The proposed settlement in the Ory case-the class action against the two big record clubs-with its new licensing scheme for the clubs, is as startling and unsettling a piece of prose as I have read in
Peter Primont is CEO of Cherry Lane Music Publishing.
The proposed settlement in the Ory case-the class action against the two big record clubs-with its new licensing scheme for the clubs, is as startling and unsettling a piece of prose as I have read in years. Like a Stephen King novel, it offers another stomach drop with each turn of the page. And like a Stephen King novel, if you haven't read it, you really should.
The first scary thing is that the lawyers pushing the proposed settlement through are on the plaintiffs' side. These lawyers are acting nominally on behalf of songwriters and publishers; they are fighting for us. When you see the settlement they have proposed, you will see why I am frightened to have these guys on our side.
I have spoken to many publishers, writers, managers and attorneys and have yet to find one who thinks the settlement extracted in our name is a good idea. Most notably, veteran artists' attorney Bob Donnelly says, "For decades the record clubs have defied the Copyright Law by not directly licensing compositions or paying the minimum statutory rate. This settlement rewards this bad behavior by allowing them to continue to avoid the same music licensing obligations that apply to every other aspect of the music industry."
The second scary thing to leap out of the closet is that this is a "negative option" scheme. The record clubs will post on a special Web site the license they feel like getting. If, within 30 days, the rights-holders have not found out about it and objected in writing, the proposed license becomes an actual license.
Attorneys general in many states have opposed negative options in lots of industries, and with good reason. They are fundamentally unfair. They shift the burden for ensuring legal licenses to the rights-holder, effectively making any license to your property legal unless you do something about it.
But wait-it gets scarier. The negative option is guaranteed only for a sole owner. If a song has more than one owner, then they all have to object in writing, or the license is valid. Of course, multiple owners have always had the right to grant nonexclusive licenses, but this is worse. In this case, you could be stuck if your co-owner is just lousy at paperwork. Do you know anyone in publishing who is, um, not the best at the paperwork thing? I know a couple.
Still another scary thing: The settlement will apply to anyone in the plaintiff class who does not opt out, and the plaintiff class includes anyone the record clubs have diddled in the past-whether or not they realize it. That's a lot of people and companies, many of whom don't even know about the settlement and will, in a grotesque irony, be saddled with giving this huge boon to the record clubs by the fact that the record clubs did them wrong.
What's more, if you want to opt out-the citizen's standard defense against lousy class-action settlements-your opt-out will not count, the documents claim, unless you list all of the songs you control that the clubs misused! This is a huge task and, in many cases, may not be possible. And this comprehensive list has to be filed with the court before June 24. It is an absurdity.
On second thought, this settlement is more like a low-end horror movie than a Stephen King novel. All those monsters, and what do we get for it? A cash payment of $6.5 million. Yes, that's an "m." The lawyers get about a third of it. The amount is so derisory it convinces me the lawyers are not selling us out on purpose. If they were, they could have gotten a lot more dough than that.
As we know from other battles in our industry, settlements can take on lives of their own, lasting decades and penalizing people not even born when they were signed. And in this case, it is unnecessary. Congress long ago created a licensing scheme under which the record clubs can get all of the licenses they want. It is called the compulsory mechanical license, and if we publishers and songwriters are paid the statutory rate, we cannot say no. If the clubs don't like the rate, that is another discussion.
We have retained counsel to try to shove this monstrosity back in the closet. But just to be clear, as an independent music publisher representing more than 50,000 copyrights, on behalf of ourselves, our affiliated companies, our writers, our co-owners, and in any role in which any of our companies or employees have any legal say whatsoever as to the licensing of any musical work, we hereby repudiate this settlement in its entirety. We will have no part of it, and we urge you all to do the same.