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Flo & Eddie not impressed at the majors’ Sirius settlement

By Chris Cooke | Published on Monday 13 July 2015

While artists Flo & Eddie and the American major record companies may have been speaking as one to date on the old pre-1972 issue, a rift has now occurred between the two parties, with the former pissed off at the out-of-court settlement secured by the latter with Sirius XM based on the musicians’ success in court.

There has been much debate in the US over whether or not satellite and online radio stations – which, unlike AM/FM outlets in the US, must pay royalties to record labels as well as music publishers – must also pay up on pre-1972 recordings.

The reason for the debate is that the rule that specifically states that satellite and online radio must pay royalties when AM/FM stations do not comes from federal copyright law, but US-wide federal law only applies to sound recordings released since 1972. Earlier tracks are protected by state laws which say nothing about satellite and online radio, so Sirius and Pandora said no royalties were due on that repertoire.

But the record industry disagreed, arguing that royalties were due under state law too. Though, as state laws make no distinction between different kinds of radio services, that would mean AM/FM radio stations owed the labels royalties as well, yet they had never paid anything to any label over all these years.

But when Flo & Eddie – formerly of 1960s band The Turtles – sued on this issue in California, the court ruled that Sirius did indeed owe royalties on pre-1972 recordings. Then a New York judge said that, just because artists and labels had never forced their royalty right against AM/FM stations on pre-1972 tracks, that didn’t mean that that right wasn’t there to be enforced at a state level.

On a roll, Flo & Eddie did two things after their initial court win against Sirius: they began separate legal action against Pandora and successfully had their Sirius case upgraded to a class action so that any artists or labels with pre-1972 tracks played by the satellite radio network could share in any damages and future royalties. Both those legalities are still going through the motions.

But then late last month the Recording Industry Association Of America announced that it had settled its separate legal battle with Sirius on the pre-1972 issue, with the three majors and ABKCO, which controls early Rolling Stones recordings, set to receive $210 million in a deal that also sees the music companies providing the satellite broadcaster with a licence on pre-1972 catalogue up to the end of 2017.

But Flo & Eddie are not happy about this turn of events. Possibly because the duo weren’t invited to take part in those out-of-court negotiations, despite their successful litigation forcing the hand of the Sirius company. And possibly also because it’s not really clear what will happen to the $210 million the labels secured. With post-1972 catalogue Sirius pays for recording rights through SoundExchange, which then splits the money 50/50 between artists and labels. So will 50% of the settlement go straight to artists?

Either way, in legal terms Flo & Eddie’s attorney says that the RIAA’s agreement interferes with the musicians’ ongoing class action against Sirius. Not least because the majors’ deal seemingly covers recordings the record companies rep and distribute as well as those they own, and that might include recordings ultimately owned by artists who would now be included in Flo & Eddie’s class action.

According to The Hollywood Reporter, the duo’s lawyer Henry Gradstein says the record industry’s legal claim against Sirius was a “coattail action” and the subsequent settlement a “brazen attempt to disrupt and interfere with the class action process”. He added: “In other words, Sirius XM and the major labels purported to settle claims for the use of pre-1972 recordings owned by other class members, and by doing so usurped the role of the court and class counsel”.

Gradstein wants the courts to force Sirius to pay the $210 million into an independent bank account under court control, with no payments being made to any rights owners until Flo & Eddie’s case against the satellite broadcaster has reached its completion.

Needless to say, the RIAA isn’t impressed with this proposal, telling reporters: “We have great respect for The Turtles and the work they have done to help secure payment for pre-72 recordings. They rightly trumpeted the recent settlement with Sirius XM as a significant step forward. However, their application is without merit and could force the delay of long-awaited payments to artists and labels who created iconic music for generations of fans”.

And so the case rolls on. For more on the pre-1972 issue, check out this free-to-access trends report from CMU, or tune in to this edition of the CMU Podcast (around 26 mins 26 seconds).

Oh, and if you think AM/FM radio in the US should be paying royalties on all the recordings it plays – as terrestrial radio stations do pretty much everywhere else in the word – then you should be getting involved with the Fair Play Fair Pay campaign. And look, this is the week when it’s all kicking off online. Why not be part of the party? Info on the MMF’s website here.