9.22.10 COME TO DADDY

This article originally appeared in the 9.22.10 issue of Metroland

The Great Rights Reversion Migration of 2013

Before I get in to this, I should remind you that the 10th Annual Future of Music Coalition Policy Summit is taking place October 3-5 at Georgetown University in Washington DC. If you’re a muso of any stripe, this will be a mind-blowing event. Featured speakers include T. Bone Burnett, Chuck D, Tim Westergren (Pandora), Ian Rogers (Topspin Media), and Fred Von Lohmann (EFF). Musician scholarships are available, and the whole thing is cheap to begin with. I’m on a panel on Sunday. Come on down and rock it with me. Info at Futureofmusic.org.

OK. Two weeks ago I said I’d talk to you about what I’m calling The Great Rights Reversion Migration of 2013. So here we go.

Once upon a time, Congress made copyright laws that supported the Constitutional purpose of copyright law, that being the betterment of society. Laws were thoughtfully debated, and academics and experts were sought out to describe how new copyright laws might or might not be good for society. Many lawmakers were thoughtful and paid attention, and we got a fair and sturdy bunch of laws as a result. Those days are long gone. These days most new copyright laws are written by lobbyists for Big Media Companies, and Congress dutifully passes them because they’re “good for business.”

Anyway, there is a provision in the copyright law that, believe it or not, was designed to protect and reward artists who sell their copyrights to somebody else. This law says that you can reclaim your copyrights, you can just ask for them and get them back, 35 years after you transfer them. Yes, the law was put in place to protect artists who transferred their copyrights for cheap when they were young and broke, or pursuant to lousy deals that paid them squat.

This law went into effect on January 1, 1978, and applies to all works transferred after that date. 35 years after that is January 1, 2013, and that’s when artists can start getting their stuff back. In 2013, anybody who transferred their rights in 1978 can go reclaim them, in 2014, anybody who transferred in 1979, and so on.

While this reversion right applies to anything that’s subject to copyright law, it’s expected to have the biggest impact on the music business. Let’s see, what US artists had big albums in 1978? Journey, The Talking Heads, Foreigner, Boston, Tom Petty, Van Halen, The Cars, Billy Joel...and the list goes on. Yup, we’re talking about the heart of what’s come to be called “classic rock”, a whole bunch of the most valuable music in the history of music.

And all this music might be coming home to Daddy.

As you can imagine, the music industry, which has made a fortune selling this music to you numerous times (all of this stuff has been out on vinyl albums, cassettes, CDs, digital downloads, re-mastered versions, best-of repackages, soundtracks, etc.) isn’t taking this sitting down. In 1999, the industry tried to sneak a law through Congress that would have re-classified all of this music, post hoc, as “works for hire.” This would mean that all of the music would be owned by the record companies from the git-go, with no transfer by the artist, and no right of reversion. A congressional staffer, acting on behalf of the RIAA, tacked an amendment to the copyright law onto a satellite television bill that got passed in the middle of the night and signed by Bill Clinton shortly after. Nobody even knew it was in there. Problem solved! Musicians screwed!

Ahhhh...not so fast there, bucko. In a remarkable display of power politicking, a bunch of well-spoken musicians (including Don Henley and Sheryl Crow) descended on Washington and got the bastard law revoked. However, the RIAA got language in the revoking bill that stated that neither the facts of the passage of the law, nor its revocation, could be considered by a court law. Let’s all pretend it just didn’t happen!

So, basically, the whole “work for hire” argument was left for another day. And that day is almost here. You can bet that the industry will fight tooth and nail any artist’s attempts to exercise their legal right to get the copyrights to their master recordings back. The legal machinery is already gearing up for the fight.

I’ve looked at this issue every which-a-way and I don’t see where the labels have a chance. Congress doesn’t list sound recordings as a category of works that can be a work for hire. And recordings don’t fit any of the other categories. And the law is there for precisely the reason why the musicians are going to exercise their rights: to get out of old, bad deals.

And that Congressional staffer who snuck in the language in 1999? He’s now the RIAA’s chief lobbyist. Getting paid a whole lot of money. I kid you not.

9.9.10 IT'S ALL OVER NOW

This article originally appeared in the 9.9.10 issue of Metroland


Eminem’s da man. He’s behind a decision that was issued by the Federal appeals court in California last Friday that may bring down the record companies entirely. Turns out a lot of musicians are owed a lot of money by a lot of record companies.

Here’s the deal: until very recently, your standard recording contract was a hideously unfair affair. In return for a recording advance, the artists would give the copyrights to their recordings to the record company, and receive a royalty payment of something like 12% of the retail price, minus 25% for packaging, another 10% for “breakage” and another 10% for “free goods”. So the effective royalty was often around 8% of retail (if that), out of which the artist had to pay back the recording advance, and often had to pay a producer, a production company, a manager, etc.

In other words, in a traditional recording deal, the artist usually got bupkis on the sale of recordings.

However, traditional recording contracts also provide where the recordings are licensed for manufacture by a different recording company, or for use in a movie, television show, or advertisement, the money is split 50-50 between the recording company and the artist.

That’s still unfair, but it’s better than bupkis.

In 2003, after almost a decade of stonewalling, lawsuits, and general dicking around, the major record companies caved to threats of anti-trust and copyright abuse lawsuits and let Apple sell their music at the iTunes store. A bunch of other vendors, like Amazon and Rhapsody followed. iTunes recently announced it had sold its 10 billionth track.

Eminem had one of these standard contracts with his record company, Aftermath, which is part of major label Universal. Since 2003, his record company has been treating iTunes sales and the like just like CD sales, that is, paying Eminem bupkis.

So Eminem’s production company sued Aftermath, claiming that digital download sales by third parties (like iTunes or Amazon) were more like licenses, and that Eminem ought to getting 50% instead of bupkis.

Think about it: with a CD, the record company has to make the CD, package the CD, warehouse the CD, and ship the CD, accept returns on unsold product, deal with wholesalers, bill and collect payments from a whole variety of sources. With a digital download, the label ships a digital file to a handful of download companies and then sits back and waits for the checks to roll in. Just like they would with any other licensing deal.

The trial court refused to rule, instead letting the question to go to a jury (beats me why a question of contractual interpretation is left to a jury, but hey...), and the jury, perhaps piqued about Eminem’s many past transgressions, found in favor of the record company. Bupkis for you, Mathers!

But at the appeals court, where passions tend to run cooler, the trial court ruling was overturned. In a succinct 15-page decision, the court ruled that it was unambiguous from the plain language of the recording contract that these arrangements between Aftermath and iTunes, etc. were licenses, plain and simple. Aftermath argued that the word “license” doesn’t appear in any of its agreements with these third-party vendors; the court found, in so many words, that these agreements quacked like a license. Eminem is entitled to 50% on downloads, ringtones, and everything else sold by somebody else. Period.

Aftermath / Universal announced that the ruling was limited to just Eminem’s license. Uh, no. The contract language was boilerplate; the exact same or similar language appears on virtually every major label contract in effect today. Then Aftermath / Universal vowed to fight the ruling. Good luck with that. The options are severely limited...they can ask the court to reconsider, which it won’t, they can ask for a hearing before the full panel consisting of every Ninth Circuit judge, which will probably be denied, and they can petition the Supreme Court, which will probably decline to consider what’s essentially a garden variety contractual interpretation case.

There’s a bunch of similar pending cases out there, brought by bands like The Allman Brothers and Cheap Trick, seeking millions of dollars of unpaid royalties. This case will affect those cases. And I’m guessing just about every other major label artist on the planet has called their lawyer this week asking if there’s something in this for them. And the answer is likely to be yes. Or more like, hella yeah.

I don’t think the impact of this ruling can be underestimated. It’s pretty huge. Maybe the labels should just all declare bankruptcy right now in order to protect their shareholders. Who everybody knows are more important than the artists.

If this doesn’t kill the labels dead, the Great Rights Reversion Migration of 2013 will. I’ll tell you about that in two weeks.