By Ananyaa Banerjee and Asmita Kaur
WIPO in their guide ‘The Global Digital Music Landscape’,[1] explains that in copyright law every recorded piece of music has two types of copyright, one for the composition which is created by the songwriter or the composer and this is the musical work that an artist performs at the recording, and another for the recording itself, also often termed as sound recording or phonogram, i.e., the master rights with the labels. Copyright law outlines that the rights are, by default vested on different copyright owners. The economic right of reproduction and distribution is often bundled together, either by the law itself or by the industry convention. This consolidation is known as ‘master rights’ in case of sound recordings. There are many aspects of music copyright that are not purely derived from the law but also from the industry conventions, such as the synch and grand rights (the right to use the music on stage, theatre, etc.). Labels usually enter into a 360 deal, or a “multiple rights agreement” with the artists where the label oversees all parts of the artist’s career and has right over a portion of all the revenue that is generated by the artist.[2] Primarily, the record label aims to extract benefit from the artist’s success, sometimes even at the expense of the artist unfortunately.
While the label has the right to license and distribute, the artists have some veto powers. The master rights is the source for further copies. The contemporary glitter-drenched world of pop music has been a witness to a revolutionary tale of reclamation with the controversial antagonism between the pop icon Taylor Swift and her music label.
A Legal Reverb of Copyright Ownership
Taylor Swift, at the age of 13 entered into a 15-year long contract with the then incipient label Big Machine, founded by the impresario Scott Brochetta. Swift released six multimillion albums under the label, namely, Taylor Swift, Fearless, Speak Now, Red, 1989, and Reputation. Notwithstanding that she had written or co-written almost all of the songs, Swift did not own the master recordings of her own voice, which were held by the label. She possessed the melodies, but not much in the way of music. In 2019, Big Machine sold Swift’s masters to Scooter Braun’s Ithaca Holdings, which took place without her knowledge or approval. What started as a routine business deal sparked a media firestorm and an unprecedented personal reckoning beyond one’s wildest dreams. Swift termed the situation as being ‘blindsided’, no opportunity given to her to acquire her own creation and instead being made to witness it being sold to someone as if it were a regular corporate asset. Swift continued this by re-recording four of the six albums, the first artist to record almost her whole catalogue of albums, except for her first and last albums. As rightly pointed out then by some fans – All she needs to now reclaim are her name and reputation.
While Section 106 of the U.S Copyright Act provides that the copyright holder has the exclusive right reproduce their work, Swift’s strategic re-recording is rooted in the legal lacunae in Sectuion 114 of the U.S. Copyright Act, which limits the exclusivity of rights in sound recordings and allows to create new, independently fixed recording of the same underlying compositions, provided there is no use of any actual sounds from the original. To simply put, Swift could legally create near-identical versions of her songs as long as they were re-recorded from scratch. Furthermore, Swift waited for the three years for which she was barred to re-record as per the terms of her contract with the label, before she released the first Taylor’s version. Swift’s re-recorded songs ‘Belongs to me’ and ‘Mine’ which turned out to be more successful commercially and in the eyes of fans and critics alike. She purchased the entire catalogue of her work recently from Shamrock Capital – an absolute ‘Anti-Hero’ move.
The Other Side of the Coin
It must, however, be noted that Braun wasn’t indictable in wanting to pursue what he knew would benefit his business, especially given that it was indeed legal to do so, irrespective of how morally incorrect it subjectively seems. Musicians typically own two types of rights: © (Circle C) which is copyright in the musical composition i.e. the lyrics and the composition, and ℗ (Circle P) which is the copyright in a sound recording (phonogram). In a traditional format of negotiations between the artists and the recording labels, the copyright of the composition subsists with the songwriter (which is Taylor herself in her case) and the labels get a copyright over the master recordings. Thus, when a recording contract is executed with a label, all the economic rights, such as reproduction, distribution, public performance, public display and creating derivative works, pertaining to the master recording are vested in the label.
When entering into such a traditional contractual agreement, the artist is essentially a worker for hire, which means that the artist, a party to the contract, is commissioned to record an album for the label and the rights pertaining to those songs subsists with the label for a specified period, though the artists have some veto rights. Usually recording contracts are signed by the nascent artists prior to any accumulation of profit from their music, ergo the recording companies mandate transfer of ownership of master recordings in exchange of an advance payment and a definite monetary stream to produce, distribute and promote the music ordinarily as an album, while the recording label receives a substantial share of the profit that the music generates. For established artist, being associated with a liable is a matter of pride. These agreements are primarily made to offset the financial risk incurred by the label while investing in careers of amateur artists. However, the relationship formed by this agreement renders the artists dependent on the label for all stages of recording except the composition of music.
Would this strategy work in context of the Indian law?
As per the provisions of the Copyright Act, 1957 (hereinafter referred to as the Act), a sound recording is seemed to be owned by its producer.[3] It was held by the Hon’ble Supreme Court in the matter of IPRS v. Eastern India Motion Pictures Association (AIR 1977 SC 1443) that “once the author of a lyric or music work parts with a portion of his copyright…to have his work incorporated or recorded in a sound track or cinematograph film, the latter acquires by virtue of Section 14(1)(c)…its exclusive rights.” Section 14(e) of the Act grants the economic rights to the copyright owner of the sound recording; including the right to license and assign the copyright. In such a scenario, the recording label would typically be the copyright owner, whose consent must be obtained by the artist for the purpose of re-recording based on the contractual terms. Regardless, a cover version can also be made as per Sec 31C of the Act, but the permission of the owner is a pre-requisite for that as well.
A Negotiation of Music and Business
Looking ahead, alternate contractual negotiations could include terms where (i) joint ownership of master rights by the artist and label, the entitlement to a reversion of copyright ownership of the master recordings could be granted to the artists after the lapse of a designated period of time or, (ii) the retention of the copyright ownership of both the composition and the master recording with the artist while licensing the “right to exploit the work” to the label. Regardless of such a bargain of reclamation, the copyright in master recordings would certainly not transfer absolute ownership to the artist because the record company would still continue to have the sole ownership of the physical copies of them. Moreover, despite the ownership, success would simply feel hollow if the artists are unable to sell the records. Thus, if the label refuses to allow reclamation by selling the masters to the artists, there is nothing more that an artist could perhaps do apart from re-recording, which was feasible for the pop billionaire Taylor Swift with the kind of bargaining power she possesses in the industry, but might not be so for other artists. Now, Swift’s contract with her new label Universal Music Group,[4] is negotiated on the terms for absolute ownership of her master recordings with herself.
The Aftermath of a Legal Encore: A Domino Effect
However, with the glaring success of Taylor’s re-recordings, and the consequent reaction of the labels the industry is now seeing a reiteration of the fear of losing control over the master recordings. Right after Swift’s fourth re-recorded album saw incredible commercial success the big names started reassessing the agreements and overhauled the contracts for the new assignees,[5] making an explicit attempt to prevent them from re-recording their music for reprehensibly long periods, in some cases indefinitely. This emergent practice has is likely to go awry and prove to be detrimental for the artists in its approach which is antithetical to the long-standing practice that estops the artists from re-recording their music only for a few years till the expiration of the contract. This new diametrically different approach has shifted towards greater protection of the label than the artists. Many artists are already consciously asking for better contracts for their works.
Now, with some the record labels indulging in the notorious practice of tying artists to predatory and unfairly restrictive agreements, the artists are left with less lucrative options to either get locked in such an arrangement or opt out of signing with any company. Thus while Swift may have taken the knife out of her back and cut the ribbon for reclamation of her music, the consequential reaction by the labels may have pushed the issue into regression. Furthermore, on signing an artist, the recording label also takes a portion of the revenue streams and other fees through a pre-designed fee recoupment structure. The label primarily diminishes the artist’s royalties from any future sales, streams and overall commercial performance of the master recording, to offset the financial risk incurred by them on investment. Even after the label has recouped the full amount of their investment, the artist still continues to receive a disproportionate share of the music royalties.
Not All Too Well But Something Can Be Done
The appropriate legal intervention to strike a balance in protecting rights of both the labels and the artists, to prevent the labels from disproportionately exploiting their leverage of bargaining over the artists, is to include a right to termination after a specified period. It has also been proposed that the artists should regain the ownership over their master recordings once the label has managed to recoup the costs dictated as per the contractual fee structure. Furthermore, contract law could be ideally made applicable to ensure that the artists are compensated if the label is receiving advance payments or have equity in the streaming company.
While the Swift affair isn’t the first case of an artist fighting a battle for reclamation of their work, it becomes particularly significant due to the momentum it gained because of Swift’s unparalleled popularity in the contemporary sphere of pop music, making it one of those rare instances where legal clauses collide with musical cadence. This discourse has not only sparked myriad debates but also managed to ignite a revolution around ownership in an industry that has long been criticized for its opaque practices. Swift has reclaimed all rights to her six albums after a long fight and showed us why intellectual property contracts and transactions need to be balanced and carefully drafted to avoid bad blood.
Niharika Batra, Former Intern at S.S.Rana & Co. has assisted in the research of this article.
[1] https://www.wipo.int/export/sites/www/cooperation/en/docs/digital-music-landscape.pdf
[2] Bryan Lesser, Note, Record Labels Shot the Artists, But They Did Not Share the Equity, 16 GEO. J.L.
& PUB. POL’Y 296-297 (2018).
[3] Copyright Act, 1957,§2(d).
[4] https://www.instagram.com/p/BqXgDJBlz7d/?utm_source=ig_web_copy_link.