Regulatory policy

Comedians find streamer payment policy a bad joke

Last month, comedian Bill Engvall received a great email from Sirius XM-owned streamer Pandora congratulating him for reaching over 600 million streams of his work on his platform from 227,000 monthly listeners. . It felt like a big milestone for a great headlining comedian, especially one who’s been in the game for over three decades. But the well-meaning gesture alerted Engvall and his team to a major problem: He hadn’t been paid for any of those streams.

“It’s like sending someone a birthday card that says, ‘Oops, I forgot to get you a present,'” Engvall told The Times.

Last week, Engvall was one of many comedians – including the estates of Robin Williams and George Carlin along with Ron White and Andrew Dice Clay – to sue Pandora in U.S. District Court for the Central District of California for failing to pay the appropriate amount of royalties for their copyrighted jokes.

The five lawsuits make noise about the long-standing practice of streamers only requesting a portion of the copyright clearances that are owed to comedians who write, rehearse and record their works. Currently, Pandora, Spotify and many others only pay for the live performance of comedian material, not the creative material itself, which most comics would consider a bad joke.

“If you invent a product and it sells, you want to get paid for it,” Engvall said. “And I think sometimes in this society we tend to ask for forgiveness instead of permission.”

In the case of music, streamers are required to pay the copyright for the sound recording as well as a copyright for the underlying written work. Typically, royalties go to public rights organizations such as ASCAP or BMI, who then pay the artists. Currently, there is no blanket license in place for ASCAP or BMI protecting large-scale spoken word works, and no government infrastructure or regulations defining the licensing and royalty payment system.

So streamers like Pandora would have to go to each comic individually to secure the proper copyrights on their comedy albums and recorded tracks — something Pandora in this case deliberately neglected to do, according to complaints filed by attorney Richard Busch, a King & Ballow partner representing the several living comedians who sued Pandora.

“For years…Pandora has illegally made digital reproductions and broadcasts on its servers and provided streaming access to its users without an appropriate public performance license and, where applicable, reproduction right license,” claim the lawsuits.

Busch’s presence on the case is notable. More than a decade ago, he handled a landmark case against Universal Music Group on behalf of the company that produced Eminem’s early work. The case hinged on whether digital downloads should be treated as “licenses” or “sales” – a substantial accounting difference that has changed the economics of music distribution numbers in the era of iTunes. . Busch has attacked Spotify in a number of high-profile cases alleging infringement.

“This is a very important case, not only for my clients but for many other comedians who are out there, whose work is shown on these platforms,” ​​Busch said. “We look forward to litigating the cases.”

Oakland-based Pandora declined to comment on the ongoing litigation.

When it comes to collecting damages for copyright infringement, an artist who wins a favorable judgment can collect actual revenue, as well as what are called profits attributable to infringement. Actual damages would be what an artist would have been licensed for their work if they had engaged in arm’s length negotiation before the infringement began; the damages would include the artist’s loss of royalties. As a penalty, a plaintiff may also obtain the benefits attributable to the infringement.

If a comedian or his estate could prove that Sirius XM’s market capitalization and advertising budget was based on a certain fraction of the ownership of those works, the comedian could possibly profit from the infringement.

Alternatively, when damages are more difficult to calculate, there is another option: statutory damages. This allows the jury to award damages ranging from a very small amount up to $150,000 per copyrighted work, which could be a single recorded joke or a track on a comedy album. For example, if a comedian has 70 royalties, multiplied by $150,000 each, that fee ends up adding up to over $10 million.

Together, the five pending lawsuits against Pandora are seeking $41.55 million in damages from the streamer.

Jeff Price, CEO and co-founder of Word Collections, works with comedians involved in the lawsuit to fight for what they believe is their due.

The founder of music distribution site TuneCore and Audiam launched his global copyright administration company in 2020 to ensure the works of comedians and songwriters are properly licensed and paid for by global digital services . Investors in the company include the band Metallica, a longtime Price client.

Price said Pandora and other streaming companies simply chose not to license the underlying works, meaning comedians like Robin Williams and his estate received nothing for streaming their working on these platforms.

Price said that from 2011 to 2017, Pandora disclosed in regulatory filings that it did not have a license for this work and that it was a potential liability.

In a lawsuit filed last week, Williams’ estate alleged that Pandora rejected Word Collections’ attempts to negotiate a licensing deal. According to the lawsuit, Pandora wrongly offered 16 of Williams’ works through its streaming service without even paying a “fraction of a penny.”

Taking the example of Williams, Price said: “Let’s say he sings the words ‘reality, what a concept’ – in which case… the licensing scheme would have been in place, a royalty would have been generated and [Pandora] would pay for the license. But because he noted the words ‘reality, what a concept’ (…) they didn’t deal with it”,

So far, comedians calling out the platforms on royalties have been met with either silence or aggression. In December, Spotify removed various comic book performances represented by advocacy organizations, including works by John Mulaney, Jim Gaffigan, Tiffany Haddish, Jeff Foxworthy and Kevin Hart.

Price said the same issue exists for other platforms and he has contacted Sirius SM, iHeartRadio, Tidal, Spotify, Amazon and YouTube Music on behalf of his clients, which also include the estate of Richard Pryor.

“I have a responsibility to my clients to contact every entity on the planet that uses their works, license them, and charge my clients,” Price said. “There is a global problem. All works of these people are used without license. These guys are unpaid and there is no excuse for that. The problem must be solved. It’s not a question of if, it’s a question of when. »

The massive deal Spotify and Joe Rogan signed in 2020 further highlights the problem of gross inequality faced by comedians, even for comedy legends like Richard Pryor, whose estate isn’t properly compensated for its streaming royalties, Price said.

“Joe Rogan was paid a lot of money. Why? Because they wanted to use Joe Rogan’s artwork to attract users and they paid the man $100 million for it,” Price said. “How many people are fans of Richard Pryor who go to an entity like Spotify to listen to his works? I bet it’s more crowded than [the audience that listens to] Joe Rogan. And they didn’t even bother to pay anything to Richard Pryor or his estate, but will they pay Joe Rogan north of $100 million?

For Engvall and other comics involved in streamer lawsuits, the comedy landscape has changed a lot when it comes to tracking who was using or profiting from your material. “When I was doing the comedy club circuit, we checked on each other if a comedian was caught using one of your jokes,” Engvall said. “But when streaming services came along, there was just no way to keep up, because you never had a record of what was playing.”

While it’s a long time coming for big-name comedians to make noise about the money owed to them for their material, Engvall says the outcome of the recently filed lawsuits could mean a lot for up-and-coming comedians down the road.

“Although I’ve been lucky in my career to generate a name, there are a lot of cats that don’t, but their stuff gets used and they also need to be paid,” Engvall said. “None of us asks more than what is due to us.”