November 19, 2018
Originally posted 2017-02-27 12:09:23
By Christina Severino | amdlawgroup.com
The U.S. District Court of Appeals for California ruled against SiriusXM last week for airing music produced prior to the 1972. The laws of federal copyrights after 1972 expanded to cover master recordings. The lawsuit was filed by band songwriters Flo & Eddie of the Turtles. They sought $100 million in damages from the satellite radio company. Since satellite radio is considered a digital service (as opposed to traditional broadcasting, or terrestrial radio) SiriusXM must comply with the Digital Millennium Act, which requires them to pay royalties for playing any music of the respective rights-holders. Judge Gutierrez ruled against SiriusXM, on the grounds that it only paid royalties for recordings produced after 1972.
The company intends to appeal the decision on several grounds. The CFO of SiriusXM, David Frear, stated that under Gutierrez’ analysis, every public forum which plays music (restaurants, bars, etc.) would be required to pay royalties to rights holders. He is also quoted as saying, “that the Rolling Stones and the Beatles and Joni Mitchell and Creedence Clearwater Revival and Frank Sinatra and Benny Goodman for that matter, anybody who recorded a song prior to 1972, for the last 33 years, has been neglectful in protecting their own economic interests.” Further, he states, “The Turtles, who recorded their songs in the ‘60s, and for 33 years failed to do anything to say they were being damaged, including back in maybe 1982 when the law was passed, or 1983 or 1984 when it was much closer to when their recordings were originally released. You would think their damage would have been far greater back then, for all the terrestrial radio stations that were playing ‘Happy Together,’ and some of those other great songs.” Lastly, Frear pointed out the inconsistencies of how these cases are treated during the same conference. He cites two recent California State court hearings in which both decisions had opposite results, thus highlighting the need for a federal court opinion on the matter.
The distinction between a satellite (digital) and a terrestrial station seems critical. Specifically, SiriusXM is a product on the market. Additionally, the company creates stations by genre and other factors, tailored to suiting the customers’ needs. If SiriusXM is able to create a new station every time they decide that a new genre, artist, or decade should be highlighted, they may do so. Whereas, a terrestrial radio broadcast is limited in the number of stations and genres since it is a public broadcasting. Further, as a public broadcasting, there are issues of the audience being captive, where they may only choose to listen to a few stations at any given time. It is not paid for and the listener only has the option to turn the radio off or flip to another station. The flexibility of a satellite radio service subscription comes at a price to the consumer, and SiriusXM is taking advantage of the wide variety of songs it offers to its customers. The customers are seeking out SiriusXM’s services out of their own volition and are not a captive audience. Therefore, SiriusXM may struggle with the appeal if they aren’t able to argue that they are not taking advantage of the number of songs and genres it chooses to air, to draw more customers and hold onto its current subscribers. The service includes several stations with recordings from as far back as the 1920s. The profitability and expansion of the service largely depends on its ability to play songs that reach far before 1972 and Sirius is taking advantage of this.