Streaming Music Royalties: Is It Time to Pay the Piper?
Singer-songwriter and Grammy winner Aimee Mann recently filed a lawsuit against MediaNet Digital, Inc. (“MediaNet”), an online media distribution company. Similar to better-known companies like Spotify and Pandora, MediaNet offers millions of songs and a technology platform to a large roster of online music services, including Yahoo Music, MTV, Songza, and eBay.[1] MediaNet does so through downloads to a user’s hard drive, on-demand streaming, and Internet radio. Mann’s complaint, filed in the U.S. District Court for the Central District of California, alleges that MediaNet willfully infringed the copyright to more than 100 of her songs, which could result in damages as high as $18 million.[2] Mann asserts claims for direct, contributory and vicarious copyright infringement; for inducing others, specifically its clients and end users, to infringe her copyrights; and she seeks to rescind her original contract with MediaNet.
Mann claims that she entered into a three-year licensing agreement with MediaNet in 2003. The agreement included an automatic two-year extension provision that could be terminated by either party with notice. Mann contends that she did just that in 2005, but that MediaNet continued to “transmit, perform, reproduce and distribute” her songs and sent her only a $20 advance in March 2013 to cover royalties for the last eight years (which Mann returned). In her complaint, Mann seeks $150,000 in statutory damages for each infringement or actual damages to be determined for the profits MediaNet has garnered from her music. Her complaint also infers that she is likely not the only artist whose works MediaNet has infringed.
The crux of Mann’s complaint focuses on MediaNet’s alleged failure to obtain a license for each sound recording and a separate license for the underlying musical composition. Both licenses are required in order for MediaNet to lawfully transmit, reproduce or distribute her sound recordings. Mann also argues that MediaNet did not have express consent to use her songs and failed to provide the notice required under the Copyright Act to allow for compulsory licensing.
Sites like MediaNet that want to distribute an artist’s songs may do so by obtaining a voluntary license (meaning express permission) from the copyright holder or via compulsory licensing under the Copyright Act. The fees for both types of licenses are based on myriad factors, including a site’s monthly revenue and the popularity of the songs. For example, Pandora negotiates with the Copyright Royalty Board to determine the licensing fees it pays to stream music, while Spotify negotiates directly with music labels to determine appropriate licensing fees. What MediaNet does to calculate the licensing fees it pays copyright owners is unclear.
Mann’s case is the latest move by music owners to reclaim what they believe are royalties owed to them by online music service providers. Other artists, including Pink Floyd, Radiohead, and Atoms for Peace, have publicly expressed their opposition to online music streaming services like Spotify and Pandora. These and other artists contend that such sites pay insufficient royalties to compensate artists and their music labels in return for music streaming services.
Mann’s lawsuit is unlikely to resolve the ever-evolving conflict between companies like MediaNet and copyright holders. Nonetheless, its resolution may influence future music licensing standards and much-needed legislative updates to the Copyright Act.
[1] See http://www.mndigital.com/catalog/music.html. MediaNet was founded in 1999 by EMI, AOL, BMG and RealNetworks and was acquired by a venture capital firm in 2005.
[2] The case caption is Aimee Mann v. MediaNet Digital Inc. et al., Case No. 2:13-cv-05269, filed in the Central District of California.