A Copyright Ruling in California Could Spell Trouble for Oldies Radio

If you live in California and listen to oldies
radio, don’t be surprised if your favorite station suddenly decides
to change its format. Thanks to a court decision that came down
this week, it might become a lot costlier for stations in that
state to play music made before 1972.

The plaintiffs in the case are the Turtles, a
’60s band best known for the song “Happy Together.”
(More precisely, the plaintiffs are Flo & Eddie, a
successor act with a litigious
history. They own the rights to the Turtles’ name and
recordings.) The defendant is the satellite-radio megalith SiriusXM.
In a nutshell, Flo & Eddie
argue that the broadcaster violated their rights each time it
transmitted a Turtles record without their consent.

This is where things get complicated. There is a difference
between owning the rights to a song and owning the rights
to a recording. (Bob Dylan owns the song “It Ain’t Me
Babe”; Flo & Eddie own the Turtles’ recording of it.) If you
own a song, you’re entitled to a fee when it is played on the air.
If you own a recording, the situation is more complex. You don’t
get royalties when the record is played on AM or FM radio. You
do get royalties when it’s played on Internet radio, for
reasons
related to fears of piracy. Because of the way the law defines
“digital transmission,” satellite stations have to pay those
digital fees too.

But federal copyright protection didn’t apply to sound
recordings before February 15, 1972. SiriusXM takes the position
that this means it doesn’t have to pay when it airs music recorded
before then. (That covers pretty much everything by the Turtles.)
But the Copyright Act of 1976 says the states can still
set the rules for those pre-1972 rights. And under California law,
copyright holders have “exclusive ownership” to those recordings
until 2047. Flo & Eddie argued that this gives them
considerable control over what could be done with those old Turtles
records. In this week’s
decision, U.S. District Judge Philip Gutierrez agreed.

“Exclusive ownership,” Gutierrez reasoned, means “the right to
use and possess the recording to the exclusion of others.”
California’s law, unlike the federal law, puts only one limit on
this control: The rightsholder may not prevent someone from
recording a remake of the record. Since this is the only exception
specified, the judge concluded that no other exemptions were
intended. He therefore issued a summary judgment for Flo &
Eddie on the parts of its suit related to SiriusXM’s broadcasts.
(Some other aspects of the case are still to be decided.) The
ruling did not determine the damages, but SiriusXM may owe millions
now not just to Flo & Eddie but to countless other owners of
pre-’72 copyrights.

SiriusXM is likely to appeal the ruling. In the meantime, Flo
& Eddie have filed similar suits in New York and Florida. Other
copyright holders, including the major record labels, have launched
lawsuits of their own.

Most media coverage of Gutierrez’s decision has stressed
the impact it will have on SiriusXM and on Internet services such
as Pandora. But the case could conceivably threaten any ordinary AM
oldies outlet that operates in California. The decision doesn’t
explicitly say AM and FM stations have to pay these fees, and you
can expect broadcasters’ lawyers to claim that this means they’re
off the hook. But the judge’s whole argument is based on the idea
that there are no exceptions to the copyright holder’s
rights save the single item spelled out in the state’s statute.
That suggests that radio stations—and, for that matter, restaurants
and bars that play recorded music—will have to either start paying
steep fees to play pre-’72 music or just take the easy road and
play something recorded more recently. (I asked Dennis Wharton, a
VP at the National Association of Broadcasters, if his group had
any comment on the decision. He replied that they were still
reviewing it.)

For years, the record industry has been trying
to get Congress to make analog broadcasters cough up the extra
fees that digital broadcasters have to pay. It may have just gotten
what it wanted through the back door, but only for records that are
more than 42 years old, and only in California. Watch for some
bizarre distortions in the radio marketplace.