The history of music is full of important dates. December 22nd, 1808, the premier of Beethoven’s Symphony No. 5.1932. August 15th, 1932, the first successful electrical re-recording, directed by Nathaniel Shillkret, of an orchestral accompaniment of a Victor recording by Enrico Caruso. 1941 Les Paul designs and builds the first solid-body electric guitar. June 18, 1948, Columbia Records commercially introduces 331/3 RPM format or better known as the LP Record. March 3rd, 1952, Ike Turner records the first ‘Rock n Roll’ song, “Rocket 88.” July 5th, 1954, Elvis Presley has his first commercial recording session at Sun Studios, and sang “That’s Alright Mama,” and “Blue Moon of Kentucky.” 1954, Leo Fender Introduces the Fender Stratocaster. February 9th, 1964, The Beatles perform on “The Ed Sullivan Show,” and break TV ratings.  August 15-17, 1969 , The Woodstock Music and Arts Festival. September 16, 1979, Sugar Hill Gang release what many consider the first rap song, “Rapper’s Delight.” Aug. 1, 1981, MTV’s on-air debut.

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One of the most important dates to musicians, which is not often talked about is February 15, 1972. This is the day The United States government gives federal Copyright protection to sound recordings. Prior to this, phonograph records were only protected at state level, and not in all states. The 1972 Copyright Law has recently made headlines because of a string of lawsuits that are arguing that of some of the recordings tied to this date are worth hundreds of millions of dollars to musicians and record labels. This poses a major issue for Internet and satellite radio stations. It could end up bringing up many liabilities if these suits are successful, and preventing many classic songs from being streamed online.

Last Wednesday, September 11th, the three Major Record Labels (Sony, Universal, Warner Music), and legendary Indie label ABKCO (which owns much of the early recordings from The Rolling Stones, The Kinks, and Sam Cooke), sued Satellite Radio station Sirius XM Radio in California. They are claiming that Sirius XM were using recordings from before 1972 without the labels and artists permission. One of the problems with this lawsuit is that Federal copyright protection does not apply to these recordings from before 1972, but the labels in the lawsuit say that these recordings are still covered by state law. Interestingly, this is not the first suit Sirius XM has been hit with. This is actually the 3rd complaint filed against them in the last five weeks. Last month, Internet Royalty Agency SoundExchange, filed a similar suit last month seeking about $100 Million dollars in damages for the illegal use of the 1967 hit song “Happy Together” by the group “The Turtles.”  The suit seeks unspecified damages and declaratory judgment about rights involving this song, which is a pre-1972 recording. The basis of the lawsuit is that Sirius XM is violating the rights they have in their sound recordings by playing their music to satellite radio subscribers without permission. According to singer-songwriter Judy Collins, “It is disgraceful, unfair, and probably criminal that Sirius XM is stealing monies due to me and other performing artists. Performers should be paid their fair share of the royalties from their songs.” This might all seem to be a strange oversight on the part of Sirius XM Radio. But it is not. Normally, radio services don’t need to get permission to play music. This is because copyrights for recording artists are a relatively recent phenomenon. Prior to 1972, recording artists didn’t have a real copyright for their music. Even after 1972, when Congress decided to expand copyrights to include recorded sound (copyrights in sheet music had been allowed since the 1830s), it did so in a limited manner. Recording artists could prevent others from reproducing, making derivative works of, or distributing copies of their works, but they couldn’t stop anyone from publicly performing them. I.E., playing their music on radio or at bars, clubs, etc.

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When Congress decided to expand recording artists’ rights to include public performance “by means of a digital audio transmission,” it also included a statutory license for that right. This means that satellite radio stations and web broadcasters who make digital audio transmissions, don’t actually have to get permission from recordings artists. They just have to pay for the use of their songs. In the case of “The Turtles,” they are arguing that these laws don’t apply to their music. Solely because they’re not actually claiming copyright infringement in the general sense. They are saying their rights under California law have been infringed. It is worthwhile to note that copyright is a federal law. In nearly all cases, this means it supersedes any state.

Some of the many artists mentioned in this current lawsuit are The Beatles, The Rolling Stones, Frank Sinatra, and The Supremes. A spokesperson from Sirius XM has declined to comment.

This case is a very important point in the music industry today. These lawsuits can have a major impact on digital music, online streaming, downloads, and Internet radio.  Major streaming sites like Pandora who rely heavily on compulsory license provisions of the federal government can be greatly affected. Ironically, lawyers and music executives said that cases like this will probably not affect Spotify or other on-demand and streaming services, because they tend to strike an all-encompassing license with labels that own the mechanical rights to songs. Traditional free radio broadcasters who transmit music from radio frequencies ranging from 10 kilohertz to 300,000 megahertz pay royalties to music publishers only. Digital music services will pay the publishing royalties and the mechanical (the owner of the recordings, i.e. record labels) royalty for the use of the recordings.

Sirius XM Radio is the only satellite radio service in the US. It currently has about 25 millions subscribers that pay $14.49 or more a month. In 2012, Sirius grossed about $3.4 Billion in revenue, but paid only 8% of this to record labels and performers. In the SoundExchange lawsuit, they claim Sirius XM improperly accounts these royalties. SoundExchange estimated that oldies music makes up about 10-15% of the total airplay on Sirius XM.

The lawsuit that the record labels filed is very similar to the one filed by SoundExchange and The Turtles. No one can argue the importance of this issue right now in the music industry. Music sales are continually going down, especially physical sales. This means that these entities need to generate revenue other ways. One of the top revenue makers in the music industry is in the digital streaming world. And, this area continues to grow each month. More and more people are turning toward online subscription, on-demand, and Internet radio for their music. The Turtles have applied for a class action suit. Record labels have filed their own lawsuit, which points to the music industry’s heavy hitters looking to take full control of this controversial issue, and receive a ruling by the courts swiftly.

Licensing any music before 1972 has almost never been tested by the courts. Some are saying that these new lawsuits are a direct response to some of the continual questions regarding the terms being established for satellite and internet radio as set by the Copyright Royalty Board. The Copyright Royalty Board is a panel of federal judges that regulate some of the many forms of licensing music today.

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Attorney’s such as Jonathan B. Sokol have brought to light a potential issue these lawsuits might cause. According to Sokol, a lawyer who represents music companies in copyright cases, the lawsuits might encounter some difficulty proving a public performance for the right to use recordings under this law. He noted that this would implicate many other types of businesses that have licenses with music publishers. In this article from the New York Times, Sokol said, “The problem is that anybody that has rights to a master recording could come after anybody engaging in public performance — any bar, restaurant, sports stadium.”

If this scenario plays out, and “The Turtles” win their case, Sirius XM Radio will need to get permission to use any recordings made before 1972. Unfortunately this creates an enormous issue in the future. If entities will need to seek permission to use these pre-1972 recordings, instead of relying upon the usual statutory license, it will create it difficult environment for it becomes for artists to get the music on the air. The high costs of negotiating with the many various rights holders of the mechanical rights to these songs might be too expensive to even try to get the license to play these songs online. I bet that in majority of these cases and even if rights holders, who will probably be major record labels come together to form an agreement and a blanket license for the use of the pre-1972 songs, this will leave many indie artists out in the dust and the catalog of available music that can be played online will shrink. Add in the issue of figuring out what the rights are for each of 50 different state jurisdictions, and playing any songs from this pre Copyright era becomes too difficult and will be a less attractive proposition than it was before these lawsuits.

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One Response to Labels Sue Sirius XM Radio – What does this mean for Internet Radio Listeners?

  1. Nikki G says:

    Ok, so this is a tricky topic or I am missing something important. I think I read this 5 times….anything prior to 1972 was only protected state bound. But because the US didn’t give federal copyrights till post 1972, they cant copyright it again or get it nulled and voided or isn’t there an alternative? How can the artist receive their millions from plays post date when its only copyrighted statewide? For anything that is post date that did get copyrighted, don’t the rules apply to them for royalties and permission rights and so forth? So if “The Turtles” do win, and they get copyrights post date, why is this a major issue for any company, radio, cover group…etc. to play them when everything else is the same rules? Sorry if I’m missing something, Maybe Ill read it 5 more times lol

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