A lawsuit filed by the Turtles seeking artist performance royalties from SiriusXM is just the tip of the iceberg of a long-running feud between the satellite radio service and record labels and artists over pre-1972 copyrights.
Since a U.S. copyright was created for master recordings beginning with those issued after Feb. 15, 1972, SiriusXM has taken the stance that it doesn’t have to pay for pre-1972 recordings since no federal copyright existed before then.
In general, SiriusXM relies on a compulsory blanket license that allows it to play any commercially available music, and in turn it pays a statutory rate set by the Copyright Royalty Board (CRB) — currently at 9% of revenue.
Since talk radio and other programming consists of about 50% of the service’s airtime, the 9% is generally applied to half of the company’s revenue. But SiriusÂXM further deducts an undisclosed amount, estimated at 10%-15% of gross revenue, for the pre-1972 master recordings played on its stations.
But the labels never challenged SiriusXM in court, apparently because they were waiting for the CRB to rule on it. They may also have been concerned that other digital services would become aware of this issue and also withhold royalty payments for pre-1972 recordings.
SiriusXM continued to deduct for the pre-1972 recordings and stopped reporting any title-by-title information whatsoever on those recordings when asked by SoundExchange which titles are being deducted, according to sources.
All of this came to a head earlier this year when the latest CRB final determination on satellite radio rates was made — 9% of revenue this year and rising by half of a percentage point each year through 2017, up to 11%.
In that final determination published in April, the CRB upheld the SiriusXM stance that the service didn’t have to make royalty payments for the pre-1972 recordings, but questioned the way those payments were withheld. Instead of shaving gross revenue to account for the pre-1972 airtime, it said that “the proper approach is to calculate a deduction from the total royalty obligation” to account for pre-1972 recording performances. It further said that the methodology for determining the deduction must be precise and transparent. So it was a big win for SiriusXM and a small one for SoundExchange on how deductions are calculated.
That CRB ruling kicked into high gear closed-door discussions within labels about pursuing a challenge to the SiriusXM stance based on state copyright laws, sources say.
With that conversation still ongoing, the proposed class-action lawsuit hit, with the Turtles as the lead plaintiff. According to the suit, filed Aug. 1 in California Superior Court in the Central District in Los Angeles, Civil Code section 980 (a)(2) provides that an author of an original work consisting of a sound recording made prior to Feb. 15, 1972, has exclusive ownership until Feb. 15, 2047. It further says that unauthorized exploitation of a pre-1972 recording constitutes “misappropriate, unfair competition and conversion.”
SoundExchange, the RIAA, SiriusXM and various labels including some majors declined to comment.
The suit was filed by Los Angeles-based law firm Gradstein & Marzano and attorney Evan S. Cohen, according to the document.