UK: Extending the Term: Should the UK Recording Industry Have New Obligations as Well as New Rights if the Copyright Term for Sound Recordings is Extended?

Front page news in the UK trade magazine Music Week on the 4^th March 2006 was the headline ‘Time for Action’ launching a major campaign under the ‘Extend The Term!’ banner, calling on the UK Government to take action over extending the term of copyright for sound recordings from the current term of fifty (50) years to anything up to 95 years, to mirror protection in the USA. The UK Government has already responded to industry calls by appointing Andrew Gowers, formerly editor of the Financial Times, to review issues in intellectual Property. Mr Gowers has now issued a call for evidence relevant to his review. At the top of his list of the twelve areas of IP he wishes to address in his review is the current term of protection for sound recordings including raising the issue of whether or not an extension to ninety five (95) years, to mirror protection in the US, is appropriate; Gowers has asked for:

• evidence that a change in term would impact on investment, creativity and consumer interest
• evidence that extended terms in other markets has had an impact on investment, creativity and consumer interest
• whether any alternative arrangements could accompany any extension of term
• whether any change should be retrospective or just cover new works

But one of the problems for the record industry in Europe is comparison with activities of the major labels (SonyBMG, Warners, EMI and Universal) in the USA: In 2003 the major labels and three retailers were forced to settle for $143 million dollars for price fixing CDs; the majors are now embroiled in a ‘payola’ scandal after being investigated by New York attorney general Eliot Spizer: Both SonyBMG and Warners have already settled in this matter (paying over $10 million and $5 million respectively) for illegal ‘pay for play’ activities - this from the companies whose trade body, the Recording Industry Association of America (RIAA) warns Americans about the illegality and immorality of downloading without permission – and bangs the drum about copyright theft! And to add to major labels woes, there is now a new federal investigation looming about the pricing of music downloads. Finally the majors are still suffering from the ongoing fall out from the SonyBMG ‘rootkit’ fiasco and other consumer resistance to heavy handed and sometimes plain daft digital rights management initiatives (see www.musiclawupdates.com).

Record company practices have recently been scrutinized to a far greater extent than they had previously: Prince’s action in famously painting the word ‘slave’ across his face in reaction to his contract terms with Warners and George Michael’s withering comments on his 90s relationship with Sony give some indication of the perceived contractual and financial imbalances created by record deals. Having heard the complaints of artists, California State Senator Kevin Murray says this about US recording industry practices: "Artists …. see themselves as victims of an indentured servitude system designed to keep them perpetually indebted to the companies who also own the product of their labor. Some artists expressed gratitude for the initial investments made by the record companies in their talent, but feel cheated by their meager share of the proceeds when the gamble pays off. One artist's representative went so far as to accuse the record companies of running a continuing criminal enterprise"

In the UK it has been the decisions of the law courts starting with A Schroeder Music Publishing v Macaulay in 1974 through to ZTT Records Ltd & Perfect Songs Ltd v Johnson (1988) and Silvertone v Mountfield (1993) that have unscrambled unfair and often iniquitous contracts between artists and labels, using the common law doctrine of unreasonable restraint of trade and concepts such as undue influence and inequality in bargaining power to try level the playing field. In the US where no similar body of case law had developed it has been left to organizations such as the Recording Artists Coalition and politicians such as Senator Murray to campaign to improve the lot of artists.

However, it is perhaps the third point that Mr Gowers raises that must alarm the majors most: Gowers asks whether any alternative arrangements could accompany any extension of term. Whilst Music Week acknowledges concerns over "artist’s influence and their ability to control how their music is exploited many years after it was created", Music Week also argues that the "extension of copyright term’ must be a priority issue over the coming months". This seems a very ‘label’ friendly position and if I were an artist or an artist manager I think I might take a very different view on this and indeed have different priorities. Fortunately artists do now have a voice with the globally active Music Managers Forum: Whilst the MMF are supporting a copyright extension and are looking to increase the term sound recording copyrights to seventy (70) years after the death of the last surviving performer their position is not that simple and the MMF have produced a Policy Statement regarding possible extension of the term in sound recordings.

The Policy, written by MMF copyrights and contracts sub-committee chairman David Stopps, calls for two new provisions in copyright law: The MMF have suggested that any assignment to a record label should be for a limited period of time – twenty five years – after which the rights revert back to the artists. Stopps suggest that ‘after 25 years the copyright will come back to the original performers and they can put out on their own label or exploit it as they wish". If this could be linked in some way to artist recoupment then this would certainly be an interesting move forward. Coupled with this is the MMF’s ‘use it or lose it’ policy whereby copyright holders who did not make a work available for public access for a period of (say) 2 years would see the copyright automatically reverted to the creators and performers who created it. The MMF say that this change would enhance competition and cultural diversity and bring great benefit to creators, performers and consumers.

So what might be some relevant suggestion to Mr Gowers?

• That there should be an extension of the copyright term in sound recordings to say seventy years from the date of recording. It is possible to argue that this should go further - for seventy years after the death of the last performer on a recording. This would then mirror other copyrights.
• And a similar extension of the term for performers rights (in live recordings – again to seventy years or life plus seventy years)

But if we want to protect and encourage our creative community - the very people who actually make sound recordings - then perhaps any change in copyright term might be accompanied with some new provisions:

• an automatic and irrevocable re-assignment of copyright in sound recordings to the recording/performing artist(s) after 25 years and
• Earlier return of copyrights to recordings artists (and indeed songwriters) where the work is not commercially exploited by a record label (or a music publisher).
• A legal recognition of recoupment by artists in terms of a return of ownership of masters (including promotional videos and long form audio-visual recordings of live events) or joint ownership and/or joint control with labels when an artist recoups costs and/or investment.
• a fiduciary duty placed on labels to account to the recording artist(s) on a regular basis for an equitable share of all revenues for the life of copyright / term and/or
• An obligation placed on record labels to account transparently to artists and account on source income.
• The automatic return of copyrights where there is a failure to account.
• Criminal sanctions (as with copyright infringement) for directors of companies for failure to account to original authors, composers and performers.
• The automatic return of copyrights in the case of the bankruptcy/liquidation of a company

The review of copyright extension is imminent and both the creators of recorded music and the consumers of recorded music need to make their aspirations known to Mr Gowers and government. The recording industry certainly will. As a creative industry, perhaps the general feeling is that the proposed extension in term should be a good thing and should be supported – within reason. But if the campaign ends up as one which is purely designed to suit the needs to the major record labels then any extension in term might well have the very reverse effect to what the government might intend to achieve – which surely is a well funded, creative, vibrant and healthy music industry in the United Kingdom and indeed elsewhere.

First published on Music Law Updates www.musiclawupdates.com © 2006 Charming Music Ltd

Abridged version republished with permission

Murray, K (2003) Recording Industry Practices The Recording Artists Coalition website at http://www.recordingartistscoalition.com/industrypractices.php

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