Legal and Practical Issues in Outdoor Musical Entertainment

Bryan T. Kroes[1] Hurtado Zimmerman SC – Wauwatosa, Wisconsin

Outdoor entertainment is not new by any means. Traveling circuses in the United States have been traced back to the late 1700s. Traveling medicine shows peppered the American landscape throughout the 1800s into the 1900s. Fast forward to the present and you will find a panoply of outdoor musical entertainment hosted every year across the world on every single scale. Some are large festivals like California’s Coachella and Milwaukee, Wisconsin’s own Summerfest®, the “World’s Largest Music Festival” ®. Others are hosted in small taverns and honky-tonks by folks who set up outdoor stages to draw in patrons with the hopes of selling some drinks and having some fun. Most go off without a hitch, however, every once in a while, tragedy strikes, requiring us to take a step back to analyze event logistics and what can be done to improve them.

The appeal of outdoor entertainment is undeniable – some would argue there is nothing better than sitting outside a warm summer day, cold drink of your choice in hand, listening to your favorite music – regardless of the venue. The planning and successful execution of outdoor musical entertainment, on the other hand, is a whole other monster and is not something that can or should be done on a whim or without know-how and preparation. In it no simplistic feat, to say the least, to convert a side lot, empty field, park, or racetrack into a venue, complete with stage, sound, lighting, effects, concessions and crowd control. On top of the show, municipal requirements regarding zoning, noise and gatherings have an overarching presence on the ability for an outdoor musical performance to legally occur.

Starting in March, 2020, as none of us worldwide will ever forget, COVID-19 changed the face of the entertainment industry as we know it. As the pandemic raged across the world, we saw almost overnight the large-scale cancelation of nearly every event that would have gathered people together for any reason – from closing non-essential businesses to the shutdown of nearly every live music event, both indoor and out. What may have not been as widely publicized, however, was that in the face of business collapse, many small business owners in the entertainment field re-imagined their business models to stay afloat. All political and health policy considerations aside, some operations simply moved outdoors. To those owners, if building a stage with an outdoor bar meant not losing business, then so be it. Musicians and business owners also got creative. Promoters in several states hosted drive-in concerts: where you still got to see real live music, but from the safety of your car. In the outskirts of Chicago, revered country-punk musician Jon Langford partnered with Fitzgerald’s Night Club by setting up in the bed of a Chevy pick-up truck and driving around town to bring his music to the people. Despite the darkest hours of the pandemic, musicians still found a way to forge ahead.

As vaccines go in arms and live entertainment starts to ramp back up again, outdoor entertainment will continue to thrive, bringing in droves of adoring fans and generating revenues. In the next few pages, I will touch upon some of the legal and practical issues in outdoor entertainment. Please note, this article is not intended to be comprehensive or state-specific. Instead, it is intended to offer a high-level analysis of general considerations to guide counsel towards more precise contract drafting and best practices in counseling clients. When in doubt, please be sure to check state- and local-specific ordinances, statutes and case law.

Preliminary Planning for Outdoor Musical Entertainment

As any teenage aspiring rock musician well knows as their garage band dreams are dashed by police shutting down a make-shift venue, organizing and successfully executing an outdoor musical event may meet some resistance from the neighbors and municipal authorities. Municipal regulations and zoning, by their very nature, are municipality-specific and best practices for any promoter or aspiring concert organizer include consulting applicable municipal ordinances and zoning codes, in addition to working amicably with applicable municipal officials as a first step in the process.

Zoning ordinances constitute an exercise of the government’s police power to promote public, health, safety, and welfare and, as legislative enactments, are entitled to a strong presumption of constitutionality. Matter of Town of Islip v Caviglia, 73 N.Y.2d 544, 550-551, 540 N.E.2d 215, 542 N.Y.S.2d 139 (1989). A party challenging a zoning ordinance generally carries a burden to prove its unconstitutionality beyond a reasonable doubt. McMinn v. Town of Oyster Bay, 66 N.Y.2d 544, 548, 488 N.E.2d 1240, 1242, 498 N.Y.S.2d 128, 130 (1985). These principals have been clarified in a number of cases in a wide array of jurisdictions interpreting many different ordinances.

Noise and volume have long been a concern for municipalities and promoters, who unsurprisingly tend to be on opposite ends of the same argument. The Ward v. Rock Against Racism case is a fantastic example of that battle:  for several years Rock Against Racism (RAR) had sponsored outdoor rock concerts at New York City’s Central Park, furnishing its own sound equipment and technicians. Ward v. Rock Against Racism, 491, U.S. 781, 781 (1989). The City received numerous noise complaints and as a result, shut off the power to the sound equipment after RAR ignored repeated requests to lower the volume at one of its concerts. Id. Litigation ensued, with RAR arguing that their freedom of speech was impermissibly being impeded. Justice Kennedy, speaking on behalf of the U.S. Supreme Court, decided that while music, as a form of expression and communication, is protected under the First Amendment of the U.S. Constitution, the government may impose reasonable restrictions on time, place, or manner of protected speech, even of speech in public forum, as long as restrictions are: 1) justified without reference to content of regulated speech, 2) are narrowly tailored to serve significant governmental interest, and 3) leave open ample alternative channels for communication of information. Id. at 790-792. A municipal noise regulation designed to ensure that musical performances at a public band shell did not disturb surrounding residents was determined to be a “content-neutral” time, place or manner regulation, which would be upheld as long as it was narrowly tailored to serve a significant governmental interest and left open ample alternative channels of communication. Id. at 803.

In another example the Town of Delaware commenced an action against a landowner seeking a permanent injunction to prevent the landowner from holding a three-day music and camping festival on his 68-acre property, citing the municipality’s zoning ordinance as the basis for the prohibition. Town of Delaware v. Leifer, 34 N.Y.3d 234, 237-238, 139 N.E.3d 1210, 1213, 116 N.Y.S.3d 630, 633 (2019). The Court of Appeals of New York decided: 1) the proposed festival was not encompassed within the permitted principal or accessory use as a single-family residence, 2) the zoning law’s theater and land use restriction was a content-neutral time, place, and manner restriction, 3) restrictions were narrowly tailored to serve the town’s legitimate interests, 4) the zoning law was not overbroad, 5) the zoning law afforded the landowner sufficient notice that the music festival was a prohibited land use, and as such, 6) the injunction against the landowner to advertise, sell tickets, and hold the festival on his property was not overly expansive. Id. at 245-246.

While it is not often that live music producers decide to take on City government for the purposes of challenging zoning that would act to prohibit such live music, when the stakes are high, sometimes a legal challenge is the only option. Tanner v. City of Virginia Beach, came out on the other end of the spectrum as Leifer, and is an example of a situation in which a prohibitive zoning ordinance was not dispositive. In that case, after suit was brought by a club and music venue, the Supreme Court of Virginia decided that 1) an ordinance was impermissibly vague and 2) unconstitutional language in the ordinance could not be severed from the ordinance and that the remaining language of the ordinance given a definite and permissible construction. Tanner v. City of Virginia Beach, 277 Va. 432, 674 S.E.2d 848 (2009). The ordinance at issue provided:

It shall be unlawful for any person to create, or allow to be created any unreasonably loud, disturbing and unnecessary noise in the city or any noise of such character, intensity and duration as to be detrimental to the life and health of persons of reasonable sensitivity or to disturb or annoy the quiet, comfort or repose of reasonable persons. The following acts, among others, are declared to be loud, disturbing and unnecessary noise in violation of this section, but such enumeration shall not be deemed exclusive:

1) the playing of any television set, radio, tape player, phonograph or any musical instrument in such a manner or with such volume as to annoy or disturb the quiet, comfort or repose of reasonable persons. …

5) the use of any drum, loudspeaker or other instrument or device for the purpose of attracting attention, by creation of noise, to any performance, show or sale or display of merchandise.

Id. at 435-436, citing Virginia Beach City Code §23-47.

In making its decision, the Virginia Supreme Court determined that the ordinance further failed to give “fair notice” to citizens, as required by the due process clause of the U.S. Constitution, because it did not contain ascertainable standards, and thus, the ordinance was impermissibly vague. Id. at 440. Further, the Court noted that terms used in the ordinance were inherently vague because they required persons of average intelligence to guess at the meaning of those words, and the ordinance’s terms left the decision up to the police to make the determination of whether the persons considered to be reasonable would be disturbed or annoyed. Id. at 440-441.

Depending on whether the entertainment structure (be it a stage, gazebo, or other) is erected, municipal building codes must also be considered.

This Concert Venue is a Construction Site…

Before the first chord is struck at an outdoor concert, the site is for all intents and purposes, a construction site and it should be treated that way. For large events, multiple large semis bring literally tons of staging, sound, light, and effects equipment to be set up in a short amount of time by trained professionals.

During initial set-up and load-in, and after the show at load-out, people who are not essential to the organized chaos should not be permitted on or near the activities. In my days as a stagehand, I recall seeing one very inebriated individual dodging through the other stagehands onstage after a concert, trying desperately to get backstage (not knowing that the band itself had long before departed). He weaved in and out of moving carts, forklifts, and under descending rigging for a short time before he was swiftly ejected by security. He was oblivious to the fact that directly above him were thousands of pounds of sound and light equipment that were very purposefully coming down, but could have severely injured him as his presence was wholly unanticipated.

For small events, the same principals apply only on a smaller scale, however, safety precautions are no less important. Just because a stage has been built does not mean it can structurally withstand a band, their gear and sound equipment. Imagine the extra live loads applied when the audience is invited onstage by an overly-exuberant cover band frontman to belt out every “bap-bap-ba” of “Sweet Caroline”. Similarly, if an overhang or roof of any type is to be constructed, it should be able to withstand adequate loading, not only for wind, but also for any light or sound rigging that may be applied to it. Consultation with a competent structural engineer regarding the construction of any such structure is essential. Consultation and certain requirements may also be required under local building or zoning code.

As the Indiana State Fair stage collapse in 2011 showed, mother nature can easily overcome staging, resulting in massive injuries and loss of life. In that instance, seven fans died and 58 were injured. Keeping that case in mind, competent personnel and authority is needed. Regardless of the size of the show, there should be people hired who know how to build a stage, safely attach sound, lighting and effects and execute all logistics and operations. There should be some key personnel on staff who can make critical decisions regarding safety and monitor weather. If a storm is coming through, there should be an understanding of who will make the determination of whether the show will go on or if it is time to evacuate.

Training and supervision of stagehands is also key. Oftentimes with larger shows, there will be a call of local individuals to work as stagehands. Sometimes those folks have experience in areas like construction, sound, lights, and electricity; other times, they just are music lovers. Either way, the importance of training cannot be understated. It only takes one person to plug in two ends of an electrical run before it is meant to be connected for disaster to strike. Most times, and although counterintuitive for the untrained stagehand, abandoning a falling member rather than trying to catch it can mean the difference between life and death. Highly specialized tasks such as electricity and rigging should also not be performed by untrained individuals without possessing applicable certifications. Stagehands should not be expected to possess super strength either and teamwork should be enthusiastically utilized.

Fatigue of stagehands and other personnel should be monitored, especially during long calls or in extreme high or low temperatures. Personnel should be offered plenty of fluids, breaks, and time to rest (especially in cases of long calls). Sometimes relieving someone of their duties for the day when they are showing signs of fatigue can be best for all parties and can avoid accidents.

The Show Must Go On (Safely)…

Overarching everything about outdoor entertainment is safety for all:  performers, staffs, and patrons alike. Regardless of the size or nature of the event, everyone wants it to be successful and no-one wants to make front page news as being part of a tragedy.

There are, of course, some inherent dangers involved in attending outdoor musical events: unpredictable or severe weather events, crowd control issues, uneven terrain, other fans obstructing (by standing, sitting, or lying down) pedestrian paths or points of egress, and unsecured seats, just to name a few. Add some drinks or other sense-impairing substances to the mix and there is plenty that could go wrong.

Promoters won’t be able to anticipate every unanticipated risk, however, with plenty of foresight and planning, identifying and reasonably planning for anticipated risks is the key to a successful event.

  1. Tort Liability

At the heart of almost every claim arising out of outdoor musical entertainment is tort liability. In order to sustain a negligence action, a plaintiff must present sufficient factual evidence to establish the existence of a duty, a breach of that duty and injury proximately caused by that breach of duty. Rozowicz v. C3 Presents, LLC, 2017 IL App (1st) 161177, 95 N.E. 3d 1277, 1282, 420 Ill. Dec. 181, 186. (internal citations omitted). Unless a duty is owed, there can be no negligence. Id. at ¶12.

In determining whether a duty exists in a negligence case of that sort, the court considers whether a relationship existed between the parties such that a legal obligation is placed on one party for the other party’s benefit. Id. at ¶13. The factors a court will determine include: 1) the reasonable foreseeability of the injury, 2) the likelihood of the injury, 3) the magnitude of the burden of guarding against the injury, and 4) the consequences of placing the burden on the defendant, with weight given to each factor depending on the circumstances of the particular case. Id.

Further, to establish a prima facie case of proximate cause, the plaintiff must show that defendant’s negligence was the substantial cause of events which produced the injury. Maheshwari v. City of New York, 2 N.Y.3d 288, 295, 810 N.E.2d 894, 898, 778 N.Y.S.2d 442, 446 (2004).

In the world of live music, a concert attendee is considered a business invitee for purposes of determining a duty of care. Rozowicvz,, 95 N.E. 3d 1277 at ¶14. As to their invitees, mass gathering permittees “have a common-law duty to minimize foreseeable dangers on their property, including the criminal acts of third parties.” Maheshwari, 2 N.Y.3d at 294.  The scope of that duty is defined according to the likelihood that such behavior will occur and endanger attendees based on past experience. Bynum v. Keber, 135 A.D. 3d 1066, 1067, 23 N.Y.S 3d 654, 656, 2016 N.Y. (2016) (internal citations omitted).

  1. Adverse Conditions

Adverse conditions abound in outdoor entertainment: rain, mud, poorly lit areas, trees, water slicks, and even people on the ground. There are plenty of opportunities for issues. When an adverse condition is open and obvious, generally, the possessor (landowner, producer, promoter, lessee) does not owe a duty of care to invitees because the landowner could not reasonably be expected to anticipate that people will fail to protect themselves from any danger posed by such obvious condition. Rozowicz, 95 N.E. 3d 1277 at ¶15. “Obvious” means that ‘both the condition and the risk are apparent to and would be recognized by the reasonable person, in the position of the visitor, exercising ordinary perception, intelligence, and judgment.” Id. at ¶16.

There are several exceptions to the open and obvious doctrine. First, there is the distraction exception, which applies when the possessor has a reason to expect that the invitee’s attention may be distracted, so that he or she will not discover what is obvious, or will forget what he or she has discovered, or otherwise fail to protect him or herself against it. Id. at ¶20. This exception applies only when evidence exists from which a court can infer that the plaintiff was actually distracted. Id.

There is also a deliberate encounter exception to the open and obvious doctrine, which refers to a situation where the possessor has a reason to expect that the invitee will proceed to encounter the known or obvious danger because to a reasonable person in his or her position, the advantages of doing so would outweigh the apparent risk. Id. at ¶22. Courts analyzing the deliberate encounter exception to the open and obvious danger doctrine must focus on what the possessor should reasonably anticipate the invitee will do. Id.

In the case of Rozowicz, where the patron did fall and break her ankle after slipping on mud at the outdoor Lollapalooza festival, the Appellate Court of Illinois, First District, First Division, held that: 1) mud was an open and obvious condition, 2) evidence did not support the patron’s claim that she was “actually distracted” to the extent that she would not discover or forget she had discovered the obvious slippery muddy condition, 3) the deliberate encounter exception did not apply to outweigh the obvious risk created by the mud, and 4) the lessee owed no duty to the concert patron to prevent her and other patrons from slipping on the open and obvious slippery conditions created by the mud. Id.

Private parties are not the only ones who have to be conscious of adverse conditions in outdoor entertainment. In the case of Martinelli v. Hopkins, a spectator at an outdoor music concert who was injured by a falling rotting tree that other drunken spectators had caused to fall by knocking down a snow fence brought a negligence action against the town that had issued the entertainment license. Martinelli v. Hopkins, 787 A.2d 1158 (2001). The Supreme Court of Rhode Island determined that the town engaged in egregious conduct, thereby losing immunity under the public-duty doctrine, in granting an entertainment license to the owner of private property, where it was determined that the town failed to inspect the premises despite being on notice of increasing attendance at the festival and also failed to inquire about the projected number of attendees and the amount of free alcohol the owner intended to make available. Id. at 1168.

  1. Crowd Control

Crowd control can be a difficult issue at any outdoor event, especially as promoters are tasked with ensuring that only the people who paid are given access to the otherwise open-air event. Strategically placed barriers can be easily assembled to provide proper crowd control measures. At the same time, however, a possessor of land (whether concert producer, promoter, owner, or operator) generally has a duty to provide a reasonable means of egress from his or her property, regardless of whether that property is an enclosed concert venue or outdoors. See Rozowicz, 95 N.E. 3d 1277 at ¶17.

Occasionally, and unfortunately, individuals can get injured or killed when attending an outdoor musical event, for a variety of reasons. During the outdoor Roskilde Festival 2000 in Roskilde, Denmark, a rain-drenched crowd pushed towards the stage forming a human stampede in slippery and muddy conditions. In all, nine music fans lost their lives and twenty-six were injured. Another example is the electronic music festival Love Parade in 2010 in Duisberg, Germany. The festival grounds, which consisted of a route had a reported capacity of 250,000, however reports of up to 1.4 million attendees were admitted. As attendees approached a tunnel, a massive crush of bodies ensued and twenty-one people died. Insufficient crowd control was cited as the cause.

The possessor owes a duty to invitees to provide an adequate degree of general supervision of the crowd invited by exercising reasonable care against foreseeable dangers under circumstances prevailing. See Rotz v. City of New York, 143 A.D.2d 301, 304, 532 N.Y.S.2d 245, 247 (1988). In order to show that negligent crowd control by a property possessor was a proximate cause of a guest’s injuries, the injured guest must establish that he or she was unable to find a place of safety or that his or her free movement was restricted due to alleged overcrowding conditions. Santodonato v. Clear Channel Broadcasting, Inc., 26 A.D.3d 543, 544, 809 N.Y.2d 608 (2006).

The outcomes of various real-world scenarios can vary widely and are unsurprisingly highly fact intensive. In the Rotz case, Mr. Rotz was in attendance at a free Diana Ross concert held in New York’s Central Park. Rotz, 143 A.D.2d at 302. While he was standing during the performance, completely surrounded by people “jammed in like sardines”, a commotion erupted (with someone allegedly shouting “get out of the way, there’s a lion, a lion”) and “everybody started running and they just ran on top of everybody.” Id.  In the course of the stampede, Mr. Rotz was unable to move and was knocked down and trampled upon, suffering a serious fracture to his left leg. Id. The Court noted that “the inquiry as to what risks were reasonably to be perceived must be framed in terms of what risks or dangers should reasonably have been anticipated by the City from the gathering of an extremely large crowd to hear a free concert by a renowned entertainer in Central Park on a summer evening. In light of common contemporary experience, a jury could certainly find that, in the absence of adequate supervision and control of that crowd, it was reasonably foreseeable that disorder, unruliness, a melee or riot could erupt from some cause ignited by the vagaries of myriad individuals “jammed together” in a heightened atmosphere.” Id. at 305. The Court continued by stating that the “jury could reasonably find that the risk of a riot or a stampede could have been averted, or its consequences contained by adequate crowd control measures which would have inhibited or prevented the eruption of precipitating incidents such as individual or group altercations, arguments or other provocative causes and that defendant City failed to exercise the reasonable care necessary under the circumstances to avoid that foreseeable risk.” Id.

An opposite outcome occurred in the Santodonato case, in which a woman who joined a large crowd outside a radio station where a celebrity was falsely represented to have been giving an in-person appearance, fell during crowd movement and sustained a fatal head injury. Santodonato, 26 A.D. 3d at 544. In that case the Court determined that the owner’s alleged negligence in controlling the crowd was not a proximate cause of the spectator’s fall, nor was the radio station’s misrepresentation regarding the celebrity’s in-person appearance. Id. at 545. In making its determination, the Court noted that the evidence showed that there were many individuals present who safely avoided the flow of the crowd, including testimony that indicated that no-one was within the decedent’s immediate vicinity in the moments preceding her accident. Id. The Court further noted that “there can be no liability when the defendant’s act ‘merely furnished the condition or occasion upon which a plaintiff’s injuries were received” and since the plaintiff did not demonstrate a “substantial cause of the events which produced the decedent’s injury,” the plaintiff did not meet his burden. Id.

  1. Safety and Security

Although landowners and permittees have a common-law duty to minimize foreseeable dangers on their property, including criminal acts of third parties, they are not insurers of visitor safety. Maheshwari, 2 N.Y.3d 288, 294, 810 N.E.2d 894, 897, 778 N.Y.S.2d 442, 445. Foreseeability and duty are not identical concepts; foreseeability merely determines scope of duty once duty is determined to exist. Id. As touched on above, in cases arising out of injuries sustained on another’s property, the scope of the possessor’s duty is defined by past experiences and the likelihood of conduct on part of third persons which is likely to endanger the safety of the visitor. Id.

In the Maheshwari case, randomly and without provocation, four unidentified people attacked the plaintiff in the parking lot at a music festival in a New York City park. The Court was tasked with determining whether the plaintiff could hold the City and the concert producer liable. The Court of Appeals of New York determined that the unprovoked assault was not foreseeable as the result of any security breach, as required to hold the City and concert producer liable. In making that determination, the Court noted that the types of crimes committed at past concerts were of lesser degree and would not have led the City and the producer to predict that such an attack could have occurred or could have been prevented. Id. at 294, 897-898, 445-446.

A similar outcome to Maheshwari was noted in Florman v. City of New York, where a concert attendee who was criminally assaulted with a car by a driver in a stadium parking lot brought an action against for negligence against the City, the concert producer and the parking service. Florman v. City of New York, 293 A.D.2d 120, 741 N.Y.S.2d 233 (2002). The Supreme Court, Appellate Division, First Department, New York ruled: 1) the offender’s actions were not a foreseeable consequence of city and concert producer’s alleged failure to provide adequate security, and 2) the attendee failed to establish that inadequate security was a proximate cause of her injuries. Id. at 126-127, 238-239.

Where people go to enjoy music, oftentimes they also bring with them mind-altering substances. Producers and promoters, in turn have a duty to exercise reasonable care in curtailing the use of such illegal drugs. See Bynum, 135 A.D. 3d at 1067 (Where plaintiffs successfully allege that defendants knew or should have known of the widespread presence and use of illegal drugs at a music festival, the plaintiff adequately stated a cause of action for negligence based on the defendant’s failure to exercise reasonable care in curtailing the use of illegal drugs on the festival grounds.) Competent and diligent security can aid in such curtailment.

In fact, hiring competent and diligent security is essential. When I say “competent and diligent security”, I mean not some guy who is a regular at the bar and is getting paid in free beer that is being consumed as he working his shift. Instead, I mean someone who has experience in entertainment security and, perhaps most importantly, is sober. Being competent does not only mean keeping people out of certain places with brute force. It also means being able to intelligently think through a scenario and act accordingly. The Rhode Island Station Nightclub fire which killed 100 people is a great example of the competent security requirement. As the fire intensified, one security guard blocked a critical exit typically meant for band members only, likely because those were his limited instructions.[2] It was not until a panicked individual forced past the security guard that he reluctantly abandoned his post. It is unknown how many people’s lives may have been saved had that security guard allowed patrons to exit through the stage door.

Outdoor concert producers or promoters will have to be cognizant that if challenged, they will have to meet their initial burden that they did indeed provide adequate security measures. A good example of such met burden occurred in Marrero v. City of New York, et. al., where after the complainant made allegations of injuries sustained at an outdoor Ozzfest concert, the respondents submitted evidence showing that meetings were held with the NYPD to assess security plans proposed, that 215 personnel to secure the concert were provided, and that security was sufficient for a crowd of almost three times the actual crowd in attendance. Marrero v. City of New York, et. al., 102 A.D. 3d 409, 958 N.Y.S.2d 51 (2013).

Conclusion

Outdoor musical entertainment can be loads of fun and can produce some of life’s best memories and experiences. In planning those events, however, it is critical to perform a well-reasoned cost/benefit analysis so that risk is not allocated disproportionately. It is not worth risking injury, loss of life, and ultimate litigation just to try to get a few extra dollars in anticipated revenues by overcrowding, cutting corners on safety or security, or forging ahead in opposition of mother nature. True unanticipated accidents may happen, however, with the right amount of planning and risk management, there is no reason a successful outdoor event of any scale cannot be accomplished.

Bryan T. Kroes is a senior associate attorney with Hurtado Zimmerman SC and is a founding member and Treasurer of the Wisconsin Entertainment Lawyers Association. For more information, e-mail him at bkroes@hzattys.com or call him at 414-727-6250.


[1] An enormous debt of gratitude must also be given to Andrew Lukowski and Attorney Yu Ha Kim for their assistance with this article.

[2] Barylick, John. Killer Show. ForeEdge. 2012. P. 73-74.

Not the Same Old Song: Mechanical Licensing Collective Offers New Blanket License for Digital Uses of Music

the mlc logo

Songwriters, lyricists, composers, and music publishers now have a new and ideally more consistent way to collect their fair share of mechanical royalties from streaming and download services in the U.S.

On Jan. 1, the Mechanical Licensing Collective, or MLC, began full operations by offering its new blanket mechanical license, allowing access to its public search for musical works, and opening registration for its online portal.

The MLC marks a significant milestone in a long battle to ensure that songwriters, composers, lyricists, and music publishers receive fair payment for the exploitation of their music in the digital and streaming age.

Copyright law historically was predicated on the idea that music would be enjoyed through a physical product. The technology driving music use, however, progressed at a rate much more quickly than the law and, as such, loopholes were discovered when various types of music delivery were developed that were not dealt with in the law. Congress revised copyright law in the late 1990s to account for digital downloads, but soon thereafter, streaming services (e.g. Spotify) increased in popularity, until those services became one of the primary vehicles for music consumption.

Since streaming was not specifically dealt with in copyright law, digital-service providers set up their own royalty-payment systems, which in turn, meant far less money would be paid to songwriters, composers, lyricists and publishers. For example, one stream could yield between 1/3 to 1/2 of a penny. Record companies, song performers, music publishers, and songwriters all take a share of each stream.

Seeing declining product sales and downloads together with an increase in music consumption through streaming, many artists and advocacy groups became outspoken that resulting minimal royalties were unfair and made it difficult for musicians and songwriters to make a living from their music. To remedy the matter, Congress unanimously passed the Music Modernization Act of 2018, which revised copyright law by establishing a new compulsory blanket licensing system for digital-service providers offering permanent downloads, limited downloads and interactive streaming.

Under the MMA, the Register of Copyrights was directed to designate an entity to administer the new license, in addition to developing and maintaining a database of musical works that is both publicly available and comprehensive. In 2019, the Register of Copyrights designated the MLC as that entity, and Jan. 1, 2021 was set as the date the MLC was charged with offering the blanket license.

To understand exactly what the MLC administers requires an understanding of copyright law as related to musical works. Every musical work or “song” contains two distinct copyrights: 1) the composition, which is comprised primarily of music, including any accompanying words, and 2) the sound recording, which is the recording or fixation of performance of a composition. There can be many sound recording copyrights, but only one composition copyright. For example, the song, “I Will Always Love You” was written by Dolly Parton. Dolly and her own music publishing company, Velvet Apple Music, own the composition copyright. When Whitney Houston covered the song, her record label obtained a copyright in her sound recording, but not in the composition itself. The MLC only licenses musical compositions, but not sound recordings.

There are several types of licenses for musical works. The MLC, though, is only dealing with mechanical licenses, which are licenses that allow a musical composition to be reproduced and distributed, without accompanying visual images. Traditionally, that right had applied to physical medial such as vinyl, CDs or cassettes, but it also applies to digital media. The MLC does not administer a license for music that accompanies visual images, such as what is offered by YouTube. The MLC also only deals with interactive streaming, which lets listeners choose whichever song they would like to listen to.

As to the nature of the blanket license itself, the MLC administers one license designed to permit a licensee to use any composition in a particular catalog. Without a blanket license, the licensee must individually obtain from each applicable copyright owner a license for every song it wishes to use on its platform. As pre-MMA practices demonstrated, obtaining licenses individually was not practical. The blanket license mechanism is much more efficient and is similar to the way musical performing-rights organizations such as ASCAP, BMI, SESAC and GMR administer licenses for public performances of compositions.

Because of the global nature of the Internet, music can be broadcast and received with ease nearly anywhere in the world. The MLC, however, only operates to collect mechanical royalties in the United States.

On the Jan. 1, 2021 license availability date, any digital music provider that offers interactive streaming or downloading may obtain a blanket license directly from the MLC. Examples of existing companies include Spotify, Apple Music, or Amazon Music. The license is not limited to existing companies and new companies seeking to provide digital-music services can connect with the MLC to obtain a license for their intended services.

As songs are streamed or downloaded using digital-music providers, the provider sends a use report to the MLC, which in turn employs that data to calculate applicable royalties due to songwriters, lyricists, composers and publishers. The royalties the MLC will pay to songwriters and publishers fall under 17 U.S.C. §115 and the MMA requires the Copyright Royalty Board to establish rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and willing seller. This standard is intended to accurately reflect a fair price for mechanical royalties and replace the policy-based rates previously set by the streaming services themselves.

If songwriters, lyricists, composers, or music publishers have registered with the MLC, meaning they have assigned a right to the MLC to collect mechanical rights on their behalf, the MLC will distribute royalties on a monthly basis. This monthly payment calendar is much more frequent than the quarterly or even bi-annual payments some songwriters receive from other royalty sources. The key, however, is that the songwriters, lyricists, composers and publishers must register with the MLC and register all compositions for which they would like the MLC to collect royalties. This includes providing the MLC with information on songwriter, lyricist, composer, and publisher identities and ownership splits and making sure the MLC has other unique song-identification information. If a songwriter is already represented by a large publisher, that publisher may already be registered with the MLC to collect royalties on the songwriter’s behalf. It is still a good idea, however, for a songwriter, lyricist or composer to check their registered compositions to ensure there is no missing or incorrect data. There is no fee to register with the MLC to begin collecting royalties.

Although still in its infancy, the MLC has already done a fantastic amount of work prior to Jan. 1, 2021, including a data-quality initiative and numerous webinars, to ensure a smooth transition into full operations. While it may take a little time to adapt to the new procedures, one this is for certain – the MLC is a much-needed and welcomed step in the right direction to ensuring that songwriters, lyricists, composers and music publishers are adequately compensated for their compositions.

For more information on the MLC, including access to the public search of registered compositions or to register as a songwriter, composer, lyricist or music publisher, go to: https://www.themlc.com/.

 

Bryan Kroes is and associate attorney with Hurtado Zimmerman SC and is a founding member and treasurer of the Wisconsin Entertainment Lawyers Association. For more information, email him at or call him at 414-727-6250.

THE CASE ACT: New law could provide an affordable remedy for copyright infringement

copyright imageCopyright protection may not be an everyday topic for construction and design companies, but it certainly should be considered as part of a comprehensive business plan.

Any person or company that owns copyrightable material, whether a construction company, architecture or design firm or marketing firm, may enjoy the copyright protections afforded under U.S. copyright law. Protectable material can include architectural works and designs, construction contracts, progress photos and videos, proprietary documents, and marketing materials, to name a few.

Under the typical copyright enforcement system, an owner of copyrighted material that wants to pursue an action for infringement is limited to federal court as the venue for those claims. The process can be not only lengthy but also burdened with significant attorneys’ fees and costs. For many creators of content that is otherwise properly protected under copyright law, the prospective costs of litigation are prohibitive. Effectively, some copyright owners are left without an affordable remedy to enforce their rights.

Starting in 2016, legislators started exploring a way to provide copyright owners with an affordable remedy for small copyright-infringement and misrepresentation claims. The first attempt was the CASE Act of 2016, which was never passed. On May 1, 2019, two companion bills were introduced in the House of Representatives and Senate, known collectively as the Copyright Alternative in Small-Claims Enforcement Act of 2019, or the CASE Act of 2019 for short. The act sat idle for the rest of 2019 and most of 2020, without good prospects. Then, in an interesting turn, the act was added to Congress’s omnibus spending and COVID-19 relief bill, which was passed on December 21, 2020, and signed into law on December 27, 2020.

Still very much in its infancy and without having been tested, the CASE Act could provide copyright owners with an affordable remedy to enforce their rights.

Copyright claims board and scope

The CASE Act sets up a voluntary small-claims board within the copyright office to give copyright owners an alternative method to resolve claims for all categories of copyrighted work. Under the act, three full-time copyright claims officers will serve on the copyright claims board and not fewer than two full-time copyright claims attorneys will assist in the administration of the board. The copyright claims officers must have substantial experience in the evaluation, litigation or adjudication of copyright-infringement claims and have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works.

The board will make rulings with respect to claims, counterclaims, and defenses of copyright infringement under the copyright law as well as claims for misrepresentation.

Damages

Allowable damages before the board would be up to $30,000, with a subcap of $15,000 in statutory damages per work infringed, if the work was registered in a timely manner pursuant to copyright law. If the work was not registered in a timely manner, statutory damages would not exceed $7,500 per work infringed, or a total of $15,000 in any one proceeding. The board would also be able to award actual damages and lost profits for infringement in accordance and may consider, as an additional factor in assessing damages, whether the infringer has agreed to cease or mitigate the infringing activity. Also, the board would be able to further order that an infringing party ceases its infringing conduct.

Except in cases of bad faith, the parties would bear their own attorneys’ fees and costs. Should it be found that a party acted in bad faith by pursuing a claim, counterclaim, or defense for a harassing or other improper purpose, then the board could award reasonable attorneys’ fees and costs to any adversely affected party in an amount of not more than $5,000.

Statute of limitations and registration requirements

Claims will need to be commenced within three years after they accrue. There will be two conditions required before filing a case: a) the owner of the copyrighted work at issue must first deliver a completed application, deposit, and fee for registration to the copyright office, and b) the registration must have either been issued or not refused. The board may not issue a determination until a) a registration certificate has been issued by the copyright office, submitted to the board, and put on offer to the other parties to the proceeding, and b) the other parties have been provided an opportunity to deal with the registration certificate. If the registration certificate for the work is pending, the proceeding will be stayed until the certificate can be submitted to the copyright claims board.

Administration

Proceedings before the board will be conducted at the offices of the board without requiring in-person appearances by parties or witnesses. Instead, proceedings will take place by means of written submissions, hearings, and conferences carried out through Internet-based applications or other telecommunications. By the time of this writing, the practical mechanics for such hearings have not yet been fully developed.

Opt-out feature

A special feature of the CASE Act is its opt-out feature, under which a respondent has sixty days from the date of service of a complaint to provide written notice that it opts out of the process. If the respondent opts out in a timely manner, the proceedings will be dismissed without prejudice.

Smaller claims

Consideration has also been given to very modest claims having total damages not exceeding $5,000, exclusive of attorneys’ fees and costs. In those cases, the CASE Act instructs the register of copyrights to establish regulations to provide for review by at least one copyright claims officer, rather than the entire board.

Failure to pay damages and appeals

If a party fails to pay damages or otherwise comply with the relief granted by the board, the prevailing party has one year after the date of final determination to apply to the United States District Court for the District of Columbia, or any other appropriate federal U.S. district court, for an order confirming the relief awarded.

In practice

Although the CASE Act may be appealing in theory, it remains to be seen how the administration of cases will proceed in practice. There may still be some administrative hurdles.

At first glance, a process relying heavily on written submittals may not be attractive to people – unrepresented litigants, for instance – who are not used to standard court proceedings.

The opt-out feature could also be problematic. If a respondent simply opts out, the copyright owner’s sole avenue for relief becomes the federal district court they sought to avoid in the first place.

As the age of COVID has taught us, there remain technological impediments to remote hearings. These include dropped calls, distorted video and audio, and delayed signals that can make electronic communications difficult or impossible. A court hearing plagued with technical defects could unduly result in prejudice toward whichever party is having the issues.

Additionally, file-transfer protocols and file-size limits could cause trouble with exhibit uploads, storage, and presentations. For example, architectural drawings tend to be very large not only when they’re in a physical format but also when they’re submitted as electronic files. Compression into another file type could affect a critical component of the work at issue or even be presented as tampering or spoliation of evidence.

Another concern may be board capacity and backlogs. Depending on popularity, a single three-person Copyright Claims Board and two-attorney support staff may not be enough to handle a multitude of small cases in a timely fashion.

Despite some process concerns, the CASE Act deals with a great many procedural issues and, in a year when it seemed like no issue could bring political parties together, has garnered bipartisan support to reform a copyright enforcement system that was not practical for the very people who need most to benefit from its protections. The CASE Act, therefore, could be a much-needed resource for content creators and small businesses alike, giving them affordable and attainable protection of their copyrighted works.

For more information about the CASE Act, or copyright protections presently available, reach out to Bryan Kroes at Hurtado Zimmerman SC or call 414-727-6250.