SiriusXM-Turtles Royalty Ruling Raises Serious Questions

Marc Hogan

By Marc Hogan

Lead News Writer
on 09.25.14 in News

A major copyright ruling handed down earlier this week continues to reverberate across the music industry. Digital radio providers typically pay royalties for both the recording and songwriting on music created in 1972 or later, but they don’t generally pay royalties for the recording on pre-1972 tracks, because federal law doesn’t specifically require it. So when the Turtles‘ cover of Bob Dylan‘s “It Ain’t Me Babe” airs on SiriusXM, Dylan would get royalties, but not the “Happy Together” band.

On Monday, a federal judge in California found that state law does require royalties for digital radio’s “public performance” of pre-1972 music. In granting summary judgment, U.S. District Court Judge Philip Gutierrez sided with the Turtles members Flo & Eddie in their $100 million lawsuit against SiriusXM. But the effects of the case could also reach streaming radio services such as Pandora.

As the dust has settled, another question has come up: What if this ruling applies to traditional radio broadcasters, too? So-called “terrestrial” radio stations currently don’t have to pay performance royalties even for post-1972 music, a separate issue that recently led David Byrne to cover Biz Markie‘s “Just a Friend” for the Content Creators Coalition, an advocacy group. But Gutierrez’s ruling doesn’t include language limiting it to digital.

California law grants “exclusive rights” over pre-1972 music to the owners of the sound recordings. “The plain meaning of having ‘exclusive ownership’ in a sound recording is having the right to use and possess the recording to the exclusion of others,” the judge wrote. “There is nothing in that phrase to suggest that the Legislature intended to exclude any right or use of the sound recording from the concept of ‘exclusive ownership.’” Note that he says “any” use.

As Billboard points out, a broad interpretation of this ruling could mean traditional broadcasters have to pay performance royalties for sound recordings, too. So is it adios for oldies radio? Not quite. The National Association of Broadcasters, the radio trade group, will surely fight this possibility aggressively.

Another question, if the ruling is upheld on its inevitable appeal, is how this would work in practice. Digital radio providers currently pay their federally required post-1972 performance royalties through SoundExchange, a nonprofit. Given different copyright laws in different states, complying with this judgment “would be an administrative nightmare,” said Danica Mathes, an attorney with Bell Nunnally & Martin, as quoted by Law360. Then again, Spotify’s on-demand service and Apple’s iTunes store have had to broker individual performance rights deals for use of recordings, and they’ve found a way to do it. In any event, the details will take some work.

Aside from an impending appeal, SiriusXM also faces a separate lawsuit in California court by the major labels. In that case, Judge Mary Strobel previously rejected a motion by the labels on the grounds that they “have not cited any authority for the proposition that the state law rights in pre-1972 sound recordings included rights in public performances of the sound recording.” The Flo & Eddie decision would appear to be just such an authority, though whether it will be enough for her to change her mind is unknown.

The ultimate way to remove all this uncertainty would be a change in federal law. That’s something that’s no doubt already the subject of intense lobbying in Congress by all the parties involved.

In the meantime, SoundExchange, is pressing for legislation in Congress that would make pre-1972 performance royalties mandatory, has cheered the Sirius XM decision. SoundExchange figures lack of performance royalties for pre-1972 recordings costs the owners of those recordings $60 million a year.

“This decision puts in high relief how arbitrary the idea of 1972 is as a dividing line,” said T. Bone Burnett, in a statement issued by SoundExchange. “If Aretha Franklin is driving listeners to a digital music service, she should share in the revenue that is generated.”

The message from legacy artists to SiriusXM and Pandora, then: Sock it to me.