U.S. Music Industry’s Open Letter to the U.S. Government – “Support Europe’s Copyright Reform and Reconcile the Royalty Payment Disparities.”

In their open letter, a host of United States music industry organizations, including Asoff MSG Entertainment, BMI, SESAC, SoundExchange, the RIAA and numerous others, have banned together asking for the United States Government’s support of Article 13 of the Copyright Directive proposed by the European Commission. Such reform directly addresses the disparity in royalty payments that have been experienced by a host of music distribution services. Specifically referencing both YouTube and Spotify, the open letter provides how critical it is that the growing digital-access model is continuously protected. The letter describes what has been termed a “Value Gap” – “a growing divide between the online consumption of [United States] content and the revenue it generates, largely due to a narrow group of businesses that exploit analog-era laws intended for passing online conduits to obtain below-market licenses never intended for active music distributors like [Spotify, YouTube].” Id. The letter addressed to the Honorable Anthony L. Gardner, U.S. Ambassador to the European Union, U.S. States Mission to the European Union and the U.S. Department of State, provides that American copyright industries generate over $1 trillion of economic output and account for nearly 7% of the GDP as a whole. It further states that the American copyright industries employ nearly 5.5 million employees and contribute in excess of $156 billion in foreign sales and exports. Id. The letter seeks support to ensure protection of American creators and their respective works and hones in on the American music industry’s transition to a digital marketplace that now accounts for 80% of the industry’s total revenue. To further exemplify the “Value Gap”, the letter provides that while “Spotify paid music creators $18 per user in 2014 (the last year of available data), it is estimated that YouTube (which exploits the Digital Millennium Copyright Act (“DMCA”) to acquire below-market rates) delivered less than $1 per user to music creators in 2015.” The example sought to illustrate how the DMCA benefits YouTube and similar platforms to the disadvantage of others who do not base their business on users uploading the content they distribute. In reconciling this issue, the letter provides that Article 13 would require those that act as music distribution services to negotiate free-market licenses or take meaningful action to prevent unlicensed works from appearing on their services. Thus, the measure would place all services on a level playing field protecting not only the creators, but the digital marketplace itself. According to the United States music industry organizations, implementation of Article 13 will ensure fair growth of all sorts of technologies and services while simultaneously protecting and properly valuing American creators whose works are being consumed without proper compensation.

By: Michelle M. Wahl, Esq.

Michelle is a Partner at Swanson, Martin & Bell, LLP and is licensed in Illinois and Indiana state and federal courts. With a Masters of Law in Intellectual Property, Michelle is the Vice Chair of the firm’s Entertainment and Media Practice Group and a member of the firm’s Intellectual Property Litigation and Transactional Services Practice Group. Her copyright and trademark practice focuses on intellectual property prosecution and related transactions, including performing trademark availability searches and providing advisory opinions, as well as preparing and filing trademark applications with the United States Patent and Trademark Office, and copyright registrations with the United States Copyright Office. Michelle also assists with the oversight of the firm’s extensive trademark docket and conducts required monitoring and maintenance of clients’ trademark portfolios, as well as provides clients with corporate counseling and innovative corporate solutions to address their respective needs.

Michelle further provides comprehensive representation in the drafting, negotiating and executing of various entertainment-related contracts and licenses, including but not limited to band member agreements, artist management agreements, session player agreements, performance agreements, sound engineer agreements, recording and personal services agreements, publishing agreements and licensing agreements. As a former artist manager, she has implemented many facets of national and regional tours, assembled benefit and charity concerts, communicated with various industry personnel, facilitated radio and internet publicity campaigns, arranged radio, print and internet interviews, and assisted in the development of press kits and websites promoting local talent. Michelle has also guest lectured on entertainment and intellectual property-related topics at The John Marshall Law School, DePaul University College of Law, Chicago-Kent College of Law and Azusa Pacific University (CA), as well as served as a panelist on various other entertainment-related continuing legal education courses. Michelle is an author and editor of the Litigation and Industry Updates Column of the ABA’s Entertainment & Sports Lawyers Journal and has also had numerous articles published by the Chicago Music Guide.

In addition, Michelle serves as Chair of Swanson Martin & Bell, LLP’s Community Service/Pro Bono Committee and proudly volunteers her time as President of the Associate Board and as a pro bono attorney to Lawyers for the Creative Arts, a non-profit organization that provides free legal services to eligible clients in all areas of the arts. She also currently serves as Events Chair for the Chicago Chapter of Women in Music, a non-for-profit organization dedicated to fostering equality in the music industry through the support and advancement of women. She recently served as Chair of the Young Lawyers Division for the Illinois Association of Defense Trial Counsel, where she was recognized as the Rising Star recipient and received a Meritorious Service Award and President’s Commendation.

DISCLAIMER: The information contained in these articles constitutes general information and guidance and shall not be construed as legal advice applicable to or provided for any particular person or entity, and shall not be deemed to create an attorney-client relationship between Ms. Wahl and anyone who elects to read and/or rely, to any extent, on the material provided herein. In that respect, Ms. Wahl hereby expressly and specifically disclaims any such legal relationship, but encourages any person or entity seeking a legal advocate pertaining to the issues addressed and discussed herein to contact her directly for further information. Ms. Wahl may be reached at Swanson, Martin & Bell, LLP (330 N. Wabash, Suite 3300, Chicago, IL 60611 or via telephone at her direct line: (312) 222-8585 or e-mail at: mwahl@smbtrials.com.