Songwriters Sue Justice Department over New Royalty Rules

IllustrationI recently wrote about how Katy Perry, Taylor Swift, Paul McCartney and about 180 other major recording artists signed a letter asking the US Congress to reform American copyright laws.

In that case, the artists objected to the "safe harbor" provisions of the Digital Millennium Copyright Act (DMCA), which frees sites like YouTube from responsibility for copyright infringement for materials posted by users, as long as they follow proper "notice and takedown" procedures.

Most songs and music videos posted on YouTube are unlicensed and unauthorized (though in many cases, YouTube shares advertising revenues with the music labels).

However, even when music IS licensed, the songwriters often earn very little.

For example, as reported by the New York Times, Michelle Lewis, a Los Angeles songwriter, writes songs for television shows like "Doc McStuffins." When these songs stream on sites like Pandora and Spotify, she earns less than $100 from all streaming sites combined.

Licensing Organizations

Most music royalties are handled by the licensing organizations Ascap and BMI. In August, the US Department of Justice (DOJ) ruled that they must change their procedures in order to comply with federal regulations.

But that upset a lot of songwriters. In late September, Lewis and Songwriters of North America, an advocacy group that she started, sued the DOJ, the Attorney General of the US, and the Acting Assistant Attorney General of the DOJ Antitrust Divisions, claiming that the government had violated songwriters' Fifth Amendment rights to not be deprived of their property without due process of law.

The songwriters' group also sued for a violation of federal administrative law.

Collecting Royalties

When songs are played on the radio, on streaming services, and in many restaurants, clubs, and other public venues, Ascap, BMI, and other performing rights organizations collect royalties that they pass on to the music labels, songwriters, and performers.

These royalties total more than $2 billion per year in the United States.

Ascap and BMI were unhappy with federal regulations that governed them and asked the Justice Department for changes. The DOJ declined, after a two-year investigation into music licensing practices.

The DOJ also added a new requirement that the licensing entities offer "100 percent licensing" of the songs they manage.

100% Licensing

Many songs have more than one writer, and the co-writers don't always belong to the same licensing organization.

Under the new DOJ rules, if Ascap wants to license a song, and one co-writer is represented by Ascap and the other by BMI, Ascap would need to have legal "clearance" to represent the song.

Musicians are concerned that this could cause turmoil in the industry. According to the Times

They argue that the performing rights organizations have long represented only the fractions of songs that they control, and that for a radio station or digital service to be properly licensed, it must have deals in place with the various groups representing any portion of a song.

Among other things, the songwriters are concerned that the new regulations might mean that contracts between songwriting partners might not comply with the new rules, putting enforcement of those contracts at issue.

According to the lawsuit,

The 100 percent mandate is an illegitimate assertion of agency power in gross violation of plaintiffs’ due process rights, copyright interests and freedom of contacts, and needs to be set aside.

Lewis said that she also hoped that the lawsuit would make the public more aware of songwriters, most of whom aren't known to the public by name, even when they write hit songs.

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