C’right Change Spells Trouble
For Artists
By Ann Chaitovitz
Congress recently passed the Satellite Home and
Viewer Improvements Act, part of the omnibus spending bill, which was signed
by the president on Nov. 29.
In a short provision unrelated to the subject matter
of the legislation, the bill changed the definition of “work made for hire”
in the Copyright Act by adding “sound recordings” to the list of works
that may be considered “works made for hire.” The language was added during
a closed-door meeting among congressional staff members at the behest of
the record companies, under the guise of a mere “technical” correction.
It was adopted without hearing or discussion. The
American Federation of Television and Radio Artists fought to kill it but
was unable to because appropriations bills cannot be amended. This so-called
technical correction spells real trouble for recording artists.
As
Register of Copyrights Marybeth Peters and other noted experts have stated,
this change was not a simple technical correction. Rather, it was a substantive
and significant change that hurts artists. It was also a pre-emptive strike
by the record companies to deny artists the ability to regain control of
their recordings in the future.
This addition of sound recordings to the definition
of “work made for hire” will permit record companies to obtain irreversible
ownership and control of artists’ recordings by eliminating the current
legal protection enabling artists to terminate the transfer of rights and
regain ownership of their contributions to sound recordings.
If sound recordings are works made for hire, artists
will lose the right to obtain control of their recording and the future
stream of income generated by the recording.
Most royalty artists’ contracts provide both 1) that
the copyright for a sound recording be transferred from the recording artist
to the record company and 2) that the sound recording is a work made for
hire.
However, just saying that something is a work made
for hire does not make it one. Before this change, a sound recording could
not be considered a work made for hire under the law, and thus the work-for-hire
contract provision was essentially null.
The effect of these contracts was that the artist
was simply transferring the copyright in the sound recording to the record
label. And, with a transfer of copyright, the artist retained the opportunity
to terminate the transfer at the end of 35 years under the Copyright Act,
thereby regaining control of the recordings.
The main purpose of the termination right was to
permit artists who have signed unfavorable contracts to regain control
of income from the now valuable copyright work. The clock is ticking as
2013, the first year that the copyright owners of sound recordings may
exercise their termination rights under the Copyright Act, approaches.
The Artist Formerly Known As Prince offers a perfect
example of the impact caused by the changes made by this new amendment.
The Artist has stated that he is rerecording all of his old albums, so
his fans will be able to buy either his new recording of the old album—and
support him—or the old recording of the album—and support his former record
label.
Assuming that The Artist’s royalty contract contained
the standard work for hire and transfer of copyright provisions, under
the old law, The Artist would be able to terminate the transfer of copyright
for his first album, “For You,” in 2013 and regain ownership and control
of this recording.
He could then decide to release only one of the recordings
or, if he continued to sell both recordings, purchases of both would support
him. As The Artist’s other recordings reach a date 35 years after their
copyright, he could simply terminate those copyrights and regain control
over the records and the income stream that they produce.
However, under the new law, these recordings would
be considered works made for hire, and he will lose his termination right
and the opportunity to regain ownership of these recordings.
A substantive change of this nature should not be
made without hearings to explore and debate fully the impact it will have.
At the very least, the change will alter the economic
equation that underpins the artist’s relationship with the record company
and tilt the balance even more in favor of the record company.
At the worst, this change tosses out long-established
principles of copyright law that were fully debated and considered.
The Judiciary Committee’s Intellectual Property Subcommittee
has promised to hold hearings on the issue, so that it can be properly
debated by all those with interest in this issue, including recording artists.
It is very important that artists make their voices
heard in opposition to this change.
