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In big setback for digital radio, court says SiriusFM must pay Turtles for pre-1972 recordings

A federal judge in Los Angeles sided with sixties band The Turtles in a closely watched copyright case that has big economic implications for SiriusXM and other digital radio providers like Pandora.

In a summary judgment ruling published on Monday, U.S. District Judge Philip Gutierrez found that SiriusXM had violated California state laws by performing 15 recordings of The Turtles dating from before 1972 without a license.

The lawsuit began as a state class action suit in 2013, in which singers Flo & Eddie of the Turtles — known for hits like "Happy Together" — said SiriusXM owed $100 million in unpaid royalties.

Monday's ruling is the worst-case outcome for SiriusXM and other digital music services because it will likely expand the scope of music on which they must pay royalties, and could add a further layer of costs for the digital services that traditional AM/FM radio stations do not have to incur.

The actual dispute between The Turtles and SiriusXM, which is mirrored in a similar lawsuit involving Pandora, turns on whether state laws cover copyright in sound recordings. The issue is up for debate because the federal Copyright Act explicitly covers music recordings dating from 1972 — which in turn led the music industry to hold out a theory that a patchwork of state laws cover recordings prior to 1972.

Indeed, the music industry has even been lobbying Congress to stretch copyright further by passing a so-called "Oldies Law" that would require digital radio services to pay for pre-1972 recordings under federal law.

The Los Angeles ruling thus gives the music industry and its pre-1972 legal theory a boost. For SiriusXM and for consumers of digital radio, however, the ruling could lead to higher prices — or less music if the radio stations decide to simply play fewer songs from the 1940s, 50s and 60s.

While the music industry has framed the disputes with SiriusXM and Pandora as a sentimental call to compensate beloved musicians, the issue is actually more complicated than that. Under copyright's convoluted licensing system, all radio stations pay songwriters when they perform their songs — meaning that songwriters and their heirs are already being paid for Turtles songs, and for songs dating back all the way to the 1940s.

The royalty regime for performers (as opposed to songwriters ) is different. It requires digital radio services but not AM/FM stations to pay performers, in addition to songwriters, for post-1972 recordings; as a result of the court ruling, the likes of SiriusXM may now have to pay pre-1972 performances as well.

SiriusXM did not immediately reply to an email request for comment, so it it is not immediately clear if the company will appeal the decision, or if it will cease playing the older recordings.

Here is a copy of the ruling, which does not specify what the damages will be, but does find SiriusXM liable for conversion, misappropriation and breach of California's unfair competition law.

Sirius 1972 Ruling

GIGAOM, September 23, 2014 (Jeff John Roberts)

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