What is Work For Hire?

The U.S. Copyright Office defines a work made for hire as “a work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned for use as a contribution to a collective work, as part of a motion picture or other audiovisual work...if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

In non-legalese, a work for hire occurs when Party A employs Party B to create something, but Party A becomes the legal author of the work. In the eyes of the law, Party B will no longer have any rights to the work whatsoever.

Work for Hire agreements are a popular mode of contractual interaction between various people and entities in the music business. Due to the nature of these agreements and the copyrights involved, songwriters, recording artists, and other creators must understand what a Work for Hire agreement is and what it implies for their creative work.

Check out some of our other guides on music industry topics at Exploration Learn, or subscribe to our YouTube channel for more information.

In this newsletter:

Latin music revenues grew 14.8% YoY in the US in H1, generating $627M in gross revenues.

Africa-based music streaming service Mdundo reports an increase of triple its premium revenue as its monthly active users top 26.6 million.

Last month, SoundExchange sued SiriusXM for allegedly failing to pay north of $150 million in owed royalties. Now, the satellite radio giant has moved to dismiss the complaint on jurisdictional grounds.

Now, the details...

Exploration Weekly - September 29, 2023
Compiled by Ana Berberana

Latin Music Generated $627M in US Recorded Music Revenues in H1 2023 - Up 14.8% YOY

Latin music generated $627 million in gross revenues in the US in the first half of the year. That’s the headline stat from the Recording Industry Association of America’s (RIAA) Mid-Year 2023 Latin Music Report, which, published Wednesday (September 27), shows that on a retail basis (money spent on streaming subscriptions, as well as physical and digital music), Latin music revenues grew 14.8% YoY in the US in H1. Latin music’s share of overall US recorded music revenues grew from 7.1% in the first half of 2022 to a new high of 7.5% in the first half of 2023. As reported last week, the entire US recorded music industry generated USD $8.4 billion in gross revenues in the first six months of 2023, which was up 9.3% YoY. The RIAA notes that its Latin music reports now include revenues from social media platforms such as Facebook, TikTok, and YouTube Shorts and as such, has revised its data for 2022 to include these sources, “in addition to other revisions”. Even taking these revisions into account retrospectively, US Latin music revenues grew by $81 million YoY in the first half of 2023 – and are therefore on course to grow by more than $150 million YoY across the full calendar year. These new H1 Latin Music results for 2023 follow a year (2022) in which Latin music surpassed $1 billion in US recorded music revenue for the time (and claimed an 8% market share of streaming revenues). Due to the continued global streaming success of Latin Music stars like Bad Bunny and Peso Pluma, streaming continued to drive a majority of the growth in the recorded music market for Latin artists in the United States, accounting for 98% of total revenues.

Mdundo Triples Premium Revenue as MAUs Top 26.6 Million

In the annual report for its fiscal year that ended on June 30, Mdundo reported a subscription revenue jump from $1.02 million (7.2 million DKK) the previous year to $1.78 million (12.6 million DKK) by the end of June. The Kenya-headquartered music streaming service reported a 239% year-over-year jump in revenue from paid subscriptions, recording a 23.2% increase in monthly active users (MAUs). Though headquartered in Kenya, Mdundo is listed on Denmark’s NASDAQ exchange and reports its earnings in Danish kroner (DKK). Subscription revenue now accounts for 35% of Mdundo’s revenue, up from 18% the previous fiscal year. The massive increase in subscription numbers put the company on track to reach its goal of meeting a positive EBITDA by 2025, and to raise 40% of its revenue from subscriptions in the future. Advertising revenue also increased from $845,000 (6 million DKK) to $1.15 million (8.2 million DKK) in a 37% year-over-year increase, bringing total revenue to $17.74 million (12.6 million DKK) in a 75% year-over-year increase. Total MAUs of 26.6 million at the end of June exceeded the company’s expectations of 25 million and mark a significant increase from the 20.3 million reported at the end of the previous fiscal year. Mdundo reiterates its earlier forecasting that it will hit 35 million MAUs by the end of the 2023 to 2024 fiscal year — a 32% year-over-year increase. “This performance harmonizes with our mission to emerge as the foremost pan-African music service. Our sights remain set on achieving 50 million unique monthly active users by mid-2025,” says Mdundo. The company is laser-focused on the five key markets of Kenya, Ghana, Nigeria, Tanzania, and South Africa. Those markets encompass “a combined population of 422 million people, approximately 35% of Sub-Saharan Africa’s population,” offering substantial growth opportunities due to high internet penetration rates and robust economic development. In June 2023, those five markets accounted for 15 million of Mdundo’s 26.6 million monthly active users.

SiriusXM Moves To Dismiss SoundExchange’s $150 Million Unpaid-Royalties Lawsuit on Jurisdictional Grounds

Liberty Media-owned SiriusXM just recently filed to have the case tossed or, alternatively, transferred to a different venue. In brief, SoundExchange submitted the original suit to a Virginia federal court, maintaining that the defendant business had “artificially” inflated webcasting revenue within its joint satellite and online radio packages. As described in detail in our initial coverage, this purported inflation then allegedly set the stage for SiriusXM to capitalize upon a Copyright Royalty Board-established revenue exclusion and, in the process, avoid paying millions to artists and rightsholders. (SiriusXM specifically pays a flat percentage of gross revenue for a statutory license on the satellite side; the amount owed for online radio, on the other hand, is calculated on a per-play basis, with the CRB exclusion designed to prevent overlapping payments.) Separately, SoundExchange, citing the results of a years-long audit performed by New York’s Adeptus Partners, claimed that the defendant had underpaid “millions of dollars” in royalties during 2018. SiriusXM promptly fired back, communicating that it was “disappointed with the actions taken by SoundExchange” and indicating that it had abided by the “clear regulatory framework” at hand. As mentioned at the outset, this public rebuttal has now been followed by a formal motion to dismiss or, alternatively, transfer the case. In a declaration in support of the dismissal/transfer motion, Catherine Brooker, SiriusXM’s SVP of corporate finance, emphasized that her company is headquartered in New York City and that this main office sends royalty payments to SoundExchange. Also in the straightforward document, Brooker claimed that “employees with direct knowledge of…current and historic royalty calculation practices more generally are based primarily in New York.” “As for Virginia,” Brooker wrote of the push to dismiss and/or move the suit from Old Dominion, “Sirius XM employs only five Virginia-based employees who manage network operations out of a technical facility in Fredericksburg—operations completely unrelated to finance or royalty calculations.”

Music Publishers Double Down on Copyright Claims Against X

A group of music publishers have submitted another filing in their ongoing legal battle with X - or Twitter if you prefer - hitting back at the social media firm's motion for dismissal. They dispute X's interpretation of US copyright law regarding what is required to hold it liable for copyright infringement. But then also claim that - even if the court accepted X's interpretation of the law - those requirements have been met. The music publishers filed their lawsuit in June, alleging that X "fuels its business with countless infringing copies of musical compositions, violating publishers’ and others’ exclusive rights under copyright law”. It was a long time coming. Long before Elon Musk's acquisition of Twitter and the subsequent rebrand as X, the music industry criticized the social media company for never securing music licenses despite allowing users to post videos to its platform that routinely contain copyright-protected music. If the case gets to court, the dispute will likely focus on the good old copyright safe harbor. X can avoid liability for copyright infringing content uploaded by its users providing it has a takedown system in place to deal with infringement and infringers when made aware of such things by copyright owners. X does have a takedown system, but the publishers argue that it is insufficient for the social media company to avoid liability via the safe harbor in the US Digital Millennium Copyright Act.

Ed Sheeran’s ‘Thinking Out Loud’ Copyright Battle Finally Ends in His Favor

As reported by Billboard, the estate of Ed Townsend — who is the co-writer of Marvin Gaye’s “Let’s Get It On” — has decided to officially end the court battle with Sheeran over allegations that the latter’s “Thinking Out Loud” infringed Gaye’s 1973 hit. A jury in federal court in Manhattan ruled in favor of Sheeran back in May, rejecting that Sheeran’s track copied Gaye’s track. This then led to Townsend’s estate filing an appeal with the U.S. Court of Appeals for the Second Circuit. In a filing on September 20, the family decided to back out of the copyright battle “with prejudice,” which means they can’t pursue and file the suit again any further. Ilene Farkas, Sheeran’s lawyer, commented on the end of the case to ABC News. “Ed defended this claim, which was always viewed as baseless, through to a jury verdict finding he and [‘Thinking Out Loud’ co-writer] Amy Wadge independently created ‘Thinking Out Loud,’ and was fully prepared to do so through an appeal as well,” Farkas said. “The plaintiffs recognized that an appeal would end up with the verdict being affirmed but also with them being exposed to legal fees and costs, and wisely withdrew the appeal.”

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