Mechanical black hole: Microsoft settles music royalties sueball

Over to you Google

Microsoft has quietly settled a lawsuit over unpaid music royalties with a drummer and his band’s music publisher.

It’s a small but significant settlement: the pair are also suing Google, Deezer and Jay Z’s Tidal for the same reason, and the issue is also at the heart of two class action lawsuits against Spotify.

All the lawsuits have one thing in common: they allege that the music streaming services launched without obtaining mechanical licenses.

Mechanical royalties are payments for use of the song or composition (as opposed to the use of the sound recording), and US law is fairly clear, as one of the litigants, David Lowery, explained here. Once you have used a song without obtaining clearance, you’re infringing. Mechanicals are handled by the Harry Fox Agency in the USA and by the PRS (after its merger with the mechanicals society MCPS) in the UK.

As much as 25 per cent of the royalties owed to songwriters are not being paid out, or are going to the wrong people, the head of the US publishers' association, David Israelite, reckons.

The suits against Microsoft (for Xbox Music, now called Groove Music), Google, Deezer, Slacker, Tidal and Rdio were brought by John Emanuele from two piece band The American Dollar, and the band's publishing company Yesh Music. They’re clearly not afraid of grappling with Goliaths: in 2011 the band sued evangelical megachurch the Lakewood Church for using their music, in a case that was unsuccessful.

Musician David Lowery opened fire first late last year, with a class action suit against Spotify for unpaid mechanical royalties. A fortnight later songwriter Melissa Ferrick filed a second, separate class action suit against Spotify for the same reason.

Why has it taken so long for such a major risk to surface? In part, it’s because the deals between record companies and VC-backed digital music services are so opaque, it’s hard for independent musicians to tell what’s going on. But there’s little excuse for Google not to know where the money is going: in 2011 it acquired Rights Flow, which handled the complexity of music royalties for new digital services. ®

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