Jun 21, 2024 3 min read

Performer remuneration should actually be paid to performers, confirms US appeals court

A dispute involving Puerto Rican group El Gran Combo asked who should get the featured artist payments due from collecting society SoundExchange when a band is owned by a company and not the performers in that band. An appeals court has concluded the performers should get paid, not the company

Performer remuneration should actually be paid to performers, confirms US appeals court

A US appeals court has ruled that - when American copyright law provides ‘performer remuneration’ as part of the SoundExchange-administered licence - the money should definitely be paid to performers. 

It may be stating the obvious, but that judgement overturns a lower court ruling in a case involving Puerto Rican group El Gran Combo. The dispute centred on whether - when you have a band - the band as a single entity or the individual band members should be considered the “artists featured on a sound recording” in legal terms. 

Judge David J Barron noted that the court’s judgement was pretty straightforward. “If you think that Paul, John, George and Ringo were ‘the recording artists featured’ on the ‘White Album’ - even though that iconic record’s cover mentioned none of The Beatles by name - then you will not be surprised", he said, at how the appeal judges arrived at their judgement.

Nevertheless, “the prompt for our analysis is not a trivia question”, he added. It’s an appeal from the district court of Puerto Rico “in connection with a dispute between the owners of El Gran Combo - one of the most popular Puerto Rican bands in history - and the band's former lead vocalist, Carlos AponteCruz”. 

Most copyright systems say that, in certain scenarios such as broadcast and public performance, performers must receive remuneration when recordings on which they appear are utilised, oblivious of any deals they have done with other artists or a record label. In the US, this remuneration right applies when online or satellite radio services use recorded music, and payments are managed by the collecting society SoundExchange. 

Where this performer remuneration is paid, a distinction is usually made between ‘featured artists’ and ‘non-featured artists’. That means featured artists in the old school record industry definition of the word, defined by the UK’s Musicians’ Union as “the artist or band whose name a track is released under”. Non-featured artists are the session musicians and backing vocalists. 

All performers are due remuneration, but often more money flows to the featured artists than the non-featured artists. In the US, of the money received by SoundExchange, 45% goes to featured artists and 5% to non-featured. 

With a band, the money due to the featured artist would usually be shared between the band’s members. However, with El Gran Combo, the band is run by its founder Rafael Ithier, who set up the group, appoints its members and owns the outfit through a company called EGC Corp

He argued that the band, as an entity, is the featured artist, and therefore any remuneration due to the featured artist should be paid to his company. 

That’s actually how things originally worked, with EGC Corp receiving the featured artist share of SoundExchange income. However, Aponte-Cruz - lead vocalist on over 200 El Gran Combo recordings - claimed that he should be directly paid a cut of that money by the collecting society after he left the group in 2014. 

That claim resulted in a legal battle between Ithier and Aponte-Cruz. Ithier argued that, when US copyright law talks about “artists featured on a sound recording”, that should be taken to mean the artist whose name appears on the artwork of the record. That’s El Gran Combo, not the individuals who perform. 

Therefore, he said, featured artist payments from SoundExchange should go to the band as an entity, which means his company. Aponte-Cruz, Ithier added, could then claim his cut of the non-featured artist payments. 

The lower court agreed with Ithier. Aponte-Cruz then appealed, with SoundExchange itself supporting the performer. 

The collecting society stated that allowing Ithier to collect the performer income as the owner of the band was “a radical departure from the distribution policies and practices that SoundExchange has implemented over the last 20 years”, based on its interpretation of US copyright law, as well as “international recording industry norms”. 

The appeals court agreed with Aponte-Cruz and SoundExchange. 

The judges said that El Gran Combo's top dog Ithier wanted the court to reject the way US copyright law has been “implemented for at least the past 20 years” based on a definition of the word ‘featured’ “that does not hold up when considered carefully”.

To that end, they concluded that Aponte-Cruz is ‘the recording artist featured on a sound recording’ and is therefore entitled to his share of featured artist income paid by SoundExchange on El Gran Combo tracks.

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