Are You Pirating Music Without Realizing It?

To most people, music piracy means illegally streaming or downloading a copyrighted work without payment to its creator. In other words, there is a realization that each and every illegal download of a song deprives the creator of payments he or she would have otherwise received through legitimate sales. This type of music piracy is obvious, because perpetrators are aware they’re getting something for nothing.

But what about lyrics? If you ever used the Internet to look up lyrics to a song, you might not have felt like you were depriving its writer of revenue. But the truth is that most websites featuring the lyrics of popular songs are not licensed by the works’ copyright holders, and therefore constitute duplication of protected works without permission or compensation. “But,” you ask, “so what? How am I taking money out of anyone’s pocket by looking up lyrics that are passively posted on the Internet?” While it’s true that the website rather than the consumer would be responsible for paying licensing fees to the artists, there’s a less obvious source of funds that might be going into the wrong pockets every time you take to the Web in search of lyrics: advertising revenue.

Some lyrics sites are heavily monetized by advertising, especially if they contain the lyrics of popular songs by frequently searched artists. With Web traffic metrics so easily accessible and certain demographics searching more frequently for some types of music than others, advertisers see popular lyrics websites a way to predictably reach a sizeable targeted audience. This can result in tremendous revenue for these otherwise passive websites that don’t actually sell any products or services. You can bet that, in an overwhelming majority of cases, the artists whose lyrics are featured won’t see a dime of the ad revenue made possible by such web traffic.

If that sounds like a surefire business venture to you, guess again. The National Music Publishers’ Association has already won judgments in excess of $7 million on behalf of its members against websites that feature unlicensed lyrics. There are a few websites out there that do post licensed lyrics, including LyricFind and MusiXmatch. Cut down on unwitting music piracy by seeking out a licensed source the next time you find yourself struggling to recall the lyrics to that song you just heard on the radio.

Frank Gulino is an award-winning composer and attorney with Berenzweig Leonard, LLP. He can be reached at FGulino@BerenzweigLaw.com.

360 Deals: It Depends on How You Splice Them

Some things never change. It is true that the American music industry looks nothing like it did at the dawn of the new millennium, but major industry executives (and smaller, independent players) still have one central goal when signing new talent: high yield with low risk. With traditional streams of revenue, such as album sales and even digital downloads, waning more and more each year, labels are extremely motivated to monetize their investment in new artists. One of the most common means of doing this is the use of so-called “360 deals,” also known as “multiple rights deals.”

Unlike traditional recording contracts, which once confined themselves to taking a percentage of artists’ earnings from sales of records and a few other, related streams, 360 deals can give labels the right to take a percentage of almost any revenue that artists earn ‒ whether from product endorsements, book deals, or branded digital material. Rapper and artist Game has poked fun at the sweeping nature of such deals, quipping: “If I find a dollar on the sidewalk I gotta give (the label) half.” In their own defense, music execs contend that 360 deals incentivize labels to build their artists’ brands, as all parties profit when the artist gains revenue from multiple sources.

In any event, 360 deals have become the norm in the music industry, and show no signs of being replaced any time soon. It is thus important for artists to know about potential pitfalls and ways to guard against them. This is especially so because initial drafts are usually weighted heavily against the artist. They can also be riddled with loopholes that make deals far less profitable for the artist than they might initially appear. Closing these loopholes can be difficult, but there are a number of winning strategies available.

It is important, for instance, to take a stand as to which revenue streams will be off limits for labels and why the result is fair. Victories in this arena may be few and far between, but even minor wins can make a massive difference in the long run. Artists can also try to have the label give them some kind of consideration for each of the revenue streams in which the label is asking to share. If the label is asking for a cut of an artist’s acting revenue, the artist might ask the label to provide a theatrical agent, acting coach, or promotional support. Artists should also push for clear definitions of key terms, such as “net proceeds,” “support,” and “digital media.” Doing so not only saves confusion down the road, it can actually narrow the scope of rights granted to a label under the terms of the deal.

Of course, some are so interested in getting signed that they may be scared to stand up for themselves during contract talks. Artists should know, however, that when labels are genuinely interested in an artist’s content, they are often willing to consider 360 deal modifications that may lead to a mutual benefit for all parties. Yet even (and especially) when a label is strong-arming an artist, it is imperative for artists to seek legal counsel so that they are fully aware of the implications of their deals at the outset; some 360 deal terms have the potential to follow artists for years ‒ or even the whole of their careers.

Ryen Rasmus is an associate attorney practicing in the Entertainment and Music Industry Law Group of Berenzweig Leonard, LLP. He can be reached at RRasmus@BerenzweigLaw.com.

Cautionary Tale: When Contemplating Live Music at Your Venue, Get a License

Last summer, a small band performed at a bar called 69 Taps in Medina, Ohio, near Cleveland. That evening, the band covered a number of popular songs that the mostly middle-aged audience had grown up listening to. The bar had not asked for a set list, nor had the band provided one. The band took requests, playing hits like “Brown Eyed Girl” and “Freebird” for a small audience. The problem? “Freebird” and nine other songs that the band covered that evening are protected by Broadcast Music, Inc. (“BMI”), a performing rights organization tasked with collecting royalties, and 69 Taps did not have a license to present music from BMI’s catalog.

 The bar was slammed with a lawsuit brought by BMI and the copyright holders of each of the ten covered songs, demanding that 69 Taps pay significant damages and attorneys’ fees. While it may seem harsh to sue a small-time bar for copyright infringement over an amateur cover band’s decision to take requests on a summer evening, this lawsuit is a testament to the fact that BMI (one of the “big three” American performing rights organizations along with ASCAP and SESAC) takes aggressive steps to protect the intellectual property of its artists. Because 69 Taps did not ask for a set list or post one on its website, BMI could only have found out about the performance of the infringing works through its survey process—by actually having a representative in the audience to keep tabs on the performance. Any venue that presents live music, no matter how small or obscure, should expect to be “surveyed” by the three performing rights organizations. 

The solution to avoiding these lawsuits is for venues to purchase a “blanket license.” For example, if 69 Taps had purchased BMI’s blanket license, it would have had unfettered permission to present any of the roughly 8.5 million songs in BMI’s catalog for a flat annual fee. BMI allocates shares of the licensing fee to the artists whose work is represented in the venue’s programming, as determined by the same survey methodologies that discovered 69 Taps’s unlicensed performances. The cost of the blanket license is much less than the cost of defending just one copyright infringement lawsuit, so if your business plans on offering live music, the safe bet is to purchase blanket licenses from all three major performing rights organizations. Otherwise, businesses may have to “face the music.”

Frank Gulino is an associate attorney with Washington, DC business law firm Berenzweig Leonard. He can be reached at FGulino@BerenzweigLaw.com.