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Round Hill sues TuneCore over unpaid mechanicals on tracks it distributes

By | Published on Tuesday 4 August 2020


Music publisher Round Hill Music has sued DIY distributor TuneCore and its parent company Believe over allegations they distributed recordings to download stores in the US where no licence had been secured covering the song rights.

This is basically an alternative manifestation of the much discussed mechanical rights mess in the US. It’s also a dispute that arises because, from a music licensing perspective, download stores in America work differently to download stores in most other countries.

Obviously, whenever recorded music is delivered digitally, two sets of copyright are exploited, the recording rights and the song rights. The record label or music distributor that provides each track to the digital service only usually controls the recording rights. So somebody needs to work out what song is contained in that recording and what songwriters and/or music publishers need to be paid whenever that song is downloaded or streamed.

In most other countries, download platforms like iTunes have their own licensing relationships with the music publishing sector, sometimes with publishers, and sometimes with collecting societies. The platforms report download sales to those licensing partners who then report back which tracks contain their songs. The platform then pays whatever portion of the download sale is allocated to the song, rather than the recording, to the publisher or society, which in turn pays the songwriter.

However, in the US download platforms pay both the recording royalty and the song royalty to whoever provided the track. It is then the label’s responsibility to pass on the song royalty – what is referred to as the ‘mechanical royalty’ – to the relevant publisher or songwriter.

There is a compulsory licence covering the song rights in this scenario, so everyone knows what money the publisher/writer is due, but the label needs to work out which publisher to pay.

That can be a tricky task, though, it’s worth noting, that’s also how things worked with CDs. So most labels were set up to do this rights administration work, usually by outsourcing it all to a company like the Harry Fox Agency.

But what about all those self-releasing artists who came along once the digital music revolution was underway? The distributors those self-releasing artists use to get their music onto iTunes et al, like TuneCore, are usually pretty clear that – if an act records a version of someone else’s song – passing on the mechanical royalties to the relevant publisher or songwriter is the artist’s responsibility.

But many of those distributors also provide an up-sell service that handles all that mechanical royalty admin – in TuneCore’s case that service is called TuneLicensing.

TuneCore’s terms state: “For digital download sales in the United States, your payment typically includes the mechanical royalty on the underlying composition. If you do not own or control the underlying composition(s) in your sound recording(s), it is your obligation to pay these publishing royalties to the person or entity that does”.

However, according to Round Hill, not all the tracks uploaded into iTunes and other download stores via TuneCore were properly licensed on the songs side. If the mechanical rights admin isn’t done, the compulsory licence doesn’t apply, and the sale of those recordings (and, for that matter, the copying of those recordings onto TuneCore and Apple’s servers) constitutes copyright infringement.

The key question here, of course, is can TuneCore be held liable for that infringement given its terms pass responsibility for sorting out the mechanical rights onto the user? Round Hill reckons it can.

“TuneCore, Believe Digital and Believe SAS are directly liable for copyright infringement, contributory copyright infringement, and vicarious copyright infringement based on the reproduction and distribution of the Round Hill compositions to third parties without a licence”, the music publisher said in a lawsuit filed last week.

That claim is partly based on the fact that Round Hill allegedly told TuneCore that tracks on its system contained unlicensed songs. The lawsuit goes on: “TuneCore, Believe Digital and Believe SAS were provided with a list identifying specific Round Hill compositions and associated sound recordings that defendants did not have a licence for”.

“TuneCore, Believe Digital, and Believe SAS had full knowledge of the ongoing infringement of the Round Hill compositions on Apple iTunes and other third-party download sites”, it goes on, “yet continued their unlicensed distribution and reproduction of the Round Hill compositions”.

It’s not the first lawsuit testing whether music distributors can be held liable when their clients upload unlicensed music. The Harold Arlen estate, and others, have sued a number of distributors over tracks where the recording rights are also infringed, meaning that the compulsory licence for the song rights cannot apply, even if the relevant paperwork is filed. However, those cases also name the download stores and labels as defendants.

Obviously, in copyright cases – especially in the US where, like Round Hill, you sue for statutory damages of $150,000 per infringed work – you want to sue someone with money. And with smaller indies and especially self-releasing artists, the distributor will have much bigger pockets than the company or person actually uploading the unlicensed music.

As an interesting aside, Round Hill was presumably pretty well briefed on how TuneCore operates when prepping this litigation. Round Hill works with Audiam on the administration of its mechanical rights in the digital domain. That being the rights agency founded and until very recently led by Jeff Price, also a co-founder of TuneCore, whose departure from the DIY distributor before its acquisition by Believe was somewhat acrimonious.

We now await to see how this case proceeds. Although, even if Round Hill wins and TuneCore is deemed liable for unlicensed songs on its servers, the long-term impact will likely be limited. Downloads accounted for just 8% of US recorded music revenues in 2019 and, with streaming, the licensing system in the US is the same as elsewhere, in that platforms rather than the labels sort out the payment of mechanical royalties. Or not, as the case may be.