Universal Music Group Fire Class Action Could Come Down to One Thing: Who Owns the Masters?
Artists want compensation for the destruction of their recordings, but their case isn't simple.
On June 21, a putative class action lawsuit was filed against Universal Music Group on behalf of artists whose master recordings are believed to have been destroyed in a 2008 fire on the Universal Studios backlot where they were stored. The main issue: To whom did the masters belong?
That suit -- brought by law firms King, Holmes, Paterno & Soriano, LLP, McPherson LLP and Susman Godfrey LLP representing Soundgarden; Hole; Steve Earle; Tom Petty's ex-wife, Jane Petty; and Tom Whalley (on behalf of the Afeni Shakur Trust, which oversees the estate of Tupac Shakur) -- seeks half of UMG's proceeds from a legal settlement and a reported insurance payment relating to the fire, plus half of whatever value they didn't cover. The case will come down to "good old American property rights," says an attorney who works for several legacy acts and estates that aren't part of the lawsuit. "As in, who owns the property?"
The plaintiffs assert that UMG breached its responsibility to protect the tapes lost -- which held as many as 500,000 songs, according to an investigation in The New York Times Magazine, although a UMG archivist said the damage was "overstated." But most recording contracts don't explicitly mention that responsibility, and there's a legal distinction between the physical recordings and the intellectual property they contain. Standard contracts give labels ownership of physical recordings, so UMG will presumably claim the property damaged was its own. (UMG declined to comment.) The lawsuit says these acts expect to reclaim the rights to their recordings under the reversion provisions of the 1976 Copyright Act -- which is not a settled issue, as major labels maintain the recordings are works for hire -- but the law says nothing about physical property.
There could be other legal arguments -- including claims on lost earnings for material that no longer exists in high-definition form. These could be valid claims, says the attorney, but they are "arguments for which there is no precedent that I'm aware."