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Work For Hire: Testimony Before Congress
Michael Greene, President/CEO - The Recording Academy
By MusicDish
(more articles from this author)
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Prepared Testimony of Michael Greene

President/Chief Executive Officer
National Academy of Recording Arts & Sciences, Inc.
3402 Pico Boulevard
Santa Monica, California 90405

May 25, 2000
U.S. House of Representatives, Committee on the Judiciary
Subcommittee on Courts and Intellectual Property

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to appear here today to discuss with you the recent amendment to the work made for hire provisions of the Copyright Act, the activities of the National Academy of Recording Arts & Sciences, and how the recent passage of the amendment to Section 101 impacted not only the members of the Recording Academy, but every member of the creative music community.

The Recording Academy is a non-profit organization comprised of more than 15,000 rank-and-file music industry professionals. These professionals include, among others, artists, songwriters, producers, musicians, and engineers representing such diverse music genres as classical, bluegrass, jazz, polka, rock and rap. While we are perhaps best known for our annual awards ceremony and telecast, the GRAMMY Awards, the Recording Academy is also a staunch advocate for the creative music community on a number of fronts, including music education in our nation's schools, archiving and preservation, and cultural enrichment, such as supporting governmental funding for the arts.

Recognizing the number of important witnesses appearing today, I will make my comments brief, and focus them on the detrimental impact that the 11th hour insertion of an amendment to the Omnibus Budget Bill which added the phrase "sound-recordings" to the Copyright Act will have on the creative music community.

The Recording Academy unequivocally believes the new amendment should be repealed pending further study by Congress, and hearings on this matter should be scheduled as soon as possible after repeal. We believe this in part because of the lack of full discussion and debate which should have preceded the passage of the amendment, and in part because of the detrimental effect it will have on recording artists.

But despite our strong position on the subject, we are somewhat conflicted about our appearance here today.

Our organization is comprised of several strata of the creative and technical community within the music industry. The Academy's constituency is recording artists, songwriters, musicians, producers, engineers and other professionals in the industry. As a result, it would be disingenuous for us to propose that in every instance the performer or producer can enjoy the benefit of termination rights under the Copyright Act.

But what I am here to say is that the Recording Academy, unlike any other music industry organization, is uniquely qualified because of the diversity of our membership, to offer you and your colleagues, Mr. Chairman, an informed perspective that you might not obtain from the representatives of the multi-national recording conglomerates who, for the most part, are owned by foreign corporations.

We are here today to ensure that Congress is informed so that a conscientious and fair debate will ensue. To date, such a deliberative and fair debate has not occurred. The performers and those representing performers were shut out of the process when Section 101 was amended last year. Quite simply, no one consulted or took into consideration the interests and points of view of the performers.

By the time the industry noticed the addition of sound-recordings as a 10th category to definition Number Two of works made for hire under the Copyright Law — in an amendment buried within an unrelated Satellite Home Viewer Improvement Act — it was already embedded in the Omnibus Bill's conference report. And at this point, the bill had already been through all the compromises and negotiations that are part of the legislative process. It's ironic that with all the debate on the bill's other provisions, no one consulted the creative music community on this one.

As you undoubtedly know, Mr. Chairman, a work-for-hire can arise in one of two ways, both of which are described in Section 101 of the 1976 Copyright Act. The first way is through definition Number One: the classic employer-employee relationship scenario. All works created by employees as a part of their duties for the employer become works for hire and are automatically owned by the employer. Definition Number Two is not so straightforward, however, since it applies to non-employees or independent contractors. These persons can only create works for hire when they sign a written contract and when the written contract contains the words "work-for-hire" and, most importantly, where the work being created fits into one of the categories listed in definition Number Two.

Prior to this amendment, definition Number Two did not include a category for sound recordings. Hence, independent contractor artists who signed contracts in which sound recordings were described as works for hire did not give up the copyright ownership in their works even when the contract language stated otherwise.

Case law supports the contention that if a type of work is not specifically mentioned in the law, then it cannot be a work made for hire (except, of course, for the classic employer-employee situation). So without a substantive change in the law, sound recordings could not be works-for-hire. Now, all of that has changed. There is no ambiguity. The addition of the new category of sound recordings as works made for hire is a major substantive change that should have required extensive deliberation and debate. Without such deliberation and debate, an informed decision by Congress is impossible.

A substantive change of this nature, at the very least, alters the economic equation that underpins the artist's relationship with the record company and tilts the balance even more in favor of the record company. At worst, this change tosses out long-established principles of copyright law that were fully debated and considered.

A repeal of the amendment, and a full debate is what we are calling for today.

While I am not here to discuss the dark-of-night method in which the amendment made its way into law, and the fact that its author, Mitch Glazier, a House Intellectual Property subcommittee staffer, who was later hired by the Recording Industry Association of America — the lobbying group for the major record conglomerates that stand to benefit the most from the new law — it is clear that the new law classifying sound recordings as works-for-hire must be repealed. It is not a technical change, nor is it one that merely clarifies a long-standing industry practice, as Glazier has repeatedly remarked.

Moreover, contrary to assertions offered by the RIAA and others, the addition of sound recordings to the list of works made for hire was not made necessary by an amendment to the cyber-squatting provision added by Senator Hatch. That provision would have created liability for using, without permission, a living person's name as a domain name with the intent to profit by selling the domain name. In fact, there is another section of the bill which creates an exemption for using such a name in connection with a copyrighted work.

Since the passage of the Copyright Act in 1976, the record companies have demonstrated their insecurity over the status of works-for-hire by requiring the musicians whose work they seek to exploit to sign documents declaring every sound recording during the last two decades to be works-for-hire.

These contracts also typically state that if a court of law finds particular works not to be "for hire" as stipulated by the copyright law, then the works are considered to be assigned to the record company. This type of clause has almost invariably been non-negotiable. Only very high-prestige artists would, on rare occasions, ever be granted the right to re-acquire their sound recordings outside of the reversion provision of Section 203. Most artists have simply been forced to sign these agreements. The playing field, as usual, could not have been more tilted in favor of the record labels.

Historically, record company lawyers have registered the songs of artists as works-for-hire with the U.S. Copyright Office, which is why the Big Five record conglomerates — speaking through the RIAA — continue to assert that the amendment to Section 101 merely "clarified" industry practice. However, for the most part, artists are not aware of these registrations. Record companies do not provide the artist with a copy of the copyright registration certificate, or notice thereof, therefore, it is inconsequential that no artist has ever contested the registrations. And in any event, a copyright registration is no more than a presumption, and one which can be rebutted in court. The registration is not the determining factor as to whether a work is or is not a work made for hire. Furthermore, the issue does not come to fruition until 2013, the first year that a sound recording may statutorily revert to the original author under the 1976 Act.

Copyright Office Register Marybeth Peters has said she views the amendment as a substantive change because it adds a whole new category. And Mr. Chairman, the Recording Academy wholeheartedly supports your statements to numerous media outlets that Congress is supposed to hold hearings before passing legislation, not afterwards.

If allowed to stand, the recent amendment will have major consequences for all artists, songwriters, producers, engineers and other rank-and-file talent in the music industry. Some industry observers have described the insertion of the amendment as a preemptive strike by the record companies to further solidify their position that the rights they have obtained to sound recordings are not subject to termination under the Act. But I'll speak more to that later.

We at the Academy have had many artists tell us that they feel particularly bruised by the passage of the new law. One even remarked that after toiling for a record company, delivering many albums under a largely onerous recording contract weighted heavily in the favor of the label, she felt there was some light at the end of the tunnel: She would be able to get her sound recordings back, because under the Copyright Act, they would revert to her in the future. But those hopes have been dashed by the prospect that future works will now remain the property of the record company unless the new law is repealed.

One thing that may not be clear to the casual observer of the music industry when discussing legislation that affects the rights of those in the music community, is that the RIAA and the Recording Academy are not the same. We have different interests and constituencies. The RIAA predominantly represents the interests of the five major record companies. The Recording Academy, as I have mentioned, represents the creative and technical community — the artists, the producers, the songwriters and other rank-and-file members of the music industry.

As you are aware, the RIAA supports the amendment to Section 101. The Recording Academy does not.

And it should be noted that this is not the first time that the RIAA has attempted to trump the rights of recording artists through legislation.

Last year, the RIAA led the charge for new legislation that would have carved out an exception in the Bankruptcy Law to make it more difficult for musicians to declare bankruptcy. The record companies’ desire to change the bankruptcy law was based on their claim that some musicians were declaring bankruptcy as a way to exit from existing recording contracts. Although musicians are more scrupulous than the RIAA gives them credit, this notion on the RIAA’s part is a result of how onerous some recording contracts can be.

And the RIAA recently announced it will begin to collect royalties on behalf of recording artists. In essence, the RIAA, with its record conglomerate membership, will control the manufacturing, distribution, media placement of artists’ works as well as the collection of royalties.

The passage of the new amendment, the aforementioned bankruptcy law effort and the establishing of a royalty collection business, are just a few examples of the unmitigated power the record companies exert over the creative music community.

It also illustrates how some on Capitol Hill have become accustomed to relying on the RIAA for an artist's perspective on certain issues. And while there are times when the Recording Academy agrees with the RIAA, there are times when we have different positions. As I have stated, the issue we are discussing today is clearly one of the points on which we disagree.

This new law will likely further increase the ranks of destitute artists who either failed to create that memorable blockbuster hit song or whose careers were not effectively marketed by the record label. It also impacts the successful artist whose songs become standards and have a long industry life. By losing the right to obtain control of their recordings and the future stream of income generated by the recording, artists are being sent the message that they are powerless against the big music conglomerates.

Clearly, the playing field between an artist and a record company is very unequal.

While a few artists are powerful enough to insist that ownership of their sound recordings remain outside the work-for-hire position, the overwhelmingly vast majority do not have that power. With the work-for-hire provisions now altered, it will be more difficult for even successful artists to negotiate to regain ownership of their sound recordings and, even if they can, the term of the original transfer from artist to record company will be longer as a result of this amendment.

New artists, those who do not yet know the value of their recordings and the very people the reversion rights provisions were intended to protect, are particularly impacted. They do not have the clout to negotiate favorable ownership provisions and will lose control and ownership of their sound recordings for eternity. No featured recording artist would ever entertain the notion that he or she works for the record company, no more than a novelist would ever consider that he or she works for a publishing company. It is simply a fiction to even contemplate that the record companies conceive the artists’ songs, performances, image, looks, etc., before the featured artists walk through the record company's doors.

The facts are that featured artists often write the song, they write or supervise the music arrangement, and they deliver the performance. For featured artists, the record companies do little, if any, of the foregoing. All featured recording artists know that in contracting with the record company they have, at a minimum, partnered with the record company. No featured artist is an employee of the record company.

And, as the Academy and music fans have observed over and over, many artists see their careers typically take off during the first five years of their notoriety, only to experience a decline in ensuing years. The decline sometimes results in them being cast off by the record labels in favor of the next big thing.

The main purpose of the law giving artists the ability to recapture their works in the year 2013, is to give them a so-called second bite of the apple. Prior to this amendment, artists who signed unfavorable contracts, or artists who found themselves in the position where their original works were no longer being exploited by the recipient of the original copyright grant, could exercise their termination rights. They will be unable to do this for future works unless the change to Section 101 is repealed.

The record companies and their representatives would have you believe that if the new law is set aside, then every creative participant on the album — the producer, the arranger, the engineer, and each background musician and vocalist — would claim "co-author" status under the copyright law, each with an equal right to authorize the commercial use of that recording. Thus, argue the record companies, terminations would be messy, confusing and chaotic with multiple parties simultaneously vying to exploit the work.

This "Chaos Theory" the record companies are advancing is merely confetti being tossed into the air to hide reality: All non-featured performers, such as side musicians, back-up singers and engineers, are hired to work on a song with the contractual understanding through standard industry agreements that their contributions are made without claims of authorship. That has been the standard practice forever.

It is ridiculous to assert, as the record company representatives have, that the recent change in the copyright law was necessary to address this issue. We believe that the copyright law might need a much more narrow amendment taking into consideration the nature of these side artists, producers, and other contributions.

Four of the 10 categories in the work made for hire section deal with textual material. The book industry had these placed in Section 101 to protect them in very limited instances, such as the creation of a translation.

Pre-amendment contractual understandings meant that featured artists could exercise their rights to terminate their record companies' ownership of the sound recordings and become sole owners, giving them the right to sell their works to any other entity.

This work-for-hire issue has actually been stirring for almost a decade in record industry legal circles. An article published in the 1994 edition of the Entertainment, Publishing And The Arts Handbook warned that "record companies must defuse this time bomb — that is, the ability of artists to act on their rights — before it’s too late" by lobbying for a work-for-hire sound recording amendment to the Copyright Act. This further supports the premise that this is not a technical amendment. This is a strategic plan that the record companies have been trying to advance for many years.

While the Recording Academy is not promoting this conspiratorial tone, we believe that now is the time to address the many copyright-related concerns that will impact the individual artists in the years ahead.

I am sure you have all heard, Mr. Chairman, the analogy that if a motion picture is widely viewed as a work-for-hire, why then shouldn't a sound recording be held to that same standard. We believe this is a specious comparison.

A film is a huge collaborative effort often involving hundreds of people. A record company often only deals with one recording artist, who frequently writes, performs and produces the work. For a record company to claim, simply because it gives an artist an advance and puts up a little marketing money that it then owns in perpetuity that artist's work and copyright, is a personal affront to all the creative members of the industry, some of whom you see sitting around the hearing room today.

The standard record agreement, as we all know it today, sets forth that all monies advanced to the artist are recoupable from the artist's royalties. There is no guarantee that the record company will effectively or seriously market the product, or that the artist will be paid any benefits. The artist is usually committed to seven or more albums with the same label, with the label being able to stop the process at any time, and with the artist not having that right at all. All in all, this relationship is patently unfair.

Record companies bill the artists for every penny spent; and any monies that the companies have expended are really just loans to the artists, "advances" as they are called in industry vernacular. They are not one-time payments offered at specific work intervals. The predicate of a work-for-hire relationship is that the individual performing the work is paid a one-time fee — and one that's not recoupable. The hallmark of all recording contracts is that all monies paid to the artists are recoupable by the record companies. Therefore, the artist entitled to termination rights is being paid on the basis of royalties due to him or her, royalties which many times do not exist because the record company has not recouped its advances from sales of the artist's product. We have all heard the horror stories of artists who have sold millions of albums, but have been told by the record company that their projects are still in the red and the label has not yet earned its money back.

As the son of a Big Band leader and as a musician and recording artist myself, I am all too aware of the frequent collision of art and commerce in the rough music industry seas which all artists must navigate while pursuing their dreams and developing their craft. Record companies control every aspect of the artist's destiny — whether it's deciding how much money to spend on marketing an album, which song to promote to radio stations, or in some instances, whether to release an album at all.

Prior to the amendment to Section 101, an artist could always take some solace in the thought that after a finite period of time, his or her treasures — those sound recordings which embodied his or her heart, soul and sweat — would someday be subject to reversion and made available to his or her children and other heirs as part of their estate. But the new amendment has extinguished those embers of optimism, and it is up to you, Mr. Chairman, and your colleagues to rekindle that hope and return ownership of the sound recordings to the artists.

Artists have very few tangible assets, and it troubles the Recording Academy that the few assets that artists do have — copyright ownership of their works among them — are being tossed aside surreptitiously without debate.

It has been said that artists are a fairly powerless group against the big record conglomerates and I would encourage all of you here today to think about the artist when deciding such earth-shaking legislation like a change in the Copyright Law.

Thank you.

This testimony is published with kind permission from the
National Academy of Recording Arts & Sciences

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