Songwriters Score Major Victory With Copyright Office Action

WASHINGTON — Songwriters scored a significant victory earlier this month when the copyright office issued a rule confirming their longstanding contention that so-called “termination rights” apply to the royalties due them from streaming services.

The rule, which goes into effect on Aug. 8, clarifies songwriters are entitled to collect certain royalties generated from streaming platforms like Amazon, Apple and Spotify after they’ve reclaimed the rights to songs from another party, namely, their music publisher.

If all this sounds esoteric, it is. But the impact on songwriters is expected to be profound.

“In short, it’s a fairer shake for anyone who composes music as their livelihood,” said Jack Kugell, a founding member of Songwriters of North America, an advocacy group based in West Hollywood, California.

However, to understand what the Copyright Office did and the impact of its action, one first needs to know a little history, and then learn a little bit of the archaic language that continues to define the rules of the songwriting game.

To begin with, music royalties are generated by the use of a copyright. That’s been true since the 19th century, when music publishers ruled the roost and sheet music was how songs, old and new, reached the music loving consumer.

Then technology reared its ugly head and music publishers went ballistic. The source of their concern was the invention of the player piano, which created music by using perforated paper rolls of note-for-note transcriptions to recreate notable piano performances.

Suddenly, anyone who could afford such a machine could recreate just about any performance they desired, without paying a dime in royalties.

The issue finally came to a head in the last days of the Theodore Roosevelt administration, when the U.S. Supreme Court agreed to hear the case White-Smith Music Publishing Co. v. Apollo Co.

Songwriters argued that player pianos would kill the public’s demand for sheet music, and that if the manufacturers weren’t forced to pay royalties, composers would be left without an income.

In the summer of 1908, a majority on the court sided with the piano roll manufacturers who’d contended that no infringement had occurred since piano rolls were not “copies” of musical works as defined by the laws of the day, and therefore could be manufactured and distributed without the need to pay royalties.

Justice Oliver Wendell Holmes disagreed with the majority, noting that “on principle anything that mechanically reproduces that collocation of sounds ought to be held a copy.” 

He also suggested that Congress should update the law. The following year, lawmakers on the Hill lept into action.

What they did was expand the Copyright Act to give copyright owners the right to make and distribute “mechanical” reproductions of musical works so long as they held a license, typically acquired from the songwriter or their publisher, and paid them a statutorily-prescribed royalty.

From that moment on, leaving aside songs so old they are considered to be in the public domain, every musical composition effectively had two copyrights attached to it — one for the song as written (the actual composition) and one for the song as recorded.

In practice that meant songwriters earned royalties on the composition copyright and performers earned royalties on the recording copyright. Performers who also happen to write their own songs, collect royalties on both.

While piano rolls fell by the wayside with the advent of shellac and later, vinyl records, the term “mechanical” remained a term of art.

Down through the decades, songwriters received so-called “mechanical royalties,” whether their songs were sold on records, cassettes, 8-track tapes or compact discs.

Look, Up in the Sky, It’s a Bird, It’s a Plane …

But this isn’t to suggest that copyright disputes over creative works were suddenly a thing of the past. Congress may act, laws may be passed, but litigious disputes over ownership go on and on.

“In fact the next big change in copyright law — and one that’s specifically pertinent to this latest action by the Copyright Office — came about because in 1939, the two creators of Superman sold their entire interest in their creation to Detective Comics for $130,” Jack Kugell said.

For those not up on their Superman trivia, the story of his creation goes basically like this:

In 1933, an aspiring young writer named Jerry Siegel, just out of high school, wrote a story called “The Reign of the Superman.”

A product of the Depression era, the central character is a vagrant who is enticed from a bread line by a mad scientist who endows him with a single “super” power — telepathy. The vagrant, drunk with his new super ability, then kills the mad scientist and sets out to take over the world.

The story ends when Superman’s power wears off and he finds himself back on the street, a struggling nobody once again.

Shortly after finishing the story, Siegel showed it to a friend, an aspiring artist and illustrator named Joe Shuster, who suggested they revamp the piece and try to sell it as a comic strip.

It’s at this point that Superman becomes the character that’s come down through the ages — the good guy with an alien backstory who hides his truth behind a secret identity and flies around wearing a red cape.

Great, they thought. Only none of the various newspaper syndicates they pitched Superman to were interested.

Finally, after five years of discouraging encounters with publishers, Detective Comics, Inc., later to be DC Comics, offered to publish Superman. The pair signed a contract releasing the copyright for Superman to Detective Comics in early March 1938, and were soon dividing up their $130 windfall.

A month later, on April 18, 1938, “Superman” was published in Action Comics #1, and was an immediate and huge success.

While Siegel and Shuster weren’t entirely left out in the cold — DC Comics kept them on as a team to keep churning out the highly popular Superman comics — “Once their work became as huge an entity as it did, they obviously had sellers’ remorse,” Kugell said.

“They attempted to sue throughout the years, with limited success, and then, in 1975, they started a huge public campaign for comic creators rights,” he said.

The impetus for the effort was Warner Brothers’ announcement that it intended to make the big budget “Superman: The Movie,” starring the actor Christopher Reeve as Siegel and Shuster’s superhero.

DC Comics had sold the film rights to Superman to producer Ilya Salkind, his father Alexander Salkind, and their partner Pierre Spengler, and this time, the man of steel’s original creators really were left out in the cold.

Ultimately, the film studio settled with Siegel and Shuster by promising to pay them a yearly stipend, medical benefits, and credit their names in all future Superman movie installments.

In exchange, they agreed to no longer contest the ownership of creation.

Incidentally, “Superman: The Movie” would go on to be the most expensive film ever made to that point, with a budget of $55 million. The movie premiered at The Kennedy Center on Dec. 10, 1978, and went on to gross worldwide box office earnings of $300 million.

More importantly, the brouhaha over Superman led directly to the passage of a rare major overhaul of copyright law, known as the Copyright Act of 1976, and the inclusion of Section 203, which gave authors of creative works (except works made for hire) the ability to “terminate the exclusive or nonexclusive grant of a transfer of license” for the works after a specified number of years.

For those who have authored works since 1978, the right to terminate licenses granted to other parties kicks in at 35 years; it’s 56 years for copyrights granted prior to 1978.

In other words, by following certain specified steps ahead of the deadline, songwriters can reclaim ownership of their songs, and the subsequent profits derived from them.

But this right comes with some restraints attached. One of these is the derivative works exception of the Copyright Act, which protects third parties who create derivative works from negative consequences should a copyright owner terminate their license.

These negative consequences could include losing the right to sell the derivative work or being forced to pay more for the rights.

Other restraints included deadlines that had to be met to effect a termination of granted rights.

“The 1976 revision of the Copyright Act was huge,” Kugell said. 

“At the same time, there were still extremely specific requirements to effect the termination, and some people weren’t able to take advantage of them.”

Kugell then went on to explain how he learned this first hand. 

His father, Marty Kugell, was a music producer who began his career at 17 by recording the song “In the Still of the Night” by a doo wop band called the Five Satins.

That recording, made in the basement of a church in New Haven, Connecticut, would go on to sell something like 40 million copies, and years later ranked #90 on Rolling Stone magazine’s list of the “500 Greatest Songs of All Time.”

For all that success, the elder Kugell made just $1,200 from what could arguably be called his masterpiece.

“He was young,” his son said all these years later. “He put this thing out on his own label. And when it started to blow up, he went to New York seeking a deal that would improve the record’s distribution.”

By this point, the young Marty Kugell was something of a presence in the city and there were, in the words of his son, “a lot of famous people in the business who liked him and thought he was an enterprising kid.”

But for all the advice they doled out to the young man, they failed to provide him with one critical piece of information — that when it comes to negotiating a music business contract, you really need a music business attorney at your side.

Instead, Kugell said, his father hired a “regular” attorney and a contract was quickly signed that gave a small label called Ember Records distribution rights to “In The Still of the Night” just as it started racing up the charts.

“It was supposed to be a 50/50 deal between my dad and Ember Records, with my dad getting 50% of the net profits,” Kugell said. “It sounded pretty good. The only problem was the attorney who negotiated the deal on my dad’s behalf failed to define what ‘net’ meant.”

“As a result, net meant whatever was left after “In The Still of the Night” bought Ember Records owner Al Silva’s house, and a house for his girlfriend,” he said. “Silva also owned his own record pressing plants, so he could charge himself, on paper, whatever he wanted for pressing his records. So in the end, he was able to keep the profitability of the record, at least on the books, to a bare minimum.”

“There were lawsuits for years over this, but that was his entry into the business,” the son said. 

“And I remember, even when I was a little kid, he would say, ‘Listen, if you are dumb enough to go into this industry one day, remember it’s called the music business and treat it as a business.’”

The father’s experience left its mark on the son. Years later, after the Copyright Act of 1976 had long been in effect and his dad had passed, Kugell tried to balance the karmic scales by helping “In the Still of the Night” writer Fred Parris exercise his termination rights to the song.

“I knew we were close to the 56 year mark, and so I reached out to the preeminent attorney in license terminations, a wonderful woman,” he recalled. “Long story short, she called me back and said, ‘You’re not going to believe this, but you missed the window by about 12 days.’

“I remember calling Fred and telling him what happened, and he couldn’t have been cooler. He said, ‘It would have been nice to get it back, but you know, I have a good life. It’s okay,’” Kugell said.

“Now, me, I was dying. It wasn’t as if I was his manager or anything. And it wasn’t that I did anything wrong. I was just trying to help the guy out. Unfortunately, I didn’t know when he had initially written the song, and when it was initially published,” he said.

Digital Killed The ‘Mechanical’ Star

Of course, the 70s were a long time ago. Especially when it comes to pop culture and how people consume it. When the world went digital, things got complicated all over again.

Where the “mechanical” mediums of the past had a certain shelf life, digital files last forever. On top of that, the nature of consumer ownership of a piece of music changed.

Where people used to go out and actually buy a physical copy of music they wanted to own — a single or an album or a disc — most now pay for a monthly digital streaming subscription.

To address this situation, in 2018 Congress passed the Music Modernization Act, which created a new compulsory licensing system for digital music, and also supposedly made the process of collecting and distributing royalties more efficient.

Under the updated regime, a new entity called the Mechanical Licensing Collective would begin administering licensing in 2022.

But things didn’t work out exactly as planned. The problem was in how the newly-minted Mechanical Licensing Collective interpreted the derivative works exception of the 1976 Copyright Act.

In its view, “a derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination.”

It based this interpretation of the law, at least in part, on the U.S. Supreme Court’s ruling in Mills Music Inc. v. Snyder, a 1985 case in which the justices held that if the author of a work authorizes derivatives, the terms negotiated in exchange for that grant stand even if the grant is later rescinded. 

The dispute involved the publishing royalties for the song “Who’s Sorry Now?” a composition written as a waltz in 1923 that became a major pop hit for the singer Connie Francis in March 1958, reaching number four on Billboard’s Hot 100.

Mills Music licensed the song to record companies — through mechanical licenses — who then created a variety of recordings (or derivative works) of the song. After the death of Ted Snyder, the song’s composer, his heirs terminated the agreement he had with Mills Music.

From that point on, the family’s contention was Mills Music was no longer entitled to a share in the royalties. Mills Music sued in federal court, and promptly won the case. The 2nd U.S. Court of Appeals overturned the ruling, before the case eventually made it to the Supreme Court.

Songwriters and their advocates balked at the Mechanical Licensing Collective using this case as the basis of royalty distribution, one of them, speaking with The Well News on background, calling it “a total travesty.”

“Essentially, it boiled down to this weird new paradigm, this idea that now that the way music is consumed is changed … licensing deals never really expire,” Kugell said.

“That’s when we were like, ‘Are you f-ing serious?’ ‘That’s how you’re going to interpret this?’” he said.

A Lobbying Effort and a Surprise Turn of Events

Several groups, including the Songwriters of North America, Music Artists Coalition, National Music Publishers Association, Black Music Action Coalition, and the Nashville Songwriters Association International, took their concerns to the Copyright Office.

Their collective complaint, in essence, was that the MLC interpretation meant that as long as a music publisher had actively licensed a work and used it at least once before the license termination date, they would continue to receive royalties in perpetuity, rather than having them revert to the songwriter.

But initially, according to multiple accounts, the Copyright Office seemed loath to revisit the issue.

Believing they’d been rebuffed, a group representing several songwriter organizations decided to descend on Capitol Hill to lobby for redress.

“We didn’t want to remake the whole system,” said one of the parties to the effort, speaking on background. 

“All we wanted was a legislative fix. So we were going to try and get a very specific carve out incorporated into the Copyright Act,” the individual said.

Kugall, who was one of those who made the trip to Washington, said a key part of songwriters’ lobbying plan was getting the major music publishers on board.

The reality, he explained, is they basically had nothing to lose by going along with the songwriters. They were well aware of their obligations under the 1976 copyright law and the clarity the songwriters were seeking on digital rights would benefit them in light of the growing trend of artists selling publishers their catalog of works.

“Having the income stream corrected was basically a wash for the publishers,” Kugel explained. “On the one hand, they stood to lose income from writers who terminated their agreements with them, but they also stood to gain a tremendous amount of income from the catalogs they purchased.

“At the same time, I think we all recognized that Congress loves it when you come in with your opponents, arm and arm, and you present them with a roadmap for resolving whatever your dispute is; it just makes their lives that much easier,” he said.

Kugel said the group’s first day on the Hill went well; then, on the second day, the chief of staff for a prominent lawmaker pulled the group aside.

“We received a phone call from the Copyright Office, telling us not to speak with you,” the chief of staff said.

“We were kind of dumbfounded for a moment,” Kugall said.

Moments later, the Copyright Office announced a new round of proposed rulemaking, intended to clarify how the derivative works exception applied to termination rights in the digital age.

In doing so, much to the songwriters’ relief, the office said it was launching the proceedings after the Mechanical Licensing Collective adopted “an erroneous interpretation of how the … derivative works exception to termination rights applies to the statutory mechanical blanket license.”

The process culminated two weeks ago with the Copyright Office confirming that the derivative works exception does not apply to the blanket license under the Copyright Act.

The ruling means songwriters who terminate their rights are entitled to be paid for all post-termination uses of their works under the blanket license. It also directs the collective to “implement a corrective royalty adjustment to remedy previous misapplications of the derivative works exception.”

“What this decision does is it stops anyone who wants to deny songwriters their rightful interest in the revenue from their creations from doing so,” a music industry attorney, speaking on background, told The Well News.

“You know, the music business has a sordid history of things … how do I put this … happening in the darkness of night,” he said. “Over the years countless artists suffered as a result of certain practices and they didn’t even understand what was happening, because this stuff gets fairly complicated pretty quickly,” he said.

“In the case of someone setting out to be a songwriter, I think a vast majority of them still believe they can sit down and write songs and if they’re good enough or commercial enough, they’ll be okay … and they’re eventually shocked and disillusioned by the complex maze they have to navigate just to make a little money from their craft,” he continued.

“In a very real sense, this action by the Copyright Office knocks down some of that maze and provides songwriters with a new sense of clarity,” he added. “It stops folks from using a flawed interpretation of the law to deny terminating songwriters what’s rightfully theirs, which is phenomenal.”

Jordan Bromley, a board member of the Music Artists Coalition, said in a written statement that the Copyright Office decision is “a landmark victory for songwriters and the entire music community. 

“By confirming how termination rights apply to the blanket license, the office has affirmed the fundamental principle that creators should benefit from their work,” he said.

“This decision not only ensures fair compensation for songwriters who reclaim their rights, but also sets a precedent that strengthens the very foundation of copyright law in the digital age. It’s a clear message that in the evolving landscape of music streaming and licensing, the rights of creators must be protected and respected,” Bromley said.

Kugall was equally elated.

“This is a huge victory,” he said. “It affirms existing copyright laws can be interpreted fairly and correctly. As an advocacy group led by and for songwriters, we sincerely thank the Copyright Office for not only listening to, but for hearing songwriters.”

Dan can be reached at [email protected]

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