music law

Music and Podcasts: How Do I Clear The Music Rights For My Podcast?

Music Rights and Podcasts How Do I Clear The Music Rights For My Podcast? #createprotect attorney-Tamera-Bennett

Media and music lawyer Tamera Bennett presented Legal Issue of Podcasting with attorney Gordon Firemark. You can watch the CLE at TexasBarCLE.  You can listen to the CLE as part of the Entertainment Law Update Podcast. Below is an excerpt from the CLE materials on Music and Podcasting.

Music Issues In Podcasting

Podcasting’s closest relative in the media world is traditional terrestrial radio.  A typical podcast may have the feel of a talk radio show. Podcast topics run the gamut from news, sports, health, the law, politics, religion, technology, entertainment and much more. Like talk radio, music can play an integral part in the feel and a presentation of a podcast. The podcast might be solely focused on music such as a “count down” of this week’s hits, or music may be a little “icing on the cake” for transitions during the podcast.

Just like the podcast is protected by copyright, so are any songs or sound recordings that you may include in an episode of the podcast.

Exclusive Rights of Copyright Owner

The owner of a copyright has a bundle of exclusive rights:

  1. to reproduce the copyrighted work in copies or phonorecords;
  2. to prepare derivative works based upon the copyrighted work;
  3. to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
  4. in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
  5. in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
  6. in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.  17 U.S.C. § 106.

These rights can be licensed by the copyright owner individually or as a whole; exclusively or non-exclusively.

Song Copyright and Sound Recording Copyright In Podcasts

Whether you’re talking intro and outro bumper music, or a whole podcast dedicated to music, you have to understand the different rights attached to a music copyright along with the different music licenses that may be involved.

When discussing the music and who owns what rights, it's important to note that there are two copyrights involved in each musical recording. 17 U.S.C § 102.  The copyright that attaches to the song covers the words, music, and the arrangement. Sound recordings are defined as “works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work.” 17 U.S.C. § 101.  The song copyright is owned by the songwriter or a music publisher who was assigned the copyright.  The copyright in a particular version of a recording is owned by the artist or record label who was assigned the copyright. 

As an example of the difference between owning the song copyright and the master/sound recording copyright, recall that Dolly Parton is the songwriter of the hit song “I Will Always Love You.” Neither Dolly Parton nor the music publishing company that owns the song copyright for “I Will Always Love You,” have any ownership in the sound recording copyright for the version of the song recorded by Whitney Houston for the movie “The Bodyguard.” Nor does the record label or Whitney Houston’s estate have any ownership in the song copyright.  The song and the sound recording are two distinct copyrights with different owners.

Streaming vs Download For Music In Podcasts

Because podcasts can be delivered to consumers in two different manners - streaming or download – multiple rights are triggered and need to be licensed. These multiple rights and licenses apply separately and distinctly to the song and sound recording.

Songs – Musical Compositions In Podcasts

A song copyright encompasses the words, music, and the arrangement. The copyright owner of a song has an exclusive right to license the public performance of the song as well as the mechanical reproduction of the song. A public performance of a song occurs when it is streamed as part of the podcast. This is analogous to listening to the song on the radio.  If the podcast can also be accessed by download, the exclusive right of reproduction – or mechanical right – is also triggered.  In traditional media, we think of a mechanical license being needed when a music compact disc or music download is purchased.

What does this mean for the podcaster who wants to include music in her podcast? In short, if the podcast can be consumed by both streaming and download, the podcaster needs both a public performance license and mechanical license whenever a song or a portion of a song is included in the podcast.

Public Performance Right For Songs In Podcasts

A public performance of a song occurs when the song is transmitted to the public; for example, radio or television broadcasts, music-on-hold, cable television, and by the internet.

In the United States, we have three major societies that collect all of the public performance payments for the various different licensees of music. Radio stations, TV networks, and nightclubs are a few of the types of businesses that publicly perform music and need a license.  What is nice about the public performance licensing scheme is that you can secure a blanket license which will allow you to publicly perform all songs in the performance right society’s catalog. You don’t have to go back for individual song licenses.  If you have a variety of music in your podcast and are unable to limit your music selections to those licensed by one performance rights society, you will need web licenses from ASCAP, BMI and SESAC.  While license fees will vary, you can estimate a minimum annual license around $300.00 for each society.

Most podcasts are embedded or streamed from a blogging or website platform. When you go to license the rights for public performance in the United States, the licenses are not typically named a “podcast license.”  At www.ascap.com the licenses are labeled for “website and mobile apps.” Search www.bmi.com under the “digital licensing center.” And, search www.sesac.com for “internet licensing.”

Mechanical Reproduction Right of Songs In Podcasts

Potentially two different mechanical uses are triggered when a podcast is accessed. If a podcast that contains music is downloaded, a permanent digital download (PDD) occurs with each individual digital delivery transmission resulting in a reproduction made by or for the recipient which may be retained and played by the recipient on a permanent basis. PDDs are sometimes referred to as full downloads or untethered downloads.  Even though the song is part of and incorporated into the podcast, the use is considered a PDD and requires a mechanical license and mechanical royalty.

The second mechanical right is triggered by interactive streaming. Streaming means listening to the podcast (which contains music) in real time, instead of downloading a file to your computer or mobile device and listening to it later.  There are two types of streaming: interactive and non-interactive. Streaming of content is considered interactive, or on-demand, when the listener can request the specific recording they wish to hear and the digital file is transmitted electronically to a computer or other device contemporaneously with the user's request.  17 U.S.C. § 114(j)(7).  Because the end user can control when they stream the podcast, the action is considered interactive. Other examples of interactive streaming include services such as Spotify, Beats Music, Google Play Music All Access, and Xbox Music.

Both the PDD and interactive streaming of the songs require a mechanical license. Does it matter how much of the song is used? Probably not. Unless the podcaster is able to fit within a fair use exemption for using the song, a mechanical license will be required. (See 17 U.S.C. § 107 for more on fair use). The leading collective for securing mechanical licenses is the Harry Fox Association (HFA). It is very important to realize that HFA does not have the rights to every song that a podcaster might want to include. Unlike a public performance license, there’s no ability to secure a blanket license for the podcast. Individual licenses must be secured for each song. Visit “digital licensing” at harryfox.com for more information on mechanical licenses for songs in podcasts. Because HFA does not have the rights to license every song, the podcaster may have to contact individual music publishers for the rights needed.

The current mechanical rate for a PDD is 9.1 cents per song per download. The rates for interactive streams are determined by a number of factors. These include service offering type, license type, service revenue, recorded content expense, and applicable performance royalty expense. 

Keep in mind the rights, licenses and rates are only for the United States. Each country has its own licensing procedures. As an example, in the UK and Australia, podcasters can license the public performance right and mechanical rights from a single organization in each respective country.

Sound Recordings or Master Recordings for Music In Podcasts

If securing the rights for the song wasn’t tough enough, a podcaster must also secure the rights for the version of the song – the recording – she wants to use. Performing the song in the podcast is a “digital audio transmission” of the sound recording. 17 U.S.C. § 106(6). With the master, two different rights are triggered.  A digital public performance right and a reproduction right – more commonly known as a master use.

A podcast is considered an interactive stream because the consumer can select when they play the podcast. A podcast is not the same thing as internet radio. Internet radio is non-interactive meaning the user cannot choose the track or artist they wish to hear.  The Digital Performance in Sound Recordings Act of 1995 created a statutory license for subscription-based, non-interactive digital audio transmissions.  17 U.S.C. § 114.  In 1998, Congress passed the Digital Millennium Copyright Act, which expanded the statutory license to include non-subscription, non-interactive digital audio transmissions.  License fees for non-interactive uses are pre-determined by a rate determining body called the Copyright Royalty Board, are non-negotiable and paid by the internet radio stations, webcasters and satellite radio stations to SoundExchange (the entity designated to collect the royalties) as a digital performance royalty. 37 C.F.R. Part 380.

You need to understand that SoundExchange cannot help you license sound recordings for a podcast.  In fact, SoundExchange states the following:

Interactive streaming and downloads: In addition, the statutory license administered by SoundExchange does not cover interactive streaming or downloads of any kind, including downloadable “podcasts” of archived programming. If you are offering podcasts that include sound recordings, then you may need to obtain a direct license.
— SoundExchange Memo to All Commercial Broadcasters dated Nov. 21, 2014

Because of the interactive nature of on-demand services, there is no statutory scheme or Copyright Royalty Board determining licensing rates.  The on-demand services must secure direct sound recording licenses from the owners of the sound recording copyrights in order to stream.  Royalty rates for on-demand services are negotiated between the sound recording copyright owner and the podcaster.

What does this mean for the podcaster? It means you have the obligation to secure a direct license for each sound recording that is in an episode of a podcast. You will have to negotiate direct licenses that will cover the digital public performance right and the reproduction/master use right. There are some companies that provide clearing house licenses for interactive sound recording uses. While I do not endorse or recommend any particular services, MediaNet (mndigital.com) is used by many large interactive streaming services for clearing popular music rights.  Their pricing may or may not be practical depending on the reach and scope of your podcast.

Possible Solutions For Music In Podcasts

Don’t give up hope yet. You may still be able to have music in your podcast.

The easiest solution to using music in your podcast is to secure music from a stock music library that has already pre-cleared all the necessary rights. It’s your job to read the license from the stock music library to determine if you have the rights for a digital interactive public performance of the song, permanent digital download of the song, interactive digital public performance of the sound recording, and master use/reproduction of the sound recording.  Keep in mind, most choices from a music library will probably be original music tracks created for the library. This means, using the latest Beyoncé track is probably not an option.

Another option is to hire musicians to record original music and sound recordings for you. Again, you need to secure in writing all of the appropriate rights.

You might also hire musicians to re-record some popular songs for you. Make sure you secure in writing the ownership and all copyrights in the re-record. In this situation, you would only need the public performance licenses from ASCAP, BMI and SESAC; and mechanical licenses from HFA.  By re-recording the popular songs, you’ve eliminated the need for any negotiated licenses for using the original sound recordings.

If you're interested in more hot topics in podcasting legal issues, visit the Google+ Community hosted by Tamera Bennett and Gordon Firemark.  Also, subscribe to the Entertainment Law Update Podcast so you don't miss any updates.


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How Do I Invest In A Music Career or Project?

How Do I Invest In A Music Career? Musician/Artist Investor Checklist Texas lawyer Tamera Bennett #musicbiz #createprotect

Texas Music Lawyer Tamera Bennett created an "Investor Checklist" to be used by musicians, artists, and potential investors before investing in a musician's career or recording project. These tips were also discussed during the 2016 SXSW panel "Developing An Indie Artist's Career Using Their Money on Others'".

You can download the Investor Checklist here and review the information below.

Investor Checklist - Musicians, Artists

  • What are the expectations of the investor and the artist?
  • Is the investment in
    • The artist's career as a whole
    • A specific project
    • A combination of the career and a project
  • Will the investment be made in
    • Cash paid to the artist
    • Payment of recording costs, marketing, touring, other expenses
  • Will a business entity be created that is owned by the artist and investor?
    • Joint venture
    • LLC or corporation
    • General partnership or Limited partnership
    • Term/Length of the agreement?
  • How much control will the investor have in creative?
    • Songs cut
    • Social media/Public Image
  • If investing in intellectual property, who will own the songs, sound recordings, videos, trademarks/band name?
  • Is there a cap on investor’s contribution?
  • How will the investor recoup its contribution?
    • Profit share
    • Royalty
    • Loan with payment plan
  • How will a return on investment be calculated for the investor? Is there a cap on return?
  • What is the artist’s track record on prior releases/projects?
  • Will the investor just provide money or can they provide industry connections?
  • What type of commitment is the artist willing to make to promote career/project?
  • Is there anybody else that has already “invested” or is claiming an interest in the artist’s career or project?

Are you ready to take the next step with your music career?

Contact Texas music lawyer Tamera Bennett

Music business books recommended by Texas Music and Media Lawyer Tamera Bennett.


This post contains affiliate links. That means if you click a link I may receive a benefit.

 

 

Texas Music Lawyer Tamera Bennett Speaks at SXSW 2016

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Texas music and trademark lawyer Tamera Bennett is honored to join her colleagues Paul Bezilla, Lynn Morrow and Kelly Vallon presenting "Developing An Indie Artist's Career Using Their Money on Others'" on Friday, March 18, 2016 at the SXSW Music Conference.

Here's a link to the materials for the presentation. And you can click the slideshow to the right of this post.

Recording Artist and Songwriter Checklist - What Do I Do Next With My Music Career?

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Dallas-area music lawyer Tamera Bennett put together the go-to checklist for every musician, artist, band or songwriter. This list helps you organize the business side of your music career.

Click this link for the Recording Artist and Songwriter Checklist as a downloadable file.

Here's a summary of the things every artist, musician, or producer needs to consider in launching a music career.

  • Join as songwriter with ASCAP, BMI or SESAC (pick one)
  • Join as music publisher with ASCAP, BMI or SESAC (pick the same one as you did for writer)
  • Make a list of all completed songs with co-writer/co-publisher splits and contact information and date of creation
  • Submit titles and songwriter "splits" to ASCAP, BMI or SESAC (just to the one you joined)
  • Determine if collaboration agreement(s) needed for co-writers on songs
  • Make a list of all completed sound recordings and co-owners, if any
  • Determine songs and sound recordings to file for Copyright
  • File Copyright Applications before release or within 90 days of release
  • Secure ISRC codes for sound recordings that will be released (https://www.usisrc.org/) and provide to anyone who releases your sound recordings
  • Embed metadata into digital tracks
  • Join Sound Exchange as an Artist (for collection of digital performance artist royalties)  www.soundexchange.com
  • Join Sound Exchange as a Copyright Owner (for collection of digital performance sound recording owner royalties)  www.soundexchange.com
  • Determine if work for hire agreements are needed for any talent, producers, engineers, side musicians on sound recordings
  • Determine aggregator to upload tracks for digital and streaming
  • Determine distributor, if any, for physical product
  • Secure domain name
  • Secure social networking fan and business sites (not just personal)
  • Consider if you need to file a trademark application for band name
  • If you are in a band, do you need a band agreement?  Are the band members hired?
  • Do you need a formal business entity?  Are you touring?
  • Do you have a manager?  Is this formalized in writing?
  • Do you have someone loaning you money or fronting expenses/recording costs/living expenses for your career?  Is this relationship in writing?
  • Create Electronic Press Kit
  • Secure work for hire/copyright assignment for any photos, video/footage filmed by others on your behalf

Books Recommended by Texas Music and Media Lawyer Tamera Bennett:


This post contains affliate links. That means if you click a link I may receive a benefit.

What's The Impact of SESAC Buying Harry Fox (HFA)?

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It's been almost two months since SESAC, Inc. announced its acquisition of the Harry Fox Agency (HFA). The deal, which merges the largest U.S. mechanical rights licensing association with the smallest U.S. performance rights organization, still needs approval by the membership of the National Music Publisher Association.

HFA has always been in the business of licensing and collecting mechanical royalties for each time a record is sold, downloaded or streamed. At one time, that meant when a physical record album was sold. Today, we usually think in terms of when a track is downloaded.

SESAC is the smallest of three public performance rights organizations in the United States. Songwriters and music publishers are members of SESAC. When you hear a song played on the radio or in a club, a public performance royalty is paid to SESAC (or ASCAP or BMI - the two other performance rights organizations).  In turn, SESAC pays a performance royalty to the songwriter and music publisher.

In the U.S., the mechanical rights collection agencies and the public performance organizations have always been separate, until now. SESAC's acquisition of HFA begins to replicate they way mechanical and performance rights have been licensed for years throughout most of Europe.

New media companies that provide streaming and locker services should be rejoicing. The merger should streamline some of the right's clearance processes. Services like Spotify, and the now defunct Grooveshark, provide music to consumers in a way that triggers both a mechanical royalty and a public performance royalty. The merger would allow for some one-stop shopping when it comes to music clearance.

We may also see an uptick in music publishers joining SESAC so the publisher can benefit from centralized licensing. The publisher would still be responsible for issuing other licenses, such as synchronization and print.

RESPECT ACT - Pre-72 Sound Recording Copyright Protection

Not paying digital public performance royalties for Pre-72 records deprived legacy artists and record labels of more than $60 million in digital royalties in 2013.
— Soundexchange

SoundExchange was joined by dozens of recording artists  to launch “Project72,” a campaign to ensure equal treatment for musicians and rights holders with sound recordings made prior to 1972 from digital radio.

Sound recordings were not protected by Federal Copyright in the United States until February 15, 1972. There's a hodge-podge of state copyright laws that artists and record labels use to fight bootleg recordings and piracy of those legacy recordings.

In a 2013 appellate court opinion, the court held that certain safe-harbor provisions of the Digital Millennium Copyright Act do not extend to websites for Pre-72 recordings because such recordings do not fall under the federal copyright act.  But, the flip-side of that result is that certain benefits of the U.S. Copyright Act, such as payment of a digital public performance royalty, may not accrue to these legacy recordings. Pandora and SirrusXM both drew a line in the sand and have stopped paying digital public performance royalties for Pre-72 recordings.

In testimony before Congress in July 2014, Pandora said they have no problem paying the royalty once the Copyright Act is revised to include protection for Pre-72 recordings.  But, what about state copyright law? It's clear the Pre-72 recordings are protected by state law. So, don't Pandora, SirrusXM and others have an obligation to pay under state law? We are keeping an eye on pending litigation in New York against Pandora on this topic.

Tell Congress to support the RESPECT Act, H.R. 4772.

Live Hearing on the Music Business Before House Judiciary Committee

Updated June 24, 2014 - below is the hearing held on Tuesday, June 10 on the state of the music business. What's your takeaway from the music business hearing before the judiciary committee? Join the conversation and leave your comments below.

Tune in Tuesday, June 10 at 10am ET, for live testimony before Congress on the state of the music business.  Here's the link for the live feed.  We will update the link for streaming the recorded hearing when it becomes available in about a week. 

It is anticipated the Witnesses will discuss the Songwriter Equity Act and current mechanical royalty rate; digital performance royalties; future of the compulsory license scheme; consolidated music licensing databases; local television stations and public performance licenses.

The Witness list includes:

What's your takeaway from the music business hearing before the judiciary committee? Join the conversation and leave your comments below.

Copyright Basics FAQ - How Do I Register A Copyright?

Updated May 13, 2014

Copyright Basics
By Library of Congress Copyright Office

The US Copyright Office has a wealth of information available on their website on the copyright registration process.

What is a copyright?

Copyright is an original work of authorship fixed in a tangible medium of expression --- such as a song, book, or sound recording.

What is the difference between a trademark and a copyright?

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. Examples of well-known trademarks include NIKE, CHANEL and ZYRTEC.  Click here to read more about trademark basics.

Copyright protection arises at the moment of creation — when you fix an original work in a tangible expression. Follow through with a copyright application to gain additional protections.

What is a “Poor Man’s Copyright”?

The practice of mailing a copy of your own work to yourself is sometimes called a "Poor Man's Copyright."  There is no provision in the copyright law regarding any such type of protection, and it is not a substitute for registration. In the event of an infringement lawsuit it may not even be admissible to prove creation and ownership of the work.

Do I need a lawyer to file a copyright application?

NO. Anyone may complete and submit an application to the Copyright Office.

Where do I file a copyright application?

Copyright applications may be filed through the U.S. Copyright Office.  More information is available at www.copyright.gov.

Which copyright application form should I use?

The Copyright Office has transitioned to an online filing system to replace the old TX, SR, PA paper forms.  To use the eCO Online Filing system click here.

What does it cost to file a copyright application?

As of May 1, 2014, the current filing fees charged by the Copyright Office are:

  • $65 per hard copy application;
  • $35 per eCO Online Filing application if there is a single author, same claimant, one work, not for hire; or
  • $55 per eCO Online Filing application for multiple authors, claimants, works; and work for hire.

Do I need to register my work to have copyright protection?

The short answer is No. Copyright protection arises at the moment of creation — when you fix an original work in a tangible expression. Follow through with a copyright application to gain additional protections.  Many choose to register their works because they wish to have the facts of their copyright on the public record and have a certificate of registration. Registered works may be eligible for statutory damages and attorney's fees in successful litigation. Finally, if registration occurs within 5 years of publication, it is considered prima facie evidence in a court of law.

How long is my work protected by copyright?

  • Life of author plus 70 years for works created or published on or after January 1, 1978 and are not deemed a work for hire;
  • 95 years from publication for works published with proper notice and renewal (if necessary) between 1923 and 1977.

Creative Commons is all the protection I need, right?

Creative Commons Licenses do not give you copyright protection. The licenses available from Creative Commons are simply that … licenses to help you define the rights and obligations by which other people can use your works.  Creative Commons is simply one option available to you for licensing your works to third parties.

This post contains affliate links. That means if you click a link I may receive a benefit.

Will Play for Tips: Legal Tips for Musicians/Artists/Songwriters at 35 Denton

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SATURDAY, MARCH 9TH at 35 Denton3:00 PM – 4:30 PM (UNT on the Square)

Will Play for Tips: 5 Legal Tips for Musicians/Artists/Songwriters

Join the Dallas Bar Association Sports & Entertainment Law Section for a panel presentation on March 9 from 3:00 PM – 4:30 PM at UNT on the Square, 109 N. Elm St. Denton, TX 76201.This introduction to legal issues in the music business panel will help you answer questions such as Who owns my song? Do I need a lawyer? How do I protect my brand? That's "fair use," right? and Can't we all just get along? Join us for a discussion covering copyright law, trademark law, business structure for the band and other music business legal basics.Participants in the panel include:

Tamera H. Bennett

, Bennett Law Office, PC/Farm to Market Music, LLC; 

Catherine Hough

, Ferguson Law Group;

Evan Stone

, Law Offices of Evan Stone;

Kevin Harrison

, Kevin Harrison Law.

Free and open to the public. 1.5 hour MCLE pending.

George Clinton v UMG: Royalty Disputes and More

This article is was originally published in Billboard Magazine and has been reprinted with permission. George Clinton v. Universal Music Group Highlights Time Limits On Royalty Claims, BILLBOARD, Sept. 29, 2011.

by Tamera H. Bennett

Judging from pioneering funk productions helmed by Parliament-Funkadelic mastermind George Clinton, the man knows the value of staying on the beat and keeping time.

But the apparent failure of Clinton to keep an eye on the clock could cost him dearly in terms of royalties he claims he’s still owed. The decision highlights one of the challenges facing heritage artists and their heirs in navigating claims for underpayment of digital downloads and possibly other new media uses of their copyrights. In addition to keeping track of royalties due to them (which can require costly audits), artists must also be aware of how long they have to raise objections to the size of the payments they receive.

In 1980, Clinton signed a production agreement with Casablanca Records, which is now owned by Universal Music Group. UMG claims that it couldn’t reach Clinton for years and that it was unable to send him royalty statements. Once Clinton re-surfaced in 2001, UMG sent back royalty statements and payments to Clinton for the years 1996 to 2000.

But Clinton sued UMG in 2007 for breach of contract, claiming that the label group didn’t pay him all the royalties he was due from 2000 to 2003. His production contract required Clinton to provide detailed and specific objections to his royalty statements and he complied -- almost. Clinton outlined under-payments, non-payments and improper withholding of taxes.  What Clinton never specified was that he had been underpaid for royalties stemming from digital downloads.

Then earlier this year, Clinton amended his lawsuit claiming for the first time that UMG had not paid him the correct royalty rate for digital downloads, citing a 2010 decision by the U.S. Court of Appeals for the Ninth Circuit in F.B.T. Productions, LLC v. Aftermath Records. In the F.B.T. case, the court held that in certain contractual situations digital downloads are a license and as such the record label must pay a higher royalty rate to the artist.

Clinton had the right under his production agreement to review and audit royalty statements to determine if UMG had properly paid him. Clinton also had the right to sue UMG if it failed to do so.

But both of these rights had a time limit --- three years after the date a royalty statement was “rendered” to Clinton. It is very common in recording agreements for there to be a time limit on bringing a lawsuit, a period of time which is usually shorter than the statute of limitations stipulated in state or federal law.

Three years seems like a pretty easy way to calculate a deadline. Indeed, in 2003, Clinton and UMG agreed to a “tolling” agreement that effectively froze time so the three-year window within which Clinton had to file a lawsuit for the statements rendered in 2000 and later would not run out.

But on Aug. 9,  U.S. District Court Judge Philip S. Gutierrez ruled that the clock had started running three years from the time Clinton should have received his royalty statement. If Clinton didn’t receive his royalty statement, his 1980 contract placed the responsibility on Clinton to tell UMG in writing that he never got his statement. Clinton’s four-year absence cost him the ability to sue UMG for potential accounting errors over multiple years.

In his ruling, Gutierrez made it clear that Clinton failed to specifically object to the underpayment of digital download royalties in a timely manner. Because Clinton didn’t comply with the requirements in his recording contract, he lost the opportunity to challenge UMG on years of royalty statements specifically related to digital downloads.

At the end of October, Gutierrez will determine whether Clinton v UMG will go to trial on the question of whether the tolling agreement was valid. The district judge ruled that it wasn’t valid, but an appeals court reviewed the decision and sent the question back to Gutierrez.

If the tolling agreement is valid -- that is, if Clinton’s suit against UMG is deemed to have been filed within the required time frame, then Gutierrez will rule on Clinton’s claims that UMG failed to pay him royalties due to him, excluding those for digital downloads. This is a significant concern for any label or artist. Even though there is no binding court decision in Clinton v. UMG on this issue, it has become imperative to include language that references the freezing of all statutory limitations periods as well as contractual limitations periods.

The possibility that the tolling agreement could be declared invalid has prompted Clinton to sue his now-former lawyers for legal malpractice. Tamera H. Bennett is an entertainment and intellectual property attorney based in Lewisville, Texas.

Music Lawyer Tamera Bennett Talks Eminem, Rick James and Allman Brothers

This article is featured in Billboard and is reprinted with permission. Rick James Estate's Class-Action Suit Against Universal: An Entertainment Attorney Weighs In

April 08, 2011
By Tamera H. Bennett

The Rick James estate filed a class action lawsuit against Universal Music Group and it's raising expectations that more artists may enter the license-vs.-sale battle over digital downloads.

But the clock could be ticking for heritage artists interested in pursuing action against their former record labels.

In its suit against UMG, the James estate is seeking damages for what it alleges are unpaid royalties for the sale of music through digital downloads and ringtones. The filing came just days after the U.S. Supreme Court declined to review an appellate court decision granting F.B.T. Productions a greater share of royalties from UMG's sale of Eminem's music through digital downloads and ringtones.

The Allman Brothers Band recently settled a proposed class action case against Sony Music Entertainment on the same issue: Is a digital download a license or a sale? In accordance with the Eminem decision in the Ninth Circuit Court of Appeals, a digital download is a license, and an artist is typically entitled to 50% of what the record label was paid for the license, versus a lesser percentage that would be due for the sale of a record.

With record labels using standard agreements from the mid-'60s to the mid-2000s, the James estate is banking on having its case certified as a class action and bringing aboard thousands of plaintiffs who had record or production deals with UMG or affiliated record labels from Jan. 1, 1965, to April 30, 2004.

What the James estate may not be counting on is another fairly standard provision in these recording contracts: the "incontestability provision." Most artist contracts signed during the proposed class window include language such as this: "All royalty statements rendered by the label to the artist shall be binding upon the artist and not subject to any objection by the artist for any reason unless specific objection in writing, stating the basis thereof, is given to the label within one year from the date the statement is rendered."

A similar incontestability provision was included in the 1985 Allman Brothers recording agreement (originally signed with PolyGram Records) that's part of the band's current litigation against UMG pending in federal district court in New York. The court held in 2008 that the clause was valid and enforceable and denied the challenge to certain royalty statements because there wasn't a timely objection to the statements in accordance with the contract.

Whether there is a one-, two-, three- or even a four-year window of time to object to a royalty statement, heritage artists who intend to challenge the royalty rate they've been paid for digital downloads may be barred from collecting years of unpaid revenue unless they act immediately.

Joining the James estate's class action may sound appealing, but waiting for the case to be certified as a class action might be too late for some heritage acts. Even though there are common questions of law and fact among the proposed class members, the court may deny a class certification. Keep in mind that the Allmans' case against Sony settled almost five years after being filed, but before the class was ever certified.

Heritage artists should review closely their agreements to determine if they have to take any additional action to preserve their rights. Launching a full-blown audit may not be financially viable for many heritage artists, but at a minimum they should immediately begin objecting in writing to the royalty rate paid for digital downloads. For those who have the financial resources, artists should comply with the contract objection provision, send notice of an audit and perhaps even send a tolling agreement to the label to freeze the contract-imposed limitations period. The Allman Brothers tried the tolling provision route first with UMG, but the major refused to freeze the limitations period, prompting the band to file suit.

Although UMG has repeatedly discounted the Eminem decision as only applying to the particular facts of that case, it's anticipated that the Ninth Circuit decision will spur many heritage artists to start the litigation process to preserve their rights. Tactically speaking, individual suits may be more effective than a class action because the labels' efforts will be divided in defending the suits. Artists might want to investigate filing suit in the Northern District of California, where the James estate filed its case.

If the rules of civil procedure are met, the court may consider a "joinder" of cases in lieu of a class action, potentially giving named plaintiffs more control over the terms of a settlement than under a class action. In the event of a joinder, only plaintiffs named in the lawsuit may recover damages.

Either way, time is of the essence. Heritage artists interested in pursuing a higher royalty rate on digital downloads should act quickly as windows of opportunity are closing each year.

Tamera H. Bennett is an entertainment and intellectual property attorney based in Lewisville, Texas.

Do I Need A Music Lawyer?

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Some of the best advice to give a person/band desiring a career in the music business is to hire a music lawyer. After that advice, the next question is "when." When do I need to hire the music attorney?

Do Your Homework:

Before you call a music lawyer, Dallas-based attorney Tamera Bennett recommends you read one or more books related to your career in the music business. 

After you finish your reading homework, when to visit and/or hire a music lawyer really does vary from situation to situation.

I am a Songwriter:

  1. If you are a songwriter, you probably do not need an attorney until you have a contract from someone wanting you to assign your copyright or to license your song.
  2. Music lawyer Tamera Bennett typically is retained when a collaboration agreement, copyright assignment, single song agreement,  exclusive songwriter agreement, or synchronization license has been presented to a songwriter or music publisher.

I am a Recording Artist, Band, Producer:

  1. If you are a recording artist, band or producer you probably do not need an attorney until you are playing frequent gigs and have a "buzz."
  2. As with songwriters, Tamera has found she can best assist artists/bands/producers when a contract is already on the table.  It may be time to call in a Texas music lawyer when you are presented with a management agreement, a shopping agreement, a production agreement, or record deal.
  3. Keep in mind that a band should typically seek legal advice early on so that a band agreement, partnership agreement and/or formal business entity can be established to spell-out the rights and obligations of the band members.

Can you Pitch my songs?

Most music business books recommend artists and songwriters hire a lawyer to pitch their demos to help secure a songwriter's agreement or a record deal. That is great advice, but you really want to make sure the attorney you use has the contacts you need in your specific genre. As an example, an attorney with contacts in the country market may not be the best fit for a Rap artist. Tamera Bennett's music law practice is focused on guiding clients through the music business legal maze. At this time she does not provide pitching as part of her client services.

I want to know how to get started in the music business and protect my songs?

Texas music attorney Tamera Bennett is often contacted by musicians and artists with questions on how to get started in a music business career, what mistakes to avoid, and how to protect songs, beats, master recordings. 

Tamera also highly recommends you read at least one of the music business books listed here before you contact a music lawyer.

What if I get sued?

If you think you need to sue somebody or you have been sued, you need to immediately contact a litigation attorney that is familiar with music business issues. You typically want to hire a litigator that is located in the county where the lawsuit is filed, or an adjacent county. Tamera helps clients with transactional/contractual matters, but she will provide you names of litigation attorneys that may be of assistance.

Is there a Consultation Fee?

Different attorneys and law firms have varying policies on the fee that may be charged for a consultation. Whether or not a consultation is charged may also depend on the region of the country where you are located and is typically a business management determination made by the law firm.  A lawyer having or not having a consult fee is not a reflection on the quality of services you will receive. At this time the Bennett Law Office firm policy is to charge a reasonable consultation fee.

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