Happy Together? 7 Things You Need to Know about Flo & Eddie Inc. v. Sirius XM Radio Inc.

The Turtles: Happy Together

A Federal Judge in California has ruled that Sirius XM must pay performance royalties to the owners of all music it plays, including music recorded before 1972. Before playing pre-1972 music, the streaming music service “must first seek authorization from the recording’s owner.”

Here’s what you need to know about the decision:

1. Does Sirius XM really pay no royalties when they play the Beatles and other pre-1972 music?

Sirius XM pays songwriter royalties to writers and publishers of all music they play. That’s not the issue here. But Sirius XM pays performance royalties only on music recorded after February 15, 1972. The relevant Federal copyright law, the Digital Performance Right in Sound Recordings Act of 1995, does not apply to sound recordings made before February 15, 1972.

There is more than payment involved. None of the protections of Federal copyright law apply to pre-1972 sound recordings, from the safe harbor provisions of the DMCA to the statutory license fees that allow Sirius XM to just send payment to SoundExchange without requiring Sirius XM to track down and negotiate with each individual rights holder.

Sirius XM chose to tell the Beatles, “All you need is love.”Since performances of pre-1972 sound recordings are not covered by Federal copyright laws, SoundExchange has no Federally-blessed right to represent these performers. That’s why the Judge said that Sirius XM, before playing pre-1972 music, must “seek authorization from the recording’s owner.”

Faced with a damned-if-you-do and damned-if-you-don’t choice, Sirius XM decided to pay no copyright royalties on pre-1972 sound recordings not covered by Federal copyright. In effect, Sirius XM chose to tell the Beatles, “All you need is love”.

2. Why did a Federal Judge rule against Sirius XM?

Although sound recordings made before 1972 are free from Federal copyright, they are protected by state laws. On September 22, 2014, a Federal District Court Judge, sitting in California, ruled in Flo & Eddie Inc. v Sirius XM Radio Inc. that Sirius XM is violating the copyright laws of the State of California, together with California’s laws against misappropriation, conversion and unfair competition.

In granting Summary Judgment to Flo & Eddie, Inc., the Judge said, as explained above, that Sirius XM must obtain authorization from Flo & Eddie, Inc., to play sound recordings made before 1972 by the group known as the Turtles. Sirius XM, the Judge further said, must pay performance royalties when they play these recordings. The Judge declined to rule on a related issue involving copying these recordings on servers in order to play them.

3. Is Sirius XM likely to appeal?

Is the Pope Catholic?

4. Are other lawsuits coming down the track?

Many lawsuits are pending, mostly in California, New York and Washington, D.C., where local protections for pre-1972 sound recordings are strongest.

The defendants are usually Sirius XM or Pandora, who also pays no performance royalties when they play pre-1972 sound recordings. On-demand streaming music services like Spotify and Beats Music reportedly pay performance royalties on all music they play, including pre-1972 music. AM-FM radio pays no performance royalties on any music they play over the air because they are exempt by statute.

The plaintiffs in most pending lawsuits are major labels and other big corporations, including the RIAA. That’s why the music industry pushed Flo and Eddie’s case forward to put a human face on their complaints.

5. Who is Flo & Eddie, Inc.?

Ownership of most pre-1972 master recordings is either locked up by major labels or lost in the murk of dubious transactions made by long-gone smaller labels and their assignees. The main members of the Turtles, as the primary shareholders of Flo & Eddie, Inc., are among the few who actually own their own masters and can prove it.

The TurtlesDuring the 60s, the Turtles had a #1 hit, Happy Together, along with several other top ten hits and well received albums. Their main performers were Howard Kaylan and Mark Volman. When they first signed with White Whale records, they called themselves the Tyrtles, but cooler heads prevailed.

By 1970, the Turtles were ready to call it quits. Since their contract with White Whale barred Howard and Mark from using their real names anywhere else, they became known as as the Phlorescent Leech & Eddie (the early 70s were like that), later shortened to Flo & Eddie. Flo & Eddie performed with the Mothers of Invention, released a string of albums and incorporated themselves as Flo & Eddie, Inc.

White Whale did not do as well. Do you remember the other artists who recorded for White Whale? Neither does anyone else. When it lost the Turtles, the label lost its principal asset. White Whale, true to its name, went belly up. At the Federal Bankruptcy Court sale, Flo & Eddie, Inc. purchased the rights to the Turtles’ name and all of the master recordings.

Thus it came to pass that the main performers of the Turtles, almost singularly among 60s recording artists, own their own master recordings and possess a federal court order to prove it.

6. Flo & Eddie, Inc., prevailed. How important is the decision?

Eriq Gardner of the Hollywood Reporter called it a “legal earthquake” and “a whopping ruling with consequences almost impossible to understate.” Roger Friedman of Showbiz 411 wrote, “This may be a lightning strike for all time.”

Not so fast. With an appeal all but certain, and with numerous other cases pending before other Judges in other places, the issue will take a while to play out. While the Turtles scored the first touchdown, the game is far from over.

Flo & Eddie, Inc., is asking for $100,000,000 in damages. That’s the ask. What they get has not been decided. Mr. Flo and Mr. Eddie have not requested my advice, but here it is: “Don’t spend the money yet.”

It seems fair that Sirius XM and Pandora should pay royalties on performances of pre-1972 music, just as they now pay royalties on performances of music recorded later. Reports suggest that music recorded before February 15, 1972 makes up about 15% of all music Sirius XM plays and less than 10% of all music Pandora plays. These streaming music services could meet the extra costs with a modest increase in their prices, blaming such unpopular targets as record labels, the RIAA and Congress.

Ah, Congress. Eventually, the issue is likely to be decided by the United States Congress, which is already considering proposed legislation to amend the Federal copyright laws to resolve the issue by extending protection to performers of pre-1972 sound recordings. Songwriters, as mentioned above, already have that protection.

While amending copyright laws makes sense, the details will involve a struggle between competing music and tech interests. Only a cynic would suggest that Congress will move slowly to extract maximum political contributions from all sides. I’ll go with the cynics.

In the meantime, watch for more decisions and more news on this issue.

7. Does the decision mean Sirius XM’s 60s-on-6 is history?

You’ll still have your 60s-on-6, Cousin Brucie and all. Just don’t expect to hear Happy Together.

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