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Eminem publisher sues Spotify, declares Music Modernization Act unconstitutional

By | Published on Thursday 22 August 2019


Here we go again! Eminem’s publishing outfit Eight Mile Style has sued Spotify for streaming the rapper’s songs in the US without securing the required licences. And if you thought last year’s Music Modernization Act was meant to stop lawsuits of this kind, well, the reforms contained in that act are an “unconstitutional denial of due process” and “an unconstitutional taking of vested property rights”. So that’s you told.

There have been all kinds of dramas Stateside around the payment of so called mechanical royalties by streaming services to songwriters and music publishers, of course. Partly due to the general complexities around licensing song rights, and partly because of the whims of American copyright law and the US music publishing sector.

A stream exploits both the performing right and the mechanical right elements of the song, and in some markets those rights have traditionally been licensed separately. Nevertheless, in most countries there are collecting societies that can provide streaming services with blanket or ‘mop-up’ licences for both sides of the copyright. So where a streaming service doesn’t have a direct deal with a music publisher, it can instead rely on its society licence.

However, in the US, while there are collecting societies licensing performing rights, there is no mechanical rights society that can provide a mop-up. There is, however, a compulsory licence covering mechanical rights in the US, so the rate that needs to be paid is set by the Copyright Royalty Board.

But the streaming service still needs to send paperwork and payment to whoever controls the rights in each song on its platform.

Which isn’t as easy as it sounds, given the absence of a complete, global, publicly accessible database linking songs to recordings, and identifying the owners of those songs. The lack of such a database makes it hard for streaming services to know what songs they are streaming, let alone who controls the copyrights in those songs.

Most streaming services outsource all this admin to the same agencies record labels use when they are licensing the mechanical rights for the release of physical albums or downloads. But with the huge amount of music on the streaming services, those agencies have struggled to keep up. Meaning, for lots of songs, no paperwork was ever sent. Meaning the compulsory licence does not apply. Meaning Spotify et al are infringing copyright.

Because US copyright law provides a rate card of statutory damages when rights are infringed – which aren’t linked to the actual losses any one rights owner incurred – there was a big incentive to go legal whenever the mechanical rights hadn’t been properly licensed by a digital platform. Cue a flurry of multi-million dollar lawsuits against most of the main streaming services, though the Spotify litigation has always got the most press.

When this first started, opinion was divided in the music community regarding who was to blame for the mechanical royalty shitstorm. Some argued that the well-funded streaming start-ups should have built systems to deal with the song licensing challenge before they even entered the US market. Others conceded that the mechanical rights licensing system in the US was royally fucked, and it was in no one’s interest to have a long line of unpaid songwriters standing alongside a stack of multi-million dollar lawsuits.

Hence the Music Modernization Act. A deal was done whereby the streaming services committed to pay for the establishment of a mechanical rights collecting society able to offer a mop-up licence – like that on offer in most other countries – in return for an end to all that litigation. Said collecting society is now being set up, while a line was drawn in the sand by the MMA on 1 Jan 2018 after which statutory damages are not available to anyone suing for unpaid mechanicals from a streaming company.

But here we are. It’s 2019 and we have another multi-million dollar lawsuit against Spotify over unpaid mechanical royalties seeking statutory damages. And with the involvement of a superstar songwriter to boot. Good times!

A big chunk of Eight Mile Style’s lawsuit, filed with the courts in Nashville, covers the same ground as past litigation on this issue. Although it lists a plethora of songs written or co-written by Eminem that have not been properly licensed, it puts the spotlight in particular on his hit ‘Lose Yourself’.

“Despite ‘Lose Yourself’ being one of the most famous and popular songs in the world”, the lawsuit notes, “Eight Mile recently learned that Spotify, and its agent the Harry Fox Agency, placed ‘Lose Yourself’ in what they call ‘copyright control’, a category reserved for songs for which the copyright owner is not known so the song cannot be licensed”.

US copyright law isn’t so stupid as to fail to recognise that someone relying on the mechanical rights compulsory licence might struggle to identify any one copyright owner. In that scenario the law says that the compulsory licence can still be relied upon providing the required paperwork is sent to the US Copyright Office. Which is something the streaming services started doing with increased frequency once the mechanical royalties litigation started to stack up in the American courts.

Eight Mile concede that Spotify did send paperwork for ‘Lose Yourself’ to the Copyright Office, although said paperwork was, it says, “untimely and ineffective”.

Also, it adds, “to the extent Spotify claims it sent [paperwork] to the Copyright Office on the Eight Mile compositions because it could not locate the copyright owners, that is absurd. Spotify, and HFA … certainly knew (and had the easy means to know) that Eight Mile is the copyright owner of ‘Lose Yourself’. With commercially reasonable efforts, that information was certainly available to them”.

Of course, one of the big issues here – and in general with the payment of streaming royalties to songwriters – is that when labels and distributors upload any one track into the streaming platforms they provide the track’s title and the unique identifier for the recording, ie the ISRC. However, they don’t provide a unique identifier for the song, ie the ISWC.

Lots of songs have the same name. The ISWC database lists more than 100 songs called ‘Lose Yourself’. Though, Eight Style would argue, if the artist performing the track is called Eminem, it’s pretty certain the ‘Lose Yourself’ being performed is T-071.889.858-8.

So fuck you Spotify and HFA with your inept paperwork and slack attitude towards administrating the compulsory licence. But hang on a second. Beyond whatever paperwork Spotify did or did not provide, to Eight Style or the Copyright Office, for ‘Lose Yourself’ or any of the other allegedly unlicensed Eminem songs, possibly or possibly not in an “untimely and ineffective” fashion – what about the God damn MMA?

The lawsuit deals with that. First, it points out that, even within the MMA, there are certain obligations for the streaming services to meet in order for the limitation on the rights of the copyright owner to sue to apply. “With respect to Eight Mile”, the lawsuit states, “Spotify does not meet the requirements for MMA damage limitations”.

And even if the court does not concur on that point, the MMA limitations on Eight Style’s right to sue should still be ignored, the publisher argues, on constitutional grounds.

It states: “The retroactive elimination of the right of a successful plaintiff to receive profits attributable to the infringement, statutory damages, and attorneys’ fees is an unconstitutional denial of substantive and procedural due process and an unconstitutional taking of a vested property right”. And, Eight Style the, the Middle District Court Of Tennessee Nashville Division should confirm this.

Elsewhere the lawsuit is critical of the US National Music Publishers Association, which negotiated a settlement with Spotify in 2016 over unpaid mechanicals and worked closely with all the streaming platforms on the Music Modernization Act. And which, until 2015, owned the much criticised (in the legal filing) Harry Fox Agency.

Eight Mile Style says that the NMPA was biased in those dealings because it is dominated by the major publishers which, directly or through their sister record companies, had equity in Spotify at the time. Of course, while the NMPA has worked closely with Spotify in the past, since the streaming firm appealed the Copyright Royalty Board ruling on what rates should be paid under the compulsory licence, the trade group has become its loudest critic.

It remains to be seen how Spotify and the other publishers now respond to the new lawsuit. But with a superstar writer, potentially millions of dollars in damages, and a constitutional challenge to a historic reform of US copyright law, this litigation arguably has it all.