"In contrast to previous economic eras,
intellectual property will be the primary source
of new wealth in the 21st century."
- Gregory A Piccionelli, 1989
 
AREAS OF PRACTICE
• Internet Matters
• Music & Other Entertainment Matters
• Intellectual Property Rights Enforcement
• Crowdfunding Matters
• Freedom of Expression Matters

Is Royalty-Free Music Right For Your Company?

MAY 2010

[Note: the use of the terms “royalty-free” and “royalty-free music” in this article is as a generic term and is not intended to be, nor should be interpreted to be, any particular company or product.]

 

Music is becoming a bigger and bigger part of our online experience. From the music that is integrated into streamed video clips, to the music animating online games, to the music playing in virtual world discos, music has become an integral feature of many types of web sites. But music is also playing a larger role in many other online adult applications. For example, music is being used with increasing frequency in web ads, site tours and in online promos for an ever-increasing range of products. Paraphrasing an old Rodgers and Hammerstein song, one might rightly say that the web “is alive with the sound of music”.

 

As a professional musician and composer myself, I warmly welcome the web’s transition from its days as a silent medium. But as an intellectual property attorney I also recognize that as the Internet and mobile networks begin to groove, shake, rock, rattle and hum, a whole new set of legal issues are emerging regarding the use of music content on the web and its sister mobile networks. As more and more adult content is distributed via the web, many of these issues will directly impact adult entertainment businesses, I suspect for most, in ways that will come as a complete surprise.

 

For example, many adult content producers are simply unaware that legal use of music in content performed via a website or a mobile network, especially if by streaming, often will require certain public performance rights that are not generally needed when the content is distributed solely in the form of physical copies, such as DVDs.

 

As we move toward a future in which music will be as much an integral part of Internet and mobile media as it is currently in the television and radio media, online adult entertainment entrepreneurs are well advised to obtain at least a basic understanding of the rights involved in the use of music. Use of music without authorization can result in substantial copyright infringement liability. For example, an infringement of a single music work could result in liability for actual damages or up to $150,000 per infringed work. Unfortunately, because of the complexity of the subject, even a basic overview of how music rights are properly acquired and exploited by adult entertainment companies is well beyond the scope of this article and is best addressed in consultation with competent intellectual property counsel familiar with music law and the adult entertainment business.

 

Nevertheless, in the remainder of this article, I believe it will be helpful to highlight some important issues regarding at least one of the most common methods of acquiring music for use in adult entertainment content, licensing so-called “royalty-free” music.

 

Royalty-free” does not mean “all the rights”.

 

The term “royalty-free music” commonly refers to stock or 'library music' licensed for a single fee, without the need to pay any subsequent royalties. Unfortunately, many adult content producers are surprised to learn that in some instances the royalty-free music they licensed may not provide them with all the requisite rights they need to lawfully exploit their works incorporating the music as they had contemplated. In fact, on more than one occasion I have had to address expressions of utter incredulity by veteran adult content producers after explaining that because the royalty-free music at issue did not provide all the music rights required to publicly perform the music on the web, the producers could not lawfully publicly perform their own motion pictures that included the subject music, even on their own websites.

 

In another even more extreme, but not unique situation, a rather famous adult motion picture (that will remain unnamed) incorporated music purported to be royalty-free but which was, in fact, not even owed by the royalty-free company that licensed the music. The motion picture was distributed for decades before the music publisher that owned the rights to the incorporated music discovered the infringement and sued for damages. Unfortunately for the adult film producer, by the time of the lawsuit, the royalty-free music company that fraudulently licensed the rights was long gone.

 

But while it is always possible that any licensor of intellectual property rights, including music rights, could be a fraud, and licensees are always well advised to perform due diligence on such licensors, in the field of royalty-free music licensing, scoundrels like the one responsible for the debacle cited above are thankfully, relatively rare. In my experience, adult content producers are much more likely to become exposed to, and actually encounter, allegations of music rights infringement when their use of the music exceeds the scope of grant of rights by the royalty-free licensor. The two most common ways this happens is (1) the license doesn’t provide public performance rights; and/or (2) the royalty free license expressly excludes use of the music with explicit sexual content.

 

The issue of whether the royalty-free music use license includes “public performance rights”.

 

When an adult content producer is considering licensing royalty free music for content that will appear on websites, an important consideration is whether the license includes the right to publicly perform the music. The reason this is important first requires a bit of explaining as to just what the “public performance rights” are.

 

A copyright in an expressive work, like music or an adult video, is not a single right. It is instead a bundle of rights that are granted by the government to the creator of the work. Under United States law, the rights are:

 

1. The exclusive right to reproduce the copyrighted work. This means that only the copyright owner has the right to make copies of the work.

 

2. The exclusive right to prepare derivative works based upon the copyrighted work. This right includes the right, for example, to be the only party authorized to adapt a work, like a video or photograph, to a different medium, such as the Web.

 

3. The exclusive right to distribute copies of the copyrighted work to the public.

 

4. The exclusive right to publicly perform certain types of copyrighted works (such as audiovisual works, including video clips).

 

5. The exclusive right to publicly perform sound recordings by digital audio transmission (e.g., via the Internet).

 

6. The exclusive right to publicly display the copyrighted work.

 

Most adult content producers are familiar with many of the rights listed above. For example, the rights to make and distribute copies and the right to make derivative works (e.g., the creation of compilations, web content from DVDs, etc.). But because adult content is rarely performed publicly in theaters or any other venue that most adult entrepreneurs commonly think of as “public”, the issue of public performance of adult content and the music that may be incorporated into it, is not one that many adult producers consider. However, as cheap and abundant bandwidth has become almost ubiquitously available, providing the means for massive streaming of adult audiovisual content via the web and mobile devices, the issue of public performance of adult content and any music associated in the content (rights 4 and 5 above) must be considered.

 

So what constitutes public performance? Under United States copyright law to perform a work “publicly” means (a) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (b) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (a) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times. Thus in the contexts of the Internet and mobile networks, the fact that performances and displays may occur in diverse locations and at different times will not exempt them from being subject to the public performance right.

 

The public performance right in a piece of music originally vests in the composer or songwriter of the subject work. But most professional composers and songwriters contract with publishers that help them get their music recorded and performed. It is important to note that since a holder of the public performance rights in music and certain other types of copyrightable works is entitled under the law to demand payment of a fee each time a subject musical work is publicly performed, composers, songwriters and publishers expect to be paid for use of their music.

 

As you can imagine, when it comes to public performance of music, it is virtually impossible for even a moderately successful composers or songwriter to keep track of all the public performances of his or her music. Because of this many years ago performance rights organizations (“PROs”) were created to keep track of public performances of music and collect fees for such use on behalf of the owners of the music.

 

PROsprovide intermediary functions, particularly royalty collection, between copyright holders and parties who wish to use (i.e., perform) copyrighted works publicly. In some foreign countries PROs are called copyright collectivesor copyright collecting agencies.

 

There are three principal PROs in the United States performing the royalty collection function for the fourth copyright listed above when it involves the public performance of music works. These PROS are known by their acronyms: ASCAP, BMI and SEASAC. Many foreign countries have their own PROs, e.g., SOCAN in Canada and SACM in Mexico.

 

A fourth U.S. PRO called Sound Exchange collects and administers royalty payments due to owners of, and performers on, the actual sound recordings of music when such recordings are performed digitally (e.g., via the web). It is important to note that Sound Exchange administers separate royalties separately due under a separate right from the right administered by ASCAP, BMI and SESAC. Sound Exchange compensates the composers and publishers of the music via a separately collected royalty due for music recordings that are digitally performed publicly. The copyright underlying the royalty collected by Sound Exchange is listed as the fifth right in the list of copyrights above.

 

Effectively, PROs pretty much all do the same thing. They issue blanket licenses to music broadcasters, such as television and radio stations, web site owners, auditoriums, larger restaurants and clubs, hotels, or theme parks. Basically, the licenses are issued to anyone who plays music in a public manner. By paying the blanket license fees to the PROs, these broadcasters are able to use whatever music they want in the libraries of the PROs without having to account to each individual songwriter. For media companies, the blanket license is usually based on user’s broadcast or digital traffic footprint. Thus, a large commercial television station will be required by a PRO to pay a higher blanket license fee than a small website, but both are subject to payment if they publicly perform music in the PRO’s catalogue.

 

Some royalty-free licensors do not have public performance rights to license in the first place.

 

As discussed above composers, songwriters and music publishers generally assign the right to license the public performance and collect fees for the licensing of the public performance, of their music, to PROs. Because of this, many royalty free music licensing companies that have acquired licenses from a large number of composers and songwriters to license the use of their music to third party producers (e.g., adult producers) in projects such as motion pictures, commercials, web sites, etc. (also known as a synchronization license), have not acquired the public performance rights to license along with the right to grant the synchronization license to third party producers. The result can be very problematic for an adult producer who is also a public performer of content in a public venue, such as a web site, that is not licensed with the appropriate PROs.

 

The problem highlighted above has not traditionally been a problem for the adult entertainment industry because for most of the last 30 years the industry has mostly used music in synchronization with visual content in tapes and DVDs which were privately sold and not often publicly performed, especially by the producer. And to the extent such content was publicly performed, say via a cable or satellite broadcast, the cable or satellite broadcaster was the public performer required to have a license from the composer or, as was more likely the case, a PRO. Now, however, as adult companies are increasingly becoming public performers of content via their own websites, if the content has music synchronized in it, they may well also be publicly performing such music as well. Consequently, without a license from all the appropriate PROs, on a global basis, (because websites are generally accessed globally) or a license of public performance rights from the owner(s) of the rights (e.g., from composers who have not assigned the right to a PRO), the website operator might be infringing the copyright of the owner of the public performance right in the subject music.

 

Solutions

 

There are several things adult content producers can do to avoid public performance rights infringement problems regarding music incorporated into their works

 

  • Obtain public performance licenses from the appropriate PROs (e.g., ASCAP, BMI, SESAC, Sound Exchange, etc.). Since adult websites provide public performance of content to a global audience, additional licenses from foreign PROs may also be required to truly obtain authorized public performance use of the music on websites. Unfortunately, the cost of obtaining numerous licenses from domestic and foreign PROs may be prohibitive for many adult web sites.

 

  • Use royalty free music that is provided by composers who are not a member of any kind of PRO so their music can be freely broadcast and played in public without paying any broadcasting license to any collection society. (Our firm represents several such composers.) This category of music is sometimes referred by some royalty free music licensors as "completely royalty free" music.

 

  • In my opinion, the best and safest solution is to hire a composer specializing in music for use in adult entertainment content to provide music with all the rights required for exploitation in all media in existence today and in the foreseeable future. Because of the economy and because of the large number of competent composers available, competition has dramatically driven down the cost of acquiring original music for adult content compared with costs a few years ago. If this is an option that your company would like to pursue to acquire music for your projects, please feel free to contact our firm at the number below. Our firm may be able to direct you to one or more providers of music suitable for all your contemplated uses.

 

  • Always read the music licensing agreement carefully and review the document with an attorney competent in the area of music rights licensing and adult entertainment matters.

 

  • License music only from licensors that you are reasonably confident actually have the rights to license to you, and who are willing to warrant in writing that they have all the requisite rights and that they will fully indemnify you regarding any third party claims of infringement against your company.

 

The issue of whether the royalty-free music use license excludes the use of the licensed music with sexually explicit content.

 

Many adult content producers that purchase royalty-free music are also sometimes surprised to learn that the licensed use of the royalty-free music expressly excludes any use associated with sexually explicit material. While this type of exclusion is not as prevalent as it once was, some royalty-free licensors still include the prohibition in their license agreement. Sometimes the exclusion is termed as “use in or with obscene materials”, or occasionally as “any use that violates any law”, or something similar. In such cases, the use of the music in association with sexually explicit materials could result in copyright infringement liability and an invalidation of the license to use the music in existing content.

 

Solution

 

  • Carefully read the license for use of royalty free music and scrutinize the agreement for exclusions, including possible use prohibitions with explicit sexual content.

 

A Final Thought

 

Rampant Internet piracy of adult content over the last few years has sensitized many adult content producers to the issue of copyright infringement. Like their counterparts in the music business, adult content producers have come to know all too well that such infringement poses a serious threat to the viability of virtually every traditional entertainment business model based on the sales of copies of recorded content.

 

Just as adult content owners are becoming more and more aggressive against unauthorized use of their content, they should expect owners of music rights to similarly do so should adult content producers infringe their rights. It is noteworthy that while music rights infringement lawsuits against adult content providers are not what I would term commonplace, the number of disputes and formal actions against adult content producers is clearly on the rise.

 

The adult entertainment industry has unfortunately obtained a reputation for being somewhat flat-footed on issues involving intellectual property rights. The best recent example is, of course, the industry’s failure to adequately prepare for and address the scourge of online piracy of adult content. The music industry on the other hand has demonstrated much greater resolve to effectively enforce its intellectual property rights. In fact, at the time the danger of Internet infringement of adult content was scarcely more than legal panel topic at adult industry trade shows, the music industry had already begun to implement new content sales models, and to proactively enforce music owner’s rights on the web, even to the point of filing lawsuits against music customers caught pirating music.

 

So, perhaps a word to the wise is in order. Simply put, I strongly urge any adult entertainment company seeking to acquire rights to use music in their content to consult with competent counsel, hopefully before entering into any agreement with a music licensor, but certainly before any use of the licensed music.

 

This article is not intended to be, nor should be considered to be, legal advice. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney familiar with the legal matters discussed in this article.

 

 

1Gregory A. Piccionelli is an intellectual property and adult entertainment attorney experienced in Internet matters. He can be reached at Piccionelli & Sarno at (805) 497-5886 or greg@piccionellisarno.com.

 

 

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