Category: Copyright

The American Music Fairness Act Gets a New Hearing

American Music Fairness Act

Tomorrow afternoon, the House Judiciary Committee IP Subcommittee will hold a hearing entitled Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists. The subject of the hearing is—at least ostensibly—to compare and contrast the royalty granting American Radio Fairness Act (AMFA) against the royalty denying Local Radio Freedom Act (LRFA). Witnesses to testify include recording artist Randy Travis; National Association of Broadcasters (NAB) president and CEO Curtis LeGeyt; SoundExchange president and CEO Michael Huppe; and Urban One Regional VP and General Manager Eddie Harrell, Jr.

As discussed in other posts, AMFA would, for the first time since radio was invented, require terrestrial stations to pay royalties to the artists whose sound recordings draw audiences and drive ad revenues. The United States is the only major radio market in the world that does not pay royalties to recording artists, and as a result, American artists are likewise not paid royalties when foreign radio stations play their music. And the only reason this unfairness has persisted is the lobbying power of NAB.

When AMFA was introduced in 2021 by Reps. Ted Deutch and Darrell Issa, the latter stated in a Capitol Hill press conference, “The broadcasters have become experts in muddying the waters.” Indeed. As we often see with the behemoths of Silicon Valley, the NAB is very adept at using the “little guy” to obfuscate and maintain the status quo of multi-billion-dollar advertising conglomerates that would rather not share even a fraction of revenue generated by the music they play. And although Mr. Travis is a star, the Subcommittee must remember that many of the beneficiaries of AMFA would be “little guys,” including studio musicians, producers, and engineers.

Granted none of the witnesses testifying tomorrow are “little guys,” though the presence of Mr. Harrell representing Urban One is interesting because I am hopeful that he does not conflate Black-owned with small. As the media conglomerate’s website states, “For more than 40 years, Urban One has been the leading voice speaking to Black America. First, as the largest local urban radio network. Then, as the largest syndicator of urban programming.”

Note the word largest appearing twice in two short sentences. And good for Urban One. They should be proud of their scope, reach, depth, and diversity of programming. But if Mr. Harrell testifies that Urban One cannot afford to pay royalties to musical artists—or worse, implies that AMFA would harm Black enterprise in media—that’s a moment to raise a skeptical eyebrow. And not just because more than a few of the musical artists drawing audiences to Urban One’s stations are also Black. As the company’s 2022 annual report states…

While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate the premier multi-media entertainment and information content platform targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties.

I wouldn’t want to take on new expenses either. But Urban One is a media giant looking to become a bigger media giant complete with television networks and, most notably, development of new and original content with licensing value. Content creators denying other content creators a fair deal is not a great look. As the above statement from the report makes clear, broadcast advertising remains foundational to the business, and the Subcommittee should not lose sight of the fact that musical artists continue to underwrite that revenue without any say or compensation in the arrangement.

Local Radio Freedom Act is the Missing the Fairness

As to actual little guys, while large broadcasters like Urban One would be subject to rates set by the Copyright Royalty Judges, the statutory “small broadcaster protections” of the AMFA should be sufficient to reject the central premise of the LRFA sponsored by Senators Hassan and Barrasso. On Sen. Hassan’s web page, NAB’s LeGeyt is quoted thus: “A new job-crushing performance fee on local radio stations would hurt stations’ ability to provide their free, essential service in communities across the country.”

In addition to the too-cute-by-half contrasting “freedom” against “fairness,” the LRFA simply ignores the fact that small, independent stations would pay fees that would not qualify as job affecting, let alone “job crushing.” A non-public, independent station with revenue between $100k and $1.5mm would pay $500/year; a public station with the same revenue range would pay $100/year; and a station with revenue under $100k would pay $10/year. Specifically, 72% of the 220 Black-owned radio stations (as of October 2021) generate less than $1mm in annual revenue and would be capped at the $500 annual fee.

Yet, despite these facts, the language of the LRFA is so replete with worn-out rationales for the status quo that it’s hard not to assume the NAB wrote every word of the bill. For instance, this one is rather long in the tooth:

Whereas local radio stations provide free publicity and promotion to the recording industry and performers of music in the form of radio airplay, interviews with performers, introduction of new performers, concert promotions, and publicity that promotes the sale of music, concert tickets, ring tones, music videos, and associated merchandise.

The “free publicity” argument was weak 20+ years ago, but today it is simply unsupportable. The Subcommittee knows, or should know, that music discovery occurs in a complex landscape that includes every platform from traditional radio to Instagram. The broadcaster cannot reasonably claim that, in general, they provide more value by promoting music than that music provides them value by drawing listeners. Speaking anecdotally, what is the frequency of remaining tuned to a radio stations playing music one already likes versus waiting to discover something new?

Nevertheless, AMFA includes a provision under which the royalty judges may consider “whether use of the station’s service may substitute for or may promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings.” Thus, where a station can provide some evidence to support the “promotion” argument, that can be taken into account when calculating the royalty payment. But this would require the broadcasters to put their money where their rhetoric is—and nobody can blame them for not wanting to put their money anywhere they don’t have to. But that doesn’t make it fair. “100 years of inequity” is right. It’s long past time to make it wrong.

Major Record Labels Sue Gen AI Devs Suno and Udio

The most prominent copyright lawsuit against Generative AI (GAI) to date dropped yesterday when the major record labels filed complaints against developers Suno and Udio in the District of Massachusetts and the Southern District of New York respectively. This is going to be one to watch, not just because of the size of the plaintiffs and the potential for significant damages, but because the complaints, in my view, present an intriguing combination of the legal questions addressed in most, if not all, of the other lawsuits filed against GAI companies.

For instance, in NY Times v. Open AI and Concord et al. v. Anthropic, both plaintiffs make a compelling prima facie case for copyright infringement by presenting large bodies of evidence showing either literal copies or substantially similar material output by the defendants’ systems. This is distinct from some of the visual artists’ lawsuits against Gen AIs like Midjourney and DALL-E where the allegations of infringement entail more inference than direct evidence of specific works copied. Not that the visual GAIs don’t output literal copies of protected works—they do—but I do not believe a plaintiff has yet filed suit with a body of that kind of evidence.

Interestingly, the evidence presented by the record labels to show that their protected sound recordings were used to train Suno and Udio encompasses a combination of substantially similar copies in the outputs, a measure of inference, and a number of self-incriminating statements by the defendants themselves. This includes the unwise assertion made by every GAI developer that machine learning (ML) is fair use, but I’ll come back to that.

Regarding direct evidence, both complaints cite several examples whereby, with a few general prompts, the systems will output music that is substantially similar to famous songs. “These similarities are further reflected in the side-by-side transcriptions of the musical scores for the Suno file and the original recording. These similarities are only possible because Suno copied the Copyrighted Recordings that contain these musical elements,” the Suno complaint states.

See cover image from plaintiffs’ transcriptions. “Red markings in the transcriptions indicate notes that are the same as the original in both pitch and rhythm, where orange markings indicate notes that use either the pitch or the rhythm of the original, but not both.”

Akin to the NYT and Anthropic cases, the logic holds that if this material comes out of the system, then it was obviously fed into the system. More broadly, inference tells us that millions of sound recordings were used in ML to enable Suno and Udio to so effectively produce a wide variety of music in so many styles. And that’s where the self-incriminating comments come into play.

As has been reported elsewhere, Suno investor Antonio Rodriguez, is quoted in the complaint as saying, “…honestly, if we had deals with labels when this company got started, I probably wouldn’t have invested in it. I think they needed to make this product without the constraints.” Yikes. Notwithstanding the questionable claim that copyright infringement is necessary for GAI development, Rodriguez’s statement reads as an admission that of course they willfully infringed copyrights—that he went into the venture knowing he would help finance litigation.

Similarly, Udio’s CEO David Ding is quoted saying that his system needs to “train on a large amount of publicly-available and high-quality music…[the] best quality music that’s out there…obtained from the internet.” As the complaints note, “publicly-available” is a term the GAI companies like to use in PR statements, but this is not synonymous with the “public domain.” Most in-copyright works are publicly available, and Ding’s statement that sound recordings were “obtained from the internet” is, again, acknowledging that unlicensed copying—and a lot of it—occurred for the purpose of training the Udio model.

All Eyes on Fair Use

When the first Gen AI lawsuits dropped, I thought the developers might try harder to claim that no copyright infringement occurs on the basis that what’s happening inside their machines does not “copy” protected works. All that nonsense about machines “learning” the same way human artists learn, when combined with an invisible or complex process, seemed to be leading toward that argument in court. Instead, whether the evidence of copying is too obvious, or the developers are too hubristic, it appears—certainly in this case—that the Gen AI companies are stipulating to a valid infringement claim and jumping straight to a presumption that they will be rescued by a fair use defense.

As mentioned above, and as the complaints note, the assertion of fair use is itself a tacit admission that a prima facie claim of copyright infringement exists. While it will only be fun to unpack the real fair use responses when Suno and Udio submit those documents to the courts, the labels’ complaints already present rationales as to why all four factors disfavor a finding of fair use. Going forward, the fair use discussion will emphasize factors one and four—the purpose of the use and the potential market harm to the works used, respectively.

The most compelling discussion will address the extent to which the courts find that Suno and Udio’s use of the works serve a “transformative” purpose under factor one. Not only will this consideration have major implications for every Gen AI developer, but it will also be the ideological hill on which the pro and anti-copyright forces will clash. The ongoing (if repetitive) debate that pits alleged progress against allegedly outdated copyright law may be won or lost on the transformative test in these cases.

On that subject, both complaints use the language “far from transformative” to describe Suno and Udio—and I agree. Just because Gen AI is novel, or even impressive, these products do not make transformative use of protected works in a manner that furthers the purpose of copyright law, which is to foster, not replace, human authorship. This essential consideration for finding transformativeness is tacitly acknowledged by the Gen AI lobbyists and cheerleaders who insist that “copyright law must change” in for the sake of Gen AI. If the law “has to change,” then clearly, the law does not support the conduct at issue. These and other contradictions will be exciting to follow as these cases proceed.

NYS Assembly Led Down the Primrose Path on eBooks Again

NYS Assembly

In December 2021, New York Governor Hochul recognized that she must veto a bill that would have prescribed the manner in which publishers may provide eBooks to public libraries. It isn’t necessary to rehash the details of that legislation—I wrote several posts about eBook bills—but only to restate the reason for the veto:  the law was unconstitutional. Why? Because state laws proposing to dictate terms for making in-copyright works available, even for libraries, is preempted by federal law.

Nevertheless, Assemblyman Angelo Santabarbara has introduced a new bill (A10544) that, although its mechanisms are different from the 2021 bill, is still unconstitutional. In fact, the operative part of the bill which, for instance, prohibits digital rights management (DRM) technology, would have the effect that a library is free to make eBooks available in any manner it sees fit and without limits of any kind. This plainly violates the Copyright Act. Even if the purpose of the proposal were well-founded in service to the public—and it is not—the states are simply not permitted to pass their own laws governing the terms under which copyright owners may distribute works to the market.

In addition to Gov. Hochul’s clear-eyed veto in 2021, related eBook bills have been proposed, litigated, and shot down in several states, begging the question as to why lawmakers seem determined to die on this meaningless hill. As discuss in this post examining the mid-sized library system serving my region in New York, there is no evidence suggesting that the public is underserved or that the current licensing regimes are so onerous as to harm the operation of libraries. Frankly, even if licensing were onerous, these laws would still be unconstitutional, but the combination of federal preemption and pointlessness does make one wonder–but not really.

These eBook bills are all variations on the same thematic effort by the same lobbying groups seeking to push an anti-copyright agenda using the Trojan Horse of the public library. Copyright antagonists couldn’t prove DRM, governed under DMCA Section 1201, was unconstitutional, so they try chipping away at the principle through state legislatures, masked beneath the white hats of institutions we all love. And indeed, because I do love libraries, I continue to hope that they will stop running interference for organizations that have neither libraries’ nor readers’ nor certainly authors’ best interests at heart. If nothing else, continuing to introduce bills that run afoul of Article I Section 8 is a waste of everybody’s time.

Photo by: vasiliybudarin