Copyright Update: Digital Music Streaming Issues

This paper was written and presented by Tamera H. Bennett at the 28th Annual Technology Law seminar hosted by UTLaw CLE. It has been edited into multiple blog posts. Enjoy part 1 below, Part 2 here, Part 3 at this link and Part 4.

I.          Streaming Pennies Are Hard to Divide

While most songwriters and artists thrive on the creative process of crafting their next song or production, the creative process by itself often does not put money in the bank.  The songs and sound recordings need to be commercially exploited with the hope and goal of securing licensing fees.

Whether you’re a label, artist, music publisher or songwriter, you either know or are quickly realizing the music business is a business of pennies. Those pennies are often so sliced and diced the music business has become a business of percentages of pennies.  Copyright owners often spend as much time tracking down payment for licensed uses as they do tracking down unlicensed content on the web. 

“In 2014, for the first time revenues from digital channels equaled revenues of physical format sales with both accounting for forty-six percent of global revenues.”

The new media – or digital space is huge and growing. In 2014, the music industry’s global digital revenues increased by 6.9 per cent to US$6.85 billion. IFPI DIGITAL MUSIC REPORT 2015 at 6. For the first time, revenues from digital channels equaled revenues of physical format sales with both accounting for forty-six percent of global revenues.

Thirty-two percent of digital revenues are from subscription and ad-supported streaming services, up from 27 per cent in 2013. Digital downloads still account for the majority of digital income coming in at 52 percent of global digital revenue. An estimated 41 million people paid for music subscription services in 2014, five times the level of eight million people in 2010. Once the royalties for digital downloads and streams are collected, they have to be distributed to the copyright owners.

When discussing the music business and who owns what rights, it's important to note that there are two copyrights involved in each musical recording. 17 U.S.C. § 102. The copyright that attaches to the song covers the words, music, and the arrangement. Sound recordings are defined as “works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work.” 17 U.S.C. § 101. The song copyright is owned by the song writer or a music publisher who was assigned the copyright. The copyright in a particular version of a recording is owned by the artist or record label. 

As an example of the difference between owning the song copyright and the master/sound recording copyright, recall that Dolly Parton is the songwriter of the hit “I Will Always Love You.” Neither Dolly Parton nor the music publishing company that owns the song copyright for “I Will Always Love You,” have any ownership in the sound recording copyright for the version of the song recorded by Whitney Houston for the movie “The Bodyguard.” Nor does the record label or Whitney Houston’s estate have any ownership in the song copyright. 

While music publishers and record labels are fighting their own issues on getting paid (and sometimes against each other), this article focuses on new media recent legal issues facing sound recording copyright owners.

Stay tuned for additional posts in this series.