YouTube MCNs Attacked in Lawsuits Over Alleged Use of Unlicensed Music (Exclusive)

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On Tuesday, Disney's Maker Studios, DreamWorks Animation's Awesomeness, Big Frame and BroadbandTV Corp. were all slammed with lawsuits that aim to rip the lid off of unlicensed music on YouTube.

The copyright infringement claims against these multi-channel networks (MCNs) comes in New York federal court from Freeplay Music, which counts a music library of 50,000 works by various composers. Since launching in 2001 under the stewardship of Scott Schreer, whose own credits include doing themes for NFL on Fox, The O'Reilly Factor and The Cosby Show, Freeplay has positioned itself as a provider of tunes for television and feature films. Increasingly, Freeplay has been working the online marketplace too.

According to nearly identical lawsuits filed today against the MCNs, Freeplay began using audio fingerprint technology TuneSat to investigate the streaming of its music across the Internet. The result was that "TuneSat detected the rampant use of FPM's copyrighted music by the MCNs," states the complaints.

Last week, two MCNs filed their own lawsuits against Freeplay, accusing the company of a "bait and switch" by enticing consumers with the promise of "free music," only to later extort "outrageous" license fees when video producers used the music. "By its conduct, Freeplay aptly fits the definition of the term 'Copyright Troll,'" said Machinima and Collective Digital Studio in those lawsuits.

In Freeplay's own legal actions against Maker, Awesomeness, Big Frame and BroadbandTV — with counterclaims forthcoming against Machinima and Collective Digital Studio from what we're told — the music publisher presents a different take on what's happening that's perhaps tied into the nuances of how music gets licensed.

Video producers typically need a "synchronization license" to match music to screen visuals as well as a second license for the public performance of compositions .

Freeplay touts a "visionary" business model that grants free synch licenses so as to focus on the public performance income stream. When applying this model for television, for example, the lawsuit says it "provided FPM’s music a competitive edge in the marketplace: producers were incentivized to use FPM’s music as their initial budget was reduced. But by increasing its market share, FPM would generate additional performance fees, especially when a television program was successful."

Then, the digital market began heating up, and Freeplay says it initially entered into a deal with Apple so that users of the computer giant's DVD Studio Pro and Final Cut Pro video editing software were able to access a music library to add a soundtrack to their personal videos without paying for sync licenses.

Freeplay also says it made its catalogue available on its website and continued to offer free sync licenses for national television broadcasts, feature-length films, in-class education and personal use. On the latter front, Freeplay says that personal use included "non-commercial purposes" and not exploitation of its music "posted on a website." Freeplay later began offering a small portion of its titles for non-commercial use on YouTube for no up-front fees and charged $250 for a one-year license for business use.

Meanwhile, YouTube in the past decade since launch has exploded as a platform for creators. Some companies like Maker and Awesomeness have aimed to become artist-breeding studios for the YouTube age, taking a cut of ad revenue and have become highly valued by investors.  The Hollywood Reporter's 2014 deal of the year went to Disney for acquiring Maker for nearly $1 billion. The Disney-Maker deal came months after DreamWorks Animation spent $117 million for Awesomeness.

"But MCNs’ lucrative business model also has created significant concerns, including increasing opportunities for copyright infringement," says the complaint filed today by Freeplay. "Upon information and belief, in response to those concerns, in 2014, YouTube issued a policy requiring MCNs to designate each channel within its network as an 'affiliate' or 'managed' partner."

YouTube itself is no stranger to copyright litigation and copyright threats, but the newest lawsuit says that for channels designated as managed partners, "the MCN is responsible for copyright compliance and instituting safeguards to protect against copyright violations. In exchange for their agreement to self-police, MCNs are permitted to monetize videos instantly and to the exclusion of third parties."

The off-setting of responsibility also means that Freeplay doesn't get notified by YouTube when its copyright music is used. For that, Freeplay turned to TuneSat, co-founded by Schreer and Chris Woods, which had its entertainment industry opening a few years ago thanks to the rampant and sometimes problematic use of hand-written "cue sheets" by television producers to monitor how music is used on-air.  In the last two years, TuneSat has initiated web monitoring too.

According to the complaint, after Freeplay detected "evidence of clear copyright infringement," it approached the MCNs to alert them and explore solutions.

"But despite their recognition that FPM’s copyrights were being infringed, the MCNs ceased serious negotiations," states the complaint. "Last week, two brought declaratory judgment actions, and other MCNs—including Defendants—have refused to address their infringement and/or properly compensate FPM."

The lawsuits allege BroadbandTV has infringed over 70 copyrights in at least 128 videos, Maker has infringed 45 copyrights in at least 60 videos, and Awesomeness/Big Frame have infringed 14 copyrights in over 20 videos. Claiming statutory damages of up to $150,000 per infringement, the damages could amount to millions of dollars.

Freeplay is being represented by Oren Warshavsky and Tatiana Markel at BakerHostetler.

The defendants had no immediate comment.

Twitter: @eriqgardner