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Legal Reality: Sound Music Deals

Legal Reality: Sound Music Deals

October 17, 2014
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" Many content producers are surprised to learn that in some instances the royalty-free music they licensed may not provide them with all the requisite rights they need to freely exploit the motion picture or video content that incorporates the music. "

Music is a big part of just about every kind of entertainment. It is, for example, an integral component of most motion picture productions from mega-budget movies to micro-budget indie films. Even a relatively large segment of adult videos include music. Online, the use of music is exploding all over the web. From YouTube content, to online games, to the music playing in virtual world discos, music has become an integral feature of many types of web sites and other online services. For example, music is being used with increasing frequency in web ads, site tours and in online promos for an ever-increasing range of products. Paraphrasing an old Rodgers and Hammerstein song, one might rightly say that the web “is alive with the sound of music.”

As a professional musician and composer, I have welcomed the web’s transition from its days as a silent medium. But as an intellectual property attorney I have also recognized that as the Internet and mobile networks began to groove, shake, rock, rattle and hum, a whole new set of legal issues began to emerge regarding the use of music content on the web and in mobile networks. For example, many content producers are simply unaware that legal use of music in content performed via a website or a mobile network, especially if by streaming, will often require the acquisition of certain public performance rights that are not generally needed when the content is distributed solely in the form of physical copies, such as DVDs.

As we move toward a future in which music will be as much an integral part of Internet and mobile media as it is currently in the television and radio media, online producers and providers will be required to have a greater understanding of the basic rights involved in the online use of music. One reason is because use of music without appropriate authorization can result in substantial and costly copyright infringement liability. For example, an infringement of a single piece of music could result in liability for up to $150,000 statutory damages per infringed work or actual damages which do not have a monetary limit.

‘Royalty-Free’ Music Isn’t Always What It Sounds Like

Many content producers, particularly those who come from or are still in the world of DVD product creation make the common mistake that all they have to know about music rights in their products is the fact that they are using so-called “royalty free music.” The term “royalty-free music” commonly refers to stock or “library music” licensed for a single fee, without the need to pay any subsequent royalties. Unfortunately, many content producers are surprised to learn that in some instances the royalty-free music they licensed may not provide them with all the requisite rights they need to freely exploit the motion picture or video content that incorporates the music.

More than once I have had to address expressions of utter incredulity by content producers after explaining to them that the royalty-free music license for the music they used in their content did not provide them with all the music rights required to publicly perform music, and, as a result the company could be sued for copyright infringement for exhibiting the content, even on its own website.

When considering licensing royalty free music for use in content that will appear on a publicly accessible website or otherwise be publicly performed, such as by cable or satellite broadcast, it is critically important to ascertain whether the license offered by a music licensor expressly includes the right to publicly perform the music. To see why this is the case requires a basic understanding of what “public performance rights” are and who usually has them to license.

The ‘Public Performance’ Right Is One Of A Bundle Of Copyrights

A copyright in an expressive work, like music, a book or motion picture, is not a single right. It is instead a bundle of rights that are granted by the government to the creator of the work. The following are the exclusive rights granted to a copyright owner under Section 106 of the Copyright Act:

1. To reproduce the copyrighted work in copies or phonorecords;

2. To prepare derivative works based upon the copyrighted work;

3. To distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

4. In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

5. In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and,

6. In the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Many content producers are familiar with at least some of the rights listed above, such as the exclusive right to make and distribute copies of work. But producers of non-theatrically distributed motion picture content, such viral video, and adult entertainment content producers that produce content that is rarely performed in a theater or any other venue that one traditionally associates with the notion of a “public” performance, often fail to realize that performance of content on a public website or via a publically accessible mobile app is likely to be a public performance.

So what constitutes public performance?

Under U.S. copyright law to perform a work “publicly” means (a) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (b) to transmit or otherwise communicate a performance or display of the work to such a place or to the public in general, by means of any device or process, whether the members of the public capable of receiving the performance or display, receive it in the same place or in separate places, at the same time or at different times. Thus in the context of the Internet or a mobile network, the fact that performances and displays may occur in diverse locations and at different times will not exempt them from being subject to the public performance right.

The public performance right as it pertains to a musical work applies to the musical composition and not a sound recording of the composition. The exclusive right to publicly perform a sound recording is a different copyright.

The public performance right in a music composition originally vests in the creator or creators of the work, usually one or more composers or songwriters. But most professional composers and songwriters contract with publishers that help them get their music recorded and performed and, in so doing, assign some or all of their rights in their compositions to the publishers.

Since a holder of the public performance right in a musical work is entitled under the law to demand payment of a fee each time such the work is publicly performed, composers, songwriters and publishers all generally want to be paid when their music is publicly performed. But as you might imagine, however, when it comes to public performance of music, it is virtually impossible for even a moderately successful composer or songwriter to keep track of all the public performances there might be of his or her music.

Because of this, many years ago, performance rights organizations (PROs) were created to keep track of public performances of music and collect fees for such use on behalf of the owners of the music. PROs, which are usually not-for-profit companies, provide an important intermediary function for composers, songwriters and publishers, namely, the collection of royalty payments from parties who wish to use (i.e., perform) copyrighted musical compositions publicly. In some foreign countries PROs are called copyright collectives or copyright collecting agencies.

There are two principal PROs in the U.S. that collect royalties from companies and persons licensed to publicly perform specified musical works. These PROS are known by their acronyms: ASCAP (The American Society of Composers, Authors and Publishers) and BMI (Broadcast Music, Inc.). There are also a number of foreign PROs, such as the Society of European Stage Authors and Composers (SEASAC), the Society of Composers, Authors and Music Publishers of Canada (SOCAN) and the Society of Authors and Composers of Mexico (SACM).

Essentially, PROs pretty much all do the same thing. They issue blanket licenses to music broadcasters, such as television and radio stations, web site owners, concert venues, larger restaurants and clubs, hotels, and theme parks. Basically, the licenses are issued to anyone who plays music in a public manner. By paying the blanket license fees to the PROs, these broadcasters are able to use whatever music they want in the large music catalogs of the PROs without having to account to each individual songwriter. For media companies, the blanket license is usually based on the licensee’s broadcast or digital traffic footprint. Thus, a large commercial television station will be required by a PRO to pay a higher blanket license fee than a small website, but both are subject to payment if they publicly perform music that is in the PRO’s catalogue.

A potential problem: royalty-free music licensors may not have public performance rights to license.

As discussed earlier, composers, songwriters and music publishers generally grant exclusive rights to license the public performance of their musical compositions (and/or digital transmission of their sound recordings) and collect fees on their behalf for such licenses, to PROs. Because of this, many royalty free music licensing companies that have acquired rights from composers and songwriters to license the use of their music to third party producers (e.g., indie film producers or adult content producers) have not acquired the right to license the public performance of music from such composers and songwriters because those rights were already provided to one or more PROs. This is why the specific terms of such “royalty-free” licenses of music (which I suspect most licensees of royalty free music do not bother to read) often are limited to granting the licensee the rights to associate, or “synchronize,” the music with visual content, such as in motion pictures, commercials, websites, etc., and specifically exclude any claim to license any public performance or digital transmission rights.

If the royalty-free music license does not provide the rights to publicly perform a musical composition or digitally broadcast the sound recording of the composition, use of a recording of music via the Web can potentially result in infringement of two of the aforementioned copyrights, i.e., the exclusive right to publicly perform the musical work (No. 4 above) and the right to digitally broadcast a sound recording of the work (No. 6 above).

The problem highlighted earlier has not traditionally been a problem for independent content producers, such as adult entertainment companies, because for most of the last 30 years such producers mostly used music in synchronization with visual content in tapes and DVDs which were privately sold and not often publicly performed in theaters or other public venues. And to the extent such content was publicly performed, say via a cable or satellite broadcast, the cable or satellite broadcaster was the party doing the public performance. Most such broadcasters maintained blanket licenses from one or more PROs.

Now, however, as independent content producers are increasingly becoming public performers and digital broadcasters of their own content via their own websites, if the content includes music, such online use is likely to include the public performance and digital broadcasting of that music. Consequently, without a license from all the appropriate PROs, on a global basis, (because websites are generally accessed globally) or a license of public performance rights directly from the owner(s) of the rights (e.g., from composers who have not assigned their public performance and digital broadcast rights to one or more PROs), a website operator transmitting content online that includes music might be infringing one or more copyrights of one or more owners of the public performance and/or the digital broadcast rights in the subject music.

Solutions

There are several things that independent content producers can do to avoid public performance and digital broadcast rights infringement problems regarding music incorporated into their works. Here are few suggestions:

• Obtain public performance licenses from the appropriate PROs (e.g., ASCAP, BMI, SESAC, Sound Exchange, etc.). Since websites often provide public performance of content to a global audience, additional licenses from foreign PROs may also be required to effectively obtain all the required public performance rights required to transmit music throughout the world from a website. Unfortunately, the cost of obtaining numerous licenses from domestic and foreign PROs may be prohibitive for many independent content producers that broadcast their content from their own websites.

• Use royalty free music that is provided under a music use license that expressly provides to the licensee a license to publicly perform and digitally broadcast the music. This category of music is sometimes referred by some royalty free music licensors as “completely royalty free” music. My firm represents several licensors of completely royalty free music and we have negotiated music licensing agreements on behalf of clients with many others.

• Hire a composer/music producer that can provide specially composed and recorded music for the subject project along with all the required rights. This is, in my opinion, the best, safest and most prudent option. It is the method by which major motion picture and television production companies generally acquire music for their feature projects. It is unfortunate that many small content production companies erroneously believe that specially commissioning music for their motion picture productions, websites, commercials, and other projects, is an expensive option well beyond their means. It has been my experience that many fine and very talented professional composers, songwriters and music producers are often quite willing to provide specially commissioned and fully produced music along with all required rights to small content producers at surprisingly reasonable rates. If your company is interested in exploring the option of specially commissioning the creation of music for a project, please feel free to contact me. My firm may be able to direct you to one or more providers of music suitable for your company’s contemplated use.

• Always read the music licensing agreement carefully. It is critically important to determine whether a music license will, in fact, provide the all the necessary music rights for the requisite amount of time required by the licensee. Because music licenses can be complex and full of legalese, I also strongly recommend that before executing any music licensing agreement, it should be reviewed by a competent attorney familiar with the area of music rights licensing.

• Finally, I believe that it is critically important to license music only from reputable music licensors that can provide adequate assurances that they actually have all the rights they are offering to license. Every reputable music licensor that I know will gladly warrant in writing that they do, in fact, have all the requisite rights required to grant the subject music license and will fully indemnify the licensee from any third party claims regarding the music rights.

This article is not intended to be, nor should be considered to be, legal advice. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney familiar with the legal matters discussed in this article.

Gregory A. Piccionelli is an intellectual property and adult entertainment attorney experienced in Internet matters. He can be reached at Piccionelli & Sarno at (805) 497-5886 or greg@piccionellisarno.com.


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