Grab your aux cord, because there’s a possibility that your favorite radio station is about to lose the rights to a lot of music.

A legal dispute between music rights organization Global Music Rights (GMR), which represents songwriters for artists such as Pharrell, Drake, and The Beatles, and the Radio Music Licensing Committee (RMLC), a group that represents commercial radio stations in music licensing matters, could pull a lot of songs by major artists off of radio stations nationwide.

GMR, a performing rights organization founded by former entertainment executive Irving Azoff, claims in its lawsuit that current licensing fees are too low, causing songwriters to be under-compensated. GMR’s suit against RMLC reportedly accuses radio stations of acting as a “cartel” that works to keep payments to songwriters low. The lawsuit demands that these fees be raised.

In its dueling lawsuit against GMR, RMLC accuses the organization of trying to “force the radio industry into paying exorbitant prices for a license to the musical works it claims are covered by its repertory, with a credible threat of financially ruinous copyright infringement litigation.” Calling GMR’s objectives “unlawful,” the lawsuit claims that GMR has been luring away songwriters from other performance-rights organizations ASCAP and BMI with promises of higher compensation. This would force radio stations to give in to demands of higher licensing fees, or else risk losing a whole roster of songs.

ASCAP and BMI have agreed to pay royalty rates to artists at rate of 4 percent of stations’ revenues, according to Rolling Stone.

If the dispute is not resolved, it could mean that many stations would be unable to afford the licensing fees for songs written by many of the top songwriters of today. Songwriters represented by GMR are reportedly responsible for 7.5 percent of all songs on the radio.

In the midst of RMLC’s legal battle with GMR, the organization also just signed an agreement with ASCAP to increase royalties for ASCAP members. The agreement seemed to be reached amicably, and the RMLC chairman seemed to aim a subtle jab at GMR in a statement to Billboard: “This agreement demonstrates how the creative and music user communities can work together in good faith to produce an outcome that is positive for both sides.”

This legal battle could potentially turn out to be a big one for the radio industry, as it struggles to survive in the era of digital music.

Editor’s Note: This article has been modified to make a correction to the names of artists with songs written by GMR-represented songwriters.

Mariam Jaffery

Mariam was an Executive Assistant at Law Street Media and a native of Northern Virginia. She has a B.A. in International Affairs with a minor in Business Administration from George Washington University. Contact Mariam at mjaffery@lawstreetmedia.com.

The post Radio Stations vs. Songwriters: Will Your Favorite Music Be Affected? appeared first on Law Street.

Pop singer Kesha will appear in court next week to hear the judge’s decision on her contract with her producer Dr. Luke. In October 2014, the singer filed a lawsuit against the producer for sexual, physical and emotional abuse. He responded by filing charges against her for defamation–which were dismissed by a New York judge earlier this month (although the suit Dr. Luke filed in Tennessee is still active). As the legal battle has played out over the past two years, Kesha has suspended her musical career, not by choice, but because her contract with Dr. Luke’s company prevents her from recording with another label. The social media campaign #FreeKesha has picked up considerable momentum in the past several months and has raised questions about how much power managers and producers have over the artists they work with. Controlling a musician’s contract means control not only over their creative process, but often over their finances. Read on for a look at who controls royalties in the music industry.

Contracts in the Music Industry

When an artist signs a contract with a record label, they usually give the company ownership of the copyright on their music for the full life of the copyright. This leaves artists vulnerable because it designates even unreleased music as the property of the label. One notable artist who has secured a reversion of this copyright is Robbie Williams, who managed to secure the return of his “masters” in the contract he signed with EMI–ownership of his albums will eventually return to Williams rather than the label. In exchange for relinquishing their copyright, artists are given royalties–which are based on record sales. Artists receive a full royalty rate for any album they sell through normal retail channels but may receive only a fraction of that royalty for records that are sold at a discount rate or through a record club. Artists are also often expected to pay a producer’s royalty out of their own royalty share. While record companies aim to make royalty rates as attractive as possible, as attorney Anthony N. Luti explains, there are hidden cuts to royalties that all artists may face:

Artists normally get no royalties on records given away free for promotional purposes ‘All-in’ royalty rate deductions: most royalty rates are ‘all-in.’ This means that you must pay the producer out of your royalties. Typically, a producer will take 3 points (3%) which lowers your royalty rate even further. ‘Packaging’ deductions: the theory behind this deduction is that the band pays for the packaging of the CD and tape. Typically, these deductions range from 15 to 30 percent of your royalty rate. As a result, a 12% royalty rate and a 25% packaging deduction lowers your actual royalty rate to 9%.

A recording contract is more than just the exchange of recorded music for royalty payments. Recording contracts almost always require the artist to sign an exclusivity agreement with the label. If an artist wants to collaborate with another artist (particularly one on a different label) they will need to have a “sideman” clause built into their contract. The contract also dictates the territory where an artist can distribute music, tour support, and promotion of the music once it is released. Terminating the contract is a complex process. Hyper successful artists can sometimes afford to break their contracts or renegotiate them to a better financial position, but most artists are locked into an initial contract. A 12 month contract may not seem like a major commitment but when a record label constantly renews the contract, the company can retain the rights to years worth of creative work, even if the album is never released to the public.

Technology Changing The Game

Music royalties and administration are becoming more equitable thanks to technological advances, and now online companies help close the gap between artists and other services. One prime example is Music Reports, a global music administrative rights platform that has created a neutral transaction platform where music producers can handle rights administration and accounting.  In a recent interview with Law Street, Bill Colitre, Music Reports’ VP of Business & Legal Affairs, discussed how recording houses once controlled the relationship between buyers and sellers. Thanks to the advent of the Internet, the music publishing community can now set rights and prices via online platforms.

Colitre also described how the Internet has tapped into worldwide creativity, letting new entrants participate in a market that they traditionally took a backseat in. The global connectivity of the twenty-first century is making a historically rigged game increasingly equitable.  The assemblage of music rights and information online let artists and producers have greater control over their products while online financial services help them get paid faster and more efficiently. However, even with access to better accounting, most artists are still vulnerable to exploitation if they have not negotiated their contracts correctly.

Promoting Music Without a Record Label

Choosing to forgo a record deal does let artists retain control of their copyright but it also cuts them off from the promotional power that only an established label can provide. Self-released albums often rely on a marketing agency to promote them. Without the infrastructure of a traditional record company, artists have no way to meet DJs and promoters who can connect their album with the listening public.

British rock band Enter Shikari cracked the U.K.’s top five charts in 2007 with a self-released album and rapper Dom Kennedy reached the U.S.’s top five in 2013 but have neither have maintained that level of commercial success over time. Macklemore and Ryan Lewis made a name for themselves by promoting their album “The Heist” without signing onto a record label but their claim to indie fame is not entirely factual. The duo hired Alternative Distribution Alliance (ADA), a branch of the Warner Music Group, to promote their album.

Numerous artists who achieved commercial success with a major label chose to build their own record companies after their contracts expired, but they only were able to establish their own brands once they had built a significant popular following. OK Go was fortunate enough to break with their initial record label right as they released their third album–they were able to re-release the album off of their new label, using the publicity they had received from their original label to kickstart their own enterprise. Cyrus’ recent Dead Petz album was created without financial or creative assistance from her RCA team, but she is fortunate enough to be in a position where she did not need that kind of support from the label (and the label did go on to promote her album, despite its lack of involvement in its creation). Both Peter Gabriel and the Who have self-released albums, but the success of those records was built on the fame they had already garnered from the years during which they were tied to a label.

 Conclusion

There are a host of reasons why a record label might delay or block an album’s release but no matter how it happens, gagging a musician is usually legal under the contract they signed. The shifting metrics of the music industry–from physical records to digital albums to streaming–provide new opportunities for artists but don’t necessarily guarantee more relaxed recording contracts. Kesha is not the only artist to speak out about restrictive contracts–Jojo, who only returned to creating music recently, has stated that she was unable to release music for years because of a contract she had signed when she was a minor and Sky Ferreira‘s label pushed her album release date back again and again. For major artists who have already built a successful brand, record labels may be more willing to provide them with flexible contracts that they can renegotiate or terminate without massive legal penalties. However, for artists who are just breaking into the music scene or who are looking to retain a degree of creative and financial control, recording contracts can still be so restrictive that they undermine that artist’s ability to work.

Resources

People: Legal Win for Kesha in Dr. Luke Lawsuit: Judge Dismisses Claims

Sound on Sound: Recording Contracts Explained

The Wall Street Journal: Pop Star Robbie Williams Signs a Massive EMI Deal

Luti Law Firm: Recording Contracts 101: The Basics

NPR: The Real Story Of How Macklemore Got ‘Thrift Shop’ To No. 1

NPR: To Sign Or Not To Sign: Artists Big And Small Face The Label Question

Billboard: U.K.’s Enter Shikari Scores Without Label

Fobres: How Rapper Dom Kennedy Made It Without A Record Deal

Paste Magazine: 14 Artists who Launched Their Own Labels 

Music Times: Miley Cyrus’ Surprise New Album Surprised Her Label RCA Records

Huffington Post: OK Go Talk Creative Music Videos and Life Without a Label

US: JoJo Claims ‘Bad Contract’ Meant She Couldn’t Release Music, ‘Didn’t Legally Own’ Her Own Voice

Buzzfeed: What It’s Like When A Label Won’t Release Your Album

Jillian Sequeira

Jillian Sequeira was a member of the College of William and Mary Class of 2016, with a double major in Government and Italian. When she’s not blogging, she’s photographing graffiti around the world and worshiping at the altar of Elon Musk and all things Tesla. Contact Jillian at Staff@LawStreetMedia.com

The post When The Show Can’t Go On: Dissecting Music Industry Contracts appeared first on Law Street.

This 2016, Spotify should make a New Year’s resolution to not get slammed with any more lawsuits. The digital streaming network finished off 2015 with 75 millions users worldwide, over 25 million who pay for premium services, and a $150 million dollar lawsuit. David Lowery of the bands Cracker and Camper van Beethoven recently issued a class action lawsuit against Spotify for failure to properly pay royalties to its artists.

NPR posted the court filing from Lowery, which states,

Spotify’s egregious and willful violations of Plaintiff’s and the Class Members’ rights are highlighted in Spotify’s recent admissions regarding its failure to: (1) obtain licenses for the musical works it distributes and reproduces (thereby infringing multiple copyrighted works); and (2) compensate copyright owners for its use of their Works.

This lawsuit is just one battle in an ongoing debate between music publishers and streaming services., and the digital age may be transforming our music consumption too quickly for the law to keep up. There are usually two different types of copyright owners for every song streamed. The owner of the song is one, so usually the artist or the record company, and the other is the person who wrote the song or has rights as the publisher of the song. Undeniably, streaming services lack transparency as royalties get passed along to several middleman, then hopefully find their way into the hands of these different owners. Streaming services continue to strive for transparency however, citing most of their issues as the difficulties of obtaining rights.

David Lowery. Image courtesy of [Zopheus via Wikimedia]

Spotify openly admits to potential challenges in its royalty payment system. The company sets aside royalty funds for when a user streams a song and Spotify cannot immediately identify the rights holder. The suit argues that the retroactive compensation from the fund clearly shows Spotify’s negligence in obtaining proper license agreement and authorization prior to streaming songs. However, Spotify does make the claim that in the United States, “the data necessary to confirm the appropriate rightsholder is often missing, wrong, or incomplete” for songwriters.

In the U.S, the legal framework for songwriters has been around since 1941. Songwriters license their work to Performance Rights Organizations (BMI, ASCAP, and SESAC), who collect and negotiate songwriting royalties under a consent decree in a special rate court. Spotify seemingly does not have to negotiate with songwriters because the government sets the rates, but the framework is still admittedly complicated.

Lowery isn’t the first to have an issue with Spotify–in previous years, artists like Taylor Swift have taken the measure to remove their work from Spotify in protest of royalties. On Spoitfy’s Artists website, the streaming service explains its artist payout formula, which includes Spotify’s monthly revenue, artist and total Spotify streams, publishing owners, and royalty rate. The artists still have other deals they’ve agreed to with the record label, so they’re ok taking down their music from Spotify.

The payment of royalties admittedly is complicated. Maybe it is time for the court to modify the legal framework behind licensing music. The David Lowery case will undoubtedly reveal more about the future of music streaming as the ownership of music continues to change.

Read More: Streaming Music: Good Business or an Attack on Artists

Dorsey Hill

Dorsey is a member of Barnard College’s class of 2016 with a major in Urban Studies and concentration in Political Science. As a native of Chicago and resident of New York City, Dorsey loves to explore the multiple cultural facets of cities. She has a deep interest in social justice issue especially those relevant to urban environments. Contact Dorsey at Staff@LawStreetMedia.com.

The post Spotify Faces a Class Action Lawsuit for Copyright Infringement appeared first on Law Street.

Lawsuits, crime, and drugs ruled the news last week and the most popular articles at Law Street were no exception. The #1 article of the week, from Anneliese Mahoney, detailed the suit over royalties earned by “50 Shades of Gray” won by a woman in Texas; #2, also from Mahoney, covers the explosive news out of Chicago that there is a secret ‘black site’ where Americans are held outside of the justice system; and #3, from Alexis Evans, is the story from Wesleyan University where nearly a dozen students were hospitalized in apparent Molly overdoses. ICYMI, here is the Best of the Week from Law Street.

#1 Texas Woman Wins Big “50 Shades of Grey” Royalties Lawsuit

It seems like one of the most popular topics of conversation these days is the movie version of the erotic novel sensation “Fifty Shades of Grey.” (Spoiler alert: It’s really bad. I went hoping to make fun of it and have a few laughs, and it was too awful to even laugh at.) But one woman may be laughing soon–laughing all the way to the bank, that is. An Arlington, Texas woman named Jennifer Lynn Pedroza just won a major “Fifty Shades” related lawsuit. Read full article here.

#2 Chicago “Black Site” Allegations Yet Another Example of Police Brutality

News of a secret detention facility in Chicago broke this week and it’s sparking horror and outrage across the country. This “black site,” revealed by the Guardian, is a nightmare image straight out of a post-apocalyptic movie. People are “arrested” and taken to this site, which is inside a warehouse in Chicago’s Homan Square. Then they are subjected to inhumane treatment. They aren’t afforded the rights that the U.S. Constitution promises all of us. Read full article here.

#3 Mass Molly Overdose Hospitalized 11 Wesleyan Students

Connecticut’s Wesleyan University was flooded with sirens Sunday night as almost a dozen students were rushed to hospitals after reportedly overdosing on the party drug commonly known as Molly, or MDMA. The exact number of alleged victims varies, with police reporting that 11 students were hospitalized for the drug, while Wesleyan University President Michael S. Roth reported the figure as ten students and two visitors in a letter sent to students Monday morning. Read full article here.

Chelsey D. Goff

Chelsey D. Goff was formerly Chief People Officer at Law Street. She is a Granite State Native who holds a Master of Public Policy in Urban Policy from the George Washington University. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at staff@LawStreetMedia.com.

The post ICYMI: Best of the Week appeared first on Law Street.

It seems like one of the most popular topics of conversation these days is the movie version of the erotic novel sensation “Fifty Shades of Grey.” (Spoiler alert: It’s really bad. I went hoping to make fun of it and have a few laughs, and it was too awful to even laugh at.) But one woman may be laughing soon–laughing all the way to the bank, that is. An Arlington, Texas woman named Jennifer Lynn Pedroza just won a major “Fifty Shades” related lawsuit.

Pedroza used to work with a business partner named Amanda Hayward who’s based out of Australia. They worked together at “The Writers Coffee Shop,” which publishes e-books. “Fifty Shades” was actually first published as an e-book and a print-on-demand book by The Writers Coffee Shop after it gained fame as an online fan fiction written by British author E.L. James. The rights were eventually sold to Random House.

Pedroza, one of the original founders of The Writers Coffee Shop, claims that Hayward took steps to restructure their partnership for supposed “tax reasons.” In doing so, Pedroza was no longer in a position to receive the royalties from the books and resulting movie(s). Pedroza claims that Hayward tricked her into signing the paperwork. While Pedroza did receive some money when the rights to the book were first sold to Random House, she didn’t receive any royalties that come from the book and its subsequent endeavors.

Given that the book has sold more than 100 million copies worldwide and the movie had an $81.7 million opening weekend, that’s the potential for a lot of royalties.

The suit claims:

Hayward signed a contract on behalf of the Coffee Shop with Random House for the rights to the ‘Fifty Shades’ trilogy in exchange for millions in advances and future royalties but, because of her chicanery, all payments flowed to her and not the partnership.

Pedroza originally filed the lawsuit in a Tarrant County court in Texas, and after a nine-day trial and three days of deliberations, the jury found in her favor. They made their determination on Thursday.

Pedroza appears to have asked for one million dollars in the court documents, but it will be up to a judge to decide how much she’ll actually be awarded. It’s going to be in the hands of State District Judge Susan McCoy. She’ll make that determination based on financial records of the sales. Although those records aren’t open to the public, it was estimated that her share could have been anywhere from $10-20 million. Mike Farris, Pedroza’s attorney, said that it will be in the seven figures.

Originally, there was a third woman involved in the lawsuit named Christa Beebe, who also partnered with Pedroza and Hayward. She, however, settled her lawsuit in December under confidential terms.

While it’s yet to be determined how much Pedroza will end up profiting, it’s safe to say that she came out on top. While no one knew that “50 Shades” would be such a success, the people who made it happen obviously all deserve a piece of the pie.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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