Thursday, 18 September 2014

Fight for Your Right to Equitable Remuneration!


The British Copyright Act of 1911 contains a crucial line. Clause 19(1) states that ‘Copyright shall subsist in records, perforated rolls, and other contrivances by means of which sounds may be mechanically reproduced, in like manner as if such contrivances were musical works’. In order to establish a songwriting copyright in relation to sound recordings (and other ‘mechanical’ contrivances) there was a need to equate records with sheet music, i.e. ‘musical works’. Artistic copyright was strongest in relation to the printed word or score. Here, authors and their publishers received copyright income in relation to each copy sold. Consequently, one of the methods used to establish this equivalence between sheet music and sound recordings was to claim that the groove of a record was a form of writing (see ‘Audio Books’ for further details).
As a result of clause 19(1), songwriters received a copyright share in record sales, just as they had done in sheet music. It was originally deemed that 5% of the retail price of record should go to the authors of musical works. In anticipation of this measure, various ‘mechanical’ copyright collection societies were formed. These eventually morphed into the Mechanical-Copyright Protection Society (MCPS), which was established in 1924.
There was another consequence of the Copyright Act. Despite its intentions, it demonstrated that there were differences between mechanical reproduction and musical works. When it came to musical works, the author of the work was deemed to be the songwriter. Songwriters were therefore the ‘first owners’ of these works and were free to exercise their rights as they wished. In order to ensure that songwriters received payment for record sales, clause 19(1) created a new copyright: the one relating to the sound recording. The owners of this copyright were not the songwriters, however, nor were they usually the performers who appeared on the records. Clause 19(1) instead decided that ‘the owner of such original plate [the master copy of the record] at the time when such plate was made shall be deemed to be the author of the work’. The owners of these plates were the record companies. Accordingly, they were regarded as the first owners of the sound recording copyright.
Today, most recording artists receive payment in the form of advances from their record companies. If they recoup those advances, they also receive royalties. As Peter Martland has outlined, there was a different method of paying popular musicians and singers during the first three decades of the twentieth century. While a few opera singers and classical musicians received royalties, this was rare for popular artists. The most successful of these might be paid a yearly retainer to record exclusively for a record company. When it came to making records they would also receive a session fee but no royalties. Lesser-known popular artists would receive session fees only. Essentially, they were being paid a one-off sum to perform in a recording studio.
At the time of the 1911 Copyright Act, these recorded performances were usually destined for domestic consumption: most records were played in people’s homes. In the coming years recorded performances increasingly came to be heard in performance contexts. As reproduction technology improved, records were more regularly played in public spaces. They also began to be broadcast, forming part of the repertoire of radio networks from the early 1920s onwards. And by the late 1920s recordings could be heard in films.
By this time the performance right for musical works was beginning to be established. The Performing Right Society (PRS) had been formed to administer this right in 1914 and had gradually gained converts amongst songwriters, composers and publishing companies. With the advent of new technologies, performance right income became increasingly important. However, despite the desire of clause 19(1) to establish copyright parity between mechanical reproduction and musical works, it was not generally assumed that this right existed in relation to sound recordings.
In 1933 the Gramophone Company brought a test case to clarify this point. Carwadine & Co had been playing recorded music in their coffee shops; the Gramophone Company deemed this to be a breach of their performing rights. In the resulting court case it was ruled in the record company’s favour that clause 19(1) did warrant a performing right in sound recordings. In the following year Britain’s two major record companies, the Gramophone Company (which by then had become EMI) and Decca Records, joined forces to create Phonographic Performance Ltd (PPL) to administer the performing right in sound recordings.
As the owners of sound recording copyrights, record companies were now legally entitled to all the performance right income earned by their records. The recording artists, who they had hired to perform on these records, were not due any money when these records were themselves ‘performed’. What followed is one of the quirks of copyright law. The first owners of the sound recording copyright shared their performance income with their recording artists even though, initially at least, there was no legal requirement for them to do so.
According to PPL’s own history, it was their choice to give the artists a share of this income. In their publicity materials they state, ‘This intelligent and far-sighted decision was particularly remarkable because of its voluntarily nature, bearing in mind that there was no legislative or other external pressure on PPL at the time’. In its early years PPL allocated 80% of its income to record companies and 20% to the artists on their records. These splits were amended in 1946; henceforth 67.5% went to the record companies, 20% to featured artists, and 12.5% to the Musicians’ Union (MU).
PPL also came under external pressure. Stephen Barnard believes that it was, in fact, the MU who were responsible for artists receiving a share of performance income. He has written that ‘Under the original [PPL] agreement, revenue received for public performance of records went direct to the participating companies, but this was modified in 1935 under pressure from the MU, whose members could in law claim no royalties for the public performance of their recorded work (the copyright resting with the companies themselves)’. He adds that it was ‘New negotiations between PPL and the MU’ that resulted in the share allocated to the MU in 1946. The MU’s position in these negotiations is understandable. For a long time the organisation campaigned against sound recordings, as it felt records provided a cheap and inferior alternative to its members live performance work. This stance was later embodied in the Union's slogan, ‘keep music live’. (Ironically, the 'keep music live' campaign, which was initiated in 1964, was funded by recordings: the MU didn't allocate the money it received from PPL to the artists who appeared on records, but instead used it collectively. The 'Phonographic Funds' were distributed in various ways: some money went to members who had fallen upon hard times, other funds were used to finance various large-scale orchestras, some was spent on a series of May Day dances, and a 'large proportion' was used for the Union's promotional campaign.) 
Why should PPL concede to the MU's demands? Sarah Thornton has listed several possible reasons. First among them is the fact that the Union helped PPL to maintain control of its repertoire, as they forbade their members from recording with non-PPL companies. Secondly, MU members monitored record performances and copyright infringement at a local level, something that the understaffed collection society was unable to do. In addition, John Williamson has suggested that 'fear on the part of the record companies of a recording strike and a challenge to PPL's collection arrangements meant that they were willing participants in post-war discussions with the MU'. It should nevertheless be noted that the MU was only receiving 12.5% of PPL's money - there was a further 20% that was allocated to artists, and this money was distributed directly to the owners of the sound recording copyrights. Moreover, PPL continued to pay artists a share of their income, despite the fact that records came to be seen as less of a direct rival to live performance. They also continued to do so despite the declining power and membership of the MU. It might be that another aspect of PPL's farsightedness was envisioning that the artists’ share would eventually be enshrined in law.
It took a long time to reach this point. Section 5 of the 1956 Copyright Act clarified that a performance right existed in sound recordings, but failed to mention any artist rights. The UK signed up to the 1961 Rome Convention, article 12 of which states that an 'equitable remuneration' is due when recordings are broadcast or communicated to the public. There is a lack of clarity in this article, however. It states that this remuneration should be paid to 'the performers, or to the producers of the phonograms, or to both', and that it can be divided by 'agreement between these parties' or by domestic law. It was not until the European Union ‘Rental Directive’ of 1992 that the matter was settled. Article 8(2) ruled that ‘Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers’.
The UK’s Copyright, Designs and Patents Act was amended in respect of the Rental Directive. In 1996 a section titled ‘Right to equitable remuneration for exploitation of sound recording’ was added. Clause 182D(1) states that: ‘Where a commercially published sound recording of the whole or any substantial part of a qualifying performance - (a) is played in public, or (b) is communicated to the public […] the performer is entitled to equitable remuneration from the owner of the copyright in the sound recording’. PPL’s literature explains what they did next:
When considering this new legislation, and after lengthy deliberations, the PPL Board agreed that the performers should benefit by receiving 50% of all ‘qualifying’ income on a track by track basis. This was a voluntary decision as legislators declined to recommend any particular split of PPL income. This meant that every single performer, whether featured or non featured would have to register their details with PPL or one of the newly formed UK performer organisations to enable their royalties to be forwarded to them.
The featured performers are those who have an exclusive contract with the record company issuing the record. Non-featured performers are commonly session musicians and backing singers. PPL has fairly complicated methods for dividing this income between the two types of performer. In general, however, the income is split 65:35 between featured and non-featured artists. This revenue has become increasingly important. In 2012 IFPI noted that ‘Performance rights income now accounts for 6 per cent of record companies’ trade revenues worldwide’. It would be higher still if it weren’t for the fact that copyright legislation has forced record companies in some countries to share this income equitably with their artists.
Finally, I would like to return to clause 19(1) of the 1911 Copyright Act and its idea that the copyright in records should operate ‘in like manner’ to the copyright in musical works. The Rental Directive has brought a form of parity between writers and artists. When it comes to the performing right, the songwriter members of PRS commonly receive 50% of this income directly, while 50% is paid to their publishers. The songwriters’ share is safeguarded in this manner because members assign their performing right in their compositions to the collection society. Their income from this right does not have to be paid off against publisher advances. In a similar manner, recording artists now receive 50% of the performing right income directly and this too does not have to paid off against their record companies’ advances. There remains a fundamental difference, however. Artists may well receive a 50% share of the performing right in sound recordings, but this share has been established without any fundamental change being made to the authorship or ownership of sound recording copyrights. In the majority of cases these still belong to record companies. But, surely some light has been let in here? The performing right underlines a conceptual problem that exists when considering record companies to be the authors of sound recordings. If artists are now considered as equal partners in the performing right, why not make them equal partners in the underlying sound recording copyright as well? 

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