Exploration Weekly - Peloton’s Antitrust Countersuit Dismissed / EU Copyright Directive Cancelled in UK / BMI and RMLC Settle Radio Royalty Dispute

Aaron Davis -

“You can't change the wind but you can set your sails.”


Billie Joe Armstrong

A New York federal judge recently dismissed Peloton’s counterclaim against more than a dozen music publishers this week. The fitness company accused publishers and their trade associations that they were engaging in anticompetitive conduct in response to a lawsuit that was filed against Peloton for copyright infringement by 15 music publishers in March 2019. According to US District Judge Denise Cote, Peloton’s antitrust claims failed, because it did not identify a relevant market. The company is considering filing an appeal, as released in a statement by a Peloton spokesperson.

British government minister Chris Skidmore announced that the United Kingdom will not be required to implement the Copyright Directive, because it is soon leaving the EU on January 31. Surprisingly, the United Kingdom was one of 19 EU countries that supported the Directive in the final European Council vote. The legislation is known for ending “safe-harbor” immunity of user-upload sites in Europe.

A two-year-old rate court litigation dispute ended this week when BMI and the Radio Music Licensing Committee (RMLC) reached a settlement with terms of the deal still undisclosed. BMI announced that the “new license carries a rate that reflects the strength of BMI’s repertoire and its share of radio spins, which is higher than any other performing rights organization”. The settlement still needs to be approved by BMI Federal rate court Judge Louis Stanton of the US Southern District of New York.

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Compiled by Heidi Seo

Exploration Weekly - January 31, 2020

Music Publishers Knock Out Peloton’s Antitrust Countersuit

More than a dozen music publishers will not have to worry about being accused of engaging in anticompetitive conduct, as Peloton claims, now that a New York federal judge on Wednesday dismissed the indoor cycling giant’s counterclaim. The dispute began in March 2019 when 15 music publishers sued Peloton for copyright infringement. Talks with the National Music Publishers Association (NMPA) to expand the licensing agreements to others fell apart, and the suit followed. Peloton then responded with claims that the publishers and their trade association were seeking to extract supracompetitive license terms in violation of federal antitrust laws and that the NMPA interfered with its ability to negotiate with the publishers directly. As a result, US District Judge Denise Cote decided that Peloton’s antitrust claims failed, because it did not identify a relevant market. "We respectfully disagree with this ruling regarding our counterclaims and are assessing our options for appeal," a Peloton spokesperson said in a statement. "We will continue to vigorously contest the plaintiff publishers' infringement claims, which were not addressed in this decision”.

Brexit Throws EU Copyright Directive into Doubt in UK

A recent announcement by British government minister Chris Skidmore stated that because the United Kingdom is leaving the EU on January 31 (well in advance of the EU’s two-year deadline), it “will not be required to implement the directive, and the government has no plans to do so.” The United Kingdom was one of 19 EU countries that supported the Copyright Directive in the final European Council vote, so the news was a surprising development to the creative sector. The European Parliament passed the directive back in March 2019, ending the “safe harbor” immunity of user-upload sites in Europe. All 28 EU member states were given two years to implement the directive into national law. Britain’s music business is worth 5.2 billion pounds ($6.8 billion) to the country’s economy, according to umbrella trade group UK Music. Many fear that failure to implement the copyright directive will damage the British music economy.

BMI and RMLC Settle Their Dispute Over Radio Royalties

BMI and the RMLC have both settled their two-year-old rate court litigation dispute, and while terms of the deal are undisclosed, BMI says the “new license carries a rate that reflects the strength of BMI’s repertoire and its share of radio spins, which is higher than any other performing rights organization”. The settlement, which is retroactive back to 2017, still needs to be approved by BMI Federal rate court Judge Louis Stanton of the US Southern District of New York. The Radio Music Licensing Committee (RMLC) first tried to impose a market share regime based on radio play on the four US PROs - BMI, ASCAP, SESAC, and GMR. That regime placed BMI’s market share at a lower share and rate than ASCAP. The settlement continues to state that the RMLC has agreed to a one-time payment to BMI for litigation fees, and clarifies and preserves the platforms that are covered by the scope of the license and associated revenue, including over-the-air broadcasts, as well as the stations’ simulcast streaming, podcasts, and HD radio. In other words, the so-far undisclosed BMI rate will apply to overall combined revenue derived from each platform under each broadcast owner’s umbrella.

Pro Music Rights Extends Streaming Lawsuits Beyond Spotify

In November 2019, Music Ally reported on the latest lawsuit filed against Spotify by music rights holders: Sosa Entertainment and its sister firm Pro Music Rights. Sosa was claiming that it had not been paid the full royalties for more than 550 million streams of its catalogue. Pro Music Rights is now targeting Spotify’s rivals as well, with copyright infringement lawsuits filed before Christmas. “Lodged with the U.S. District Court for the Southern District of New York, the bundle of lawsuits names Apple, Google, YouTube, Amazon, SoundCloud, Pandora, Deezer, 7digital, iHeartradio and Rhapsody as defendants,” explained the company’s press release, which staked its claim to license works recorded by the likes of A$AP Rocky, Wiz Khalifa, and Pharrell Williams. Pro Music Rights is seeking the full $150,000 of statutory damages for each work claimed to have been infringed.

Discovery Networks Reverses Decision to Buy Out Composers’ Music Rights, Will Continue Paying Royalties

According to a statement released a week ago by the Production Music Association (PMA), media company Discovery Networks has reversed a previous decision to enforce buyouts of composers’ music rights, and will instead stick to the long-established performing rights model that pays out backend royalties for their work. “We have been informed today by Discovery Networks that in regard to performance rights, Discovery has decided that their US channels will remain operating as is under the traditional PRO performing rights model,” said the PMA in a statement. Revealed in December, Discovery Networks’ original decision to impose licensing contracts on composers of its programming came as a major blow to composers who have long depended on future royalties collected and distributed by performing rights organizations ASCAP, BMI and SESAC. In a statement at the time, the PMA estimated this change would have reduced revenues from scoring Discovery programs between 80 and 90%.

Apple’s Services Business Grows to $12.7 Billion in Quarterly Revenue

Apple’s services business grew to $12.7 billion in revenue during the final three months of 2019, the tech giant reported Tuesday. The operating division, which houses subscriptions including Apple Music, Apple TV+ and Arcade, was up 17% year-over-year, helping to drive a 9% overall boost in quarterly revenue to $91.8 billion. It was an all-time record, Apple said. Earnings per share were $4.99. Analysts polled by FactSet were expecting Apple to report net income of $4.54 per share and quarterly revenue of $88.41 billion. Services have become a focus for the company, which on November 1 launched the long-awaited streaming video service Apple TV+. The company has not said how many people have subscribed to the $5-per-month service. Apple is targeting 600 million total subscriptions across its services by the end of 2020 after it expects to hit its previous target, 500 million subscriptions, by the end of March.

SoundExchange Paid Out $908.2 Million to Artists and Labels in 2019

US performing rights body SoundExchange saw its payouts to artists and labels fall by 4.7% in 2019, most likely due to the impact of a $150 million settlement with SiriusXM the year before. The company’s payouts still totalled $908.2 million in 2019, according to Music Business Worldwide, which notes that if the settlement is discounted, SoundExchange’s organic growth in payouts would have been a healthy 13.1%. There was also a sharp increase in the number of artists and labels being paid by SoundExchange, and a corresponding decline in “per-head” payouts. “The average per-head quarterly distribution from SoundExchange weighed in at $10,133 in Q4 2018, and fell to $5,908 in Q4 2019,” as it explains. This is a pattern that other collecting societies have also reported in recent years, as streaming has continued to grow.

Over Half of US Listen to Fewer Albums Than We Did 5-10 Years Ago (Report)

A new global study carried out by music streaming service Deezer found that 54% of respondents are listening to fewer albums than they were 5-10 years ago. This decline, according to Deezer’s respondents, stems from them having “too much music to choose from” in addition to being too busy to stick with a single LP. The company surveyed 8,000 adults including 2,000 respondents each from the USA, Germany, France, and Brazil. Only 9% of the people surveyed said that they favor albums. Almost 40% of those surveyed said that they prefer playlists, while 1 in 10 felt that “artists don’t make albums like they used to”. The study continued by saying that, on average, people are streaming five albums per month, with some variation per country. Deezer says that 94% of the survey’s respondents agreed that higher audio quality is the most important feature for album listening.

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