The CopyKat - A spliffing new case for Mr Prince!

Photographer Donald Graham has sent cease-and-desist letters to the 'appropriation' artist Richard Prince and the Gagosian Gallery, requesting that they stop displaying or disseminating any artworks or other materials that include Mr. Graham’s images. 1709 readers will remember Mr Prince from the 2013 U.S. case of Cariou v Prince where Mr Prince largely succeeded with his fair use defence after 'transforming' Mr Cariou's photographs of Rastafarians in Jamaica. The new complaint, which was first reported by the website Hyperallergic, stems from a work shown last Autumn at Gagosian in the exhibit “New Portraits” (see image) which featured ink jet prints of images that Mr. Prince had taken from Instagram. The work shows Mr. Graham’s photograph “Rastafarian Smoking a Joint, Jamaica” as it appeared on the Instagram feed of a third party, with the comment “Canal Zinian da lam jam” added by Mr. Prince as a caption. Yes, he added a caption to an Instagram grab. In Prince's earlier case, the US Court of Appeals for the 2nd Circuit broadly supported Mr Prince's transformations, saying "Here, our observation of Prince's artworks themselves convinces us of the transformative nature of all but five, which we discuss separately below. These twenty-five of Prince's artworks manifest an entirely different aesthetic from Cariou's photographs. Where Cariou's serene and deliberately composed portraits and landscape photographs depict the natural beauty of Rastafarians and their surrounding environs, Prince's crude and jarring works, on the other hand, are hectic and provocative." Could the same apply on these facts? The CopyKat thinks not - but it's all good publicity! More on Artsbeat here. 

PPL, the UK collection society which licenses use of recorded music on behalf of performers and record companies, brought 230 High Court cases against operators of leisure establishments for alleged copyright infringements in 2014, an increase of 10% on last year, according to analysis by the City law firm RPC. As this Blog has previously noted, The Football Association Premier League also increased the number of High Court cases it launched in 2014. It brought 36 cases, compared with five in 2013, as FAPL and Sky focussed pubs allegedly infringing copyright by broadcasting matches without an appropriate licence. More here.

BRICS (Brazil, Russia, India, China) countries accounted for only 5% of global copyright license revenue for authors and composers in 2013, according to a report from the International Confederation of Societies of Authors & Composers (CISAC). The CISAC Global Collections Report also quotes industry data estimating the Chinese advertising market as one of the fastest growing in the world. Advertising revenue is a key reference indicator in determining collective licensing tariffs. Much of the growth in advertising revenue comes from online advertising, with the China Internet Network Information Center (CNNIC) separately reporting that China now has 649 million Internet subscribers.

Swedish songwriters have joined their UK counterparts in criticising the way in which the digital streaming pie is currently shared out, pointing out the unfair and unsustainable way in which royalties stemming from streaming services are being shared between different stakeholders - in particular the large share taken by record labels on their own behalf, and on behalf of recording artistes. Earlier this month Marty Bandier, head of Sony/ATV Music Publishing, used the Grammy's to argue that songwriters and publishers have been given an unpalatably small portion of the digital music pie, and the British Academy Of Songwriters, Composers And Authors (BASCA) launched a campaign called The Day The Music Died which stated that as the recorded music industry has shifted from CDs to downloads to streams, "songwriters and composers are now finding their livelihoods under dire threat". This view is now echoed by 133 Swedish writers who say the returns from the likes of Spotify and Deezer mean ""very few songwriters will be able to afford to create music other than as a hobby". CMU Daily estimated that in a typical business model, 30% of the income from subscription and advertising revenues are taken by the streaming service to cover non royalty costs, overheads and its own profit, record labels take 55-60% of gross revenues, leaving at the most 10-15% for songwriters and publishers - if that - with one report backed by CISAC saying the songwriting share can be as little as 3% and recommending upping the revenues shared by rights holders to 80% and rebalancing the shares taken for recorded music and the songs to an equal footing. More on the Guardian Blog by songwriter Helienne Lindvall and on potential US reforms here.

So what to do? Well here's a solution (maybe .......): Qtrax, which at one time looked like being a leader in the digital music market only to see its much lauded bubble, launched at the MIDEM conference in 2008, well and truly burst as the major labels refused to deal, is back!  Qtrax is an advert-supported music player that "for the first time allows the users to download, stream and create a personalised radio channel all from one place" - and, crucially, all for free - that is relaunching at the end of the quarter with the twin aims of cracking down on music piracy and - yes, here's the twist - ensuring artists get paid for their work.  The all new Qtrax will launch the Artist Manifesto and 30% of equity in the company will be set aside for an 'Artists Trust', while  an additional 10% of royalties will be paid directly to artists and songwriters whose content is available on the service with Qtrax boss Allan Klepfisz telling The Telegraph: "There is something very wrong with the current model. The current economic structure is not likely to ever compensate the artist... But it's not that difficult for a paradigm shift to occur. Traditionally the record companies get equity in digital services, but no one has asked on behalf of the artists. This could become a de facto way of doing business".

The CopyKat may not be able to look at the Queen - but the Kat can look at royalties

So - streaming is the future of the music industry is it? Well, hot on the heels of Apple's itune's announcing a 14% drop in revenues from global download sales in the first half of 2014 and the continuing and decade long year on year decline in CD sales - it may well be. A recent survey [1] said that Dutch music fans spend just half of what they spent in 2003 on recorded music - but they spend more than twice as much on live music as on recorded music. That sai, the study by streaming service Spotify this year said that in 2013 and for the first time in 13 years there was a slight increase in revenues from recorded music, and figures from the record label's trade body the IFPI supported this position with 39% of global recorded music revenues now from digital channels and 7% from performance rijghts. So - things are on the up - yes? Well  maybe - but, and its a big but - who gets what from the share of the streaming pie is big news indeed at the moment with artists, composers, record labels, music publishers, collection societies and the operators and investors for both subscription and so called freemium (ad funded) platforms all looking for their share of that pie. So, with that in mind, this weekend the CopyKat is all about royalties and who gets what -with a selection of recent posts from around the globe.

Irving Azoff

First off - the big stars flex their muscles. Some 20,000 works composed by popular musicians including The Eagles, Pharrell Williams, Boston, Foreigner, John Lennon, Smokey Robinson, Chris Cornell, and George and Ira Gershwin could soon be removed from YouTube - just as the Google streaming giant launches it's YouTube Music Key, it's much-anticipated music subscription service that will compete with Spotify and Pandora. Why? Well band manager, ex Live Nation chief and now boss of  Global Music Rights (GMR) Irving Azoff (right) has told The Hollywood Reporter that he is prepared to take 42 of his clients away from YouTube. Azoff had already fired a shot accross the bows of the two big US music collection societies BMI and ASCAP saying "The way fans listen to music is evolving daily" adding "GMR is going to give songwriters and publishers an opportunity to engage in meaningful licensing for their intellectual property. The trampling of writers' rights in the digital marketplace without any regard to their contribution to the creative process will no longer be tolerated."

Azoff's announcement followed hot on the heels of the news that Taylor Swift and her record label Big Machine had  pulled her entire catalogue from 'freemium' streaming services - most noticably Spotify and Deezer. Swift's view seems to be this: why let eager fans have something for nothing - when they would happily buy her album in physical form or as a download? And indeed in the first week of Swift's Spotify free album release her album 1989 sold 1.287 million copies in the US, debuting at No 1 in the Billboard 200 albums chart.  "If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, 'Why did you pay for it? It's free on Spotify', we're being completely disrespectful to that superfan who wants to invest", said Big Machine's Scott Borchetta.

Indeed the the recorded music industry may be gearing up to cut down on free music. The Wall Street Journal reported that many of Universal Music’s current licensing deals with streaming partners are expiring at the end of this year, and UMG boss Lucian Grainge recently said “ad-funded is not a sustainable business model”. The WSJ says Universal "planned to experiment with price and membership terms, possibly offering subscribers everything from interaction with artists to access to live events" with Grainge saying "But the third phase" is “going to be accelerating paid subscription and experimentation ....  with an enormous, high-margin, regular, recurring prize at the end of it.” Is that right? Ek thinks freemiu drives subscription and - no freemium - do the piracy rates start to soar again?

Next the British Academy of Songwriters, Composers and Authors has extended the debate by pointing to the relative inequality in payments from streaming made to songwriters when comparied to recording artists and labels. Gary Osborne, who chairs BASCA's Ivor Novello Awards, said this of streaming royalties: "No matter how bad it is for the [recording] artists it's a whole lot worse for the writers! People don't understand the difference between the writer and the act, but artists receive a far higher income from streaming than the people who write the songs. This is because deals were done first with the record labels that represent the artists, after which a few scraps seem to have been tossed to the songwriters and their publishers as an afterthought". BASCA Chairman Simon Darlow added: "The Fair Trade Music study just published by North American and Canadian composer organisations reveals that the label/ publisher split is, on average, around 95/5 in the label's favour - this cannot be justified". And BASCA's CEO Vick Bain added "BASCA totally supports the principle that authors should have control over the distribution of their music. The rates received by composers from the streaming services - especially YouTube - are so dismal that very few of the people who create the incredible songs that drive and support the music industry can make a decent living in the digital environment".

Foo Fighters

Ex Nirvana drummer and Foo Fighter's front man Dave Grohl added to the debate - sort of: when asked about streaming royaties and Swift's decision to pull her music - saying ""Me personally? I don't fucking care" adding "That's just me, because I'm playing two nights at Wembley next summer" and "I want people to hear our music, I don't care if you pay $1 or fucking $20 for it, just listen to the fucking song" and underpinned his economic model by saying "You want people to f**king listen to your music? Give them your music. And then go play a show. They like hearing your music? They'll go see a show. To me it's that simple, and I think it used to work that way" although he did temper his critique of Swift's stance by adding "But I can 
understand how other people would object to that".

And High Flying Birds and ex Oasis man Noel Gallagher managed to somehow get coffee into the royalties debate telling Noisey "It infuriates me that people are more willing to sit in a coffee shop and spend a tenner on two coffees, talking about the weather with their friends, and that coffee will last 45 minutes, yet they will physically get angry at you for asking them to buy an album for a tenner that will last a lifetime and might tell you about yourself and might even change your life. It's a strange moment we're in where people are willing to spend money on shit".

Back to the big debate: Spotify's Daniel Ek responded to Taylor Swift and other critics in a lengthy blog post reigniting the debate prompted by Swift pulling her recorded music catalogue from free (freemium) streaming services. Ek begins by saying "Taylor Swift is absolutely right" (referring to remarks the singer made in a Wall Street Journal  and Yahoo interview) adding "Music is art, art has real value, and artists deserve to be paid for it. We started Spotify because we love music and piracy was killing it. So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time". Ek then detailed how the Spotify payment model works and revealed that Spotify has now paid out $2 billion to the music industry since launching in 2008, $1 billion of that in the last year and that Spotify now has 50 million active users, 12.5 million of whom are paying subscribers - an increase of ten million and 2.5 million respectively since the last lot of official figures released back in May of this year. However Ek somewhat failed to address why a relatively small share of these streaming royalties are shared out to recording artists once the money has left Spotify's bank account, not least as the labels who seem to be keeping the lions share of streaming revenues are key partners in his business, both as content providers and shareholders. Ek added "The music industry is changing - and we're proud of our part in that change - but lots of problems that have plagued the industry since its inception continue to exist" ading "As I said, we've already paid more than $2 billion in royalties to the music industry and if that money is not flowing to the creative community in a timely and transparent way, that's a big problem. We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans - that's our responsibility as a leader in this industry; and it's the right thing to do". In December 2013, the company launched a new website, "Spotify for Artists", that revealed its business model and revenue data. Spotify pays “rights holders” royalties for all the music streamed on the application. The company pays 70% of their total revenue and retains 30%

Ek also points out that, while consumers can access music at this level for free, the artist does still earn a royalty from each play their music receives a stream and compared that  to terrestrial US radio station where labels and recording artists earn nothing for a play (although songwriter earns a royalty from American radio.). In other countries such as the UK both PPL (for labels and recording artists) and PRS (music publishers and songwriters) collect from radio stations. Undeterred Ek continues  "Here's the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid", noting that Spotify's main competitors are radio, YouTube and piracy. "If we want to drive people to pay for music, we have to compete with free to get their attention in the first place". Spotify's free tier is vital to driving people to pay, he continues, saying: "More than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no $2 billion" - not least with a 14% global decline in download sales so far in 2014." Spotify as has many paying subscribers as the other main streaming services pu together - Deezer has 5 million, Rhapsody/Napster 2 million and no figures published for Rdio or Beats in the US.

Thom Yorke 

According to a recent study by UK communications regulator Ofcom, the number of illegally downloaded tracks fell by around a third last year, dropping from 301 million in March 2012 to just 199 million in March 2013. This was attributed in part to the growth of legal music streaming services. But these streaming services have come under fire in recent months for paying relatively low royalty rates, compared to the royalties that musicians receive from traditional CD sales and legal downloads. In July 2013, Over a year before Swift's move, Radiohead and Atoms for Peace frontman Thom Yorke withdrew his independent work from Spotify, later describing the music streaming service as “the last desperate fart of a dying corpse”. In September 2011, US independent label Projekt Records entered a public disagreement with Spotify, stating "In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept. In May 2012, British Theatre vocalist and Biffy Clyro touring guitarist Mike Vennart noted, "I'd sooner people stole my work than stream it from [Spotify]. They pay the artists virtually nothing. Literally pennies per month. Yet they make a killing. They've forced the sales way down in certain territories, which wouldn't be so bad if the bands actually got paid." Yorke's colleague, Radiohead producer Nigel Godrich, noting that both Universal and Sony were shareholders in Spotify, added "The big labels did secret deals with Spotify and the like in return for favourable royalty rates.The massive amount of catalogue being streamed guarantees that they get the big massive slice of the pie (that $500 million) and the smaller producers and labels get pittance for their comparitavely few streams. Back in 2009 Spotify's shareholders included Sony BMG 5,8%, Universal Music 4.8%, Warner Music 3,8%, EMI (now Universal) 1.9% and indie label body Merlin had 1%. With estimates of Spotify's value anything between $1 and $3 billion - that's a nice profit!

And finally the UK's Music Managers Forum followed this by issuing a statement saying that the organisation is a "big supporter of streaming services", and suggesting Taylor Swift and her label  are taking a short-sightedness for pulling her content from Spotify, although the MMF also hit out ar Non Disclosure Agreements that hide the deals between streaming services and the major labels. "Few markets are perfect and yes the 'low rate issue' has conflicted many, but above all, streaming services are a fabulous tool that connects artists and creators with fans", the statement reads. "No longer restricted by physical barriers, streaming gives a voice to those that want to be heard and a platform from which to build multi-revenue businesses that cross borders. There are no guarantees of success but the opportunity is there for all that want to give it a shot".  Finally, the statement concludes: "Non Disclosure Agreements hide how the major music corporations license streaming services and we have grave concerns that the deals contain stipulations that both significantly reduce the amount artists ultimately get attributed and damage the growth of the streaming economy. The real fight is more likely between opacity and transparency, and we call on all major music corporations to take note and react in the best interest of their artists and shareholders". Legendary record label boss Morris Levy reportedly more than told a leading recording artist "You say you want royalties. Then you should try Buckingham Palace" [2]. I don't hear many artists laughing. U2 frontman Bono told the Web Summit conference “The real enemy is not between digital downloads or streaming. The real enemy, the real fight, is between opacity and transparency. The music business has historically involved itself in quite considerable deceit,” [3]

There will be more to come as the jousting continues. Spotify is yet to make a profit as a global business: in 2011, when the music service made its US debut after years of popularity in Europe, Spotify brought in about $252 million in revenues, according to the New York Times. In 2012, revenues jumped to $576.5 million but losses  had grown from $60 million in 2011 to $77 million in 2012, largely due to increased licensing fees. And those licensing fees from Spotify drove a large part of the 75% jump Universal Music Group achieved in 2013 in subscription and streaming revenues to $618 million. Globally Spotify now has 50 million plus users, and Spotify’s UK business was profitable for the first time in 2013, Spotify Ltd’s revenues rose 41.8% from £92.6m in 2012 to £131.4m in 2013, helping the company’s UK arm to move from an £11m net loss in 2012 to a £2.6m net profit in 2013. “This growth can be attributed to a 42% year on year growth in UK subscriptions and also to an increase in advertising revenue,” a Spotify spokesperson told the Guardian. In 2013, Spotify Ltd’s cost of sales – which includes royalties paid to music labels and publishers – were £96.2m, accounting for 73.2% of its revenues. And that's just the UK - the service operates in North and South America, mainland Europe and Australasia - so we are looking at A LOT of money from a global streaming market from just this one player - explaining that $1 billion figure Ek had trumpeted. 


But who gets what from this growing pot has yet to be decided: there are numerous ongoing lawsuits between artist's and their record labels about their respective share of the digital pie - some settled, some not; clearly songwriters feel that recording artist and record labels are getting an unhealthy share of revenues; The collection societies face the threat of being pushed out by direct deals between the major labels and music publishers and services such as Pandora and Spotify - and squeezed by new entrants such as GMR; small labels and independent artists feels they are disadvataged because of the shareholdings held by the major labels in Spotify and 'secret deals' between streaming service and the labels; are the likes Spotify keeping too much of the pie anhyway? And what happens to the revenues from shareholdings in Spotify if it lists on a stock market? Questions, questions, questions! As streaming rapdidly moves into the audio-visual media with services such as Netflix and NOWTV rapidly gathering subscribers and new competition from both Google and Amazon - there will be more quesxtions, debate, arguements and no doubt failures and it will be fascinating to see how this all develops - until the next 'big' technology takes over!


[1] IQ Magazine Issue 56 Nov 2014 based on data from BUMA/NVPI/GfK Netherlands/Mojo Concerts 

[2] The Life and Crimes of the Music Biz  by Simon Napier-Bell Observer Music Magazine, January 2008

[3] http://www.theguardian.com/music/2014/nov/15/taylor-swift-music-spotify

Pie chart image by Jan Burch https://www.flickr.com/photos/53149458@N08/14124697651/

More on Spotify here http://en.wikipedia.org/wiki/Spotify

The CopyKat - funny, but it's still all about the money, honey.

A new study by the European Commission shows that 70% of Europeans are regularly downloading and streaming film content for free on the net. The survey of 4,608 consumers covers both legal and illegal streaming, and 97% of those surveyed said they watched films at least occasionally, and 68% said they accessed free movie content online, 34% on a weekly basis - much of which is presumed to be currently from illegal platforms. The report says: "The high cost of cinema or legal platforms is a key motivation for free downloading and streaming. 50% of respondents admit streaming and downloading films online for free because 'cinema tickets, video-on-demand and DVD are expensive and they can't afford them for all the films they want to see' and 37% think 'some films are interesting but not worth paying for the cinema experience'". It goes on: "Other reasons for streaming and downloading films for free include ease of access (31% of downloaders consider that 'many films are available online and don't see the point in paying'), lack of availability (30% say that 'many films they want to see are not available in their country' and 27% that 'many films they want to see are too slow to come to their country') and missed opportunities (28% say that 'they didn't go when the film was on the cinema and they can't wait for it to be available on DVD or on TV' and 23% say they 'don't have time to go to the cinema')".

US consumer group the Digital Citizens Alliance, has released a report of research by MediaLink surveying 596 piracy sites and estimates that together those sites are generating about $227 million a year in advertising revenues, with the top 30 sites bringing in around $4.4 million each. And because these sites have relatively few running costs, certainly no royalty payments for either sound recordings or music rights, or payments to film companies or other broadcasters, the DCA calculates that these operations could be operating at an 80% to 94% profit margin. The DCA is a "consumer-oriented coalition focused on educating the public and policy makers on the threats that consumers face on the Internet and the importance for Internet stakeholders – individuals, government and industry - to make the Web a safer place."

She may have won the battle of the T-shirts against Topshop, but Rihanna's 'S&M' 2011 music video has prompted claims from two photographers that the video steals from their work. The first claimant is celebrity photographer, David LaChapelle, while German photographer Philipp Paulus first made his allegations in June 2011. Paulus is now going legal, claiming that Rihanna's label Universal Music has failed to properly respond to his complaint. Paulus's claim focuses on a repeated sequence in the vdieo where the singer is wearing oversized dress and stands up against a plastic sheet surrounded by Xs.Universal has admitted the similarities that exist between the video and the photographer's work. Paulus said: "It is shocking that a company like Universal Music, which generates its turnover with intellectual property, copies the intellectual property [of others] completely unauthorised and without respect".

Warner Music has launched website to explain it's proposed digital royalties settlement in response to a class action lawsuit brought by a number of heritage artistes who want a fair share of digital music revenue: Artists with pre-iTunes record contracts argue that they should be paid a bigger cut of the revenue generated from downloads, because such income stems from licensing deals between the labels and the digital firms, and a traditional record contract pays a bigger cut to artists on licensing income versus record sales - usually half of such income after fixed costs rather  than a 'per unit' royalty that would be reduced by contractual terms as well as fixed deductions. In the FBT (Eminen) decision - the US appellate court agreed. Warners unveiled its proposed settlement late last year, offering to increase future download pay outs to artists by up to 5% with a 14% cap. BUT - its still a 'per unit sold' royalty. The major also said it would set aside $11.5 million to provide artists with some extra payments related to past download sales as well as some legal fees. A statement issued announcing the site states that "Warner Music Group denies any wrongdoing" in the way it has paid out digital royalties to artists in the past. A statement from Warner's attorneys also notes "[Eligible artists] who want to keep the right to sue Warner Music Group must exclude themselves from [this] settlement by 31 May 2014. People who stay in the settlement may object to it by 31 May 2014. People who do not exclude themselves or who do nothing will be bound by the court's decisions". Personally - the label's maths doesn't work  - the profit margin for digital downloads (and streaming) is huge - if I was an artist I would want my half share of revenues. Full stop.  More at www.wmgdownloadsettlement.com. 

In Russia, the operator of a stream aggregator called Tracks Flow is facing a fine and possible web-blocking actions over copyright infringement claims. The site, which pulls in streams from a plethora of sources but allows users to listen to and organise tracks through one web-based interface, was targeted with litigation by now Warner affiliate SBA Music Publishing. According to Torrentfreak, the Moscow Arbitration Court has sided with the publisher, ordering TracksFlow and its owner Boris Golikov to pay over $44,000 in damages and ruling that the TracksFlow.com domain should be "terminated" and given the dotcom registry sits outside the jurisdiction of the Russian courts, judges may issue web-block injunctions against internet service providers in the country, similar to those issued by various other European courts, including in the UK.

A Utah judge has blocked TV streaming company Aereo from operating in several Western states, at least until the U.S. Supreme Court takes up a related case in April. District Judge Dale Kimball ruled that Aereo's retransmission of video signals is "indistinguishable from a cable company." He said that if Aereo continued to do business, it would damage broadcasters' ability to negotiate with legitimate licensees, siphon viewers away from their websites and subject them to potential piracy. The U.S. Supreme Court, which will begin hearing arguments in the Aereo case on April 22, will aim to resolve different rulings in different districts including Kimball's court which goes against the decision of the 2nd District Court of Appeals, which covers New York, Connecticut and Vermont, which held that Aereo was not violating copyrights.

More from Russia: Anton Yelesin, the owner of the ironclub.tv file hosting website, has received a two-year suspended sentence after pleading guilty to  “intentional large-scale violation of copyright law”. The sentence was handed down by a court in Tatarstan’s second largest city Naberezhnye Chelny, after Yelesin pleaded guilty. According to the Russian newspaper Kommersant this is the first guilty verdict in a case of online copyright infringement. Over on the IPKat  there is a guest post by IP attorney and blogger Lucas Michels, who brings us up to date with a topic that is very much in our minds these days -- the enforcement of copyright against digital exploitation on the internet in Russia and the hurdles facing Russia’s leading publishing houses, Eksmo, who have filed a copyright infringement lawsuit against Russia’s largest social media site, VKontakte.

The full conference programme for the IP Protect exhibition and  convention at the Business Design Centre in London on March 11th and 12th has been launched. Day 1 focusses on "Generating and protecting the value of your creative ideas - the basics of intellectual property and beyond" and speakers include Gary Townley, Business Outreach Manager, IPO, Matthew Lumb, Chief Operating Officer, Tangle Teezeron and Claire Lyons, Corporate Counsel EMEA, OtterBox all on  "Generating value from your creative ideas (a seminar for SMEs)", John Hodge, Head of Internet Investigations, BPI and Eddy Leviten, Director of Communications, FACT (Federation Against Copyright Theft) take on "Industry cooperation – the protection of digital content", Neil Boyd, Senior European Anti-Piracy Counsel, Nintendo of Europe GmbH talks on "Copyright protection in the UK and abroad – the Super Mario story" and the 1709 Blog's Ben Challis is giving a talk titled "Fit for purpose? Revising copyright laws in the digital age". Day 2 highlights "Meeting the challenges of the international market place – the intellectual property  response" and features, amongst others, Jason Drangel and Ashley Sands from Epstein Drangel LLP on "Anti-Counterfeiting Programs in the U.S.: The Angry Birds Case Study", Per Strӧmbäck – Editor, Netopia speaks about "3D printing and intellectual property – challenges, market and policy disruption" and there is a live telephone link with the IP attaches in China and Singapore – so you can ask questions about China and South East Asia! You can visit the exhibition and participate in the sponsored workshop sessions and table top discussion completely free of charge. More on tickets for attending the conference and participating for one or two days here. 

The Owl, the CopyKat - and the Tiger: All at (C) in beautiful EC boat

Owl City singer Adam Young has cleared up reports suggesting the band had lost a plagiarism lawsuit over his 2012 collaboration with Carly Rae Jepsen - "Good Time" - after TMZ reported that singer songwriter Ally Burnett had won a six-figure sum for copyright infringement claiming Good Time heavily sampled her 2010 tune, "Ah, It's a Love Song", taking the "unique vocal motif" and hook of her song. Burnett filed her lawsuit against Jepsen and Owl City in 2012, also naming the co-writers on the song Brian Lee and Matt Thiessen, plus publishers Universal Music, Songs Music Publishing, Schoolboy Records and all the US collecting societies, ASCAP, SESAC and BMI, as defendants.  It seems the sums in question - $804,156 - were pending royalties which were placed in escrow by Young's collection society BMI until the case is resolved - enabling BMI to be removed as defendants in the action.

A big cat

Keeping with music, Survivor are the latest band to go legal over the payment of royalties for downloads, mainly in relation to their 1982 'Rocky III' soundtrack epic hit 'Eye Of The Tiger'. Founding Survivor members Jim Peterik and Frankie Sullivan, the latter still performing with the band, have sued Sony Music for a 'licensing' cut of the revenue generated by their recordings, which they say should be 50% of the income. The  lawsuit also claims that the major still owes the duo money stemming from settlements the American record industry reached with the big file-sharing platforms of old like Kazaa, and also alleges a number if other accounting irregularities including improper deductions. According to Billboard: "A Sony representative threatened that in the event Survivor persisted in its objection, Sony would exercise what it termed 'the nuclear option' - removal of the Survivor masters from the songs licensed to iTunes for download by consumers, thereby wiping out that revenue stream altogether. By threatening 'the nuclear option', Sony has conceded that its transaction with iTunes is a license subject to termination, and not a sale of the Survivor masters to iTunes. If it was a sale, Sony would have no right to demand return of the songs".

Still with music (well, it is the CopyKat's thing after all), MEPs have strongly backed a new bill that will allow music download sites to secure single music rights licences from collective management organisations that are valid across the EU, voting 640-18 in favour of adopting the Collective Rights Management Directive . Organisations managing authors' works will be required to prove that they can process data from service providers showing when music is downloaded or streamed online, and that they can match this data to the music by their clients. MEPs say the law should stimulate the development of EU-wide online music services and that lower licensing costs will mean cheaper prices and greater access for consumers. Meanwhile, collective rights societies will be required to pay artists within nine months of the end of each financial year to ensure that artists' performing rights are paid out faster. The EU recorded music market was worth around €4.1 billion in 2012, while the industry is also responsible for an estimated 6.7 million jobs. The European Commission, which proposed the law, says this should facilitate the rolling out of new online services and Single Market Commissioner Michel Barnier described the bill as "a cornerstone of the digital single market," adding that it would "contribute to wider availability and better choice of offers of online music in Europe." The new Directive, due to come into force in 2016, now needs the final sign off from The European Council, expected to happen within the next couple of weeks. There are currently more than 250 collective management organizations in the E.U.

Last Saturday (1 February) the internet was flooded with tather funny and creative user-generated content ridiculing, in real time, the actions of the populist Serbian Deputy Prime Minister Aleksandar Vučić. Vučić visited a site in the north of Serbia where hundreds of motorists and their passengers were stuck in a snow storm, joining the armed forces in their efforts to evacuate them. Serbian Radio Television (RTS) filmed a bare-headed Vučić in action, including a sequence where he carried a boy through the deep snow, stumbled, fell, but then stood up again and delivered the boy to another man. Many saw Vučić’s actions as a public relations exercise undertaken with an eye on the Serbian parliamentary elections scheduled for mid-March (Vučić’s Serbian Progressive Party, already the dominant partner in the current coalition government, is expected to win most votes.) An anonymous satirist added subtitles to the RTS recording, creating a fictitious narrative in which Vučić orders his subordinates to find him a boy “up to 20 kilos”, and five minutes later a boy – a bit heavier than that – is brought from a warm house nearby where he was innocently watching cartoons. The boy’s protestations annoy Vučić greatly. The person to whom Vučić  surrenders the boy to assures the latter that he would not be put in the helicopter and evacuated, because the entire scene is for cameras only, and the cameras would be switched off shortly. BUT - the question is: did the montage infringe copyright (i.e. the “neighbouring right” of the producer of a videogram, if one uses the categories found in the Serbian copyright law)? well it seems this depends on the applicable substantive law — and also on whether the later work is qualified as a satire or a parody. Bogdan Ivanišević (Head of IP Practice, BDK Advokati/Attorneys at Law, Belgrade) tells all in fascinating and well written article on the IP Kat Mockery via use of someone else’s footage: parody or satire, and does the difference matter?.

Tom Cruise is reportedly being sued for £610million ($1billion) by screenwriter Timothy Patrick McLanahan who claims the Top Gun star stole his idea for Mission Impossible: Ghost Protocol. McLanahan claims he came up with the concept for the 2011 box office smash in his own script for a film titled Head On in 1998. He is now seeking damages from Cruise, Paramount Pictures and various production companies after filing a lawsuit in December. And in a federal lawsuit seeking $1 million in damages and injunctive relief, writers Bernard Hiller and Gabriel Bologna claim Mexican filmmaker Luis Mandoki, who was hired to direct their screenplay "Brundibar", "swiped" the gist of a screenplay set in a Nazi concentration camp to develop a competing story of his own. The writers say that whilst their story is based on historical events and characters, they created original material which has been infringed.  Mandoki, Informant Media, it's partner and producer Judy Cairo, and producer and actress Athena Ashburn are all listed as defendants.

Quentin Tarantino

And still on films - director Quentin Tarantino, well known for title such as Pulp Fiction, Inglorious Bastards and Kill Bill  has filed a suit against the popular media and gossip blog, Gawker, and an anonymous file-sharing website, AnonFiles.  The Complaint, filed in the United States District Court for the Central District of California, Western Division, states a claim for copyright infringement against AnonFiles, and a claim for contributory copyright infringement against Gawker.  Tarantino alleges that the websites promoted and disseminated unauthorized downloadable copies of an unreleased screenplay for a Western that Tarantino wrote entitled, “The Hateful Eight.” The screenplay was allegedly leaked after Tarantino gave it to only six people, including three actors. He subsequently scrapped the film, a planned sequel to Django Unchained.

And OK - nowt to do with the law - BUT it is the CopyKat's day job and he is a bit proud - The BBC's coverage of Glastonbury 2013, including the fab Arctic Monkeys, the Rolling Stones and Mumford & Sons, picked up a prestigious Broadcast Award at a ceremony hosted by Alexander Armstrong at the Grosvenor House Hotel in London last night. The judges commented that the BBC's coverage on TV, radio, red button, on demand and live web streaming made it "feel as if you were right there" and was "ambitious in scale and executed brilliantly".  The Glastonbury coverage beat off strong challenges from The Mercury Music Prize Sessions (Channel 4), Later With Jools (BBC2) and Bollywood Carmen Live (BBC/Asian Network). Other winners in the night included Mr Stink (Best Children's programme), Ant & Dec's Saturday Night Takeaway (Best Entertainment Programme), Coronation Street (Best Soap), The Ryder Cup (Best Sports Programmes), Educating Yorkshire (Best Documentary Series),  Broadchurch (Best Drama Series) and Googlebox (Best Original Programmes).

Warner Music moves to settle digital royalties class action

Those Sledge sisters

There have been a spate of actions in the USA between heritage artistes and their record labels, with the former trying to improve what are often considered desultory royalty rates, as the music industry shifts from the sale of physical units to the licence of online downloads. The key issue is how a 'sale' should be classified when it comes to paying royalties to artists, particularly  with record contracts that pre-date iTunes, which launched in 2003. These contracts are usually silent on the issue of to digital sales - the internet simply did not exist when they were written. Most labels, including all three majors, have treated download income as 'record sales', but many veteran artists say that digital revenue originates in 'licensing deals' with iTunes and other digital platforms, and so should be treated as 'licensing' or 'other' income under their contracts. And it's a very important distinction, because most traditional recording contracts pay the artist a much bigger royalty on licensing revenue than from per unit sales - and the latter will also be subject to royalty reducers - contractual provisions such as a 'new technology' format reducer, TV advertising reducers (both sometimes to a half royalty rate), and/or a packaging deductions for CD and vinyl, and/or a reducer for units sold by mail order and/or a reducer for 'breakages'. Whilst artist royalties typically range from 1% in early contracts to about 20% - reducers can mean they are in reality actually almost nothing for some artistes.

A number of claims, beginning with the now settled law suit brought in 2006 by the Allman Brothers, Cheap Trick and others against Sony, revolved around the way in which record labels had calculated their digital royalties. In court papers filed in the United States District Court Southern District of New York in this case, a comparison of calculations was set out based on the sale of 1,000 downloads at 0.70c per unit – giving a total income of $700: Sony BMG thought the appropriate payment would be a royalty payment on 85% of all downloads sold after deducting mechanical royalties to the songwriters, a container charge of 20% and an royalty reducer for new technology of a further 50%. This gave a total royalty payment of $45.05. The Allman brothers felt they should be paid one half of the income from 100% of all units sold, less just the mechanical royalty payable to songwriters. This gave a royalty due of by Sony BMG to the Allman Brothers of $315.50. Some difference!

Legendary record label boss Morris Levy allegedly once told one of his acts “if you want royalties, go to Buckingham Palace” but a plethora of heritage artists including Toto Kenny Rogers,  Peggy Lee,  the estates Louis Armstrong, Billie Holiday, Patsy Cline, Ella Fitzgerald, Bill Haley, Mary Martin, Rick James, Rob Zombie and and Pearl Bailey as well as Chuck D, Peter Frampton, Public Enemy, Sister Sledge, Ras Kass, Dixie Chicks and Whitesnake have all sued on this issue, with all three major labels facing litigation, including class actions. 

Weird Al Yankovic

In another March 2012 lawsuit against Sony Music by Weird Al Yankovic, the successful US parody act again argued that Sony was improperly treating digital downloads as "sales" rather than "licenses" reducing his share of income from 50% to something more akin to 15%. Yankovic also alleged thhat Sony were improperly charging marketing costs for various VH1 and MTV specials, underpaying on domestic publishing royalties, failing to pay him for goods given or discounted to retailers, failing to properly account for streaming transmissions like ringbacks, and under reporting 'sync' income on music used on TV shows around the World. Yankovic also highlighted the equity stakes taken by Sony in YouTube, Vevo and Spotify and Yankovoc argued that his own videos - very popular on YouTube - had helped Sony get their equity stake and he was entitled to a share.

The landmark case is the action brought the producers of a number of early Eminen recordings, producers FBT Productions: In a claim against Universal Music, FBT succeeded in achieving the higher royalty rate: FBT argued they had a right to a 50/50 split of profits with Universal on sales of digital music and ring tones through online retailers as these were 'Master Licensing' deals attracting the higher royalty. The contract did not specifically mention income from download stores like iTunes, or what share the artist (and therefore FBT) should get from such sales but Universal had been treating download sales as being equivalent to CD sales paying a lower rate of 12-20%% as if these were physical sales. The  District Court refused summary judgment saying the agreement was ambiguous, but The U.S. Ninth Circuit Court of Appeals in San Francisco agreed with FBT saying that the higher royalty should apply - not least as a digital 'sale' is not actually a sale - its a licence to consumers. Universal even belatedly tried to apply royalty reducers to digital income - something that Judge Philip Gutierrez was having none of. The Supreme Court refused UMG's request for a further appeal so the appellate court's decision set an important precedent i the USA - although UMG have publicly disputed this.

Ronee Blakely

In the latest development, the smallest of the three major labels, Warner Music Group (WMG) has submitted a proposed settlement to its ongoing digital royalty disputes (a class action) over the Christmas break, which the courts will now consider. According to Billboard, the mini-major is proposing a two-part compromise to artists with record deals that pre-date 2002 - plaintiffs in the settlement agreement are named Kathy Sledge-Lightfoot, Gary Wright and Ronee Blakely.

Moving forward, WMG will increase digital payouts to artists by 5% from whatever record sale royalty figure is in their current contract, with a floor rate of 10%, but with a 14% cap, meaning the deal will favour more the artists with older record deals on lower royalty rates (because anyone with a 14% split already will see no benefit to their royalties - whereas an artiste on 1% will see an increase to the floor rate of 10%). The increase will be less on non-US download income. Billboard explain that the rate increase would be 2.5%. But since contracts typically call for artist to receive, in some countries, 90% of the U.S. rate, that means foreign downloads for an artist receiving a 10% rate in the U.S. would receive 90% of 12.5%, which equals 11.25% of wholesale.

In addition to the increased royalties, WMG will also set aside a one-off pool of $11.5 million, to be split between any artists who agree to the deal pro-rate based on their download sales between 2009 and 2012, though Billboard say that at least $3 million of that pot of cash will go to lawyers who have worked on this case.

Any artiste accepting this deal will be barred for pursuing further action on the digital royalties point, their contracts being amended to explicitly define digital income.  WMG is not admitting any wrongdoing. Moreover, Billboard says that the settlement allows the company to sidestep the issue of whether downloads should be paid as a license. More pragmatically, given that, if download revenue was simply treated as licensing income, artists could expect to receive probably near to 50% of those revenues, this must make this arrangement cost effective for WMG, and although participating artists will get an immediate pay off and avoid a long drawn out litigation, they might be giving up substantial future revenues as we move into a digital future. 

Sony Music proposed a similar deal to settle its digital royalties class action in 2012, though rumour had it the two main  artists who launched the litigation - the Allman Brothers and Cheap Trick - actually had a separate and more favourable agreement.  Both of these settlements, along with a settlement agreed by Weird Al Yankovic, mean that the 'FBT' precedent has still to be tested in US courts. 

Judge Richard Seeborg must now review the proposed settlement to the class action in the San Francisco federal court, which is in the Northern District of California. It remains to be seen if the court backs WMG's proposals and, if so, how many artists will then take up the offer. After the claims are put in, WMG will provide a report to the class counsel on what amounts will be paid out to each participant within six months, and then the class counsel and artist will have 90 days to object to any of WMG's calculations.

The Future of Music Coalition estimated that the major labels may have to hand over $2 billion in extra royalties to heritage acts if they lost the cases. The Dixie Chicks put it more simply in their claim against Sony– calling the royalties and accounting process “systematic thievery”.

F.B.T. Productions, LLC; EM2M, LLC v. Aftermath Records, DBA Aftermath Entertainment; Interscope Records; UMG Recording Inc.; Ary, Inc.  September 03 2010  621 F.3d 958; No. CV 07-3314 PSG (MANx).

Weird Al joins digital royalties battle

CMU Daily reports that Weird Al' Yankovic is the latest artist to file a digital royalties claim in the US, in a wide ranging royalties lawsuit that accuses Sony Music of improper reporting of its costs, of failing to pass on any of the damages it won from file-sharing companies like Kazaa, and of paying him a record sale royalty on download sales when such revenues should be treated as licensing income. He joins Toto in the latest assault on the major, who had recently settled (subject to court approval) the 2006 lawsuit launched by The Allman Brothers, Cheap Trick and others which would see artists receive a 3% increase in their share of download revenue and a lump sum payment. Meanwhile EMI faces litigation on this issue from Kenny Rogers, and Warner Music from Sister Sledge and Tower Of Power.

Whilst obviously (and perhaps unsurprisingly) less than impressed with the Allman Brothers' class settlement, it’s interesting to see that Yanovic (like Rogers) also wants to know why he hasn’t received a share of monies received by Sony from P2P litigation, or from the equity stakes the major has taken in digital start-ups, particularly as his track ‘White & Nerdy” was parodied on YouTube and repeatedly streamed with the lawsuit claiming that "A portion of Sony's equity share in YouTube is directly apportionable and allocable to 'White & Nerdy' as well as other content created by Yankovic".

Artist’s digital royalty beef will go to court

A class action between a number of recording artistes and Universal Music over how digital royalties are calculated will go to court. A federal judge in California has given the green light for a class action lawsuit against Universal Music by a number of long established artists, led by White Zombie, Whitesnake, and the estate of Rick James. The music major had requested the case be dismissed. The case will be a major test of how artiste digital royalties are calculated by record labels in the absence of specific contract wording: The label would like to calculate the royalty based on the same accounting process as a normal (physical) sale – whilst artistes want a share of the income which will almost certainly be a substantially greater share of the revenues. Almost all pre-internet contracts make no mention of digital releases beyond CD (and many predate CDs) let alone downloads and streaming and artistes have argued that because digital removes label's manufacturing and distribution costs, the risks of sales are almost non-existent, and when a label makes its catalogue available to a service such as iTunes, it is actually a licensing deal and therefore the higher artist royalty should be paid.

There is a precedent here – the so called ‘Eminen’ case that actually involved FBT Productions, the production house involved in some early Eminem recordings, who took Universal to court over digital royalties and succeeded in achieving the higher royalty rate: FBT argued they had a right to a 50/50 split of profits with Universal on sales of digital music and ring tones through online retailers such as iTunes and Sprint as these 'Master Licensing' deals attracting the higher royalty. The contract did not specifically mention income from download stores like iTunes, or what share the artist (and therefore FBT) should get from such sales but Universal have been treating download sales as being equivalent to CD sales paying a lower rate of 12-20%% as if these were physical sales. Whilst a district court refused summary judgment saying the agreement was ambiguous, The U.S. Ninth Circuit Court of Appeals in San Francisco agreed with FBT saying that the higher royalty should apply.

The major insists that the FBT case related to the specific wording of the production company's contract, and the precedent in that case did not apply to every other pre-download record contract. That said, the new litigation means that all artists signed to Universal with pre-internet contracts could benefit from any positive outcome, with lawyers for the claimants saying that they believed Universal "engaged in a broad scheme to underpay numerous royalty participants, including formulating an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses and engaging in a sustained public relations effort designed to convince the public that it had employed 'groundbreaking' and 'enlightened' accounting practices that actually benefited (rather than cheated) the Class".

In a separate case, Sony have also been taken to court by a group of artistes including the Allman Brothers and Cheap Trick over how royalties should be calculated. The action, stated in 2006 in the United States District Court Southern District of New York, shows how the different parties calculate how the artist’s royalty should be paid. On the sale of 1000 downloads at 0.70c per unit (total income of $700) Sony BMG thought the appropriate payment would be a royalty payment based on 85% of all downloads sold after deducting mechanical royalties to the songwriters, a container charge of 20% and an audiophile reducer for new technology of a further 50%. This gave a total royalty payment of $45.05. The Allman brothers felt they should be paid one half of the income from 100% of all units sold, less just the mechanical royalty payable to songwriters. This gave a royalty due of by Sony BMG to the Allman Brothers of $315.50 with attorney Brian Caplan saying at the time "Sony Music is presently engaged in a widespread attempt to underpay its recording artists".

In the new Universal case the court said that the allegations were enough to justify the matter being treated as a class action.

Thank you Amanda for reminding me to post this blog!

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