant on The Voice, signed with KZZ Music/Blue Élan, which released her new single, “Vertigo,” on Aug. 8. She’s represented by manager Ann Henningsen and booking agents Jennifer Hludzik at APA and Jared Caleb.
Singer-songwriter Rissi Palmer signed with New York-based management/distribution/merchandising company Invasion Merch and has signed a new contract with talent and literary agency Paladin Artists. Palmer recently earned two Grammy nominations and hosts the Apple Music show Color Me Country with Rissi Palmer. Earlier this year, Palmer’s Still Here documentary film was featured on PBS’ American Masters: In the Making series. – Jessica Nicholson
Singer-songwriter Ryan Larkins signed with CAA, where he will be represented by Marc Dennis. Larkins previously signed with Red Street Records, which released his debut songs as an artist — “Man That Holds the Beer” and “She’s the Tough One” — on Friday (Aug. 11).
The BBC’s historic Maida Vale Studios has been sold to a business partnership headed by Oscar-winning composer Hans Zimmer and film producers Tim Bevan and Eric Fellner, the British broadcaster announced Monday (Aug. 14).
The famous London facility has been used for music recording since the 1930s and has played host to everyone from Adele to David Bowie to The Beatles throughout its storied history. The BBC first announced its plans to close the building and relocate to a new purpose-built music base in 2018, although Maida Vale Studios was only officially put up for sale by the broadcaster in November.
The new owners, which also includes Zimmer’s business partner, Steven Kofsky, have said that the Grade II listed building — originally a roller-skating palace — will continue to operate as a music hub and will undergo a multi-million-pound refurbishment to create a “world-class studio space for the next generation of composers, producers, editors and engineers.”
Terms were not disclosed for the deal, but last year it was reported that the studios were being advertised on the property market for offers above £10.5 million ($13.3 million). According to Sky News, a rival business consortium that included Warner Music Group controlling shareholder Len Blavatnik and film producer Matthew Vaughn also made an offer to buy the studios but was rejected.
Zimmer, Bevan, Fellner and Kofsky said they will also establish a not-for-profit education facility at Maida Vale Studios that will provide jobs and opportunities for the local community.
In announcing the sale, the BBC’s director of music, Lorna Clarke, paid tribute to the important role the venue has played in British popular culture. “We are so pleased to secure a sale which looks to continue the bright, vibrant future of music-making in this iconic building,” she said in a statement.
Zimmer recalled the first time he worked for the BBC at the complex 45 years ago. “I still remember the strong pull, the desire to touch the walls, as if that would somehow allow me to connect to the artists whose extraordinary music had resonated against these walls on a daily basis,” said the composer.
Zimmer went on to say that he now wants to “close the circle” and make the facility an inspirational place “that gives the next generation the same opportunities I was given: to create and to never give up.”
Bevan and Fellner, co-chairmen of London-based film production company Working Title, called the acquisition a “once-in-a-lifetime project” that will continue the BBC’s legacy by attracting global talent to the United Kingdom.
In addition to playing host to a wealth of rock and pop stars over the years — a long list that also includes Led Zeppelin, Dusty Springfield, Beyoncé and Bing Crosby, who made this final recording there in 1977 just days before he died — Maida Vale studios was previously home to the BBC’s pioneering Radiophonic Workshop.
At present, the facility is home to the BBC Symphony Orchestra and is regularly used to record a large number of music and drama sessions broadcast across the BBC’s radio and online network. The BBC says it has agreed to lease back the building from the new owners and will continue to use the studios until it moves to a new studio complex, which is currently under construction in East London and due to open in late 2025.
Universal Music, Sony Music and Concord are suing the Internet Archive over a project to digitize old vinyl records from Frank Sinatra, Ella Fitzgerald, Bing Crosby and other iconic artists, calling it “blatant” copyright infringement under a “smokescreen” of preservation.
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In a complaint filed Friday in Manhattan federal court, the labels took aim at the Internet Archive’s “Great 78 Project,” in which thousands of physical records have been digitized and made available to users for free. They called the project “wholesale theft of generations of music.”
“The Great 78 website is a massive, unauthorized, digital record store of recordings,” lawyers for the music companies wrote. “Although Internet Archive describes the Great 78 Project’s goal as ‘the preservation, research and discovery of 78 rpm records,’ the Great 78 Project is actually an illegal effort to willfully defy copyright law on an astonishing scale.”
Though they claim “hundreds of thousands” of songs have been illegally copied, the labels are specifically suing over 2,749 songs – every single one of which, they say, is already available on legal digital services. They include iconic tracks like Crosby’s “White Christmas” and Sinatra’s “I’ve Got the World on a String.”
“Defendants [cannot] justify their activities as necessary to preserve historical recordings,” the music companies wrote. “These recordings face no danger of being lost, forgotten, or destroyed.”
The lawsuit is hardly the Internet Archive’s first dust-up with copyright law. The group fought to invalidate legislation passed by Congress in the 1990s that added years onto the length of a copyright’s term of protection, and is currently embroiled in a lawsuit filed by the major book publishers over a COVID-era library project that scanned physical books and lent them to users for free. Earlier this year, a federal judge ruled that Internet Archive’s project was not a legal fair use of the publishers’ books.
In Friday’s complaint, the music companies cited the Internet Archive’s “long history of opposing copyright laws” and previous efforts to “improperly … wrap its infringing conduct in the ill-fitting mantle of fair use.”
“Having failed repeatedly in Congress and the courts, Internet Archive now chooses to simply willfully disobey the copyright laws of which it is acutely aware,” lawyers for the music companies wrote.
At issue in Friday’s complaint are so-called pre-1972 songs – a category of music that was previously not covered by federal sound recording copyrights. But in 2018, federal lawmakers extended such protection to the old songs as part of the Music Modernization Act. In their complaint, the music companies said they were suing to “vindicate the rights Congress has granted creators in pre-1972 sound recordings.”
“When Defendants exploit Plaintiffs’ sound recordings without authorization, neither Plaintiffs nor their artists see a dime,” the companies wrote. “Not only does this harm Plaintiffs and the artists or their heirs by depriving them of compensation, but it undermines the value of music.”
The lawsuit is seeking so-called statutory damages for each copyrighted song allegedly infringed, which could total $412 million if fully granted. But such damages totals are heavily litigated and could be substantially lower if the case ever reaches a final judgment.
In addition to naming the Internet Archive itself as a defendant, the lawsuit also individually names the group’s founder, Brewster Kahle, as well as George Blood, an audio engineer who allegedly worked on the Great 78 project.
The Internet Archive did not immediately return a request for comment.
Read the entire complaint filed against the Internet Archive here:
The Copyright Royalty Board’s final determination for royalty rates for making and distributing phonorecords for the 2018-2022 term (aka Phonorecords III) were published by the Federal Register late last week, following a legal review — and close check for typos — by the office of Register of Copyrights Shira Perlmutter.
The majority of the rates determination is no surprise. Since the official remand by an Appeals Court in October 2020 — which followed a March 2019 appeal by digital services of the CRB’s February 2019 rates determination for the 2018-2022 term — the CRB judges had been wrestling with different aspects of the complicated mechanical rate formula cited by the appeal courts, with various aspects of the rates determination coming out in dribs and drabs over the last eight months.
As is already known, the CRB judges stayed with the escalating rate structure for the all-in percentage of revenue prong, which covers both mechanical and performance royalties, for on-demand streaming for the 2018-2022 period.
(The 21% of total content cost is for performance royalties are determined by a separate process but whatever was agreed to be paid to ASCAP, BMI and the other performance royalty organization is subtracted from the all-in bucket in one step of the process to determine one of the mechanical rates bucket.)
That rate structure escalated from 10.5% in the prior five-year term of 2013-2017 to 11.2% in 2018, 12.3% in 2019, 13.4% in 2020; 14.2% in 2021, and 15.1% in 2022. But in moving to the other all-in prong — the total cost of content prong, i.e. what the services pay the record labels — the CRB judges re-installed the ceiling, which prevents publishers and songwriters from automatically being rewarded when labels and artists negotiations higher rates from the services; and the judges abandoned the earlier escalating rate structure from its initial 2019 determination for the total cost of content prong, which similarly rose in annual increments from 21% of what’s paid to labels to 26.1% over the five year term. Instead, the judges stuck with 21% of total content cost for the full five-year term — the same percentage it had been in the previous five years.
(This article mainly uses the percentages from what’s known as the stand-alone portable streaming model, i.e. the main on-demand streaming vehicle, which at Spotify is known as the paid subscriber tier. The ad-supported rate is 22% of what’s paid to labels.)
In other moves, the CRB stuck with 9.1 cents per song for physical and downloads and 24 cents per ringtone for Phonorecord III. In Phonorecords IV, for 2023-2027, the royalty rate for ringtones would remain the same but the per song rate will earn 12 cents per track or 2.31 cents per minute of playing time or fraction thereof, whichever amount is larger for physical products and permanent downloads. Also, that rate will be subject to an annual cost-of-living adjustment.
Before an Appeals Court remanded a significant part of the CRB rate determination for 2018-2022 back to the CRB, digital streaming services were adhering to the structure of the initial determination which means that for some 33 months the formula applied the higher rates for the total cost of content prong without a ceiling. As such, industry sources speculate that some digital services overpaid during that period — and Billboard estimates that they might have over paid by $50 million.
But after the remand most services reverted back to the 2013-2017 rates of which used the headline rate of 10.5% of revenue, and consequently most industry financial sources suggest that the service underpaid from October 2020 through December 2022. Consequently, Billboard estimates that digital services collectively might owe $200 million to $250 million for the latter period. Looking at the two period, with the earlier one 2018-2020 partially offsetting the later period of 2021-2022, that could mean a $200 million windfall for publishers and songwriters.
Now that this has all been settled, the Mechanical Licensing Collective—working with required updated information from the digital services—has six months from the Aug. 10 date to make adjustments in what has been paid and what may still be owed from 2021 and 2022, the two years the MLC has been in operation. It will also have to rectify any under or over payments for unclaimed and unpaid royalties from the earlier periods before it began operations— a responsibility it was handed as part of the Music Modernization Act.
But besides the unpaid royalties, any needed adjustments to the rest of the payments made to publishers and songwriters during the 2018-2020 period will be handled by the digital services, likely with the help of their third party vendors, i.e. Music Reports Inc and the Harry Fox Agency.
The Phonorecords IV rate determination for 2023-2027 preceded the final determination for Phonorecords III, as it was published in the Federal Register on Dec. 16, 2022.