Another Royalty Ripoff!

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  • #34240 Reply
    Renzi
    Participant

    My attempt at humor.You know how some of these groups throw members off at the least controversial comment?
    JR

    #34243 Reply
    MichaelL
    Participant

    There has been an ongoing discussion in several threads about PROs, in this instance BMI, not collecting royalties, or perhaps collecting but not distributing royalties to composers. It has been suggested that some kind of legal action be taken against BMI to force payment or that laws be changed, etc. I’m going to try to address several issues here.

    First, understand that your relationship with BMI is a non-exclusive license. It is this fact that allows you to direct license your music. Because you have effectively licensed your music to BMI, it would potentially be difficult to argue that BMI is somehow infringing on your copyright unless it is doing something outside the scope of the license, a portion of which reads as follows:

    4. Except as otherwise provided herein, you hereby grant to us for the Period:
    (a) All the rights that you own or acquire publicly to perform, and to license others to perform, anywhere in the world, in any and all places and in any and all media, now known or which hereafter may be developed, any part or all of the Works

    This appears to be the relevant language regarding payment:

    6. (a) As full consideration for all rights granted to us hereunder and as security therefor, we agree to pay to you, with respect to each of the Works in which we obtain and retain performing rights during the Period:
    (i) For radio and television performances of a Work in the United States, its territories and possessions, amounts calculated pursuant to our then current standard practices upon the basis of the then current performance rates generally paid by us to our affiliated writers for similar performances of similar compositions. The number of performances for which you shall be entitled to payment shall be estimated by us in accordance with our then current system of computing the number of such performances.

    Under 6(a)(i), in exchange for the rights that you grant to BMI it agrees to pay you according to “our current standard practices” upon the basis of the then current performance rates. The key phrase here is, “our current standard practices.” This clause gives BMI a lot of discretion to determine what they will and will not track or pay for, like pharmaceutical commercials. It’s just not their “standard practice,” at the moment. The applicable rates are set by the Copyright Royalty board, not BMI.

    Section 6(b) states as follows:

    Notwithstanding the provisions of subparagraph 6(a), we shall have no obligation to make payment hereunder with respect to (i) any performance of a Work which occurs prior to the date on which we have received from you all of the information and material with respect to such Work which is referred to in paragraphs 2 and 3, or (ii) any performance of a Work as to which a direct license as described in subparagraph 5(c) has been granted by you, your co-writers, if any, or the publishers…

    Section 6(b) appears to state that BMI has no obligation to make any payments for performances that you, your co-writers, or your publishers direct license. So, in as much as certain libraries do direct license deals this suggests that BMI is not obligated to pay royalties under those circumstances. Additionally, I recently read a contract from a popular library which basically stated “we do not have to pay you anything for blanket license fees.”

    So you have a double whammy. The combination of these agreements is the hole through which Scripps drive the no-royalty truck. The library says we don’t share blanket fees and BMI says we don’t pay for direct licenses. Composers say “How is this even legal?” The answer is that you agreed to it under contract.

    Suing the PROs was mentioned in a few threads. Without debating the merits of litigation, BMI’s contract contains an arbitration clause. Here is the relevant language:

    21. All disputes of any kind, nature or description arising in connection with the terms and conditions of this agreement shall be submitted to the American Arbitration Association in New York, New York, for arbitration under its then prevailing rules… The award made in the arbitration shall be binding and conclusive on both of us and shall include the fixing of the costs, expenses and reasonable attorneys’ fees of arbitration, which shall be borne by the unsuccessful party. Judgment may be entered in New York State Supreme Court or any other court having jurisdiction.

    Potentially, this clause eliminates the possibility of “class action” litigation as mentioned in an earlier thread. Arbitration clauses are a common tactic used to avoid class action suits. But, beyond that, notice that if you lose you are on the hook for costs and BMI’s legal fees. The same situation applies with respect to copyright infringement litigation in federal court (which seems to be waived under BMI’s agreement). Under 17 U.S. Code §?505, if you were to sue BMI and lose the court could order you to pay costs and BMI’s legal fees.

    Maybe jdt9517 can put a different spin on this, but its appears that these various royalty issues are a product of the contract terms that composers have agreed to with the PROs and various libraries.

    #34244 Reply
    MichaelL
    Participant

    It may not be so much that the royalty situation is a product of the PRO and library contracts, but that the contracts enable the situation and perhaps insulate the PROs and the libraries from any meaningful action.

    #34245 Reply
    LAwriter
    Participant

    Thank you @MichaelL !! Pretty much as I remembered / expected. BMI are not fools, they have no doubt been down this road many times and know well how to perform (yes, pun intended) a CYA symphony.

    #34247 Reply
    Art Munson
    Keymaster

    Yes, thanks MichaelL for all of your input.

    #34248 Reply
    jdt9517
    Participant

    @Michaell- thanks for the good information. Why this is so dear to me is that many years ago, BMI refused to pay me royalties for many, many documented, reported and paid commercial radio spins for a song I had on the charts. BMI relied upon those same provisions you cited. BMI kept many thousands of dollars of royalties that should have been paid to me.
    Certainly the PRO’s have set up the contracts to create this big hole and arbitration provisions to keep any effective litigation from happening. This scheme seems to prevent the very purpose that the contract is supposed to enable – get the composer paid. It seems if the procedural hurdles can be overcome, a fair-minded federal judge would look at the merits fairly seriously. The federal judges I have come to know would be very slow to say a contractual scheme is OK that pays everyone except the creator of the product.
    I’m sure you have a better handle on the nuances of this area of law than I do. I would love to be able to talk to you directly about this and what possible solutions there may be. If you could PM me with contact info, or I would be glad to do the same. Thanks. .

    #34252 Reply
    Music1234
    Participant

    the contracts enable the situation and perhaps insulate the PROs and the libraries from any meaningful action.

    Absolutely agree but should this fact silence us? Everyone in the business knows this is wrong and morally bankrupt. When Music Publishers/ Libraries peddle our music only for them to profit from deals they make, they are morally bankrupt individuals.

    When PRO’s can hide behind vague language that says “our current standard practices” which seems to be paying performance royalties for TV spots that are tracked in Numerator’s database only, that too is a problem that should be protested or at least discussed. Change only occurs if you raise your voice and advocate for change and bring awareness to important issues. I am perplexed as to why Numerator would not track Pharma ads?

    We need to advocate for I Spot TV being a source of valid air date information for PRO’s to consider too.

    For the record, the way royalties were collected on Spots in the 90’s was by fedexing a video tape of the spot with a copy of the work for hie contract in the package and a letter explaining “I was hired to write original music for this commercial enclosed, I am attaching a copy of the music contract for your reference. As a member of your society, I am hoping to collect performance royalties for these public broadcasts on TV….etc…”

    We’ve come a long way and Numerator is a good service for all, but if Numerator decides certain industries/ and advertisers will not be tracked (i.e Single Care) well that’s a problem and we need to bring awareness to this. I Spot TV sure is a great option for PRO’s to use. So we should advocate for either Competitrack/ Numerator or I Spot TV as acceptable data/ evidence/ proof of usage on air.

    The federal judges I have come to know would be very slow to say a contractual scheme is OK that pays everyone except the creator of the product.

    Dear Lord, I hope so! How about YOUTUBE’S $15 Billion in ad revenue (More ad revenue than VIACOM and Discovery). All those ads broadcast music yet I see on my statement statements

    “YOUTUBE FREE” Total Royalty amount – $.03 Cents

    “YOUTUBE Premium Total” $0.02 Cents

    OH indeed….I’d say that these “Standard Practices” are really behind the times. There is way too much weighting put on ABC, CBS, NBC, FOX while YOUTUBE / GOOGLE (Streaming in general) seems to be neglected by all PRO’s.

    Last comment: Single care is not a Pharma company, but a prescription Savings Card. Their mission Statement

    “We partner with pharmacies nationwide to get you affordable prices on your prescriptions.”

    So I assume they have a royalty deal in place – If we were to walk into a Pharmacy and present the card, we will get a discount on the drugs we’re buying. They in turn ( I assume) get a royalty commission from Walgreens or CVS or the drug company? Strange business model….I wonder how they make money?

    Art, Single Care may not be in Numerator’s database just yet, since it seems to be a new brand recently coming onto the market.

    #34253 Reply
    Art Munson
    Keymaster

    Art, Single Care may not be in Numerator’s database just yet, since it seems to be a new brand recently coming onto the market.

    There is that.

    I uploaded the music to AdRev. With 1.8 million views on YouTube it will be interesting to see what happens when they get a copyright strike!

    I also posted this to my FB page that has a lot of music “friends” from my past including Miriam Cutler one of the founders of Your Music, Your Future. https://yourmusicyourfuture.com/

    #34254 Reply
    Music1234
    Participant

    Art, I was so curious that I called Single Care’s line. They get paid a royalty/ commission from Walgreens/ CVS..etc..(From Pharmacies) every time a customer buys drugs with their “free discount card”. The card seems to act as a coupon. It’s crazy the business models that are dreamed up these days. So If we go to CVS to buy a prescription and present our Single Care cards, CVS will charge 20% less, and also line Single Care’s pockets with a commission.

    Why can’t we just walk into CVS and get a fair and reasonable price for the drug with no card at all?

    Closing in on 9000 air dates. They sure have a lot of money to buy a lot of spots on TV advertising their discount card.

    #34260 Reply
    Debbie Hennessey
    Guest

    Martin Sheen is a SAG board member. You should try and reach out to him there.

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