Legislation Designed to Pay Performers of Pre-1972 Musical Works May Create New Problems Without Solving Old Ones

Copyright law is a complicated beast, as just about any lawyer can tell you. It gets even more complicated when you're dealing with old sound recordings—those created before Feb. 15, 1972 aren't protected by the federal Copyright Act. The songs are protected—songwriters and publishers have always gotten royalties—but the performances of those songs aren't, which means singers and record labels generally don't get royalties for use of those songs.

For a while, this wasn't a huge issue, as radio has never paid royalties to any performers. But in 1995 and 1998, Congress passed laws giving the copyright owners of recordings licensing rights for digital performances. As satellite radio and Internet radio expanded, they began paying performance royalties—but not for pre-1972 recordings. This results in weird situations—if you listen to 1980s George Jones on SiriusXM, his estate will get paid for it, but if you listen to 1960s George Jones, the estate won't.

In 2011, the U.S Copyright Office issued a report recommending Congress take action to change this, but so far, nothing's happened. That's where state Sen. Stacey Campfield comes in.

"The music industry—they came to me and said, ‘We're not getting our royalties.' They said it's something that could have a big impact," says Campfield, who has introduced the "Legacy Sound Recording Protection Act" (SB/HB 2187) with Rep. G.A. Hardaway (D-Memphis) to close the federal loophole in Tennessee.

And at first glance, the bill seems quite reasonable. Most of its language is copied directly from federal copyright law, says sometime music industry lobbyist Tony Gottlieb, who gave Campfield the legislation.

"There's a lot of music that predates 1972, and these musicians aren't getting paid for it," Gottlieb says. "They need our help. … These are all the people we venerate."

The legislation, as written, would give the owner of copyright of a pre-1972 sound recording the exclusive right to reproduce the recording; prepare derivative works based upon the recording; sell or lend copies of the recording; and "perform the sound recording publicly by means of a digital or satellite audio transmission."

Gottlieb says the legislation was narrowly tailored on purpose—he gave Campfield another, much broader bill (SB 2186) that copied California copyright law, but they decided not to push that forward. But Brandon Butler, a copyright attorney who is currently the practitioner-in-residence at the Glushko-Samuelson Intellectual Property Clinic at American University Law School, says the narrowness of the bill is a problem.

"The bill is strikingly one-sided. It gives rights-holders even more power than they have under federal law, but it gives the public, including libraries, journalists, and even other artists, none of the reuse rights that federal law includes," says Butler.

Butler says he's concerned that a lack of reuse rights could prevent Tennessee libraries and archives from making copies of sound recordings for preservation purposes, or that teachers could no longer play old albums in class—that's technically a public performance.

"The law is likely unconstitutional because it lacks fair-use protections," Butler adds.

Another thing missing from the bill is a provision—included in federal copyright law—called the first-sale doctrine, which eliminates copyright protections after consumer purchase. This is how used-record stores can legally resale LPs, for example. University of Tennessee Law School professor Gary Pulsinelli says it's unclear how this could affect retailers.

"It's entirely possible a court would say that you can't sell music recorded before 1972," Pulsinelli says.

Gottlieb admits, "That might be a fair criticism," but he says the focus of the legislation is to protect musicians, not consumers. That is, musicians and record labels and other rights holders—like Gottlieb, who owns Get Songs Direct, which licenses dozens of pre-1972 songs.

But as Pulsinelli points out, even if the bill does become law, it's going to be hard to force compliance.

"How is a broadcaster supposed to comply with this? I could be a California customer driving through Tennessee listening to old songs and so now I owe royalties? Or do only Tennessee customers owe royalties? Or only companies digitally broadcasting that have offices in Tennessee?" Pulsinelli asks. "I can imagine two possible responses—they stop transmitting songs recorded before 1972, or they charge Tennessee customers more. Or, I guess, it's possible that they just start paying for all of them across the board."

SoundExchange, the company that collects and distributes digital performance royalties, told the U.S Copyright Office in 2011 that pre-1972 sound recordings accounted for 10 to 15 percent of usage by services, which isn't a lot either way—to pay for or to drop. In the same report, SoundExchange noted some services were "already making statutory royalty payments under the section 114 license," but it's unclear how much of the $590 million the company collected last year that is. (SoundExchange didn't return calls by press time.)

And even if SoundExchange can figure out how and from whom to collect Tennessee royalties, Butler points out that Campfield's bill has no framework for dividing royalties. Under federal copyright law, there's a formula for dividing royalties between labels, featured performers, and backup and session musicians; Butler says it's possible under the Tennessee bill that the labels could end up with more, and musicians could end up with less.

As it is, musicians don't get paid much from those digital royalties anyway. Knoxville musician Susan Lee of the Tim Lee 3 says the band's most recent annual check from SoundExchange was $165.

"Beer money is what we've gotten, basically," Lee says. "And it was a huge pain in the ass to get signed up. … That being said, a little bit here and a little bit there is better than nothing."

The legislation has not yet reached a committee in either the House or the Senate, so there's plenty of time for it to be amended or rewritten. But if it stays as is, it won't be much more than a political gesture, says one music industry lawyer in Nashville who declined to be named for professional reasons.

"I think it is more of a nudge to Washington than anything else," he says.

It's also unclear, says Pulsinelli, whether the bill would be preempted by federal law. Campfield says not. "There is no Federal Preemption as pre 1972s are specifically excluded from Federal Copyright protection [all sic]," he writes in an e-mail.

But Pulsinelli is more cautious. "That is a very subtle issue. … The Copyright Act says the states can't create their own copyright-like law, but then it has a special exception to that rule for pre-1972 recordings, so he is right to that extent," Pulsinelli replies. "The problem is, the proposed legislation will have a large effect outside Tennessee, because the nature of the Internet and satellite radio makes it impossible to know where someone is receiving the recording. Broadcasters will therefore have a hard time making sure they comply with the Tennessee law, and thus Tennessee's law will create national problems. …

"The Supreme Court has said that the purpose of having a federal copyright scheme is to prevent the states from creating a patchwork of rules that make it difficult to do anything with protected works. If Tennessee creates a rule that no one else has, it potentially conflicts with that purpose and thus might be preempted."