It looks like musicians have won a small, but meaningful victory in the uphill battle for streaming royalties. On Monday, a federal judge in California ruled that Sirius XM, the satellite radio company, was liable for copyright infringement for failing to pay royalties on recordings made before 1972. It’s a decision that’s rekindled the long-lasting debate over streaming and artist royalties, and may incur widespread implications for the digital music industry.
Last year, members of the 1960s band, the Turtles (best known for the familiar “Happy Together” tune) filed a claim against Sirius XM, seeking $100 million in damages for lost royalties on their digital recordings. It’s a strange, obscure loophole, but by law, federal copyright applies only to recordings made on or after Feb. 15, 1972. The Turtles’ biggest hits were all recorded well before this date, in the 1960s. This so-called ‘Pandora’s Loophole’ is incredibly convenient for most major streaming platforms like SiriusXM, Pandora, and Spotify. So far, they’ve been taking full advantage, and streaming oldies without seeking licenses or paying any group royalties. Thus, SiriusXM almost got away with paying zero royalties on hit songs like “Happy Together,” “It Ain’t Me Babe” and “She’d Rather Be With Me,” arguing that reinterpreting state law could “radically overturn decades of settled practice.”
Judge Philip S. Gutierrez of Los Angeles ultimately disagreed, concluding that aside from cover versions, pre-1972 recordings carry the exclusive rights to performance. It’s not the first time a streaming service has gotten caught up in legal woes. Last year, Pink Floyd openly accused Pandora of trickery for attempting to cut royalties.
This is only the first step in the case, and an appeal from SiriusXM is probable, but it could give artists and recording owners a leg up in the music industry. Michael Huppe, chief executive of Sound-Exchange says, “This decision in California confirms what we have always known: all sound recordings have value, and all artists deserve to be paid fairly for the use of their music.” Harvey Geller, the Turtle’s former music lawyer and general counsel for Universal Music Group (UMG), declared the ruling “historic.” Sound-Exchange estimated that nearly $60 million in royalties is lost each year from oldies on all digital radio services. It’s also interesting to note that about 15% of all music that Sirius XM plays was recorded before 1972.
Gutierrez’s ruling could motivate streaming giants like SiriusXM, Pandora, and Spotify to pay fairly for the use of pre-1972 recordings. If we’re more realistic, it will more likely spur them to lobby Congress for new copyright laws. This is only the first step in the case, and an appeal from SiriusXM is probable, but it could give artists and recording owners a long-awaited leg up in the music industry.