In recent months the music publishing world has heard the rising howl of complaints directed at the proposed settlement in the Ory case against the record clubs, a settlement characterized by Cherry L
David Hirshland is executive VP at Bug Music.
In recent months the music publishing world has heard the rising howl of complaints directed at the proposed settlement in the Ory case against the record clubs, a settlement characterized by Cherry Lane Music Publishing CEO Peter Primont in the June 18 issue of Billboard as a horror novel.
Come on, people. It is not that bad. At least it provides copyright owners with some measure of power where none has previously existed. In fact, the settlement is now being reworked to address problems raised in the numerous objections, including the establishment of a 75% floor.
While I joined the apparent majority in finding problems with the original settlement, I have to wonder where publishers, songwriters and their advocates have been for the past 40-odd years. I have heard little discussion of either the horrifying back story that led to the suit in the first place or any realistically workable alternatives to dealing with the ongoing, unlicensed underpayment scheme the clubs foisted upon copyright owners.
Primont's Stephen King analogy seems overwrought. A more apt genre might be the classic Western in which the wealthy land baron subjugates the townsfolk with his own laws and thugs, usually in black hats. When the lone gunslinger arrives to bring frontier justice, although not everyone likes or trusts him, he does bring them a weapon and some measure of control over their lives.
The facts are simple: Since inception, the two record clubs -- Columbia House and BMG Direct -- have, without seeking mechanical licenses from publishers, paid for songs at 75% of the statutory rate. No other third party has enjoyed the same privilege on such a large scale without legal ramification.
In the Ory case, the plaintiffs' lawyers were convinced that they could not achieve the dual objective of receiving past monetary damages and a ruling that the clubs must also obtain licenses from all copyright holders. After all, in a similar suit more than a decade ago, known as the Wixen case, a court ruled in favor of the clubs, deciding that a continual failure to object to their activities and acceptance of royalties created an implied mechanical license on the clubs' terms.
Although that ruling is not legal precedent, the risk of the Ory court making a similar decision is a formidable weapon for the clubs, especially when they have effectively coupled this possibility with the argument that they are not financially set up, like record labels, to license every track.
Led by class-action litigation expert Max Blecher, the plaintiffs' team succeeded where the attorneys in the prior suit failed, pushing the case beyond the summary judgment stage on the twin pillars of a strong infringement claim and certification of the class. Still, they knew quite well that they faced an uphill and time-consuming battle. Because of the herculean effort and significant costs involved in prosecuting this case, I commend the attorneys and in no way begrudge them the contingency fee they have earned. Nor do I leap to criticize the monetary component of this settlement.
It is time for the publishing community to be realistic. It is entirely too optimistic to believe that we will ever live in a world where the clubs are forced to license compositions at the statutory rate. The alternative system proposed in the settlement, the so-called negative option component, whereby songs and their proposed royalty rates are posted on a dedicated Web site for acceptance or rejection is, in spite of its shortcomings, a workable compromise.
I too am concerned that this plan shifts the administrative burden from licensee to licensor, but I do not buy the argument that such a plan will set a precedent, allowing other third parties (such as labels or digital stores) to insist they be treated similarly. The record clubs are different, acting as retailer, manufacturer and distributor, and this position, combined with the history of implied licensing, gives them their unique leverage.
I am more than a little disappointed by the tenor of my colleagues' responses. This is not a perfect victory -- the baron still resides in the ranch on top of the hill -- but it is a significant step forward. The publishing community should see this as a partial but important victory and cooperate with counsel as they improve this settlement. If it is thrown out completely -- as Primont and others would prefer -- we could very well find ourselves back in the Wild West, powerless and merely mending fences instead of reaping the bounty of our land.