Record Labels Sue Pandora Over Pre-1972 Recordings

As expected, the three major labels, ABKCO, and the RIAA filed a copyright infringement lawsuit in New York state court against Pandora for playing pre-Feb. 15, 1972 recordings without making any royalty payments. This suit is a follow-up to the one filed against SiriusXM last September.

The labels say both digital music services take advantage of a copyright loophole, since the master recording for copyright wasn't created federally until 1972. But the labels claim that their master recordings are protected by individual state copyright laws and therefore deserve royalty payments.

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SoundExchange CEO and President Michael Huppe estimates that non-payment for pre-1972 recordings cost artists and labels $60 million in royalties non-payment in 2013 alone.

According to the just-filed lawsuit, the Copyright Act that created the master recording copyright "expressly preserves for pre-72 recordings 'any rights or remedies under the common law or statutes of any states' -- which rights and remedies are not in any way annulled or limited." The lawsuit further states that the New York courts have done so by recognizing and enforcing exclusive ownership rights in pre-1972 recordings. “For more than 100 years, the courts repeatedly have affirmed the policy of this [New York] State that the unique performances embodied in sound recordings are intangible property interests protected from unauthorized use and exploitation,” the complaint states.

The lawsuit further states that Pandora's refusal to pay royalties on such records is unfair to labels and artists.

"Pandora is confident in its legal position and looks forward to a quick resolution of this matter," said a company spokesperson.

In the press release announcing the lawsuit, legendary guitarist and songwriter Steve Cropper said in a statement on Pandora, "Why would they not want compensate me for my work? It’s an injustice that boggles the mind. Just like the programmers who deserve to be paid for their work, I deserve to be paid for mine.”

Commenting on the payment policies of SiriusXM and Pandora, Buddy Holly's widow Maria Elena Holly said in a statement, "Many artists from the 1950's are retired and struggling to support themselves or have families or heirs who are trying to make end meet . . . These companies’ failure to pay the rock 'n roll pioneers is an injustice and it needs to change.”

The complaint was filed with the Supreme Court of the state of New York on behalf of Capitol Records, Sony Music Entertainment, Universal Recordings Inc., Warner Music Group, and ABKCO Music & Records was filed on behalf of the labels by the lawfirm Mitchell Silberberg & Knupp LLC, who are also representing them in the SiriusXM case.

In the SiriusXM case, there could be important clarity on the issue of pre-'72 music coming in weeks. The plaintiffs have brought a motion for jury instruction and there is a hearing set for May 14. The satellite radio company has argued "there is no state law that requires SiriusXM (or any of the hundreds of thousands of other U.S. businesses that publicly perform music) to pay license fees for Pre-1972 Recordings."

In addition the majors lawsuit against SiriusXM, the Turtles are acting as lead plaintiff in a class-action lawsuit against the music service, alleging the same non-payment of royalties for pre-1972 recordings, on August  1, 2013 in the California's Superior Court in the Central District in Los Angeles.

Additional reporting by Eriq Gardner