SiriusXM recently suffered a series of disastrous courtroom defeats that threaten to harm not just its own digital radio service, but other companies — from YouTube to FM radio — that also play oldies from before 1972. In response, SiriusXM is pinning its hopes on an oldie of its own, in the form of a 1940 copyright case.
The case in question concerns phonograph records, and SiriusXM is asking a New York judge to use it as a basis to reconsider her finding in November that based on state laws, performers from the band The Turtles deserve an unprecedented copyright payout when companies play their old songs.
According to Litigation Daily (sub. required), SiriusXM believes U.S. District Judge Colleen McMahon overlooked the phonograph decision’s significance. A further report, meanwhile, suggests the company scored a point when the judge this week said she hadn’t considered the case and that it “might require her to rethink the ruling.”
Penned by the famous jurist Judge Learned Hand, the 1940 decision concluded that a radio station did not have to pay an orchestra band leader, in addition to the song composer, each time it played a recording of his performance.
Learned Hand wrote that state law should not let performers, once a phonograph was sold, control how and when it was played:
we think that the “common-law property” in these performances ended with the sale of the records and that the restriction did not save it; and that if it did, the records themselves could not be clogged with a servitude.[my emphasis]
Now, 65 years later, the case could prove decisive in the high stakes dispute between SiriusXM and the music industry. If the 1940 rule does not stand, and the Turtles’ position prevails instead, it will mean bring higher music prices for everyone, and yet another expansion of U.S. copyright law.
Closing a loophole or imposing a tax?
The New York dispute over the phonograph ruling is just one piece of a greater game in which the Turtles and record labels are trying to pry more royalties from digital radio services like SiriusXM and Pandora.
So far, the Turtles won the first round in New York as well as two similar rulings in California. And already, they have tried to build on these victories by bringing a class action suit over pre-1972 recordings against the digital radio service Pandora.
The Turtles claims are also just the tip of the iceberg, since every other performer (or their heirs) will be in a position to make claims over unpaid per-1972 royalties too. This could represent a major financial blow to radio stations and to music websites like YouTube and Vimeo, and would likely lead them to simply pull most oldies music from their playlist altogether.
Consumers, meanwhile, would face the prospect of higher music rates and diminished access to their favorite songs. So far, however, the potential implications of the Turtles’ victories has not been widely recognized.
This may be due to the fact labels have portrayed the lack of performance payments for pre-1972 songs as a “loophole” rather than something, as the 1940 decision shows, that never existed in the first place. Also, in their public statements, the labels have also been careful to omit the fact that SiriusXM and others do pay royalties for these songs in the form of payments to the songwriter, and when they purchase the songs in the first place.
Overall, the call to create new pre-1972 payment obligations may be less about closing a royalty loophole, and more about imposing a new copyright tax. This is especially the case given that copyright is supposed to provide an incentive for artists to create new work — rather than offer new rewards for work performed more than four decades ago.
In the case of showing respect for the oldies, then, SiriusXM and the rest of us should hope that respect extends to judges like Learned Hand too.