Rights in sound recordings - Statutory licensing

If you're anywhere close to the music industry, you have no doubt heard some buzz since President Trump signed the Orrin G. Hatch - Bob Goodlatte Music Modernization Act ("MMA") into law on October 11, 2018. As you might expect, the exact course of implementation has yet to be determined. And there are some new positions of influence that have yet to be filled.

But we are aware of the amendments to the federal copyright code. To begin full explanation of the MMA, it is helpful to review other parts of copyright law that were already in place prior to the MMA becoming law.

If you own a copyrighted work, you have certain exclusive rights associated with it. Four such rights are important when considering the rights associated with sound recordings (as opposed to the musical compositions that are contained in such recordings):
  1. To reproduce the work in copies or in material objects known legally as phonorecords.
  2. To produce a derivative work based on the original work.
  3. To distribute such copies or phonorecords of the work to the public by sale, rental, or lease.
  4. To perform the work publicly by means of digital audio transmission.
(See section 106 of the U.S. Copyright Act of 1976 plus amendments)

One major MMA change to the copyright code is in section 114. Section 114 deals with the scope of exclusive rights in sound recordings. Those rights are stated above and do not include the right to perform the sound recording publicly except by digital audio transmission. Note that standard terrestrial radio is not affected by the MMA.

However, subscription digital audio transmission is affected and is subject to statutory licensing (as opposed to compulsory licensing). Statutory licenses are negotiated. So those who own copyrights in sound recordings and those who use/perform sound recordings may negotiate license terms and conditions, including royalty rates to be paid to copyright owners. They may designate agents to receive and remit such royalty payments.

A panel of Copyright Royalty Judges are to determine reasonable rates and terms for owners of copyrights in sound recordings and those performing sound recordings digitally. Such rates are to distinguish among types of services in operation and include a minimum fee for each type of service. Those rates and terms should most clearly represent those that would have been negotiated in the marketplace between willing buyers and sellers.

However, license agreements negotiated between owners and performing entities are given effect over any determination by the Copyright Royalty Judges. 

One common theme throughout the MMA is better record keeping practices regarding those who own copyrights, a procedure for providing notice to such owners, and records of use of sound recordings. However, there are also "good faith" provisions regarding performances of sound recordings where the copyright owners cannot be located. Attention to detail is important if you want to collect your royalties.

On the important issue of who is entitled to what amount of pay:
  • Featured recording artists are entitled to pay as stated in their respective record deals.
  • Nonfeatured artists are also paid in accordance with their contracts.
  • 50% of licensing receipts shall be paid through a designated nonprofit collective to the owner of the sound recording copyright.
  • 2.5% of receipts shall be placed into an escrow account to be distributed to nonfeatured musicians who perform on sound recordings.
  • 2.5% of receipts shall be placed into an escrow account to be distributed to nonfeatured vocalists who have performed on sound recordings.
  • 45% of receipts shall be paid to featured recording artist(s) or those who convey rights in their performances, i.e. a label.
A nonprofit collective is designated by the Copyright Royalty Judges to distribute receipts after deducting reasonable costs of administration and dispute resolution. A letter of direction regarding  compensation for producers, mixers, or sound engineers may also be written by the sound recording copyright owner or featured recording artist(s). This would seem to be similar to the letter of direction packet already in use by SoundExchange, Inc. in Washington, DC.






Comments

Post a Comment

Popular posts from this blog

Summarizing the ASCAP and BMI consent decrees

Image
As you have been reading in plenty of places (including this blog), the Music Modernization Act of 2018 and the reforms put into place by it will continue to have a positive impact on those who create music. In recent months, discussion regarding possible termination of the ASCAP and BMI federal consent decrees has begun. This was noted in an article by Nate Rau in  The Tennessean  on March 3, 2019. So just exactly what are these consent decrees? And why should we even want to see them terminated? The answer lies in monopoly and price-fixing litigation initiated by the United States Department of Justice over 80 years ago in the Southern District court of New York. In 1941, agreed orders, also known as decrees, were presented to and approved by the court. ASCAP has the most recent modified decree on its web site. This was signed in 2001. The BMI decree was amended last in 1994. If you can find the BMI decree, please send me the link. Executives from both ASCAP and BMI have declare
Read more

Confusion About Trademark Applications

Image
In my entertainment law practice, the one subject that seems to generate the most confusion is trademarks. I am going to take the term "confusion" to a legal point in this blog post. "Likelihood of confusion" is a major hurdle to achieving a registration in the United States Patent and Trademark Office (USPTO). Many music industry people have false impressions about the process of filing and registering a federal trademark. Some are savvy enough to file their own applications. However, when the application is reviewed by an examining attorney at the USPTO in Alexandria, Virginia, the fearless pro se  applicant will call and request help. Many times it is too late to help. Application fees and the time spent filing the online application are wasted. So it is best to be informed about the basics of the process before beginning. A mark must  be in use in commerce before it can register. It is possible (and sometimes advisable) to file an application based on t
Read more

Luke Bryan has the 32 Bridge trademark - But not "Food + Drink"

Image
The world of trademark is not as simple as one might think. And that is what lawyers are for. When Luke Bryan winds up the CMA Music Festival Sunday night at Nissan Stadium in Nashville, he will have a single registration for the 32 BRIDGE mark that salutes his Georgia heritage. But the restaurant and bar mark won't yet be registered.  And if you're thinking that one registration covers all uses and possible uses, think again. If you're filing for a merchandise/clothing, you're not automatically protected for restaurants and bars. In fact, there are really two types of marks: "Trademark" is a universal term, but some marks are really used as service marks. There are 45 international classes, mostly used for administrative purposes by the United States Patent and Trademark Office ("USPTO"). The big point of administration for you is that you pay an extra fee of at least $225 if you apply for more than one class of goods or services. The first
Read more