Music Artists Seeking Royalties

Recently, I had the opportunity of listening to a few podcasts on Entertainment law via iTunes U. If you’ve never tuned in, it’s a great resource to staying abreast on legal updates within the Entertainment industry.

In particular, I tuned in to Episode 36 of the Entertainment Law Update podcast by Gordon P. Firemark, esquire. This episode made me aware of a recently settled lawsuit with Universal Music Group and Eminem’s Producers. The case has been going on since 2007 where the court ruled that Eminem's digital songs should be treated as a sale rather than a license. Then in 2010 they returned to court with the outcome that digital music should be treated as a license, where the artist will receive 50% in royalties. The settlement terms aren’t available for the public eye, but this case is certainly progress for many other artists who are still seeking justice for their digital sales. This mainly includes artists who have signed a contract before 2003, such as The Temptations, Kenny Rogers, and Rick James.

My business plan is a music venue and restaurant, so of course this case stands relevant to my particular field of interest. For example, in my venue I plan to host karaoke nights that encourage customers to come out and take a stab at performing some of their favorite artists songs. The Temptations, Eminem, and Rick James are definitely some artists whose popular music can be found in a karaoke machine. The artists 50% will come from me paying a license fee through a performance rights organization like BMI, SESAC, or ASCAP, but it’s always good to know the artists are being paid correctly.

In Episode 38 of the Entertainment Law Update podcast, I found a similar case where Ray Charles’ children are fighting for the rights to their father’s songs. In 1978, Congress amended the Copyright Act for artists who signed away their song rights before they became stars, allowing them to possibly gain back those rights. The artist, or in this case the family would simply have to wait 35 years from the publication date, then follow a strict procedure. Charles’ 12 children crossed the first barrier of this process allowing them to reclaim copyrights on almost 60 of their father’s songs.

Like the UMG case, the outcome can be applied to my business plan in terms of the performance rights organization I plan to purchase my license from. Seeing that this case is fairly new, I want to make sure that my performance rights organization is distributing proper royalties to Charles’ family if his music is played in my venue. Throughout the rest of the year we can expect to see more artists go through similar disputes, hopefully their final ruling will come out just as good.

The 40/40 clubs Liabilities and Lawsuits

In my last post, I took time to pay homage to some of the Hip Hop industry’s entrepreneurs and product spokespersons. Of these artists, Jay-z has definitely set himself apart as a Hip-hop mogul and entrepreneur. Though, with any grain of success also comes a hurdle of problems and disputes, let’s take Jay-z’s 40/40 club as an example. Although he has made millions with his chain of venues, he has also gone through his share of lawsuits with the venue.

The 40/40 club is a franchise of lounges, clubs and sports bars owned by Desiree Gonzalez, Juan Perez, and Jay-z. Their first club opened in 2003 in New York, since then they’ve expanded to Las Vegas, and they implanted one in the New York Nets newly built Barclays Center.

In 2007 the 40/40 club faced a Federal lawsuit with BMI for “unauthorized public performance of musical compositions. A representative from BMI attended the club and heard a plethora of songs from their catalog illegally played, some of which included Michael Jackson, Kanye West, and R. Kelly.

In 2009 Jay-z’s 40/40 club was sued for publicized assault against its customers. In most cases assault serves as the threat, where as battery will be the action that took place in carrying out the threat. In this case, video evidence was archived of the 40/40 club’s security guards belligerently beating down two customers. Shortly after, up to 12 of the venues security guards were fired for disorderly conduct, the remainders of the lawsuits findings were kept silent.

In my opinion, the venue probably wanted to keep things as quiet as possible in order to maintain their positive public image.

In 2011 the tables turned and Jay-z filed a lawsuit against MLB player David Ortiz, over the 40/40 club’s trademark. Apparently, David Ortiz who visited Jay-z’s club on a number of occasions then went to open his infringing “Forty/Forty club” in the Dominican Republic. Jay-z and his team had plans of suing Ortiz for trading on the clubs name and value, which caused “marketplace confusion and damage”. However, a day before the proceedings began, the two parties settled the dispute in principle. They settled for $5 million, and David Ortiz would have to change the name of his club, pull down his www.fortyforty.net website, and cease all promotional activities.

There is much to be learned in all of these examples. For future venue owners, it would be wise to make sure you have the proper licensing to any and every song played in your venue. Secondly, hold responsibility for your security and staff to avoid assault and battery charges. Lastly, always protect your franchise through trademarks; you never know who may be trying to make a fortune on your brand.