by : Music Law, October 2011

Artists And Their Masters: Conflict in 2013

2013 will be a defining year for many artists, record labels, and the recording industry as a whole. With the clause in the 1978 Copyright Act, an author may reclaim ownership of his work after 35 years.  We are on the verge of witnessing a clash of the titans between major labels and superstar artists. This reversion of rights debate is of major importance as it threatens to either redefine copyright law or allow artists to fully control what they believe to be rightfully theirs, and deliver a potentially fatal blow to record labels across America.

The 1978 Copyright Act states that authors of a specific work may reclaim ownership after 35 years of its creation. Publishing deals have noted this with little controversy. However, the Copyright Act also claims that this reversion of rights does not apply to works made for hire. There is a specific list of limitations that the work must fall under in order to be accepted as a work made for hire. These conditions state that in order to be considered as such, there must be either an employer/employee relationship, or the work must fall into nine specific categories, none of which include sound recordings.

The debate stems from the labels’ claim that artists, when recording their albums, acted as employees of the record label, which would therefore qualify the masters as works for hire. However, in order to be an employee, it is generally thought that the recipient must receive a specified salary, which most artists don’t. Instead, the large majority musicians receive cash advances that become fully recoupable against artist royalties. Record labels also crafted contractual clauses specifically stating that the masters were in fact works for hire. The problem with these clauses is that sound recordings do not fall into the specific limitations of works for hire, rendering the language in these articles legally unsound.

In order to avoid the upcoming conflict, the RIAA secretively passed a bill in 1999 stating that sound recordings were once and for all to be considered works made for hire. This immediately created conflict with the population of songwriters, including the Recording Artists’ Coalition, who lobbied successfully for the bill’s cancellation.

The record labels have long been portrayed as large, soulless corporations, which has lead the public to perceive this upcoming battle as a way for artists to regain ownership of what is rightfully theirs. But it is important to gauge the consequences of such legal action before jumping to any conclusions. The music industry is already in a load of trouble, and further hindering the labels’ business could be bad for everyone.

An interesting article by Moses Avalon discusses a few popular alternatives that could leave both parties happy without damaging our industry [1].Of these solutions, the most attractive encourages labels and songwriters to use this threat as an initiative to renegotiate royalty percentages on masters. This could end up being far less costly than a never-ending legal battle. In addition to saving money, artist rights would still be protected by the labels’ ability to seek out and pursue copyright infringers, an activity many artists may not have the resources to become involved in.

Furthermore, certain clauses in the recent extension of copyright protection for masters in the E.U. could be used as a model for solving the 2013 debate. Just a few months ago, the E.U. extended its copyright protection from 50 years to 70 years after the creation of a master. Although major European corporations mostly backed this change, the new law includes a few extremely beneficial clauses for artists, including the E.U. directive that it is “a requirement for labels to ensure all recordings are commercially available, failing which the artist will be entitled to release their recordings themselves.”[2]  If such a clause were to be included in a 2013 rights reversion compromise, it would allow artists whose masters have been withheld to release their material and potentially revive their careers.

Many proponents of the reversion of masters to its original creators believe that the impact on the labels will be minimal. This reasoning is backed by the fact that the only masters whose rights will be reverted in 2013 will be the ones recorded in 1978. Each year, labels would only lose the rights to masters recorded 35 years prior. This means that as long as a label continues recording artists, its catalog should continue to thrive, losing the rights to only a small part of its sound recordings collection each year.   Although such reasoning may seem logically sound, we must not assume that all masters are equally profitable. The consequences could be disastrous if a label were to lose the rights to one of its “gold-mine” masters.

Another interesting complication that arises from this debate is the actual ownership of the masters. In the eyes of the law, the proprietor(s) of a sound recording could be any combination of people having contributed to its creation. This dilemma would include a multitude of parties, ranging from songwriters, featured artists, producers, session players, engineers, etc., all of whom contributed in some way to the production of a master. Adding all these people to the already complex dispute could turn this case into a legal nightmare with multiple parties fighting each other for partial ownership.

It is important to remember that the rebuilding of a successful industry requires the cooperation of all parties involved.  Although tempting, a long, costly legal battle may actually hinder the recording industry’s ability to successfully navigate through the traitorous waters it already faces. The legal conundrum that will erupt in 2013 will most definitely reshape our industry; let us only hope that it will be for the best.

By Frederic Choquette

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1. http://www.mosesavalon.com/mosesblog/

2. http://www.billboard.biz/bbbiz/industry/publishing/eu-extends-copyright-term-to-70-years-1005348552.story

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  1. Luigi Cappel says:

    Another interesting aspect to this is that if the record companies stop producing hard media ie CD’s then they perhaps lose a major component of control in the industry. They will have to dramatically change their business models to stay relevant.

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