Category: Intellectual Property

Music Artists Ask Congress to Finally Correct the Radio Royalties Mistake

music

Today is World Radio Day, and when most of us think of radio, we think of music. That’s why today, Congress received a letter signed by about 300 performing artists asking lawmakers to pass the long-overdue American Music Fairness Act (AMFA) this session. “Each year, AM/FM radio stations play nearly a billion songs. And each year, giant radio corporations rake in billions in advertising dollars while refusing to pay a single cent to the artists behind the music that attracts their advertisers in the first place and makes their entire business model possible,” the letter states.

The artists reiterate what presidents and legislators have known for generations—that it is absurd that the nation which produces some of the most popular recorded music in the world is almost the only democracy that does not pay artist royalties for AM/FM radio play. “This leaves the U.S. in the dubious company of North Korea, Cuba, and Iran,” the letter reminds Capitol Hill. And in a time of deep political divisions, lawmakers agree that this ongoing conflict between broadcasters and musical artists is unfounded and unfair.

As the letter reminds Congress, this is an international trade matter as much as it is a domestic issue of economics and fairness. Although most nations where American music is played on the radio do pay royalties, American artists receive nothing abroad solely because foreign artists receive nothing in the U.S. Plus, the core principle of AMFA is popular with voters. As the letter states, “…by a 6-1 margin Americans support Congress addressing this injustice….” That many Americans don’t agree on much these days, but Congress can feel confident that their constituents do support equity and fairness for American music artists.

AMFA’s Pedigree is Long – Too Long

Under copyright law, musical works, which are created by songwriters, are protected separately from sound recordings, which are created by performing artists who may or may not also be the songwriters. Broadcast, terrestrial radio networks have long paid royalties to songwriters for public performance of musical works but never to performing artists for airing the sound recordings.

AMFA, first introduced in June of 2021 by former Congressman Ted Deutch and co-sponsor Darrell Issa, is the legislative descendant of many bills over many decades proposing to remedy this inequity. During that time, artists have even earned royalties from digital transmission thanks to an amendment to the Copyright Act passed in 1995—sixteen years before Spotify became popular. So, to say the terrestrial radio fix is overdue is an understatement. I have advocated AMFA and explained its provisions in several posts, but I will copy and paste the basic terms again here:

For smaller stations (under $1.5 million/year), the AMFA caps royalties between $10/year to $500/year depending on revenue and status as either a public or private station. For larger stations and networks, rates would be set, as they for the rest of the performance licensing market, by the Copyright Royalty Board (CRB). Under the provisions of AMFA, the CRB must consider station size and revenue when setting rates and must also consider the station’s promotional value to recording artists.

The broadcasters have no plausible, factual argument to oppose the terms of AMFA; the basic principle of the bill is popular with Americans who love the music made by the signatories of this letter; and lawmakers already know all the reasons why passing this bill is the right thing to do. Time to get it done.

Photo source by Kjekol

Reversal in Thomson Reuters Case May Bode Well For Copyright Owners Against AI

Thomson

It has already caught the attention of most copyright watchers that Judge Bibas of the District Court for the District of Delaware (3rd Circuit) reversed his own 2023 summary judgment ruling in the copyright AI case Thomson Reuters v. Ross Intelligence. Thompson, which owns the legal research database Westlaw, sued Ross for copyright infringement after the latter built its competitive AI-powered search tool by copying over 2,000 headnotes from Westlaw. Headnotes contain summaries which the court finds are sufficiently original for copyright protection, and it also finds that the material is protected under the doctrine of “selection and arrangement.”

Judge Bibas found copyright infringement of the headnotes and held that Ross’s defenses, including fair use, all failed. It is the fair use ruling that may be predictive of outcomes in other cases alleging copyright infringement for the purpose of AI training. Notably, Judge Bibas held that fair use factors one and four favored Thomson, and that Thompson prevails overall on fair use. To review, my amended summaries of the fair use factors are:

  • The purpose of the use, including whether the use is commercial.
  • The nature of the work used (i.e., whether it is more factual or creative).
  • The amount of the work used, including whether the “heart” of the work was used.
  • The potential market harm to the work used, namely whether the use substitutes for a use that the copyright owner retains the exclusive right to exploit in the market.

In Thomson, it is compelling that the court finds factors one and four go to plaintiff and that these carry the fair use finding overall when factors two and three go to defendant Ross. I say this because in other AI cases involving ingestion of entire visual, musical, and literary works, factors two and three will surely go to plaintiffs, and the AI developers can only hang their hopes on factors one and four.

Under factor one, Judge Bibas held that Ross’s use was clearly commercial and that the purpose of the use serves essentially the same purpose as the works used. Here, the opinion uses language that could benefit other AI developers, but not necessarily. It states:

Ross was using Thomson Reuters’s headnotes as AI data to create a legal research tool to compete with Westlaw. It is undisputed that Ross’s AI is not generative AI (AI that writes new content itself). Rather, when a user enters a legal question, Ross spits back relevant judicial opinions that have already been written.  

On the one hand, that parenthetical note that Ross is “not generative” could be cited to argue that generative AIs like Midjourney or Udio favor a finding of transformativeness under factor one. But several of the strongest cases against the developers present similar evidence of “spitting back” copies of the material ingested. Further, as emphasized in Udio and Suno, two AIs built on ingesting protected sound recordings, plaintiffs also present a strong argument that the GAIs serve the same purpose as the works used and, therefore, the purpose is not transformative.

Where a court finds under factor one that an infringing use serves the “same purpose” as the work used, this will often, quit logically, lead to finding market substitution under factor four. Here, Judge Bibas is forthright in his reversal about his initial instinct to leave factor four as a question of fact to be decided by the jury. Most notably, in my view, he writes…

I worried whether there was a relevant, genuine issue of material fact about whether Thomson Reuters would use its data to train AI tools or sell its headnotes as training data. And I thought a jury ought to sort out “whether the public’s interest is better served by protecting a creator or a copier.”

Those first considerations from 2023 reprise two familiar arguments presented in fair use defenses, but which courts have generally found unpersuasive in recent high-profile cases. That the plaintiff is not yet in the market being pursued by the defendant has been held erroneous because it fails to properly consider the “potential” market for the protected works. Next, the “public interest” (i.e., for innovation’s sake) argument has been held too broad in major fair use cases—except Google v. Oracle, which is an outlier for several reasons. Thus, in reversing his thinking, Judge Bibas writes…

Even taking all facts in favor of Ross, it meant to compete with Westlaw by developing a market substitute. And it does not matter whether Thomson Reuters has used the data to train its own legal search tools; the effect on a potential market for AI training data is enough. Ross bears the burden of proof. It has not put forward enough facts to show that these markets do not exist and would not be affected.

Because factor two is generally considered the least important and factor four has long been considered the most important, Judge Bibas rests on that precedent to find that fair use overall favors Thomson. What this decision could signal for many AI developers who have copied millions of creative works to train their models is that the generalized “innovation and important for society” arguments will find slippery footing when they argue fair use.

Congress Should Only Pass AM Radio Act with the American Music Fairness Act

music fairness

Two bills are back in motion in the U.S. Congress—the AM Radio in Every Vehicle Act, and the American Music Fairness Act (AMFA). As I argued in a post for The Hill last May, if the first bill is to become law, then the second bill should also become law. While the AM radio provision arguably has some public-serving benefits, it is unavoidably a favor to broadcasters—and to pass it without finally delivering long overdue justice for music artists would be unconscionable.

AM Radio in Every Vehicle

The AM Radio in Every Vehicle Act, mandating that all new vehicles include receivers for the AM band, was initially drafted in response to the auto industry signaling a move away from AM radio in new cars. For instance, in electric vehicles (EV), the powertrains interfere with AM radio reception, but even manufacturers of traditional powertrain vehicles were recognizing a downward trend in AM listeners and, therefore, planning to discontinue AM receivers in new sound systems. Thus, Senator Ed Markey (D-MA) and Representative Josh Gottheimer (D-NJ) sponsored the AM Radio in Every Vehicle bills, which gained bipartisan support, albeit along partisan lines.

Republicans emphasized the importance of conservative talk radio while Democrats highlighted the role of AM in the emergency broadcast system and its reach to underserved markets. Make of those rationales what you will (e.g., most people likely get their emergency messaging on their cellphones), but there is no question that AM in Every Vehicle would be a legislative favor to broadcasters, extending the life of terrestrial radio as the market moves toward alternatives like streaming and podcasts. Even if the market eventually abandons the AM band, the bill can serve as a precedent for FM radio, where more drivers listen to music. And that is significant because U.S. broadcasters still do not pay royalties to music artists for terrestrial radio play. That’s where AMFA comes in.

American Music Fairness Act (AMFA)

While the AM Radio bill was reintroduced this week by Rep. Frank Pallone, Jr. (D-NJ), Senators Marsha Blackburn (R-Tenn.), Alex Padilla (D-Calif.), Thom Tillis (R-N.C.), and Cory Booker (D-N.J.) reintroduced AMFA. “The United States is the only democratic country in the world in which artists are not paid for the use of their music on AM and FM radio,” said Senator Blackburn. “This legislation would close an outdated loophole that has allowed corporate broadcasters to take advantage of artists and their songs for decades.”

That’s it in a nutshell. And in a time when bipartisanship is in short supply, one would be hard-pressed to find a Member of Congress who does not agree that radio broadcasters should pay royalties to music artists for their vital contributions to the stations. The broadcasters will oppose AMFA, as they have always opposed royalty legislation, on the basis that 1) they cannot afford the royalties; and/or 2) their promotional value outweighs the royalty value. These claims are overstated, but even if they were not, the AMFA bill answers both. As describe in an older post:

For smaller stations (under $1.5 million/year), the AMFA caps royalties between $10/year to $500/year depending on revenue and status as either a public or private station. For larger stations and networks, rates would be set, as they for the rest of the performance licensing market, by the Copyright Royalty Board (CRB). Under the provisions of AMFA, the CRB must consider station size and revenue when setting rates and must also consider the station’s promotional value to recording artists. It’s hard to imagine how the deal gets more fair than that.

As composers and artists have noted in many contexts, music is more regulated in terms of price than most other products on the market. While radio broadcasters are free to charge what the market will bear for advertising on their networks—and the largest entities earn billions in revenue—the music artists, with AMFA, are asking for a regulated price of more than zero for use of the only product that draws listeners to the stations in the first place. (Or do you listen to radio for the commercials?)

Further, not only should Congress condition passing AM Radio on passing AMFA, but it should set aside the political theater of a little-known resolution called the Local Radio Fairness Act (LRFA). Since at least 2008, this insincere (one might say cynical) never-to-be-passed resolution is akin to a loyalty pledge to the broadcasters, promising not to mandate royalties for musical artists. For instance, last year’s resolution highlighted the unfounded implication that radio play only benefits the artists rather than the honest assessment expressed in AMFA that the benefits are at least mutual if not generally tilted in favor of the broadcasters.

If Congress wants to mandate that AM radio remain in automobiles for the foreseeable future, so be it. But Members should also acknowledge that the law is a gift to the broadcasters and a precedent for a similar mandate for FM in the future. As such, it is only fair that Congress finally require American radio stations to pay artists for the music without which many radio stations would have little or no value whatsoever.

Photo by Ababil12