Music Licensing

1
Music Licensing

• Donald R. Simon, Esq.
• Adjunct Professor
• Radio Dept. - Columbia College Chicago
• J-Term, 2009

2
Music Licensing - Session 4

• Digital Sampling
• Digital public performance and new media
  licensing
• Licensing for podcasting
• Internet Radio Equality Act
• Guest speaker

3
Music Licensing

• Digital Sampling
• Refers to the recording of a sound or a portion
  of a previously existing recording, then placing
  that sample in a new recording.
• What started out as a minor practice of taking
  great drum sounds and unusual squeaks and groans
  has turned into a wholesale lifting of rhythm
  tracks, melodies, etc.

4
Music Licensing

• Digital Sampling
• Pervasive in the rap genre.
• Examples
• M.C. Hammers Cant Touch This sampled Rick
  James Super Freak
• Vanilla Ices Ice Ice Baby sampled David Bowie
  and Queens Under Pressure
• Eminems Stan sampled Didos Thank You

5
Music Licensing

• Digital Sampling

6
Music Licensing

• Digital Sampling
• Sampling merged with original material affords
  the artist or producer a way to more economically
  complete the recording process.
• For some artists, it is easier to select the
  right sound than to produce it from scratch.
• More cost effective than employing the talents of
  live musicians who could otherwise produce the
  desire sound or performance.

7
Music Licensing

• Digital Sampling
• A more common and compelling reason why sampling
  is used stems from the artists desire to give
  their original work a familiar element that
  listeners will recognize.
• In the early days, a lot of sampled works were
  released with the attitude of if they catch me,
  Ill make a deal or inaccurately thinking that
  the sample was a fair use.
• Potentially a violation of both CRs.

8
Music Licensing

• Digital Sampling
• Record have had an unspoken agreement to overlook
  sampling by each others artists.
• Songwriters/publishers take a different view.
• Artists should play it safe and license both
  CRsa mechanical license for the composition
  (notes/lyrics) and a master use license for the
  recording.
• Keep a log of all samples used and get permission
  before distribution occurs.

9
Music Licensing

• Digital Sampling
• Mechanical licenses for song samples are not
  subject to the compulsory license and statutory
  rate provisions discussed last time.
• Songwriters/publishers can refuse to license.
• Fees may be freely negotiated as a flat rate for
  a few Ks or on a royalty basis (most common)
  that can range from .08 to .10.
• Sample Digital Sample License Agreements.

10
Music Licensing

• Podcasting
• A podcast is an audio file archived on the
  Internet, accessed by a personal computer,
  downloaded, and the transferred to a portable MP3
  player, such as an iPod.
• Podcasts are usually in a talk show format but
  can be music or audio clips from television
  programs, movies, chat groups, daily horoscopes,
  or lectures.

11
Music Licensing

• Podcasting
• Remember that CR law protects musical
  compositions and the performance of those
  compositions in sound recordings.
• Podcasting implicates these in four ways
• the performance of a composition
• the reproduction of a composition
• the performance of a sound recording and
• the reproduction of a sound recording.

12
Music Licensing

• Podcasting
• Podcasters must license all CRs involved.
• This leaves the podcaster with three choices
• attempt to obtain licenses from publishers and
  record companies
• limit podcasts to compositions and sound
  recordings that are not subject to CR protection
  or
• eliminate the use of musical work altogether.
• Sample BMI Web Site License for performance of
  compositions.

13
Music Licensing

• Digital Performance Licensing
• Recall that CR owners are afforded virtual
  monopolies
• To reproduce the work in copies or phonorecords
• 2. To prepare derivative works
• 3. To distribute copies or phonorecords
• 4. To perform the work publicly
• 5. To display the work publicly and
• 6. To perform sound recordings by digital audio
  transmission.

14
Music Licensing

• Digital Performance Licensing
• Radio (terrestrial) and TV stations, restaurants,
  and clubs do not need a performance license for
  the recordings.
• Except for Internet uses, no monopoly right of
  performance for sound recordings.

15
Music Licensing

• Publisher grants right to license performance
  right to a performing rights society (PRS).
• Anyone wishing to perform a song publicly must
  get a license from a PRS or directly from a
  publisher.
• The PRSs handle the royalty distribution for all
  public performance licenses.
• PRSs issue blanket licenses to radio and TV
  stations, bars, restaurants, etc. that perform
  their members songs.
• Radio/TV stations pay a percentage of their
  revenues and businesses have set rates depending
  on various factors.
• PRSs have complex tracking and distribution
  formulas.

Public Performance Licensing(Analog)
16
Music Licensing

• Performance Licensing
• The Digital Performance Right in Sound Recordings
  Act (DPRSRA) of 1995 created a new right for
  owners of sound recordings.
• Under the DPRSRA, owners of CR in sound
  recordings were given exclusive public
  performance rights for the purposes of digital
  audio transmissions.
• Certain digital music services are to a
  compulsory to use pre-recorded music.

17
Music Licensing

• Performance Licensing
• DMCA later provided for a statutory license and
  royalty structure for the performance of sound
  recordings on Internet radio.
• SoundExchange collects and distributes these
  royalties on behalf of its members.
• Internet broadcasters are responsible for paying
  performance royalties for both CRs
• to ASCAP or BMI for the composition and
• to SoundExchange for the recording.

18
Music Licensing

• Performance Licensing
• SoundExchange is a non-profit PRS that collects
  royalties on the behalf of sound recording CR
  owners for non-interactive digital transmissions,
  including Internet radio.
• SoundExchange was created in 2000 as an
  unincorporated division of the RIAA.
• Lots of royalties go uncollected.

19
Music Licensing

• Performance Licensing
• The rates of these royalties periodically
  reviewed and adjusted by the CR Review Board
  (CRB).
• This group proposed a rate increase 3x to 4x the
  rate Internet broadcasters were playing.
• Threatened to bankrupt webcasters.

20
Music Licensing

• Performance Licensing
• Dissatisfaction prompted the introduction of the
  Internet Radio Equality Act to nullify the CRBs
  recent rate increase.
• Still out on appeal.
• Other legal issues still remain unresolved.

21
Music Licensing

• Performance Licensing
• The DMCA also limits the compulsory license by
  setting up stringent restrictions that are
  intended to avoid displacement of record sales.
• These restrictions contemplate that a listener
  will not use the webcasting service to create
  his/her own custom designed loops featuring a
  single artist or album.

22
Music Licensing

• Performance Licensing
• The compulsory license may only be secured if the
  webcaster does not play in any 3-hour period more
  than 3 songs from a particular album, including
  no more than 2 consecutively, or 4 songs by a
  particular artist or from a boxed set, including
  no more than 3 consecutively.

23
Music Licensing

• Publisher grants right to license performance
  right to a performing rights society (PRS).
• Anyone wishing to perform a song publicly must
  get a license from a PRS or directly from a
  publisher.
• The PRSs handle the royalty distribution for all
  public performance licenses.
• PRSs issue blanket licenses to radio and TV
  stations, bars, restaurants, etc. that perform
  their members songs.
• Radio/TV stations pay a percentage of their
  revenues and businesses have set rates depending
  on various factors.
• PRSs have complex tracking and distribution
  formulas.

Public Performance Licensing(Analog)
24
Music Licensing
Public Performance Licensing (Digital)
Assignment
Royalties

• The DPRSRA of 1995 created a new performance
  right for sound recordings.
• Only with respect to digital audio
  transmissions.
• Digital audio services can obtain a compulsory
  license for sound recordings at a statutory
  rate.
• A new PRS, SoundExchange, handles the sound
  recording license.
• Non-interactive only Interactive services
  must license at a negotiated rate.
• Streaming webcasting satellite radio other?

Royalties
ASCAP BMI SESAC
Performance
Blanket
Royalty (50)
Digital Music Service
Royalties
Assignment
Performance
Blanket
Sound Exchange 114
Recording Artist
Royalty (50)
25
Music Licensing
Movies, Television, Games, Advertisers
Radio, TV, Restaurants, Bars, Background Music,
Jukeboxes
Royalties
Assignment
Blanket
Synchronization
ASCAP BMI SESAC
Reproduction
Harry Fox Agency
Performance
Mechanical
Mechanical
Blanket
Reproduction of Sound Recording
Digital Music Service
Royalty (50)

• Independent
• Seller
• Download Service
• Compilation Issuer

Performance
Royalties
Assignment
Blanket
Sound Exchange 114
Designation
Royalty (50)
Licensing in the Music Industry
26
Music Licensing - Session 5

• Miscellaneous licensing issues
• Review for final
• Final exam