Copyright
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A federal jury in Texas decided Thursday (Nov. 3) that an internet service provider must pay the three major record labels and others more than $46 million in damages over music illegally downloaded by the company’s subscribers.
After a month-long trial, jurors found that Grande Communications was legally liable for copyright infringement committed by its users — and that it owed separate damages for each of the more than 1,400 songs that were pirated on the company’s network.
The case is one of several such cases filed by music companies against ISPs, aimed at forcing them to take more proactive steps to eliminate piracy on their networks. In 2019, the labels won a shocking $1 billion verdict against Cox Communications in a similar case.
Grande’s attorneys did not immediately respond to a request for comment Friday on the verdict. Mitch Glazier, the head of the Recording Industry Association of America, called it “the latest validation by US courts and juries that unchecked online infringement will not stand.”
“The jury’s strong action here sends an important message to Internet Service Providers,” Glazier said. “Artists, songwriters, rightsholders, fans and legitimate services all depend upon a healthy digital music ecosystem that effectively protects creative works online.”
Universal Music Group, Warner Music Group and Sony Music Entertainment teamed up to sue Grande in 2017, claiming the company had put itself on the hook by failing to take action against users who repeatedly pirated music.
“Defendants have been notified that their internet customers have engaged in more than one million infringements,” attorneys for the labels wrote at the time, but “have permitted repeat infringers to use the Grande service to continue to infringe plaintiffs’ copyrights without consequence.”
Internet service providers are typically not liable for individual infringements by their millions of users, thanks to the Digital Millennium Copyright Act’s “safe harbor.” But starting in the mid-2010s, music companies began arguing that ISPs had forfeited that immunity by ignoring the DMCA’s requirement that they terminate “repeat infringers” from their network.
Starting with a landmark case filed by BMG Rights Management against Cox, those arguments have repeatedly proved successful. Major labels have filed similar cases against Cox, Charter, RCN and other ISPs in courts around the country, winning huge verdicts like the $1 billion award against Cox (which is currently pending on appeal).
Facing such a lawsuit, Grande fired back that the music industry was wrongfully trying to turn ISPs into “copyright police.” Grande said such claims should really be targeted at the actual people who steal music, but that record labels had stopped pursuing them “due to bad publicity.” That was a reference to a series of controversial lawsuits filed in the 2000s, including one that ordered a Boston college student to pay $675,000 for pirating just 30 songs.
But the federal judge overseeing the case denied Grande’s motions and sent the case to trial, which kicked off last month. Following Thursday’s verdict, the company can appeal the ruling — first by asking the judge to overturn it, and then by taking the case to a federal appeals court.
Read the verdict form here:
Global music copyright generated $39.6 billion in 2021, up 18% from the previous year, according to the latest report by Will Page, industry analyst and former chief economist for Spotify. “The post-pandemic fallout has seen consumer subscriptions and ad-funded streaming continue to soar,” he wrote, “whereas business-to-business licensing by CMOs [collective management organizations] has only partially recovered.”
Streaming accounted for 55% of global copyright revenue, up from 52% in 2020. The industry’s shift to streaming has been dramatic: jJust five years ago, in 2017, streaming accounted for just 30% of global music copyright revenues.
Page brings together four sources of industry data for his analysis: IFPI’s annual Global Music Report, CISAC’s annual Global Collections Report, Music & Copyright’s analysis of music publishing and MIDiA Research’s estimate of royalty-free music licensing services such as Epidemic Sounds — a new addition to his study this year. He removes double counting in the reports, such as some mechanical royalties that are counted as revenue by both record labels and publishers.
Record labels’ revenue grew to $25.8 billion in 2021 from $21.3 billion in 2020 and $19.8 billion in 2019. In terms of market share, record labels improved their percentage of global revenue to 65.2% in 2021 from 63.4% in 2020 and 60.6% in 2019 — a sign of healthy consumer spending on subscription services such as Spotify and Apple Music.
On the flip side, publishers’ share of global revenue dropped to 34.1% in 2021, from 35.7% the year before. Still, as Page points out, this is more equitable than other points in history. In 2001, when labels’ revenues were peaking at the height of the CD sales boom, publishers received just 23% of revenues. In 2014, however, when label revenues had deteriorated, publishers were growing modestly and CMOs reported “record-breaking collections” up to 45% of global revenues. Record labels grew faster than publishers over the next seven years, however.
Record labels’ share of revenue increased due to “the recovery in consumer spend on music,” according to Page, “which traditionally favors labels over publishers.” The trend was amplified by the pandemic’s impact on business licensing – such as performance rights blanket licenses for retail, radio and concert venues – that favors publishers over labels.
Had the pandemic not occurred, performing rights income would have likely grown at 6% a year and would “arguably” be $1 billion greater today – a possible $9.4 billion rather than the actual $8.4 billion. On the other hand, wrote Page, “had the pandemic not happened, streaming may never have accelerated the way it did.”
Royalty-free music is a small part of the global music business but growing quickly thanks to the increasing need for easily licensed music on online platforms such as TikTok, Instagram and YouTube. MIDiA Research put the value of royalty-free music – meaning the license is a one-time purchase without residual royalties – at $250 million in 2021.
The U.S. Copyright Office is quietly proposing a new rule to make sure that songwriters who invoke their termination rights actually get paid their streaming royalties, overturning a previous “erroneous” policy that could potentially have kept sending money to former owners in perpetuity.
Starting in 2020, groups like the Recording Academy raised alarm bells that a policy adopted by the Mechanical Licensing Collective (the entity that collects and distributes streaming royalties) might lead to a bizarre outcome: Even after a writer takes back control of their songs, royalties might still flow to the old publishers that no longer own them — forever.
In a new rule proposed last month, the agency said the MLC’s policy was based on an “erroneous understanding and application of current law.” Ordering the group to “immediately repeal its policy in full,” the Copyright Office’s says that when a songwriter gets their rights back, they should obviously start getting the royalties, too.
“It is not clear why the statute or the case law should be read as making one particular copyright owner the permanent recipient [of royalties] because it happened to be the owner immediately before termination occurred,” the agency wrote in the proposed rule, issued Oct. 19.
The proposed rule change was quickly hailed as a win for songwriters. In a statement to Billboard, Michelle Lewis of the Songwriters of North America said the ambiguity over termination had “created stress and uncertainty for many songwriters.” Todd Dupler, vp for advocacy & public policy at the Recording Academy, says the rule change is “big news” for songwriters.
“We’re very grateful to the Copyright Office for stepping in to do this,” Dupler says. “We think the reasoning is very clear and I think they’ve reached the correct outcome.”
The MLC did not return a request for comment on the Copyright Office’s proposed rule.
Termination empowers an author to reclaim the rights to their copyrighted work decades after selling them away. In the music business, if a songwriter sold a publisher the rights to a song that later became a smash hit, termination allows them to automatically to get those rights back years later (the rule kicks in between 35 and 56 years later, depending on when the song was sold). Created by Congress when it updated federal copyright law in 1976, termination was designed to level the playing field for creators, who usually lack leverage in negotiations with big companies and are often forced to fork over rights before they know they’re valuable.
But termination comes with an important exception. Even though a publisher must hand back the rights to the original song, they’re entitled to keep selling any existing “derivative works” they created when they owned it. That means that even after a songwriter wins back ownership of their song, they can’t suddenly send cease-and-desists over a famous sample, or sue over a movie that featured the song under a synch license. Those continue to be fair game, and any fees under existing licenses keep flowing back to their old publisher.
That exception makes sense; it would be unfair to let a terminating songwriter suddenly revoke existing licenses that were legal when they were granted. But it also creates difficult ambiguity for the MLC and its so-called blanket license — the streamlined system created by Music Modernization Act in 2018 to make it easier for digital services to get mechanical royalties to the right songwriters.
Say a songwriter terminates their publisher’s control of their music. The writer is now the owner of those songs — that’s easy to figure out. But by paying the MLC for access to the blanket license, Spotify arguably already has an existing license in place with the old publisher. So, isn’t the copy of the song on Spotify an existing derivative work? And shouldn’t the royalties from it continue to go to the old publisher under that license?
Under the MLC’s termination dispute resolution policy issued in 2021, it appeared that was the case. The rules seemed to choose who to pay based on when a song was uploaded to a digital streamer’s servers; if it was uploaded prior to when a songwriter invoked their termination right, the royalties would keep going to the old owner — seemingly forever.
The MLC’s approach was not intended as a scheme to hurt songwriters. According to the Copyright Office’s filing, the MLC saw it as a “middle ground,” aimed at preventing drawn-out disputes that would lock up royalty payments “to the disadvantage of both songwriters and publishers.”
But for the Recording Academy’s Dupler, the ultimate outcome still seemed at odds with the spirit of the Music Modernization Act, which he says was designed to “help songwriters get compensated fairly for their work.”
“It raised concerns for us that this ambiguity was going to have a negative impact on songwriters,” says Dupler. “We feel pretty confident that it was never the intent of Congress that songwriters wouldn’t be receiving those royalties after termination.”
In the new rule issued last month, the Copyright Office agreed with that sentiment. In a detailed legal analysis, the agency explained that services like Spotify and Apple Music were not creating “derivative works” when they uploaded songs to their servers, meaning there was no caveats that should be imposed on a songwriter’s termination. And even if there were, the office made clear that it did not matter anyhow, stating simply: “a terminated publisher is not entitled to post-termination blanket license royalties.”
“The Office concludes that the MLC’s termination dispute policy is inconsistent with the law,” the agency wrote. “The statute entitles the current copyright owner to the royalties under the blanket license.”
Under the new rule, it won’t matter who owned a song when it was first uploaded to a digital service. Instead, it would “make clear that the copyright owner of the musical work as of the end of the monthly reporting period is the one who is entitled to the royalties.”
The text of the Copyright Office’s proposed rule is available in its entirety on the agency’s website. The rule is now open to public comments, in which interested parties can either support the changes or offer opposition. Such groups have until Nov. 25 to weigh in.
Miley Cyrus has settled a copyright lawsuit a month after she was sued for posting a paparazzi photo of herself to Instagram, according to court documents filed Wednesday (Oct. 18) and obtained by Billboard.
In the original complaint, filed on Sept. 12 in Los Angeles federal court, photographer Robert Barbera claimed that Cyrus reposted his 2020 image of her without a license or permission to do so. In the snap, the “Midnight Sky” singer is seen waving to fans as she exits a building.
In his complaint, Barbera claimed Cyrus has an “immense presence” due to her millions of followers on Instagram, and that posting the image “crippled if not destroyed” his ability to make money licensing it.
According to court documents, the lawsuit was subsequently dismissed “with prejudice,” meaning Barbera cannot refile the same claim again in that court.
The lawsuit against Cyrus is not the first Barbera has filed. The New York-based photographer previously filed copyright complaints against Ariana Grande in May 2019 and January 2020, and Justin Bieber in October 2019, though both cases were later settled on confidential terms. Earlier this summer, he filed another lawsuit against Dua Lipa that at the time of publication is still pending in court.
Though these cases may seem unfair, the law is on the side of photographers like Barbera, as they own the copyrights to the images that they take — and using those photos without a license constitutes infringement. Simply appearing in an image does not give a celebrity co-ownership of it, nor does it give them a right to repost it for free.
Had the court found that Cyrus had infringed Barbera’s copyright, the singer could have faced damages totaling as much as $150,000. For that reason, most celebrities accused of infringement by photographers opt to settle out of court, likely for a smaller sum, in order to avoid the time and expense that come with continued litigation. Though the terms of these settlement deals are nearly always private, for a single photo, amounts likely range in the tens of thousands of dollars.