LOS ANGELES--Thanks to a simplified application process, producers are having an easier time recouping their share of webcasting and satellite transmission royalties of their recordings. <br clear="no

Breaking News

NLRB Dismisses 'Virtual Music' Complaint

By Christopher Walsh

NEW YORK--The National Labor Relations Board has dismissed an unfair labor practice charge brought by Realtime Music Solutions against a union of the American Federation of Musicians.

The complaint was filed March 4, citing Local 802's Feb. 6 agreement with the Opera Co. of Brooklyn, under which OCB would ban use of RMS' Sinfonia virtual orchestra from future productions. RMS said the agreement, which both bans the "virtual orchestra" and mandates the exclusive use of live musicians, was unlawful.

The NLRB ruled that "the Union has a legitimate concern that unit employees could be replaced once again by Sinfonia, either on the present show or on a subsequent show."

Local 802 president David Lennon, a critic of Sinfonia, said he was "pleased that the NLRB dismissed this frivolous and unwarranted charge and agreed with us that the machine does indeed pose a threat to live music."

"The only purpose of any virtual orchestra machine is to eliminate live music in order to reap profit. Audiences expect a living, breathing orchestra in live, quality productions," he continued.

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MTV Europe, VPL Look Ahead

By Emmanuel Legrand

LONDON--MTV Networks Europe and British rights collecting society VPL are set to act on a new deal concerning royalty payments for music videos broadcast on MTVNE from independent labels

MTVNE says the deal does not restrict MTV from continuing to seek direct deals with independent labels.

"We are making a firm statement of our unwavering commitment to indie artists and labels, and affirming their value and importance to us and our business," says MTVNE president and CEO Brent Hansen.

"I am delighted that VPL has been able to facilitate a new collective agreement with MTV on behalf of the independent record companies," says Fran Nevrkla, chairman and CEO of VPL.

Terms of the deal, finalized April 1, weren't disclosed.

MTVNE was seeking to reduce the royalties it paid to VPL. Talks with VPL broke down last month, and MTV attempted to sign direct deals with labels, before the parties headed back to the negotiating table.

Meanwhile, British independent labels body AIM plans to begin talks with MTV in other parts of the world about the use of indie labels' music videos.

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British Court's 'Apple' Ruling Expected

By Melinda Newman

LOS ANGELES--The British High Court is expected to rule shortly on whether a trademark suit filed by Apple Computer against the Beatles' Apple Corp. can be heard in the United States instead of England.

The move is expected after U.S. District Judge Ronald Whyte ruled last month in San Jose that the case could be heard in California.

Last September, Apple Corp. sued, saying Apple Computer's iTunes and iPod violate Apple Corps.' trademark.

Apple Computer then countersued, asking Whyte to rule that it had not violated the original 1991 agreement that defined how Apple Computer could use the Apple term.

Whyte decided that since Apple Corp. had filed three suits in California, it was reasonable to expect it to defend the suit brought by Cupertino, Calif.-based Apple Computer in California.

Sources for Apple Computer say no date for the British High Court's ruling has been set, but that they expect the decision to come down soon.

Apple is the entity the Beatles started in 1968 that continues to oversee the group's assets.

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Recouping E-Royalties Made Easier

By Susanne Ault

LOS ANGELES--Thanks to a simplified application process, producers are having an easier time recouping their share of webcasting and satellite transmission royalties of their recordings.

Since July 2002, the U.S. Copyright Office has designated royalty rates due featured artists, nonfeatured artists (session players and vocalists) and copyright owners for statutory licenses of sound recordings in these emerging music areas. Those rates were reaffirmed by the Copyright Office in October, 2003.

SoundExchange collects and distributes royalties from nonsubscription webcasting music services such as AOL and Yahoo and satellite operations like XM Radio and Sirius Radio. The statutory royalty rate per song is split 50% to the copyright owners (a.k.a. the label), 45% to the featured artist and 5% to non-featured artists.

Producers are lumped within the featured artist portion. But there was nothing in the rate specifications defining how much they could expect to collect.

That confusion led many producers who negotiate a royalty for services to not pursue webcasting or satellite royalty money at all.

"I saw no means for producers to get paid," says Leslie Lewis, director of the producers and engineers wing of the Recording Academy.

Chris Castle, an attorney with Akin Gump Strauss Hauer Feld, says it "was a problem that producers were not spelled out [in the official rate break-down]. [Traditionally] producers are entitled to royalties per their producer's contract."

So, the two contacted SoundExchange executive director John Simson to figure out how best to cut in producers to the webcasting and satellite royalty pot.

SoundExchange expects to corral $13 million from these webcasters and satellite transmitters in 2004.

This is modest in terms of royalty amounts currently garnered from recordings placed in traditional media outlets, says Simson. But by 2007 and 2008, he says, the amount should balloon to $50 million.

"I think this is a dramatic growth area for business. We should see an increase of the satellite TV subscriber pool and XM and Sirius growth," says Simson, which should ultimately boost royalty collection.

Castle then drafted a formal "letter of direction" asking artists to write down what portion of their 45% webcasting/satellite rate they are promising to their producers.

Next, both producer and artist sign the contract and send it to SoundExchange for their royalty disbursement records.

Starting in January, SoundExchange has displayed the form on its website at soundexchange.com/letter_of_direction.htm.

Since SoundExchange is now officially recognizing record producers as participants in the payment of these royalties, Leslie, Castle and Simson recommend artists and producers to complete the "letter of direction" as standard practice when negotiating recording deals.

"Without the letter of direction on file, [SoundExchange] won't know to pay you otherwise. It'll be an open question of whether you'll be able to recover any of that money," says Castle.

The letter seems to be doing its job. "We're sending out money and sending out checks," Simson says. "We're starting to see more and more attorneys and producers having letters of direction signed and turned into us. More people are getting the message."

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IFPI Suits Seen In UK, France

By Emmanuel Legrand

LONDON--International trade body the IFPI is expected to start suing illegal file-sharers in the United Kingdom and France, following similar recent actions elsewhere in the EU.

On March 30, IFPI launched legal actions in Denmark, Germany, Italy and Canada against a total of 247 individuals accused of illegally downloading copyrighted music.

Peter Jamison, British executive chairman of British trade body the BPI, says he is "convinced that we will take action this year if things don't change."

On March 25, the BPI launched an instant-messaging campaign, warning P2P users that they risk legal action if they continue their file-sharing operations.

"The warning period will last for as long as we believe it is necessary," Jamieson says. "We will resort to legal action when we feel that we've done all we can in terms of education."

However, the BPI will only resort to civil-not criminal-actions. The first users to be targeted will be what outgoing BPI director-general Andrew Yeates calls "the uploaders who act as mini-retailers." He says civil law applied to copyright is preferable to criminal lawsuits because the former "allows us to get compensatory damages."

Meanwhile, in France, industry body SNEP also issued a warning to file-sharers. "We will continue to raise awareness, but litigation has become indispensable," says SNEP director general Herve Rony. He expects there to be French cases "before the end of 2004."

Legal action is complicated in Europe because each country has a different set of rules.

In Germany, 68 individuals have been reported to law enforcement authorities pursuant to criminal complaints for alleged peer-to-peer infringement.

In contrast to other European countries, German law does not provide for any secure right to claim information from ISPs in civil-law proceedings. As a result, the copyright holders are forced to initiate criminal-law proceedings to determine the identity of the parties involved.

In Denmark, more than 120 people were sent civil demand letters asking them either to stop illegal file sharing and pay compensation, or face legal action. Each individual was asked to pay euros 10,667 ($12,990) for illegally downloading music or films from the Net. Each of them downloaded an average of 5,000 music files, or 60 films.

In Italy, 30 individuals have been charged with copyright infringement; in Canada, the number is 29.

"This is the start of an international campaign against copyright theft," says IFPI chairman and CEO Jay Berman.

"These cases are not about downloading for personal use," says IFPI general council Allen Dixon. "It's about putting hundreds or thousands of files [on the Internet] for people to share."

More legal actions are expected in the coming weeks.

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Washington Report

Amendments To Filesharing Bill On Horizon

By Bill Holland

WASHINGTON--Expect some unhappy House lawmakers to offer amendments to the pending H.R. 4077 when it comes before the full Judiciary Committee after the Easter recess.

The bill's key provision would authorize the Department of Justice to go after big-time filesharers with felony charges, and would slap 10-year jail terms on repeat offenders using P2P for commercial advantage or financial gain.

Surprisingly, legislators who usually champion "fair-use" copyright views when it comes to peer-to-peer services voted in favor of the main provision, passed by the Subcommittee on Courts, the Internet and Intellectual Property March 31.

What they want to change is another provision supported by the record industry that would allocate millions to create a public service copyright education program within the FBI.

"There would be no way to draw the line and say 'no' to the next interest group that wants a DOJ tax-funded education campaign against, say, drug trafficking or bank robbery," Rep. Rick Boucher, D-Va. tells ELW.

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Feds To Hollywood: Keep On Truckin'

By Brooks Boliek

WASHINGTON (Hollywood Reporter)--Hollywood will get a break under an amendment approved by the U.S. House last Thursday that relaxes the sleep requirement for truck drivers who haul supplies to movie and TV show sets.

Under an amendment, the new "hours-of-service" rules for truck drivers that went into effect this year are permanently suspended for truckers driving to and from sets as long as the distance is less than 100 miles.

Supporters of the amendment to the Transportation Equity Act argue that the safety factor making the hours-of-service rules necessary don't apply to most drivers employed by the entertainment industry.

The hours-of-service rules were put into effect over concerns that too many truckers were driving while fatigued, which is a leading cause of highway accidents.

While truckers working on Hollywood jobs often drive the same class of big trucks as over-the-road drivers, they seldom have to cover the same type of distances. Truckers working for production companies also have long layovers during filming, giving ample time for them to rest up.

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NAB Code-Of-Conduct Draft On Tap

By Bill Holland

WASHINGTON--Chances are good that the National Assn. of Broadcasters will attempt to forge a voluntary code of conduct in the next few months.

Such a code would keep the Federal Communications Commission from creating its own code to regulate broadcast-only programming that it deems profane, indecent or obscene.

FCC chairman Michael Powell gave NAB officials the green light on a self-imposed conduct code at a March 31 meeting. Federal lawmakers have also pushed for a new code.

This would be the second code of conduct for NAB. The first, in place for three decades, was knocked down on anti-trust grounds during the Reagan Administration in the 1980s.

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International Section

CRIA To Appeal ISP Ruling

By Larry Leblanc

TORONTO--The Canadian Recording Industry Assn (CRIA) plans to appeal a recent decision by the Toronto federal court that blocks CRIA from obtaining the names of alleged illegal file-sharers.

The court on March 31 ruled against a motion by CRIA, which would have allowed the group to begin suing individuals who illegally make music available online.

In his 28-page ruling, Justice Konrad von Finckenstein said CRIA did not prove there was copyright infringement by 29 alleged music uploaders. Von Finckenstein also ruled that downloading a song or making files available in shared files does not constitute copyright infringement under current Canadian law.

"No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings,'' Von Finckenstein wrote. "They merely placed personal copies into their shared directories which were accessible by other computer users via a P2P service.''

CRIA has been trying to sue individual high-volume infringers in order to recoup some of the losses from file-sharing networks, including over an estimated C$400 million in retail sales of music since 1999.

On Feb. 11, CRIA had filed a motion against five Canadian-based ISPs in federal court, to force these companies to hand over the names of 29 people who allegedly have shared a "high volume" of songs with others via the Internet in November and December 2003.

Bell/Sympatico, Rogers Communications, Shaw Communications, and Telus Corp. fought CRIA's request. However, Quebec-based Videotron Telecom agreed to comply.

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Kazaa Judge Reconsiders Raids

By Christie Eliezer

SYDNEY--The judge in the Kazaa civil case in Australia is expected to decide this week whether to allow Sharman to appeal the decision allowing MIPI to conduct raids in February.

Sharman, the parent company of Kazaa, argues that the Anton Pillar search order which authorized the raids should not have been granted.

Sharman CEO Nikki Hemming calls the seizure of data during the raids "heavy-handed, unnecessary and indicative of the recording industry's increasing desperation to crush peer-to-peer technology. We have complied full in U.S. proceedings and will continue to do so in this case under appropriate legal procedures."

Among the 12 premises raided were Sharman's offices in Sydney and the homes of its two senior executives.

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BBC Names Grade Chairman

By Sam Andrews

LONDON (Hollywood Reporter)--The BBC has named Michael Grade its new chairman.

Grade, the former CEO of Channel 4 in London, replaces Gavyn Davies, who exited in the wake of criticism in the Hutton Report.

The appointment requires the ratification of the British prime minister, the Privy Council and the Queen of England.

Grade is a former director of television at the BBC and currently executive chairman at Pinewood Shepperton studios.

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NZ Lawyer Blasts Copyright Proposals

By John Ferguson

AUCKLAND, New Zealand-A leading local intellectual property lawyer says controversial new changes planned for New Zealand copyright laws could breach the country's international obligations.

The New Zealand Government is looking to amend the Copyright Act of 1994 to take account of new advances in digital technology (ELW, March 29).

Earl Gray heads the intellectual property practice of New Zealand law firm Simpson Grierson. He says one particular proposal on home copying could place New Zealand in a precarious position in terms of international copyright obligations.

In June 2003, the Ministry Of Economic Development published recommendations covering such issues as format-shifting, ISP liability and technological protection.

These proposals form the basis of the new Copyright (New Technologies and Performers' Rights) Amendment Bill, which was expected to be introduced into Parliament in March, but is now unlikely to appear before June.

The bill's proposal to allow people to make a single copy of a sound recording for personal use has attracted fierce criticism from music industry organizations. Labels body the Recording Industry Association of New Zealand claims it could have a devastating impact on the local business.

New Zealand is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights, which sets minimum standards on the protection of intellectual property rights. The MED says the proposed amendments would make the NZ act "substantially consistent" with the World Intellectual Property Organisation Copyright Treaty.

However, Gray says: "In terms of TRIPS, any exceptions have to be confined to special cases, and I'm not sure that this [format shifting] is a special case. It would also seem to conflict with normal exploitation of a copyrighted work."

He also says it's "naive" that no provision seems to have been made by the government for any compensation for the music industry if format shifting gets the go-ahead. Other territories which have adopted similar proposals have usually incorporated some form of compensation, such as a levy on recordable products, he says.

Gray says the music industry will also be looking at the final provisions relating to the liability of Internet service providers. The key issue will be the speed at which ISPs remove offending sites once contacted by the copyright owner.

RIANZ is also set to make submissions on the proposals, and separate reports have reportedly been commissioned on the economic impact of the legislation and New Zealand's international copyright obligations. The submissions will be presented in two weeks.

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War Over 'Warsaw Concerto'

By Roger Pearson

LONDON--The London High Court is expected to rule on who owns the U.K. copyrights to 44 musical works by the late British composer Richard Addinsell.

London-based music publisher Novello & Co. is asking the court to rule that it owns the U.K. copyrights to Addinsell's works, while Keith Prowse Music Publishing Co., part of EMI Music Publishing, is contesting that claim.

At issue is Addinsell's "Warsaw Concerto" piece from the film "Dangerous Moonlight" and music from the David Lean film "Blythe Spirit."

The litigation stems from an allegedly ambiguous assignation made in 2000 by the trustees of Addinsell's estate.

Other musical works at issue are Addinsell's adaptations of some Lewis Carroll works, including "Alice in Wonderland" and "Jabberwocky Song."

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Dream Makers & Deal Breakers

This Week's Dream Makers & Deal Breakers:

- Razor & Tie Records in New York ups Victor Zaraya to VP of finance and operations. He previously was senior director of finance and operations.

- Rhythmic top 40 WBBM in Chicago appoints John Martin VP/GM. He was president of Converge Media.

- Verve Music Group in New York names Jamie Krents manager of international operations.

- Attorneys Nick Sciorra, Chuck Leaness, Craig Averill and Todd Rubenstein have opened a New York-based entertainment law firm.

The firm, Sciorra Leaness Averill & Rubenstein, will advise clients in film, TV, book and magazine publishing, restaurants and nightclubs, brand licensing and development, venture financing, apparel and advertising/marketing.

Clients include executives at HBO, Miramax, Lion's Gate, CAA, Sony, Universal Music and EMI; music acts Bonecrusher and Fischerspooner; Wind-Up Records Merchandising; producers Mike Mangini (Joss Stone) and Errol McCalla (Beyoncé, Destiny's Child); the Blue Note and B.B. King's nightclubs; Comedy Central; the publisher of In Touch magazine; and actress Annabella Sciorra.

- BMI in Nashville promotes Misha Hunke to senior director of performing rights and Eric Nance to associate director of performing rights. Hunke previously was director of performing rights, while Nance was senior researcher.

Contributors: Carla Hay and Samatha Chang.

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ASCAP Take On Digital-Download Royalties A Joke

By Cole Sternberg

U.S. copyright law grants musical works rights holders various exclusive rights, including the right to reproduction and the right to public performance.

Songwriters are owed mechanical royalties for copies made and performance royalties for public performances of their songs. ASCAP collects performance royalties on behalf of its member composers, songwriters, lyricists and music publishers.

The worlds of performance royalties and mechanical royalties are not meant to collide. For example, a CD is a reproduction deserved of a mechanical royalty and radio play is a public performance deserved of a performance royalty. ASCAP, however, is now attempting to claim that both a mechanical royalty and a performance royalty are owed for digital downloads.

How can this be? According to the ASCAP Internet licensing department, the transmission of the download from an online retailer's server to a personal computer is a public performance.

Whereas, the saving of the file to one's hard drive is a reproduction of the musical work. Although the reproduction aspect is entirely logical, as a copy is being made, the performance aspect is entirely illogical. Where is the public performance? A digital download is merely a new mechanism for delivery of a copy of the musical work. There is no performance.

Under ASCAP's flawed rationale, any delivery could be considered a public performance, such as amazon.com mailing a CD to a customer. And while ASCAP does not expect to collect a performance royalty for music sent through the mail, it does expect to collect a performance royalty for music sent through the Internet.

ASCAP's definition of a digital public performance is not supported in the industry. SoundExchange, the collection society appointed by Congress to collect digital performance royalties for sound recording rights holders, does not collect performance royalties on digital downloads.

Furthermore, BMI, ASCAP's biggest competitor, in its contractual definition of gross revenues (used for computing performance royalties owed) does not include digital download revenues.

Considering a download as a public performance simply makes no sense and it is doubtful that major digital retailers will allow ASCAP's definition to prevail.

Unfortunately, small digital retailers, looking to produce a legal website that fairly compensates copyright holders, face a non-negotiable pdf-contract from the ASCAP website with its inflated, unjustifiable rate scheme. What a joke.

Cole Sternberg, a 3L at American University, Washington College of Law, was a finalist in this year's Entertainment Law Initiative legal writing contest, co-sponsored by the Grammy Foundation and the American Bar Assn.

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Case Analyses

Jackson: Jury Should View Exculpatory Evidence

By Samantha Chang

NEW YORK--Michael Jackson wants the grand jury investigating child molestation charges against him to hear new evidence that he says prove his innocence.

Jackson's attorney, Benjamin Brafman, told Santa Barbara County Superior Court Judge Rodney Melville last Friday that he and co-counsel Mark Geragos were turning over to the prosecution a letter listing 100 items that tend to help show Jackson did not commit the crimes with which he is charged.

"There is a wealth of clearly exculpatory material. We are filing today 20 notebooks with the district attorney's office," Brafman said.

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Recent Cases And Filings:

Case: Payback Industries v. Bad Boy Entertainment; Arista Records; Bad Boy Records; BMG Entertainment
Issue: Breach of settlement agreement
Cite: NY Supreme Court, 104885
Filing attorney: Sherri Eisenpress of Reiss Eisenpress

Case: Jessica Simpson v. 4 Dog Productions
Issue: Breach of contract arising from defendants' alleged failure to pay for services rendered
Cite: US District Court for the Southern District of New York, CV-2510
Filing attorney: Sandor Frankel of Frankel & Abrams

Case: Elise Pearson v. Anton Alfred Newcombe; Tee Pee Records
Issue: Unauthorized use of a phone message from plaintiff on the new Brian Jonestown Massacre album.
Cite: Superior Court of California, County of Los Angeles BC312768
Filing attorney: S. Martin Keleti of Cohen & Cohen

Case: PWE Productions/James Curtis Brown, dba Perfect World Entertainment v. Russell Parrish, Darren Leader, Ralph Saenz, Travis Haley
Issue:Unfair competition and trademark dilution in defendants' alleged appropriation of the name "Metal Shop."
Cite: Superior Court of California, County of Los Angeles, BC312524
Filing attorney: Richard Trugman

Case: Donald Boyer v. Sherry Lansing; Paramount Domestic TV Films Pictures
Issue: Employment discrimination
Cite: SDNY, CV-2137
Filing attorney: Pro se

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