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Tuesday, 23 December 2008

Are performers a special case?

While almost every serious commentator in the field of contemporary copyright law takes the view that no case has been established for the extension of copyright term in respect of sound recordings, the case for the extension of the protection term enjoyed by performers themselves has at least one doughty advocate.

Right: these worthy performers can be found among the cyber-cats greeting cards, here.

IPKat reader and copyright specialist Professor Amanda J Harcourt writes:

"While Andrew Gowers' article (Copyright Extension is Out of Tune with Reality) makes a number of useful and pithy points, it does not fairly, in my view, state the case for the performer.

While the record companies in the 1990s indubitably "missed the boat" when attempting to debate and adjust their commercial practices to accommodate the developments of the internet - and now are suffering the consequences - there are moral arguments surrounding this new development. The songwriter and performer occupy the only moral high ground in the economic environment that is the music industry. This economic model of copyright has been taken to extreme by record companies. Guy Hands's early pronouncements about executive and administrative waste soon after his purchase of EMI were on point, but an understanding of the way artists are contracted by record companies demonstrates that those at the bottom of the royalty food chain - in this case the artist - have reasons for moral outrage.

Recording artists are " given" an advance to make an album. This advance has to be repaid, and repayment is made through the royalty percentage (between, say, 15% and 25%) the record company agrees to pay the artist. Artists who complete one album, the copyright of which the record company owns, and are on course for their record company to call for a second (or third) album (which the record company will
also own) are provided with a second (or third) advance. As before, this advance or loan has to then be recouped from income generated by sales of the artist's recordings. Money in the form of royalties is payable to the artist after they have recouped their advance - but it is payable in clearly defined accounting periods. If an artist has been lucky enough to recoup their first advance, they would be entitled to royalites which the record company and its subsidiaries have already received, and to be paid at the next accounting date - this is known as "pipeline income". But, if an artist is asked to deliver the next album, and the next advance is paid, the artist's entitlement to royalties is subject to the recoupment of the second advance. Thus, as a matter of accounting for an individual artist, the artist will have been loaned their own pipeline income, and will then have to recoup (or repay) this, their own, money before they once again approach a position where they may, possibly, receive actual royalites in the form of cheques. This is, to be generous, an imaginative economic model.

And, hairdressing salons and other small businesses will not be required to pay "a hidden extra tax" in the form of higher music licence fees. The fees for music use are set by the collecting societies, in the case of the sound recording copyright Phonographic Performance Limited. PPL licenses users and pays the fees across to the record companies whose copyright recordings have been played and to the performers whose performances were on those sound recordings. The societies' activities are regulated by the Copyright Tribunal and unreasonable increases in licence fees requested would certainly be challenged in that forum.

Performers fought long and hard to persuade the UK Government to grant them a statutory right to income from the broadcast and public performance of their performances on sound recordings. It was the intervention of the EU (EC Directive 92/100) that eventually meant the performers shared in this income - income that the record companies alone had been receiving since the 1970s (and had only minimally shared with performers on an ex gratia basis). There was no accompanying great hike in PPL licence fees to accommodate these new rightowners (the performers). The PPL distribution practices were simply altered.

The Directive that improved the lives of performers by giving them so-called secondary income that was not subject to the record companies' recoupment practices arose from the Rome Convention. This was an international convention that began life at the International Labour Organisation before the Second World War. The man that drafted much of the Convention, the late Ted Thompson, advised me that in its original draft, the Convention was to have given this right to broadcast and public performance income to the performers alone. Technological developments during the War prompted broadcasters and record companies to "get in on the act" in revised drafts after the War.

Performers have waited a long, long time to be treated more equitably and we should be pleased for the older and the lessser known, but equally deserving, artists, to whom this extension of term may make a useful financial difference. It is interesting that this concession has arrived at a time when, arguably for some, record companies need performers more than performers need record companies".

The IPKat is curious to know what his readers think. Please let him have your comments below.

9 comments:

William Patry said...

Professor Harcourt advances the very argument those from Lord Macaulay to Gowers have effectively and repeatedly refuted; that there is some moral obligation on the public to pay and pay and pay until every last remote heir of a copyright owner has died.

She has only one twist: the record labels are admittedly immoral but the songwriters occupy the moral high ground. That's like saying I invested all my money with Bernie Madoff, so please public bail me out because he stole from me. Its even worse than that though, since performers know record labels are very unlikely to give them anything back.

In 1841 Macaulay advanced the only rationale ground for term extension: will it lead to more copyrighted works. No one can claim the current proposals will, and certainly can't if granted retroactively. Morality is the last refuge for those who have not a single substantive argument.

Slothrop said...

A recorded musical performance is a tangible creative work that exists independently of the musical composition that was the subject of the performance.

Take Bob Dylan's original studio recording of "Like a Rolling Stone". That is a work whose "value" will endure indefinitely, independently of the song itself. Why should its performers be treated any differently from the author of a book or a painting for copyright purposes? Why should the same logic not apply to any musical sound recording, regardless of its "value"? If a musical sound recording is of no value, it can't cost anything to record a new, equally good version rather than pay for a copy of the original.

A typical music consumer buys recordings, not sheet music, in the way that a book reader buys books.

Ben Challis said...

Amanda makes an interesting point - and touches on record company contracts with performers. For those who haven't read one of the 'standard' form contracts for the exclusive services of recording artists which the major labels provide, they are most interesting documents. Theese contracts have also been repeatedly challenged in the courts and in some instances voided by the courts in England and Wales for being in unreasonable restraint of trade, or having been entered into with an inequality of bargaining power.

One of the best known cases which examined these contracts was George Michael's 1994 action against his label, Sony. Michael pointed out that unlike buying a house with a mortgage, when Michael was advanced monies to record his albums, even when he had 'repaid' the advance through recoupment by the label from his royalties, he still didn't own the copyright- this was owned for the term of copyright by the label - even though he had paid for it. Now, to be fair, once recouped Michael would receive pipeline royalties but Michael went further and pointed out that the use of contractually binding 'royalty reducers' by labels dramatically reduced his royalties. For example Michael suffered a 25% reduction on his royalty rate for CDs (which of course in the 90s was the dominant media for sale of music). Other typical royalty reducers in label contracts include automatic breakage deductions of say 10% of the artists royalty (carried over from the days of vinyl and before where discs did shatter), A 35% for 'packaging' which extends to downloads (!), a 50% reducer for mail order sales (errrm that would be Amazon then) and another 50% royakty reducer for TV advertised albums. These, when applied cumulatively and with other reducers such as free goods allowances and accounting resrves can quickly reduce an artist royalty of what they thought was a 'reasonable' sum of say £1 each CD or album download sold to say something more like 10p. Until recently it has been the courts who have been the only effective break on these practices which many do feel are at best immoral. Artists are now better organised and trade associations like the Music Managers Forum in the UK and the Recording Artists Coalition in the US are fighting back. But it is STILL an upheal struggle and many artists are tied by contracts which they feel are at best unfavourable. It is interesting that in the fight to extend the term of sound recordings from the current 50 years the labels have used both featured abd now backing artists to support their cause. It may well be that on closer examination it is only the artists who do have the moral high ground as Amanda suggests.

See Panayioyou v Sony Music Entertainment (UK) Ltd (1994) E.M.L.R. 229 and see Zang Tumb Tumb Records v Johnson (1993) E.M.L.R. 61

William Patry said...

Ben, I still fail to see how recording artists getting taken advantage of by record labels means that the public must in turn get taken advantage of by both groups.

The fact that recording artists get the short end of the economic stick in their dealings with the labels has been known since the first recording contracts. Where have Mr. Burnham and his predecessors been? Why did their professed keen sense of morality and fairness toward recording artists not manifest itself it until now, many, many decades after the injustice was patently apparent?

I would love to know the reaction of the labels and Mr. Burnham to a proposal that 100% of the proceeds from term extension go to recording artists and that prospectively they receive a mandatory minimum payment enabling them to receive a living wage,an alleged concern of his. I fear that as in past legislative proposals, from the Statute of Anne on, creators have been put forth as the beard for the commercial business who stand to actually benefit. As with the Statute of Anne, if the term extension is approved, the politicians will have their photo ops and the warm support of celebrities, but when the lights are out and the time for payment to recordings artists comes, there will little if any payments made to those who were supposed to benefit. By then Mr. Burnham will have moved to help the next worthy group and the public will get stuck with the cheque. Where's the morality in that?

Richard Arnold said...

I agree with William Patry that the inequities of recording contracts are a separate issue from the issues of extension of term for (1) sound recording copyright and (2) performers' rights.

So far as extension of term is concerned, I agree with Amanda Harcourt that the arguments in favour of an extension for performers' rights are different to those in favour of an extension for sound recording copyright. This point is addressed in the latest (4th) edition of my book on Performers' Rights at para 1.119.

Anonymous said...

None of this addresses the overriding economic factor - namely that the only records likely to still be selling well enough fifty years after recording are those which would have made a fortune upon their release (disregarding the exceptionally rare examples of records which did not sell well on release but then are suddenly made famous in their original recorded version decades later).

Hence, we are not assuring a living income for poor artists - we are throwing them a couple of pence, and lining the pockets of the already rich.

Anonymous said...

No: IP law should not be used to address any perceived non-IP issues i.e. making good “unequal” contracts between performers and recording studios is not the function of IP law.

Ben Challis said...

Dear William

When you say "I still fail to see how recording artists getting taken advantage of by record labels means that the public must in turn get taken advantage of by both groups" I have to say that I do agree with you. I was just making a specific comment to the 'morality' issue raised in Amanda's article. I am personally somewhat neutral in the 'extending the term' debate and still need to be convinced of the rationale behind the term extension for sound recordings. If the argument is one of inequality with original works (in particular music and literary copyrights) then this needs to debated in the context of a possible reduction in the latter. I thought Andrew Gowers' response to Andy Burnham's annoucement made for an interesting (and amusing) read here. I also wonder quite why the recorded music industry has expended so much effort in this area - I firmly believe they have bigger fish to fry.

Best wishes, Ben

such sweet thunder said...

Perhaps I missing the issue, but why doesn't the problem outlined by Professor Harcourt beg for a solution in contract law rather than copyright?

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