Country Radio Broadcasters, Inc.® has announced the CRS-40 “Life Of A Legend” panel will feature an interview session of country music legend Barbara Mandrell by host Kix Brooks.

Barbara Mandrell The “Life Of A Legend” panel, sponsored by ABC Radio Networks, takes place Friday, March 6, 2009 at 4:10 p.m.  This panel is the climax of the seminar, and is always highly regarded as one of the most engaging and memorable events of CRS week.   Brooks (half of superstar country duo Brooks & Dunn and host of American Country Countdown) will interview Mandrell as she reflects on her legendary career in country music. Mandrell earned her first No. 1 single with 1978’s “Sleeping Single in a Double Bed,” followed by “(If Loving You Is Wrong) I Don’t Want to Be Right.”  Mandrell went on to score four more No. 1’s: “Years,” “I Was Country When Country Wasn’t Cool,” “Till You’re Gone” and “One of a Kind Pair of Fools.”  A member of the Grand Ole Opry, Mandrell also starred in her own television series (“Barbara Mandrell and the Mandrell Sisters”) and won both the CMA “Entertainer of the Year” and “Female Vocalist of the Year” Awards twice. “Barbara and the CRS grew up together, and it is particularly appropriate to feature her this year at CRS on the convention’s 40th Anniversary, the same year that marks her 40th anniversary with Columbia Records,” says CRB Executive Director Ed Salamon. “Barbara Mandrell is a legend in every sense of the word.  She has won countless awards, entertained millions with her television show and influenced so many of today’s artists.” This is the fourth year for the “Life of a Legend” panel.  Previous years’ lineups included: Gerry House interviewing Kenny Rogers (CRS-37), Eddie Stubbs interviewing Ronnie Milsap {CRS-38} and Norro Wilson and Ronnie Gilley interviewing George Jones (CRS-39). CRS-40 is scheduled for March 4-6, 2009 at the Nashville Convention Center.  Complete information, including registration, may be obtained by contacting CRB, Inc. at 615.327.4487 or by visiting www.crb.org.  Technorati Tags: Barbara Mandrell,Country Radio Broadcasters,CRS-40,Nashville,Entertainment

OUT WITH THE OLD

After over 18 years of service to the organization, Harold Bradley is no longer president of Nashville’s Local 257 chapter of the American Federation of Musicians.  Dave Pomeroy was elected president last week by a vote of 675 to 449.  Out of it’s 2620 members, 1165 votes were cast in this election, which is more than double the number of votes cast in the 2005 election.

This is most certainly the end of an era for Harold Bradley, for whom Harold I have a great deal of respect and admiration.  He began his long services as president of Local 257 on January 1, 1991 and later became the International Vice President serving the AFM’s International Executive Board, a position he will likely retain until 2010.  He received the AFM’s Lifetime Achievement Award in 2006, the same year he was inducted into the Country Music Hall of Fame.  Bradley was also the first president of the Nashville chapter of NARAS and continues to serve as a member of the Grammy organization’s Board of Governors.

Harold and his brother, Owen, built Nashville’s earliest recording facility, Castle Recording Studio, in the early 40’s. As the architect of the Nashville Sound, Harold was part of Nashville’s original “Nashville Cats,” the A-Team, which included such notables as Boots Randolph, Floyd Cramer, Hargus “Pig” Robbins, Buddy Harman and The Jordanaires.

He is one of the most recorded guitarist in the world, and has been pickin’ on country albums for over 60 years, including work on such classics as Bobby Helms’ Jingle Bell Rock, Brenda Lee’s I’m Sorry, Roy Orbison’s Only the Lonely, Patsy Cline’s Crazy, Roger Miller’s King of the Road, Tammy Wynette’s Stand By Your Man, Eddy Arnold’s Make the World Go Away, and Loretta Lynn’s Coal Miner’s Daughter, just to name a few.

Harold Bradley will always be considered a formidable force in Nashville’s music industry.

IN WITH THE NEW

Bradley’s replacement, Dave Pomeroy, is a well known and seasoned musician as well, having played electric and acoustic bass on more than 500 albums during his 34 years in the music industry.  Dave has played with artists including Emmylou Harris, Alan Jackson, Elton John, Peter Frampton and Chet Atkins, including work on 6 Grammy-winning projects.  Dave is also an independent producer and has produced numerous projects which can be found on website.

Pomeroy issued the following statement after winning the election:

"I am humbled to be elected to the office President by the members of Local 257. Thanks to everyone who voted and all those who volunteered to help my campaign.

On behalf of all members past and present, I thank Harold Bradley for his many years of dedication and service to this Local and the AFM. I am honored to be carrying on the historic tradition of leading Local 257 as we move into a rapidly changing future.

We have one of the most dynamic, versatile, and innovative music communities on earth, and I look forward to representing the best interests of all Nashville musicians, both here at home and around the world."

Pomeroy will begin his three-year term effective January 1, 2009.

In the same election, Craig Krampf defeated Billy Linneman for Secretary-Treasurer by a vote of 570 to 539.  Re-elected to the Executive Board were Bruce Bouton, Bobby Ogdin, Andy Reiss, Laura Ross, and Denis Solee, who were joined by new members Duncan Mullins and Jimmy Capps.

THE CONTROVERY

There is much controversy surrounding the election, which is viewed by some as “revolutionary.”  The scuttlebutt is that a riff has been developing since 2001 between the leadership of the AFM’s International Executive Board and AFM members who were also members of the Recording Musicians Association, the local chapter of which Pomeroy is president.   The RMA, a player conference sanctioned by the AFM, is a 1400-member organization of studio musicians with chapters in Los Angeles, New York and Nashville,  It is arguably one of the most active conferences in the AFM.

Bradley and Linneman, for better or worse, threw their support behind resolution put forth by Thomas F. Lee, the IEB President, and passed by the IEB in Las Vegas in June 2008, which threatened to “de-conference” the RMA at its September conference.

Lee’s opposition to the RMA derived from stemmed from his promotion of a deal which eliminated so-called backend new usage “buyouts” of musical scores used in video games, something which the AFM was reluctant to do in the past.  Read more about his in this Variety article.

The lines of battle were thusly drawn, and the Local 257 uprising has been building ever since, with tempers flaring on both sides of the disagreement.  (A detailed, though somewhat biased, historical trail can found on the “Sounds” blog).  As a result of the June vote, Pomeroy and over 150 other local members of the AFM presented a resolution at the executive board meeting of Local 257 calling on the members to censor Bradley for his support of the anti-RMA resolution, which Bradley described as “ridiculous” and to which he responded:

This resolution, submitted by RMA President David Pomeroy, is intended to influence my vote! I will continue to vote my conscience (based on the facts before me), and I resent this attempt to force me to vote otherwise.

This statement appeared in an open letter to Local 257 in the July-September 2008 edition of the Nashville Musician, the Local’s newsletter.  This exchange ultimately led to the controversial election of last week.

The waves of discontent were also felt in Los Angeles, where RMA member Vince Trombetta was elected as Local 47’s president earlier this month, also in an apparent backlash against Tom Lee’s anti-RMA leanings.

The principals of democracy are certainly at work in the AFM, just as they were in the presidential elections this year!

SUMMARY

I know Dave Pomeroy and I  believe he will be a caring and effective leader for the AFM.  I congratulate him and wish him the best in the new endeavor, knowing full well that he has some difficult struggles ahead in leading the opposition.

I also know and respect Harold Bradley.  Harold is a Nash
ville icon who has been an effective leader of Local 257 for almost two decades.  I believe he wanted what he thought was best for the musicians and I know that he always had the musicians’ interests at heart.  I thank him for his service to the industry.

But no one is perfect.  While I do not intend to take either side in this debate, I will note that perhaps it was indeed time for a revolution.  There is no doubt now that new leadership is the order of the day. Nashville’s musicians are the backbone of our industry and they deserve adequate compensation and representation.  The majority of them now feel that Dave will do that and I commend their choice.  While no one really likes it when it comes, change is often a good thing.   I hope that at least in the Local 257, egos can deflate to normal and tempests can subside, and harmony can once again return to the organization that is at the heart of Music City.

See Jane.

See Jane write lyrics.

See Dick.5237697662_f8e465b716

See Dick write melodies.

See Dick meet Jane.

See Dick and Jane combine their efforts and collaborate together to write a song.

This is one frequent story among Nashville’s songwriting community.  On any given afternoon in Nashville, there will be innumerable co-writing sessions occurring at any given moment.  Those collaborative efforts certainly produce most of the top hits on the country charts.  The odds are, however, that at least 9 out of 10 of those songwriters will not know the implications of collaborating with another songwriter on the creation of a copyright.

Rarely do songwriters consult an attorney or enter into any form of collaboration agreement prior to co-writing.  Rarer still is the songwriter that fully understands the important consequences that flow from co-writing with another songwriter.

If a songwriter does happen to consult about this issue, the first thing I tell them is that it is very much like entering into a marriage relationship.  When two songwriters get together and collaborate on the creation of musical composition, each songwriter is a co-owner of and equal and undivided interest in the whole copyright, i.e. each songwriter co-owns 100% of the copyright – regardless of the relative extent of their respective contributions.   Ownership is not equally divided, as is commonly thought — i.e. split 50/50 (that confusion comes from the fact that the royalties derived from the copyright are usually divided equally).

In the Dick and Jane analogy above, for example, Jane does not separately own the lyrics and Dick separately own the melodies.  Dick effectively owns 100% of the song, including both the lyrics and music and Jane effectively owns 100% of the song, including both the lyrics and the music.  The concept is very similar to the legal principle of tenancy in common. Unless they agree to the contrary in writing, each songwriter has the right to administer the entire copyright without consulting with the other songwriter, i.e., each songwriter may issue nonexclusive licenses to the entire copyright or issue first use licenses.  The only obligation each co-owner has to the other is to account for any profits earned by the exploitation.  A co-owner may not, however, without the permission of the other co-owner, transfer exclusive rights to use the work or transfer the entire copyright to a third party.

To be absolutely clear, the Copyright Act does not really define “joint authors,” but rather defines a “joint work” as a “work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.”  17 U.S.C. 101.   The key here is intention — i.e., the parties must intend that their work be integrated or merged to form a united whole at the time the work is created.  The legislative history that accompanied the act specifically states that a work is “joint” if the authors collaborated on its creation.  See H.R. Rep. No. 1476, 94th Cong., 2d Sess. 120 (1976); S. Rep. No. 473, 94th Cong., 1st Sess. 103-104 (1975).

Take for example the circumstance that arises when a person creates a poem, which is registered as a copyright.  Then, later on, a second person takes the poem and modifies the words, adding music to create a song.  The situation described is different from the collaborative effort in that there was no intent, at the time the poem was created, to merge it with the second creative effort.  The second work, the song, is a derivative work, and its writer needs permission from the creator of the poem to create the derivative work.

While we’re on the subject of derivative works, each co-owner of a joint work may create derivative works independently of each other and without the permission of the other, and, without any obligation to share the royalties derived from the exploitation of the derivative work.

Songwriters3 Now, not to further confuse the issue but, in the eyes of the law, there is a difference between co-ownership in the copyright and split of the royalties.  To get back to the Dick and Jane analysis, the typical understanding is that Dick and Jane would split any royalties received from the exploitation of the copyright on a 50/50 basis.  It is important to understand once again, however, that this understanding can be modified with a written agreement between the co-writers.  A songwriter whose reputation is strong enough can certainly request that he or she receive a greater percentage from the royalties, and even ask for a greater percentage ownership interest in the copyright.  These types of exceptions, however, must be expressed in writing between the parties in order to be enforceable.

Another complication arises in circumstances where a party merely contributes an “idea” to the collaborative effort.  Is that person entitled to be a co-owner?   I’ve had this issue arise in litigation.  Two parties are collaborating on a song and have most of the song written.  In walks a friend who is also a songwriter.  He listens to the song and contributes an idea that is incorporated into one line of the song.  He leaves, the song is finished, and becomes a hit.  Does the third songwriter have an interest in the song?  The answer to the question is inevitably determined by the particular facts and hinges on whether the third party merely contributed an idea, or actually contributed the expression of an idea.

As a final observation, let’s overlay the life of the copyright over the co-ownership of a collaborative work to give our brains a final flash fry if you will.  Assuming the work to have been created after January 1, 1976, the life of the copyright is life of the author plus 70 years.  In the event of a joint work, however, it is the life of the surviving author plus 70 years.    What this means in realty is that one of the co-writers in a successful hit song, i.e., the last man standing, will eventually become co-owners with the heirs of the deceased songwriter, either in the form of a wife or a child.

Most songwriters, of course, are not thinking this far down the road when they make their daily co-writing appointments.  But that’s the real thrust of this article.  If you’re a songwriter, you should consider the possibility of a collaboration agreement.  Most songwriters, I admit, do not think about this sort of thing because it cramps the creative vibe that needs to be created in a collaborative effort.  This, in my opinion, is not a wise idea.  At the very least — and this is not my recommendation — the writers should have some conversation about the consequences of their efforts.  Considering the consequences, the best course of action would be to consult with qualified legal counsel and get a collaborative agreement drawn up and signed — or at least have a written statement of intent signed by both writers  — at some agreeable point before the co-writing session begins, so as not to interfere with the creative efforts.

Technorati Tags: , , , , , , , , , ,

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

Amazon.com, Inc. (Tickler Symbol: AMZN) will hold a conference call on October 23, 2007 at 5:00 p.m. ET to discuss its 2007 third quarter financial results. This announcement has tremendous relevance for those of us interested in the commercial viability of digital sales and downloads of DRM-free music — since Amazon launched its online music store, Amazon MP3, which sMP3aells songs without copy protection in this fiscal quarter, the sales of said music will be a component of the report. Many financial analysts are expecting Amazon to announce earnings of around 18 cents per share on just over $3 billion in revenue for the quarter.

Most online reviewers agree that the Amazon experience of buying digital music is very favorable when compared to iTunes. My feeling about iTunes generally is that is an overbloated, unwieldy piece of software that doesn’t do the job it was designed to do very well at all, so this favorable comparison comes as no surprise to me. Although Amazon’s MP3 store is web-based, once you download a small companion program (on either Windows or the Mac) you get a better one-click experience than Apple’s iTunes store, and the software automatically adds purchased files to iTunes, if you choose to use that software, or any of the myriad of better music players available on the Internet.

In addition to the favorable software experience, many users are impressed that Amazon offers over 2 million at an average of 10 cents less than the cost on iTunes. The offering, while only about 20% of Apple’s offerings on iTunes, is the largest collection of DRM-Free music anywhere.

Both UMG and EMI have signed up with Amazon, while Sony BMG and Warner Music Group still lurk in the Dark Ages when it comes to the digital spectrum. The only negative vibe about Amazon’s service is that UMG is slipping watermarks into the downloads to enable tracking.

According to some stock analysts, Amazon’s global site traffic rose 13 percent year-over-year in July and August.

The thing that attracts me to the Amazon model is the flexibility. The ala carte digital music can be used on any player, with any software and reproduced on as many devices as you want. It does not expire and you are not required to subscribe to any service or use any specialized players or software. This, in my opinion, is the business model of the future. As Amazon’s catalog expands, I expect that it will become increasingly more competitive than Apple.

The Motley Fool described Amazon’s chances for success in the digital music download business as follows:

Amazon sold $10.7 billion worth of merchandise last year — $7.1 billion in the form of media — but at issue here is more than just respect for Amazon’s girth. Amazon is a trusted source in music. Now it also happens to offer the better deal. If you have a choice of paying $0.89 on Amazon for a higher-quality track with no DRM, or $0.99 for a lower-quality track with portability restrictions, where will you turn?

I can only add that Amazon has an incredible database of customer preferences and cross-references. Amazon does an amazing job at suggesting impulse purchases.Most consumer already have an established account with Amazon that has established preferences. Amazon is the Wal-Mart of online merchandisers, the king of the Internet in sales. I believe it will succeed where others have failed.

There is a very well written blog entry by McQuinn on the blog MCQESQ entitled The Future of the Music Industry.  You can read the article in its entirety here, and it is well worth the effort.  Crossroads copy2It attempts with acute perception and finesse to dispel the rampant rumors that the music industry conglomerates are are a dying breed of dinosaurs.  The essence of the authors opinion are as follows:

It’s popular to bash the labels (especially the majors) and to celebrate their apparently imminent demise.  For me, there is no pleasure in seeing people get laid off and large companies go bankrupt in any industry.  But I also dispute the idea that labels (in general) have been a bad thing for music. . . .  Without record labels recording and promoting music, we would never have heard of most of the artists that we now recognize as music legends. 

I wrote similar sentiments back in 2000 when Courtney Love bashed the very industry which gave her soap box any credibility at all.  In the article by Mcquinn, the author is not attempting to defend all record labels nor the actions of all record industry professionals, but successfully points out that without the music industry moguls’ promotion and even love of music, there would be no “superstars” for us to download!  There would only be garage bands. Ugh! (no disrespect to any particular garage band intended, but we must realize there is a reason why some bands “make it” and some don’t).

I tell my clients that they should consider the major label to be not only their marketing arm, but a bank!  The fact is, a major label will customarily spends upward to 3–5 million dollars to record, advertise, market and promote ONE act.  Granted, much of that investment is recoupable from the artists’ royalties (meaning that the artist must pay it back the money back of earned royalaties – the artist doesn’t pay it back if the label cans them), however, it still garners the artist a very valuable commodity:  name recognition.  How many superstars can you name off the top of your head?  Madonna.  McCartney.  Garth.  Prince.  Dolly.  The Eagles.  Elvis.  Elton John.  I may be dating myself a bit here, but you get the idea – without the record labels, these artists would not have what they have today – the ability to annouce a concert date and sell it out a 200,000 seat venue within hours, for example.  Is it totally fair to denounce the industry that helped these artists become the superstars that they are?  Is it fair to expect that industry to take no profits from the product we so much enjoy? 

So, what about the rumor that the major labels are heading for an imminent demise?  A recent article in the September 2007 issue of Country Aircheck entitled Music Sales at a Crossroads – Labels Face the CD’s Swan Song gets a little more specific.  The article cites RIAA-compiled data that illustrates that the gross sales of the CD format have diminished by almost one third since 1999, when it was over 14 billion, to 9 billion last year.  In the country genre, where the CD format is still a popular one, total sales through September 2007 were 31 million units, whereas the genre tallied a total of 75 million units last year.  Overall, total sales of CD for all genres is down 20% over the same time last year, a very significant drop.  While I do not believe the music industry is going away, I do believe that the CD format will ultimately be gone.  Tower’s demise was a forecast of this inevitability.

In the past, loss in profits from one format meant a rise in profits from another format, as, for example, when the CD format replaced records and cassettes, or when cassettes replaced 8–tracks (for those of you old enough to remember tape-based product).  But in today’s market, the sell of digital downloads is not generating enough profilt to offset the loss of profits from the demise of CDs.  Why, you might ask?  I think all of us know that the reason for this is that the majority of songs being consumed today are either ripped from somone else’s CD or iPod, or they are obtained over the P2P networks.  Those methods of obtaining music do not profit the artist, the songwriter, or, of course, the record labels.

McQuinn’s article points out that the label must find alternative methods of making profits, and mentions touring, merchandising and expanded licensing.  This is not a new concept as, in fact, I have already started seeing contracts from labels taking an interest in more of the revenue streams than they have in the past.  As Joel Galante, chairman of Sony BMG Nashville, points out in the Country Aircheck article, “you can’t have the label engine driving everything and being compensated the way it was before.  We are taking most of the risk and there are a lot of revenue streams making money.”  The trend in the music industry is for more independent-type deals with the artist in which the artist actually becomes a partner with the label.  I also believe that we will see a resurgence of the “single” concept and/or the “mini-album” and a shift away from the 10–12 song album idea.

The music industry will also find reprive in the form of direct-to-retail marketing.  The Eagles release through Wal-Mart is only one in a long chain of well-known artist who have found their own path to the retail market — Prince, McCartney, Radiohead, Nine Inch Nails — circumventing the Big Four:  Song BMG, Warner, UMG and EMI.  These artists are certainly blazing new trails and have been successful.  The major labels, however, still maintain that they have the edge when it comes to developing and promoting artists and/or distributing their product.  In view of the success of the aforementioned artists, however, this point is certainly not a given anymore. 

We are, as I said in earlier articles and blogs, facing a new paradigm in the music industry.   The major labels have yet, in my opinion, found the holy grail of digital downloads.  What can the labels do to move into the 21st century?  The answer cannot be yielding 90% of the market to iTunes.  Labels have to take the lead of EMI and UMG and offer their music without any digital rights management — after all, the music on CDs is DRM-free!  They must abandon the misplaced trust in “subscription-based” services which require monthly fees.  As I have maintained in my ten years of analyzing and thinking about this issue, I believe that they must do what all good entrepreneurs have done:  find a price point that will make it foolish for people to download music through a P2P and risk litigation.  Sell the product at a reaonsable price.  Most people, myself included, want to pay for their music — they just don’t want to overpay for their music.  The first configuration of label and online distributor that finds that right combination of value and profit — i.e. the right price point — will be the significant winner in my opinion.

 

On Monday, Jammie Thomas’ attorney, Brian Toder, filed a motion asking that the judge set a new trial to determine damages or, in the alternative, for a remittitur.  Thomas is the woman who was recently found guilty of copyright infringement as a result of which the Plaintiff was awarded $222,000.

The Federal Rules of Civil Procedure gives the judge sole discretion to require that the plaintiff “remit” a portion of the award back to the defendant if he finds that the award is “palpably and grossly excessive” as a matter of law.  See Douglas v. Cunningham, 294 U.S. 207, 210, 79 L.Ed 862, 55 S.Ct. 365 (1935).  The motion requests that U.S. District Michael Davis reduce the award to between zero and $150 dollars.  As an alternative, if the judge deems all 24 uploads to be a single infringing act, an aggregate punitive award of $750.  The defendants entire brief can be read on the blog, Recording Industry v. the People

Thomas’ attorneys base their requests on the sole grounds that the award of $222,000 is excess and, therefore, violates the Due Process clause of the United States Constitution. 

Courts have universally found that when a punitive damage is awarded, as is the case with the statutory damages awarded in Thomas, the defendant must be given due process with regard to the award of the damages.  Her attorneys are arguing that Thomas did not receive due process in this case because the award of $222,000 was grossly in excess of the actual damages sufferred by the Plaintiffs for the infringement of 24 songs which could be purchased online for $1 each. [They cite Zomba Enterprises v. Panorama Records, Inc, 491 F.3d 574 (6th Cir. 2007) and State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003), both infringement cases where the ruling was that due process was violated because the punitive damages were over 100 times greater than the actual damages).

This is a very viable motion and one which I feel the court might seriously entertain.  However, there is one other alternative available to the Court: the Court can treat each song as an act of infringement and therefore award statutory damages of $750 for each infringement, which would make the remititur closer to $18,000.  It would certainly be ironic, if not a bit poetic, if the Court remitted the award to somewhere between $3,000 and $5,000 which is exactly what the RIAA proposed to the recipients of its pre-litigation letters.

Tags: , , , , ,

Section 101 of the United States Copyright Act defines work for hire at as follows:

(1) a work prepared by an employee within the scope of his or her employment; or
 
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. 17 U.S.C. sec 101

Whether a particular work is a work made for hire is determined by the relationshiCopyright_symbolp between the parties.  According to the Supreme Court of the U.S., one must first ascertain whether the work was prepared by (1) an employee or (2) an independent contractor.

Subsection 1 above only applies when the work is created by an employee, not independent contractors.  A work created within the scope of a regular salaried or hourly employee’s job is a work made for hire. Whether an individual is an employee for the purposes of the work made for hire doctrine is determined using common law principles of “agency.”  A person is an agent of an employer if he or she, for example, the employer controls how the work is done, if the work is done at the employer’s location, the employer provide equpment and supplies for the work, the employer controls the worker’s schedule and has the right to make assignments, and if the employer provides benefits to the employer.  Some examples of works made for hire include a software program created by an employee programmer, newspaper articles written by a staff journalist for a newspaper, musical compositions created by a staff writer for a music publisher, or advertising copy created by a marketing department employee.

If a work is created by an independent contractor or freelancer (that is, someone who is not an employee), the work may or may not be created as a work made for hire, depending on two variables.  In this case, the work is considered a specially ordered or commissioned work.  In order for such a work to be made work for hire, both of the following conditions are required: i) the work must come within one of the nine categories of works listed in the definition above; and ii) there must be a written agreement in advance between the parties specifying that the work is a work made for hire.  As an example, an independent reporter who writes a specially commissioned article for a newspaper or magazine will probably not be an producing a work made for hire, unless there is a written agreement between the two parties to the contrary.

The distinction between an employee and an independent contractor can be difficult to analyze in some situations.  The closer an employment relationship comes to a regular salaried position, the more likely a work is to be considered made for hire. 

When a work is considered a work made for hire, the author and owner of the work is the employer and it is identified as such on the copyright registration form.   For more information on this subject, contact me or another competent entertainment attorney.

The author, Steven Corn is the co-founder of Big Fish Media, a digital music distribution company working with all the major download music services like iTunes, eMusic and Napster.  He is the author of the blog, The Digital Lowdown.  This article appeared in Issue 32 of Royalty Week, dated October 9, 2007 and is reprinted here with the permission of the author. 

Recently the CEO of Vivendi, Jean-Bernard Levy, called the deal between Apple and its music providers “indecent” and complained about the lack of a differentiated compensation structure. His simple, yet bold, comment reflects the primary complaint that the major record labels have with the iTunes business model. They feel that they are not getting paid enough and they want a better deal from iTunes. As a provider of over 50,000 tracks to iTunes (and other services), one might think that I would agree with his viewpoint. However, his statements are flawed and represent a desperation that pervades the music industry today.

Referring to the iTunes deal as “indecent” is nothing short of a hyperbole. When a UMG CD is sold for $13.99, the distributor generally receives about $9.99. The record label would probably receive $5 – $6 per CD. (Note: these figures vary greatly from album to album and distributor to distributor. This estimate is admittedly rough but serves merely to give a general idea of the revenue splits for selling CDs.)

If the CD being sold is a Universal Music Group artist and the distributor is Universal’s own company, then Vivendi can claim to earn about 70% of retail sales. This is remarkably similar to the wholesale price of an iTunes sale. If a particular CD is an older catalog item, the distributor might offer it at a discounted price. This is reflected in CD sale prices ranging from $9.99 – $11.99. The wholesale on such sales will still remain about 70%.

So, it is unclear how Mr. Levy is calculating his math when he calls the splits on iTunes “indecent.” In many industries, a 70% wholesale price would be considered quite good.

I suppose that a counterargument would be that iTunes makes a lot of money selling iPods and the labels do not share in those revenues (not for any lack of trying on their part). And yet, a supplier of socks to Wal-Mart does not make money when Wal-Mart sells shoes. I suspect that the wholesale price for goods in Wal-Mart, a company notorious for having very slim margins, is no better than 70% and quite possibly much worse.

The battle between iTunes and Vivendi is certainly heating up. The labels are, no doubt, greatly concerned with the large market share that iTunes has and relinquishing control has never been a trait of the majors. For many labels, iTunes is becoming their number one retailer topping even Wal-Mart and other big box stores. If the digital marketplace was more diverse with less concentration in one retailer, then it is likely that the labels would be less critical of the wholesale pricepoint on iTunes.

It is interesting to note that Mr. Levy’s comment occurred on the same day as the beta launch of Amazon’s eagerly awaited download store. While Amazon does offer a multi-tiered pricing structure, their wholesale percentages still closely resemble iTunes. Furthermore, the revenue split on competing services like Napster, Rhapsody and Zune are even less favorable than iTunes. These services appear to escape Mr. Levy’s wrath due, I would presume, to their small market share when compared to iTunes.

So, is it the deal that is indecent? Or is it the fact that Vivendi can’t seem to find effective ways to counteract the decline in physical goods? Perhaps it is the basic fear of the power that iTunes wields.

When a market is declining, as CD sales are, it is natural for large companies to maximize their other revenue streams. Consistent with the Wal-Mart analogy, many companies feel the pressure of meeting their targeted price points and margins. And yet, it is very hard to ignore such a major retail outlet, regardless of what products you manufacture. If Vivendi decides to pull out of iTunes, I am sure that most any indie label would be happy to step in and offer their albums for the same banner slots that UMG has secured in the past. Perhaps some consumers will be upset that they cannot buy both a Nine Inch Nails (UMG) and an Artic Monkeys (WMG) track on the same store. But I doubt that it would greatly affect the general appeal of iTunes. Mr. Levy’s comments sound like a game of “chicken” where no one really cares who wins.

Tags: , , , , , , ,

Imagine that you have a wireless network router in your home which you set up yourself.  Also imagine that, because you are not computCourt3er saavy, you failed to establish a password for that router, or established a “weak” password consisting of only numbers, or your birthdate, or something of that nature.  Consider now the proximity of homes, roads or pathways within around 100 feet of your home.  How many people would have access to your unsecured wireless network?  Your wireless router has an IP Address.  Regardless of the the number of nodes using that IP Address, it appears the same to others in cyberspace.  It does not matter if it your own computer or someone else with a laptop that has jumped onto your wireless network.  Now, using the precedent established in the decision against Jammie Thomas, you could be liable for any copyright infringement committed by a scavenger utilizing your wireless network.  Does that seem fair?

Something like this scenario is what Jammie Thomas still maintains happened to her.  The latest news in this case is that she is appealing the $222,000 verdict against her.  She still claims that her computer was spoofed, which generally refers to various techniques of using falsified data to obtain entree, services and/or goods using a “middle man” to obscure identification.

In order to appeal to the 8th U.S. Circuit Court of Appeals, the court with jurisdiction in this matter, Thomas must establish some clear error in the district court’s finding of facts.  See Glover v. McDonnell Douglas Corp., 150 F.3d 908, 910 (8th Cir. 1998).   On the other hand, the RIAA can defeat the argument by showing that any trial errors committed were harmless and had very little effect on the jury’s verdict  See United States v. McCrady , 774 F.2d 868, 874 (8th Cir. 1985)

In this instance, Thomas’ primary argument will undoubtedly be that Jury Instruction No. 15 was not a correct statement of the law with regard to the Copyright Act, that the judge erred in submitting it to the jury, that the instruction significantly impacted the jury’s decision, and therefore there is reversible error in the instruction as provided.  Jury Instruction 15 read as follows:

The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown.

Thomas argues that this instruction made it too easy for the jurors to find liability if they found she made her Kazaa shared file folder available to others, regardless of whether anyone downloadied any of the music from the public folder.

For it’s part, the RIAA has argued this theory successfully in several cases prior to this one, including, for example, Electra v. BarkerThe essence of the argument is that Section 106(3) of the Copyright Act gives the copyright owner the exclusive right to distribute copies of its work to the public and, while “distribute” is not defined, it is the equivalent of “publish” which is defined in the Copyright Act as follows:  “the offerring to distribute copies or phonorecords to a group of persons for the purpose of further distribution . . . constitutes publication.”  It is not an unsolid argument.

The question quickly becomes whether it is necessary that a tangible copy actually be distributed, or whether simply creating the possibility of that distribution is sufficient.  One of the grandfathers of copyright law, Nimmer on Copyright, states that the “sine qua non of publication should be the acquisition by members of the public of a possessory interest in tangible copies of the work in question.”   This seems to suggest a conclusion to the contrary.

That definition, in fact, seems to suggest that a tangible copy of the work must be acquired before publication can occur.  A new line of cases, however, are interpreting this section differently when it is applied to making digital copies available for download on the Internet, including two U.S> Circuit Court cases, one in the 4th Circuit and one in the 9th Circuit. 

The most apropros of these two is A & M v. Napster, 239 F.3d 1004 (9th Cir. 2001), which found that “Napster userse who upload file names to the search index for others to copy violate plaintiffs’ distribution rights.” Id. at 104.

Perhaps even more supportive of the “making available” theory is the international WIPO treaties to which the United States is a siganatory.  Article 6 of the WIPO Copyright Treaty states that the “authors of literary and artistic works shall enjoy the exclusive right of authorizing the making available to the public of the original and copies of their works through sale or other transfer of ownership.  Article 8 is even more specific, stating that “authors of literary and artistic works shall enjoy the exclusive rights of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works.”

Finally, the Register of Copyrights, Marybeth Peters, weighed in on the discussion in a letter to Rep. Howard L. Berman dated September 25, 2002.  Citing the Napster case, she opined that “making [a work] available for other users of a peer to peer network to download . . . constitutes an infringement of the exclusive distribution right, as well as the reproduction right.”

So, as these citations illustrate, the theorectical concept of “making available” as copyright infringement is not merely the construct of the RIAA lawyers’ imagination, as is concluded by The Recording Industry v. The People in Argument Over “Making Available” in Virgin v. Thomas.   While the 9th Circuit case was, indeed, a brainchild of the RIAA, the concept of “making available” has its origns in the international community as reflected in the WIPO treaties.

It seems, therefore, that Thomas’ appeal will not be an easy battle to win.  At the very least, the Judge’s decision to include the jury instruction was based on some pretty solid and well argued prior case law and supporting opinions.  In order to prevail, Thomas’ attorney will have to convince the Eighth Circuit that merely making the files available does not constitute publication. 

One case which might offer some support this theory is the 8th Circuit’s opinion in Nucor Corp. v. Tennessee Forging Steel Service, Inc., 476 F.2d 386.  That opinion cites the Nimmer quote above in ruling that distributing brochures and photographs of architecture did not constitute general publication of the detailed plans.  This case, however, involves common law copyright and is factually distinquishable from the Thomas fact pattern.

Thomas will also, no doubt, have tremendous support from various third parties, as evidenced by the Electronic Frontier Foundation’s announcement on Monday that they will be filing a friend of the court brief in support of Thomas’ appeal.  A friend of the court brief is a procedure whereby an interested third party who are not a party to the litigation can file a document in support of a party’s position.

Wired’s THREAT LEVEL blog reports that one of EFF’s attorneys, Fred von Lohmann, will hinge their arguments, at least in part, on the “tangible” requirement as set forth in Nimmer.  “Look into the Copyright Act — it narrowly defines distribution as distribution of a phonorecord or a copy. The definition says it has to be a physical object,” von Lohmann is quoted as saying.

Whether there will be enough to overturn the trial court on appeal is, of course, yet to be seen.  I will attempt to keep you posted on the appeal as it develops.

For a Mahoneyvery reasoned commetary on the potential impact of Virgin v. Thomas on other Internet activity, read John Mahoney’s article entitled Forget File Sharing: the Internet is on Trial at his blog, The Digital Edge.  Thanks for the insight John.

Mr. Mahoney correctly points out that in this age of wireless technologies and computer malware, many people are less in control of their devices than they may think.  The lines between computer actions and people’s intentions are more blurred than many realize.  This certainly has a great deal of impact on what we lawyers call the mens rea, i.e., the guilty mind.  If a jury wants to hold someone liable for an action, the law generally requires that their be mens rea, particularly in the criminal arena.  If that concept is applied to the copyright infringement that occurred in this case, the plaintiffs may have established the likely presence of a “mind,” but they have not established the presence of Ms. Thomas’ mind.

To be more precise, the plaintiffs were unable to establish the identity of the actual person, i.e., the guilty mind, if you will, behind the acts of infringement.  Mahoney correctly points out that the only thing the plaintiffs succesfully proved was that the infringing activity occurred through the use of a specific hardware address associated with Ms. Thomas’ internet account, using a username that was consistent with other online usernames associated with her in the past.  To use another legal term, the evidence was, at best, circumstantial.

This is more than just “smoke and mirrors,” a phrase plaintiffs’ counsel, Richard Gabriel, used in his closing to describe the defendant’s legal strategy.  Is is an important component in any copyright infringement action to establish that the defendant, in this case Ms. Thomas, actually committed the acts of infringement.  It is not enough to establish that the acts of infringement were committed using a computer owned by Ms. Thomas at a particular internet protocol.

We all await the verdict of the twelve.  It is my hope that the jurors will see the subtleties of this distinction between an actual person and their online “identity.”