Record Labels Sue Pandora for Royalties on Songs Made Pre-1972
April 21, 2014 9:13 AM
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Pandora feels confident and plans to fight in court
Record labels are in the process of suing streaming music provider Pandora for back royalties. Specifically, the record labels want to raid Pandora’s wallet for songs played that were made before 1972.
Last week Sony, Universal, and Warner Music, and ABKCO sued Pandora Media in New York State Supreme Court for playing the songs without a license. The suit alleges that Pandora violated the common-law copyright protections when Pandora used older recordings without permission.
Recordings made before February 15, 1972 aren't subject to federal copyright protection and some industry estimates believe that record labels could be missing out on tens of millions of dollars in royalties from these songs.
“This case presents a classic attempt by Pandora to reap where it has not sown,” the labels say in the suit. “Pandora appropriates plaintiffs’ valuable and unique property, violates New York law and engages in common law copyright infringement and misappropriation and unfair competition.”
The suit that has been filed seeks royalties for music made from the 1940's to the early 1970's and includes artists like the Beatles, Hank Williams, the Rolling Stones, and others. Pandora says that it is confident in its legal position and of course plans to fight.
María Elena Holly, widow of rock 'n' roll pioneer Buddy Holly, pleaded, “Just because Buddy and the other ’50s musicians recorded songs before 1972 doesn’t mean their songs have no value. These companies’ failure to pay the rock ’n’ roll pioneers is an injustice and it needs to change.”
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RE: Legal Standing?
4/21/2014 5:27:11 PM
Yeah, that's the real issue. With physical property, you sell it once and it's gone. You need to spend more money to manufacture another copy. With intellectual property, you sell it, and you still have it available to sell. Making copies costs nothing.
We've gone from one extreme (pre-copyright, where you can't sell IP because anyone can copy it for free once you've published it anywhere), to the other extreme (where the
way to get IP is to buy it, over and over and over again).
One of the solutions I thought of is decreasing royalty rates. The first 10,000 sales of IP, you can charge whatever you want. After that, up to 100,000 the price must be halved. Up to 1 million it's halved again. And so on. So if you release a CD at $20/ea, the moment it hits 100,000 the price must be cut to $10/ea. If it hits 1 million, it's $5/ea. 10 million it's $2.50/ea. 100 million and it's $1.25/ea.
The exact numbers can be tweaked to smooth out the jumps, but it would insure the IP-holders make a healthy profit, without giving them the leverage of a full-blown monopoly. The purpose of IP law isn't to give content creators a monopoly. The purpose is to encourage them to create content. And I think a good argument can be made that the current total monopoly provided by IP law vastly overshoots that purpose. To the point where it's distorting other parts of the economy which actually produce something (e.g. computers and electronics).
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
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