Lawyers in Love: At ABA '08 Music Lawyers Reveal the Future

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In this issue:

Between the October meetings of the California Copyright Conference (CCC) and the American Bar Association (ABA) the new laws for the music biz are under the microscope.

— Summary of the ABA conference: blah, blah, blah, oh, yeah… we’re all screwed.

— California Copyright Conference reveals the idiocy of the new CRB royalty rates.

— Will labels lose rights to Pink Floyd and dozens of other classic masters in 2013?

— Will a determined lawyer and his loophole extinguish the Copyright Royalty Board (CRB)?



And the buzz word is– “convergence.” A fancy way of saying— well, no one really knows yet. Things coming together, I guess. Like mergers. But what does that have to do with music? Add the other new buzz term, “new media,” and– it makes even less sense.

Regardless, it was impossible to have an “intelligent” conversation with this year’s American Bar Association Conference delegates without employing these two new idioms of nomenclature. Here’s a sample sentence, “With the convergence of new media and [insert what you’re selling] we’re seeing [insert projections you’re making] in the music space.” What does it mean?

Several long sessions had just about every speaker expounding the panacea of mobile content and convergence. But we were still confused. Thank Heaven we had veteran music lawyer/icon, Jay Copper (Greenberg Traurig) to sum it up. Towards the end of day one, on the “Reversion of Masters” panel–where he was but one speaker–he capped a fifteen minute Howard Beale-like filibuster with, “It’s all going into the phones!”

At last, a working definition of “convergence of new media.” I felt better.

Other regular characters were “the Brabi” (plural for the Brabec brothers) the bookend lawyer twins who swear they do not caucus on dressing identically just to screw with us. Their book “Music Money and Success” is a must read for anyone with a very long attention span and a desire to learn the inner workings of the accounting side of the biz.

But this year I saw something different; a rather large contingent of international attendees. Nigeria, Jamaica (see last email) and a few others very much out of the ABA jurisdiction, who, nonetheless, like legal anthropologists studying a lost civilization, came here to learn about the US music business.



The Mayan calendar says the world will come to an end in 2012. Even if they’re wrong it seems the Pop music biz will only survive one year beyond that. In 2013 many classic recordings slip out of the control of their major labels.

The hot topic for 2008’s American Bar Association conference was “termination of masters.” A little raison d’etre in the copyright act that supposedly levels the playing field for authors who are often at a disadvantage to the big, bad publisher (or record company in this case). The Copyright Act states that after 35 years, the license or transfer of a work must “terminate” and revert back to the original author.

With so many variances in the law we really need an iPhone Countdown app for what master rights are soon to go bye-bye. But, due to several exceptions, the albums that are immediately affected are those released in the US from 1978-1979. So, in the year 2013 the following Albums may no longer be property of their labels:

The Wall (Floyd)

Van Halen (Van Halen)

Off the Wall (Jackson)

Highway to Hell (AC/DC)

Joe’s Garage (Zappa)

Tusk (Fleetwood Mac)

London Calling (Clash)

Rust Never Sleeps (Young)

Darkness on the Edge of Town (Springsteen)

Man the Torpedoes (Petty)

Kids Are All Right (The Who)

Some Girls (Rolling Stones)

Fear of Music (Talking Heads)

Ricky Lee Jones (Jones)

Basically my entire vinyl collection.

Oh, I almost forgot– Breakfast In America, Super Tramp. (They can have that that one.)

As you can see, this is not an insignificant list, and this list is in NO WAY complete.

While this may sound like a victory for the artists, keep in mind that without the threat of label litigation we will likely see a de facto Public Domain-i-zation (I made that word up) of these masters. Artistically this might be cool, because now people can do wacky remixes and P2P them free of RIAA lawsuits, but it also means a complete deterioration of the one area that labels have been relying on for the revenue it takes to invest in new artists– catalog.


Yes! To make matters worse, it’s not only the labels that could get the shaft here, but the artist as well. You see, ANYONE who worked on the recording is considered “an author” and can apply for a “termination of [their] rights.” ANYONE. Right down to the hanger-on who played the tambourine because he dropped off weed at the studio and someone said, “Hey, want to jam on the record.”

Imagine being a top heritage artist, you get your masters back and you’re looking forward to making a fresh deal for your classic recording, only to have an army of ex-entourage you left in the wake of ascension shaking you down. Even if you’re legally in the right, the cost of litigation could bury you.

Several arguments have been forwarded to further define exactly who exactly “the author” is, but so far each one seems to have just enough merit to pass summary judgment. The fact is, no one knows for sure exactly what or who “the author” will be in this context.

For my anarchist readers, who are presently wringing their hands with glee, I’ll say this: it’s one thing to want labels to suffer because they’re such greedy bastards, it’s quite another to want to see a complete erosion of classic recordings and financial infrastructure.

This is only a small article on what is going to be a very, very scary topic over the next couple of years. Stay tuned and for the label haters out there keep reciting this mantra… “Better the devil you know…. Better the devil you know….”



After over a year’s worth of mediations the Copyright Royalty Board (“CRB” to their friends) has decided to piss off everybody and keep much debated mechanical licenses exactly the same.

The 2006 rate of 9.1 cents per copy was being debated by both sides of the street, the master side (labels, via the RIAA) and the songwriter’s side (publishing, via the NMPA). While the NMPA argued intelligently that the rate has gone up steadily every few years to keep up with inflation, and should continue to do so, the RIAA argued that using economics as a basis for discussion means the rate should go down. A single in 1960 cost $1. In 2008 it costs ninety-nine cents—assuming you pay for it at all. You don’t have to be Allen Greenspan to figure out that’s not cool. (Admittedly he’s not a great example to draw from this week.)

After more than a year of mediation the CRB decided to keep the rate just as it is– 9.1 cents; a decision that makes neither side happy. However, they did throw an interesting monkey wrench into the equation, one that, thank heaven, will give lawyers something to do for the next year. They created a second minimum rate for ringtones– 26 cents.

Just a few months back, when publishers wanted a special rate increase for ringtones, the CRB decided that a master was a master, was a master and the rate for a ringtone should be no different than the rate for a CD or a download. Now they’ve changed their minds. The RIAA will likely appeal and the NMPA will defend. Cage-match imminent.


One area the CRB decided to make not so simple for us in the music biz is the mechanical rates for streaming media. In other words, the rates for a “sale” of a recording when streamed through the internet (called a “play event”). Not to be confused with a download, iTunes-like sale. This would effect subscription services and so-called internet radio-like services, like Yahoo or Pandora. To make things really super simple the CRB has created five basic categories for the different types of play events:

–“Standalone Non-Portable Subscriptions – Streaming Only.”

–“Standalone Non-Portable Subscriptions Mixed Use.”

–“Standalone Portable Subscriptions Mixed Use.”

–“Bundled Subscription Services.”

And finally,

–“Free Non-Subscriptions Ad-Supported Services.”

And they’re just getting warmed up. The rates vary from formulas like “lesser of fifty cents per subscriber per month and (if pass-through) 18%” to “10.5% or (if not pass-through) 18%.”

If none of this makes sense to you, don’t worry. At this month’s CCC meeting some of the top attorneys in the business were scratching their heads too Since these rates are supposed to take into consideration that fact that many new models are based on content as a loss leader for revenue generated from ad sales, much of it then boils down to how each company chooses to define “ad revenue.” Attorney Ken Steinthal, poised, “If there is an ad in the pre or post roll then is that ‘revenue?’” More debates to follow.

But none of this may matter because, according to LA Attorney Ken Freundlich, the entire CRB May be “unconstitutional.” Read on…



Ken represents the only company that has made a viable play to compete with SoundExcahnge (SX) the agency that collects performance royalties for sound recordings. Ken’s client, Ron Gertz who owns Royalty Logic has lost appeal after appeal to create essentially a “two party” system, much like we already have with ASCAP and BMI (and SESAC) for performance royalties on the publishing side.

For sound recordings, presently only SoundExchange can collect the new revenue, and according to the CRB there will never be another contender. Gertz thinks this is unfair to everyone (except SX) and goes against Federal policy regarding monopolies.

But the Feds disagree. So, like any decent attorney would do, when the law is on your side, but the system is against you, you challenge the law makers. In this case Gertz’s lawyer, Ken Freundlich has filed an appellate motion to have the CRB dissolved. In essence, he wants the judges removed for incompetence, but his legal argument is based on the undisputed interpretation of the Constitution which requires that agencies like the CRB (also the IRS, CIA and other Federal Agencies) MUST have its Executives appointed by the Executive branch of the Government. The present CRB Judges were not.

If Ken wins his motion all the past three years of lobbying and mediation and everything you just read above will go down the tubes and we’ll have to start over again with a “properly appointed” CRB.

Ken says this is for the greater good.

We’ll see.

Ken, tell me this a very early April fool’s joke. Please.

Mo Out.