September 11, 2013 7:19pm PT by Shirley Halperin, Eriq Gardner
Major Labels Unite in Lawsuit Against SiriusXM
Major labels Sony Music Entertainment, UMG Recordings and Warner Music Group are suing satellite radio giant SiriusXM over recordings that predate 1972, joining at least four other similar legal actions.
At the heart of the dispute: that Federal copyright law did not protect sound recordings until 1972. Recordings made before 1972 -- staples of satellite radio -- are protected by state laws but SiriusXM has interpreted that fact such that they only pay for the use of songs recorded after 1972.
The plaintiffs allege that in playing songs recorded before 1972 -- including standards from the 40s and 50s, rock and roll from the 50s and 60s, and the Motown Sound – SiriusXM is neglecting to pay the artists and rights holders who brought those songs to life.
Flo & Eddie of The Turtles filed a $100 million class-action lawsuit against the satellite radio giant in August premised on the theory that because sound recordings didn't fall under federal copyright protection until 1972, SiriusXM couldn't rely on statutory royalty rates for these older tunes. The next month, SoundExchange filed its own $100 million lawsuit alleging that SiriusXM shouldn't have subtracted pre-'72 recordings from gross revenue calculations.
Despite the fact that hundreds of millions -- and possibility billions of dollars -- are at stake collectively in these lawsuits, investors are shrugging off the legal tidal wave against Sirius, pushing the company's stock price up 2.4 percent since the beginning of August.
In the suit, which was filed in California state court on Sept. 11, eight music artists voice their support for the action, including Dionne Warwick, Sam Moore, Eric Burdon and Judy Collins. Writes Nicole Cooke, granddaughter of Sam Cooke (“A Change is Gonna Come”): “SiriusXM is using my grandfather’s music to attract millions of subscribers and broadcasting his recordings for free. SiriusXM has been enjoying record profits at the expense of artists like my grandfather for too long.”
According to the complaint, SiriusXM generates $3.4 billion in annual revenue and “regularly advertises and promotes the availability of Pre-72 Recordings on its service.” With channels devoted exclusively to music from the ’40s, ’50s, ’60s, and ’70s, that SiriusXM refuses to obtain a license or pay any royalties “also undercuts those streaming services that do obtain licenses” for those particular recordings, the record companies, which also include ABKCO, state in the filing.