Oh dear, another post about music, but this is just too juicy!
Sometimes a quiet little lawsuit opens up a can of worms that crawls all over the copyright landscape and starts sliming decades old assumptions about the law. Such a wormy suit has surfaced in California and quickly burrowed over to New York much to the likely consternation of radio stations all over America.
Call this story: “The Turtles Want to Get Paid.” You remember The Turtles and their string of 1960’s hits terminating including the iconic “Happy Together.” Well, they discovered a while ago that Sirius XM Radio was not paying them any royalties when their recordings were being played. Sirius took the position that it was under no obligation to pay anyone any royalties for playing any pre-1972 recordings. Why? Well, according to federal copyright law, digital broadcasters only have to pay the holders of federal copyrights when they stream music, and by definition, owners of pre-1972 recordings aren’t owners of federal copyrights. Huh? Say what? But the digital broadcasters are right. Congress did not bother to protect sound recordings until 1972. A 1973 album is protected by federal copyright law; a 1971 album is not.
Congress, however, did not forget the owners of existing recordings when it acted in 1972; it specifically preserved state law rights for those old recordings. Most states, not surprisingly, before 1972 had laws preventing the piracy of recordings, and no one has questioned the illegality of making of making counterfeit copies of pre-1972 recordings under those laws.
But what about the performance right as opposed to the reproduction right? Sirius XM was not making copies of Turtles songs, it was just playing them. Did/does state copyright protection give owners the right to receive a royalty when their songs are performed by Sirius XM? This turns out to be a tricky question. Normally, the right to perform a work is one of the five statutory rights guaranteed to copyright owners, but Congress in 1972 denied that right to owners of federally copyright sound recordings. Yeah, that’s right. When your local broadcast radio station plays the latest hit by Pharell Williams, it only has to pay the composer of the song NOT the owner of the sound recording. And that goes for all terrestrial radio stations in the U.S. Oddly, and this is what prompted the law suit, Congress changed its mind about performance rights in the digital context a couple of years ago, and legislated that Sirius, Pandora, Spotify, etc., do have to pay both composers and owners of sound recordings, but it changed nothing for terrestrial radio stations like your local broadcaster.
Alright, let’s circle back to the case. The Turtles needed to find something in state law that would give them a performance right enforceable against Sirius XM, and they, suing under the legal name of “Flo & Eddie” have successfully convinced courts in the two most important media jurisdictions in the United States: California and New York. One court interpreting the California statute and another interpreting New York common law have held that Sirius XM must pay.
The first bit of fall-out is really quite minor. Sirius, Pandora, and Spotify have to start paying, but they are used to doing that with post-1972 recordings and a collecting rights organization called Sound Exchange will make it all quite tidy. They will adjust and we shouldn’t perceive much of a change. Maybe more ads.
The second bit of fall-out could deprive us from hearing some of our favorite pre-1972 artists being played on terrestrial radio. You see, the reasoning of the New York and California opinions apply equally to your local broadcast radio station and all other broadcasters. Suddenly, for the first time in history, all stations, at least those in CA and NY, will have to start paying royalties to the owners of sound recordings.
Now, there’s a couple of things profoundly weird about this. First, there is still no obligation for terrestrial stations to pay the owners of post-1972 recordings. Why should The Turtles get paid by your local broadcast radio station but not Pharrell? When Congress grandfathered in state law copyright, could it really have meant this strange result? Second, the New York opinion makes clear that this state law performance right has always existed, it was just never asserted. In other words, some of the most sophisticated people in the entertainment business and their lawyers left billions of dollars in royalties sitting on the table for decades. The first radio station in New York began to broadcast in 1916. It apparently should have been paying royalties from day one—and the normally greedy recording industry just forgot to ask—for almost 90 years.
Now, maybe we should all be Happy Together for the Turtles, but the complete lack of any recognition of a performance right in sound recordings for decades is pretty good proof than no one thought that there was one. Congress has debated the issue many times in the context of a federal right, and nobody thought to say, “Hey, New York established this right 80 years ago!” Let’s hope the fall-out from these opinions is not the disappearance of iconic songs from the airwaves, dropped by radio stations that either cannot afford to pay or cannot locate the 1000’s of owners whose rights they might be violating.