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Archive for the ‘Entertainment Law’ Category

Link to Politico Interview

As a follow up to my previous post on the subject, the radio widget above should play Politico’s interview with Smashing Pumpkin’s founder and frontman Billy Corgan following his testimony in front of the House Judiciary Committee in support of HR 848, the Performance Rights Act.

Corgan testified on Capitol Hill on behalf of the musicFIRST Coalition yesterday.  Corgan testified that the current sytems is “hurting the music business” because of radio stations’ failure to compensate musicians for performing their music.

My readers know my thoughts on this subject.  While I agree with Corgan’s overall sentiment, I stand by my emphasis yesterday that the legislation as it is written may be drafted in favor of the record labels more so than the performing artists. 

HR 848 should have a provision that provides for direct payment of royalties to the artists who performed on the sound recording and which specifically does NOT rely on the record labels to distribute these royalties “in accordance with the terms of the artist’s contract.”  (See my previous post).  This kind of language contained in the House version of the legislation at Section 6 only assures that the record labels would receive all the performance royalties and that performing artists would have to overcome numerous obstacles to ever see any of the additional income, inevitably leading to more disputes with the record label.   The current artists agreements with record labels simply do not contain provisions addressing payment of these types of royalties and, even if they did, the artists who have unrecouped balances on their ledger sheets would never see a dime. 

My proposal is that the current system for collection and distribution of performance royalties for musical compositions be utilized.  Specifically, why not allow BMI, SESAC and ASCAP to collect and distribute the performance royalties for sound recording copyrights on behalf of member artists, allowing these organizations to pay 50% of the income directly to the artists (the original owners of the sound recordings) and 50% to the record labels (the assignee owners of the sound recordings).  This structure is identical to the distribution of performance royalties for owners of the musical composition copyright.  It’s a systems that has functioned well since the turn of the 20th century and it is a systems that, overall, works fairly well. 

In general, members of the performance rights organizations have fewer royalty disputes with these entities over  than artists do with record labels, since these entities, for the most part, do not function as profit generators.  There is no doubt that this idea has some flaws as well, but in comparing the alternative, it seems to me that this would benefit the artists and musicians much more than giving the money to the record labels.

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The House Judiciary Committee will hold hearings on H.R. 848 (this year’s version of HR 4789) tomorrow morning at 10:00 a.m.  Although the Committee’s website does not identify any witnesses at this time, I am informed by musicFIRST that Smashing Pumpkins’ founder Billy Corgan and Mitch Bainwol, chairman and CEO of the RIAA will be speaking on their behalf at the hearing.

Billy Corgan H.R. 848 was introduced to the 111th Congress by Rep. John Conyers on February 4, 2009 then referred to committee on the same day.  It was co-sponsored by Tennessee representative, Marsha Blackburn.  If passed, HR 848 would amend The Copyright Act (specifically Title 17) to provide “parity in radio performance rights” under the Copyright Act.  In other words, the Bill would grant a performance rights in sound recordings performed over terrestrial broadcasts (i.e., traditional radio broadcasts, not satellite).   S. 379 is the Senate’s complimentary bill, introduced by Senator Patrick Leahy.

The act has certain provisions to accommodate concerns by the broadcast industry, such as the provision which establishes a flat annual fee in lieu of payment of royalties for individual terrestrial broadcast stations with gross revenues of less than $1.25 million and for non-commercial, public broadcast stations; the provision which grants an exemption from royalty payments for broadcasts of religious services and for incidental uses of musical sound recordings; and the provision which grants terrestrial broadcast stations that make limited feature uses of sound recordings the option to obtain per program licenses. 

The Act specifically states that it will not adversely affect the public performance rights or royalties payable to songwriters or copyright owners of musical works.   In particular, the Act prohibits taking into account the rates established by the Copyright Royalty Judges in any proceeding to reduce or adversely affect the license fees payable for public performances by terrestrial broadcast stations. Requires that such license fees for the public performance of musical works be independent of license fees paid for the public performance of sound recordings.

The full text of the bill can be found at govtrack.us.

One provision I found interesting was Section 6, (1)(A), regarding payment of certain royalties, that states, in full:

A featured recording artist who performs on a sound recording that has been licensed for public performance by means of a digital audio transmission shall be entitled to receive payments from the copyright owner of the sound recording in accordance with the terms of the artist’s contract.

Emphasis added.  This last clause intrigues me.  What I find interesting about it is that under the current structure, the record labels own most, if not all, of the commercial sound recording masters, i.e., they are the “copyright owner of the sound recording.”  This clause entitles the “featured recording artist,” e.g., Madonna, Michael Jackson, etc., to receive payments from the owner “in accordance with the terms of the artist’s contract.” 

In most artists’ contracts, payments are based on a percentage of the gross revenues from sales of physical units – current artist contracts do not have provision for payment of performance royalties on the sound recording.  It would seem that under the Act as written, there is silence as to what happens in this instance where these specific payments of performance royalties are not addressed in the artist’s contract.  One possible remedy would be for the legislators to draft language that would apply, such as what they have done with regard to the “non-featured artists in subsection (B) of the same Section 6.   This Section 6 is not found in the Senate’s version of the legislation.

All of this makes me curious about what will happen to performance royalties that are paid under this Act to the owners of the sound recording copyrights, i.e. the record labels if there is no language in the artists’ recording agreements to specify as to what percentage the artist is entitled?  One thing is certain:  an artist who is not recouped under his artist recording agreement will never see any of these performance royalties under such time as his balance is recouped.

One proposal you might suggest to your representatives is that they consider a payment structure similar to that of the current performance rights organizations that collect and pay performance royalties for musical compositions, wherein one half of the royalties go directly to the songwriter and the other half directly to the publisher.  If this were the case under the new Act, half of the royalty payments would filter directly to the artist and the other half would go to the record labels.  If there truly is a concern about the recording artists not getting paid for his or her performances, this is the only method that would assure this happens.

If you are a recording artist whose performances are being playing on local FM and AM radios, you should investigate the impact this legislation will have on you.  Call you Senators and Representatives and ask them to keep you updated.

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Kris Kristofferson and Fred Foster once penned one of my favorite lyrics in the song Me and Bobby McGee, i.e., “freedom’s just another word for nothing left to lose.”  The sentiment is perhaps appropriate for the ongoing war that is being waged against copyright laws as we know them.  The latest battle in this war was fired by the esteemed Lawrence Lessig, famous lawyer and copyright scholar, in his new book Remix: Making Art & Commerce Thrive in the Hybrid Economy.

Remix Lawrence Lessig The main goal of the book is the demolishment of existing copyright laws, which Lessig has described as Byzantine.  He believes our current copyright laws are futile, costly and culturally stifling. The "hybrid economy" is described by Lessig as one in which a “sharing economy” coexists with a “commercial economy.”  See this very humorous interview by Stephen Colbert.  He gives examples such as YouTube, Flikr and Wikipedia, which rely on user-generated "remixes" of information, images and sound to illustrate his point.  This “hybrid economy,” in Lessig-speak, is identical to what he calls a "Read/Write (RW)" culture — as opposed to "Read/Only (RO)" — i.e., a culture in which consumers are allowed to "create art as readily as they consume it."  Thus, the “remix” to which he refers is the concept of taking another persons copyrighted work and “making something new” or “building on top of it.”  This is what us less-published copyright lawyers like to refer to as a derivative work!  And that is the crux of Lessig’s problem:  the copyright law DOES in fact make provision for this type of creative endeavor, provided that the creator of the derivative work gains the permission of the copyright owner.  This is that with which Lessig seeks to do away.

In the Colbert interview, Lessig drolly points out that 70% of our kids are sharing files illegally and that the “outdated” copyright laws are “turning them in to criminals.”  This reminds me just a bit of what my Daddy used to tell me: just because everybody’s doing it doesn’t make it right!   Or, as Colbert blithely responded, “isn’t that like saying arson laws are turning our kids into arsonists?”  The obvious conclusion is that perhaps the law is simply not the problem.

Colbert then comically crosses out Lessig’s name on the cover of his his advance copy of Lessig’s book, draws a picture of Snoopy inside, and then questions Lessig as to whether the book was now his (Colber’t’s) work of art, to which Lessig says “that’s great,” we “jointly” own the copyright.  That’s a point to which Lessig’s publisher, Penguin Press, would surely not acquiesce.  In the final retort to Lessig, Colbert makes the point that he likes the current system, and I quote, “the system works for me.”  I might add that the system seems to be working extremely well for Lawrence Lessig as well.  Lessig is making a fortune exploiting the very system he criticizes as antiquated – the very essence of free speech, I suppose, but in the final analysis, a bit disingenuous.

While I do admire Professor Lessig for working toward a solution to a perceived problem, it’s very difficult to believe that tearing down the entire system of copyright laws in order to accommodate a large percentage of prepubescent teenagers who are too cheap to pay for their music is the appropriately measured response we need in this instance.   Call me crazy.

Here are several good critiques of Lessig’s work and ideas here for further exploration of this issue:

The Future of Copyright, by Lawrence B. Solum (download PDF from this page)

Lessig’s call for a “simple blanket license” in Remix, by Adam Thierer

Copyright in the Digital Age, by Mark A. Fischer

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By Jennifer Bendall, Executive Director of musicFIRST

Did you know that every time you hear your favorite artist’s hit songs over the airwaves he or she doesn’t receive a single penny from the radio stations broadcasting the song? Sounds crazy, right? While AM and FM music broadcasters rightly pay the writers of these songs, they refuse to compensate the performing artist as the performer of the song.

In fact, AM and FM music radio stations earn a cool $16 billion a year in advertising revenue without compensating the artists and musicians who bring MusicFirstmusic to life and listeners’ ears to the radio dial.

The fight for a fair performance right on radio has been going on in the U.S. for more than 80 years. Frank Sinatra was a leader in this fight 20 years ago, and his daughter Nancy carries the legacy today. In 2008, Nancy Sinatra testified before a House subcommittee on behalf of the musicFIRST (Fairness in Radio Starting Today) Coalition, telling members of Congress about the life of an artist:

Imagine struggling in your job, perhaps for years, to make the best product you can – a product made of your blood, sweat and tears. Now imagine people taking that product to use to build their own hugely successful businesses. Just taking it – no permission, no payment, and no consequence.

A fair performance right is not only beneficial for the musicians and artists behind the music, but also for the U.S. economy. Currently, the U.S. is the only member of the 30-country Organization of Economic Cooperation and Development (OECD) that does not fairly compensate performing artists when their songs are played on the radio. This puts the U.S. in the company of countries such as Iran, China and North Korea who don’t pay royalties to performers for their intellectual property. Plus, since we don’t have a performance right here in the U.S., artists lose out on the royalties collected overseas for the play of American sound recordings.

The musicFIRST Coalition, a group of artists, musicians and music community organizations, supports the creation of a performance right on AM and FM radio. The Coalition formed in June 2007 to ensure that all performers – from aspiring and local artists, to background singers and well-known stars – are fairly compensated when their music is played on the radio. On February 4, 2009, bipartisan legislation – the “Performance Rights Act” – was reintroduced in the House and Senate. MusicFIRST supports this measure and plans to remain at the forefront of the fight for fair pay for airplay.

AM and FM radio remains the lone holdout in providing a fair performance right for artists and musicians. All other music platforms – Internet radio, satellite radio and cable television music channels – pay a fair performance royalty for the use of music. It’s time that radio broadcasters are held to the same standard.

Eighty years is far too long for AM and FM radio stations to refuse to compensate performers for their work. Let this be the year fairness is provided to the talented performers who bring to life the music of our lives.

My special thanks to guest author of today’s article, Jennifer Bendall, and Lindsay Dahl for making this happen.  For more information about musicFIRST and the great work they’re doing, go to www.musicfirstcoalition.org, or click on the picture above.

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The interview that I gave to DigimusicTV.com is becoming viral.  Metacafe has it in three parts:

Barry Shrum Entertainment Attorney Part 1 

Barry Shrum Entertainment Attorney Part 2 

Barry Shrum Entertainment Attorney Part 3 

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OUT WITH THE OLD

After over 18 years of service to the organization, Harold Bradley is no longer president of Nashville’s Local 257 chapter of the American Federation of Musicians.  Dave Pomeroy was elected president last week by a vote of 675 to 449.  Out of it’s 2620 members, 1165 votes were cast in this election, which is more than double the number of votes cast in the 2005 election. 

This is most certainly the end of an era for Harold Bradley, for whom Harold I have a great deal of respect and admiration.  He began his long services as president of Local 257 on January 1, 1991 and later became the International Vice President serving the AFM’s International Executive Board, a position he will likely retain until 2010.  He received the AFM’s Lifetime Achievement Award in 2006, the same year he was inducted into the Country Music Hall of Fame.  Bradley was also the first president of the Nashville chapter of NARAS and continues to serve as a member of the Grammy organization’s Board of Governors.

Harold and his brother, Owen, built Nashville’s earliest recording facility, Castle Recording Studio, in the early 40’s. As the architect of the Nashville Sound, Harold was part of Nashville’s original “Nashville Cats,” the A-Team, which included such notables as Boots Randolph, Floyd Cramer, Hargus “Pig” Robbins, Buddy Harman and The Jordanaires. 

He is one of the most recorded guitarist in the world, and has been pickin’ on country albums for over 60 years, including work on such classics as Bobby Helms’ Jingle Bell Rock, Brenda Lee’s I’m Sorry, Roy Orbison’s Only the Lonely, Patsy Cline’s Crazy, Roger Miller’s King of the Road, Tammy Wynette’s Stand By Your Man, Eddy Arnold’s Make the World Go Away, and Loretta Lynn’s Coal Miner’s Daughter, just to name a few.

Harold Bradley will always be considered a formidable force in Nashville’s music industry. 

IN WITH THE NEW

Bradley’s replacement, Dave Pomeroy, is a well known and seasoned musician as well, having played electric and acoustic bass on more than 500 albums during his 34 years in the music industry.  Dave has played with artists including Emmylou Harris, Alan Jackson, Elton John, Peter Frampton and Chet Atkins, including work on 6 Grammy-winning projects.  Dave is also an independent producer and has produced numerous projects which can be found on website.

Pomeroy issued the following statement after winning the election:

"I am humbled to be elected to the office President by the members of Local 257. Thanks to everyone who voted and all those who volunteered to help my campaign.

On behalf of all members past and present, I thank Harold Bradley for his many years of dedication and service to this Local and the AFM. I am honored to be carrying on the historic tradition of leading Local 257 as we move into a rapidly changing future.

We have one of the most dynamic, versatile, and innovative music communities on earth, and I look forward to representing the best interests of all Nashville musicians, both here at home and around the world."

Pomeroy will begin his three-year term effective January 1, 2009.

In the same election, Craig Krampf defeated Billy Linneman for Secretary-Treasurer by a vote of 570 to 539.  Re-elected to the Executive Board were Bruce Bouton, Bobby Ogdin, Andy Reiss, Laura Ross, and Denis Solee, who were joined by new members Duncan Mullins and Jimmy Capps.

THE CONTROVERY

There is much controversy surrounding the election, which is viewed by some as “revolutionary.”  The scuttlebutt is that a riff has been developing since 2001 between the leadership of the AFM’s International Executive Board and AFM members who were also members of the Recording Musicians Association, the local chapter of which Pomeroy is president.   The RMA, a player conference sanctioned by the AFM, is a 1400-member organization of studio musicians with chapters in Los Angeles, New York and Nashville,  It is arguably one of the most active conferences in the AFM.

Bradley and Linneman, for better or worse, threw their support behind resolution put forth by Thomas F. Lee, the IEB President, and passed by the IEB in Las Vegas in June 2008, which threatened to “de-conference” the RMA at its September conference. 

Lee’s opposition to the RMA derived from stemmed from his promotion of a deal which eliminated so-called backend new usage “buyouts” of musical scores used in video games, something which the AFM was reluctant to do in the past.  Read more about his in this Variety article.

The lines of battle were thusly drawn, and the Local 257 uprising has been building ever since, with tempers flaring on both sides of the disagreement.  (A detailed, though somewhat biased, historical trail can found on the “Sounds” blog).  As a result of the June vote, Pomeroy and over 150 other local members of the AFM presented a resolution at the executive board meeting of Local 257 calling on the members to censor Bradley for his support of the anti-RMA resolution, which Bradley described as “ridiculous” and to which he responded:

This resolution, submitted by RMA President David Pomeroy, is intended to influence my vote! I will continue to vote my conscience (based on the facts before me), and I resent this attempt to force me to vote otherwise.

This statement appeared in an open letter to Local 257 in the July-September 2008 edition of the Nashville Musician, the Local’s newsletter.  This exchange ultimately led to the controversial election of last week.

The waves of discontent were also felt in Los Angeles, where RMA member Vince Trombetta was elected as Local 47’s president earlier this month, also in an apparent backlash against Tom Lee’s anti-RMA leanings.

The principals of democracy are certainly at work in the AFM, just as they were in the presidential elections this year!

SUMMARY

I know Dave Pomeroy and I  believe he will be a caring and effective leader for the AFM.  I congratulate him and wish him the best in the new endeavor, knowing full well that he has some difficult struggles ahead in leading the opposition. 

I also know and respect Harold Bradley.  Harold is a Nashville icon who has been an effective leader of Local 257 for almost two decades.  I believe he wanted what he thought was best for the musicians and I know that he always had the musicians’ interests at heart.  I thank him for his service to the industry.

But no one is perfect.  While I do not intend to take either side in this debate, I will note that perhaps it was indeed time for a revolution.  There is no doubt now that new leadership is the order of the day. Nashville’s musicians are the backbone of our industry and they deserve adequate compensation and representation.  The majority of them now feel that Dave will do that and I commend their choice.  While no one really likes it when it comes, change is often a good thing.   I hope that at least in the Local 257, egos can deflate to normal and tempests can subside, and harmony can once again return to the organization that is at the heart of Music City.

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On August 7th, a lawsuit was filed by Kristen Alison Hall, former member of the country band, Sugarland, against the remaining original members of the band, Jennifer Nettles and Kristian Bush.   A copy of the complaint can be viewed here.Sugarland

Essentially, the lawsuit alleges that Nettles and Bush breached a partnership agreement between the three members, breached their fiduciary duty to Hall, and failed to account to her for partnership profits.  Among other facts alleged, Hall claims that she contributed the trademark, “Sugarland” to the partnership.  A search of the trademark database at www.uspto.gov shows that the partnership owns two marks:  a service mark for live performances, Reg. No. 2747326, and a trademark for merchandise, Reg. No. 3250679.  All three original members, Hall, Nettles and Bush, are identified as the registrants on these marks.

More about the lawsuit can be gleened from this article in the Atlanta Journal-Constitution, written by entertainment journalist Shane Harrison, with contributions by Rodney Ho.  Yours truly is cited as a resource in the article.

This lawsuit provides a dramatic visual aid as to why it is so important for musical groups to plan in advance with regard to issues such as who owns the band name in the event of a dispute.  Either a band partnership agreement, or a  properly established limited liability company or corporation, can effectively provide for what happens to the name in the event a member leaves.  One method I commonly use is to establish a limited liability company and assign the trademark and trade name to the company.  Provisions for what happens to a member that leaves the LLC are then incorporated into the Operating Agreement which set forth the procedure for valuing the company’s assets in that instance.  Such a structure could have eliminated the need for a lawsuit such as the one that Hall filed against the other two members of Sugarland.

If your band does not have a written document dealing with this issue, you should consider retaining an entertainment attorney for such purposes, particular if your band is starting to generate significant income.

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