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Microsoft, Yahoo and RealNetworks were hit this week with a copyright infringement suit filed on behalf of the composers of 950 songs offered by the companies through on-demand streaming or downloads that last only for the duration of a subscription.
While the amount of damages available under the law if the composers win is very large—as much as $150,000 per violation deemed to be “willful”—a more likely outcome is a settlement for less than the penny-per-play right recently established for streaming royalties.
The details of the case show why lawyers are among the precious few groups of people earning money in the music business these days.
Every play of a song is supposed to provide royalties both to the (often multiple) owners of the track in question and to the composers of the underlying work.
For permanent downloads, all the royalties are distributed at set rates through the labels without a great deal of aggravation.
Temporary downloads and streams, on the other hand, are governed under different schemes established by the Copyright Royalty Board that took effect March 1.
But those rates were not determined retroactively, argues the plaintiffs’ attorney in the new lawsuit, Stephen Grauberger (not all agree). That means companies offering such services had to reach their own revenue-sharing deals with all of the rights holders, he said.
Microsoft, Yahoo and RealNetworks evidently struck bargains with the labels and most of the composers, who are represented by the Harry Fox Agency. But Harry Fox doesn’t control all compositions, and so some songsmiths aren’t getting their miniscule cuts—which in the case of music streams would often work out to far less than a penny per play.
“It’s cruddy rate,” Grauberger said. But one evidently worth suing over: The same group of composer representatives sued and reached a settlement last year with Napster.