The Pitch newsletter is a monthly update of legal issues and news affecting or related to the music, film and television, fine arts, media, professional athletics, eSports, and gaming industries. The Pitch features a diverse cross-section of published articles, compelling news and stories, and original content curated and/or created by Arnall Golden Gregory LLP’s Entertainment & Sports industry team.
“Art enables us to find ourselves and lose ourselves at the same time.” – Thomas Merton
AGG News
Decoding Intellectual Property Law for Video Game Developers
Video games are the ultimate interactive experience in intellectual property (“IP”), combining overlapping layers of copyrights, trademarks, licenses, “work made for hire” contracts, and publicity rights, all of which require careful consideration by a game developer to avoid legal issues and prepare the game for distribution. The legal documentation demonstrating the developer has the rights it needs to release the game, including all of its constituent parts, constitute the “chain of title” to the game — a necessary precursor to satisfy the warranties required by most distributors. This article will examine those layers more closely to help developers think proactively about their IP strategy and anticipate legal issues before they arise.
(Source: Arnall Golden Gregory LLP, January 18, 2024)
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Industry News
'Disney Settles Breach of Contract Suit From Film Financier TSG Over Accusations of “Hollywood Accounting”
Disney and 20th Century Studios have settled a breach of contract lawsuit from film financier TSG Entertainment, which accused them of withholding profits and self-dealing to boost subscriber numbers for their streaming platforms. The case centered on an independent audit of three films TSG invested in, including best picture winner The Shape of Water, that revealed it’s owed at least $40 million. This shortfall, the company alleged, caused it to take a worse position in its investment of Avatar: The Way of Water and deprived it of the cash necessary to exercise options to invest in other movies.
(Source: The Hollywood Reporter, January 16, 2024)
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Prince Estate Civil War: Heirs Battle in New Lawsuit Over Alleged Company Coup
A year after the legal battle over Prince’s estate was finally settled, the music legend’s heirs are now suddenly back in court again, battling amongst each other over allegations that certain family members are trying to wrongfully seize control. The lawsuit, made public Jan. 10 in Delaware court, amounts to a civil war among the members of Prince Legacy LLC, one of the two holding companies created to run the star’s $156 million estate. (Primary Wave, which owns the other half of the estate, is not involved in the dispute.)
(Source: Billboard, January 11, 2024) [Subscription may be required]
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Better Know Your Neighboring Rights — A Simple Guide to a Confusing Income Stream
Most songwriters understand the importance of affiliating with a performing rights organization (PRO), like ASCAP, BMI, GMR or SESAC in the United States — a critical step in making sure they can collect the royalties from public performances of songs they’ve written or cowritten. Even when signed to a publishing deal in which the publisher collects most revenue generated by songwriting, songwriters can still rely on collecting the writer’s share of public performance income from their PRO directly. Is there an equivalent for artists who are signed to record labels? Enter neighboring rights! “Neighboring rights” is simply the term used to refer to the public performance rights associated with a sound recording, which generates public performance royalties for artists and the sound recording copyright owner(s). The term comes from the concept that these rights are related to, or “neighbor,” the performance rights of songwriters. If you have performed on a sound recording (or are the owner or licensee of sound recording copyrights), you are likely eligible to receive “neighboring rights” royalties from the performance/broadcast of your recording around the world. This is where SoundExchange enters the conversation, but more on that below.
(Source: Billboard, January 11, 2024) [Subscription may be required]
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Division I Council Approves NIL Disclosure and Transparency Rules
A year after the legal battle over Prince’s estate was finally settled, the music legend’s heirs are now suddenly back in court again, battling amongst each other over allegations that certain family members are trying to wrongfully seize control. The lawsuit, made public Jan. 10 in Delaware court, amounts to a civil war among the members of Prince Legacy LLC, one of the two holding companies created to run the star’s $156 million estate. (Primary Wave, which owns the other half of the estate, is not involved in the dispute.)
(Source: NCAA, January 10, 2024)
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Amazon Is About to Eat the TV Universe
Mark your calendar: On Jan. 29, Amazon will unleash what one top advertising executive calls a “tornado” that will “upend” the streaming video landscape. The company will flip a switch and turn on ads for all of its Prime Video viewers. Users will have the option to pay $3 a month to remove the ads, but as the executive quips: “Almost no one will do that, are you kidding me?” The move will instantly turn Amazon into a streaming-ad juggernaut, and the largest ad-supported subscription streaming platform in the marketplace with tens of millions of users, leapfrogging the likes of Netflix in the process.
(Source: The Hollywood Reporter, January 10, 2024)
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158 Million Tracks Had 1,000 Plays or Fewer on Music Streaming Services Last Year. 45 Million Had No Plays at All.
For at least the past year, music industry leaders have voiced unease about the flood of tracks hitting streaming services. Some worry that, under streaming’s dominant pro-rata royalty system, professional and popular artists’ share of the royalty pie is being diluted by payments going to low-quality tracks. Others are concerned that high-quality artists will simply be drowned out by this tidal wave of new material – a fear heightened by news last year that an estimated 120,000 new tracks are being uploaded to streaming services every day.
(Source: Music Business Worldwide, January 10, 2024)
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Record Label Market Share Year-End 2023: Republic Sets High Water Mark; RCA, Warner Finish Strong
At the midyear point of 2023, Republic Records had put up a 12.46% current market share — defined as albums released in the past 18 months — which was a remarkable figure, and more than 4.5% higher than the second-largest label. Now, as 2023 has come to a close, Republic finished the year even higher, reaching an eye-popping 13.47% current market share for the year. That’s the highest full-year mark since at least 2015, when streaming began to lift the industry out of its post-CD doldrums, and more than 3% higher than its current share in 2022, which was a then-industry-leading 10.38%.
(Source: Billboard, January 10, 2024) [Subscription may be required]
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Copyright Office Proposes Streamlined Registration Option for News Websites
Copyright infringement is a significant problem for operators of news websites. As any journalism organization knows, producing original news content is a costly endeavor. All too often, sophisticated and amateur infringers alike copy content from news websites without permission and pass it off as their own – in many cases forcing legitimate news organizations to compete with their own content for views and advertising dollars.
(Source: JD Supra, January 9, 2024)
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Ohtani Contract: State Controller Calls for Congressional Intervention on Dodger Star's Deferrals
Shohei Ohtani's contract with the Dodgers could possibly give him an unfair tax break, according to the California state controller. In a statement released January 8 Controller Malia Cohen said Congress should narrow a loophole that could spare Ohtani from paying tens of millions in taxes. "The current tax system allows for unlimited deferrals for those fortunate enough to be in the highest tax brackets, creating a significant imbalance in the tax structure," Cohen said. "The absence of reasonable caps on deferral for the wealthiest individuals exacerbates income inequality and hinders the fair distribution of taxes. I would urge Congress to take immediate and decisive action to rectify this imbalance.
(Source: ABC7 Eyewitness News, January 9, 2024)
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Barstool Sports’ ‘Tasteless Effort to Lampoon’ Did Not Defame Michael Rapaport, Appeals Court Affirms
Barstool Sports’ online smack talk against actor Michael Rapaport was not defamatory, a federal appeals court held on Tuesday. The 53-year-old actor and comedian claimed in a 2019 amended complaint that the popular sports and pop culture website Barstool Sports, which had briefly hired him as a podcast host, defamed him in public statements and in a diss song video that portrayed him as a racist fraud, having herpes sores, and having physically abused his ex-girlfriend.
(Source: Courthouse News Service, January 9, 2024)
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Investigating Rock Radio With Rick Beato
How corruption and greed led to the downfall of the music industry with Rick Beato and Jim Barber.
(Source: Stars After Stars After Stars, January 9, 2024)
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Spotify’s New Royalty Model Has Arrived — Here’s a Hard Look at the Potential Revenue Consequences for Labels, Distributors, and Artists
Expectedly, the data shows that Spotify’s new system will leave DIY distributors with far more “ineligible streams” than majors Universal Music Group, Warner Music Group, and Sony Music Entertainment. The reason is simple: developing and emerging artists are streamed less than major label acts, with many non-major artists struggling to break Spotify’s 1,000-stream annual threshold.
(Source: Digital Music News, January 6, 2024)
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Inside the NYT-OpenAI Legal Skirmish: The Proof Is in the Prompting—Or Is It?
The New York Times sued the poster child of AI startups, OpenAI, and its partner Microsoft for copyright infringement. While it is not the first content creator to do so, the NYT lawsuit has captured much attention for being the most unique, and by some observers’ estimation, the strongest copyright action against OpenAI yet. Attorneys who spoke to Legaltech News had vastly differing views about the validity of the publisher’s infringement claims, and the verdict—or settlement—that would eventually follow. But they agreed on one thing: the immediate result of The New York Times Corporation v. Microsoft Corporation, OpenAI, Inc. et al. suit, which was filed in the Southern District of New York, is likely to be the most prescient reading of tea leaves for what’s in store for AI companies who are progressively finding themselves in the choppy waters of copyright litigation.
(Source: Law.com, January 5, 2024)
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Stage Directors & Choreographers Reach Pact With Producers on Union Protections for Associates
The national union of stage directors and choreographers has reached an agreement with producers on a new four-year pact being called a landmark for some theater workers, the groups announced today. The Stage Directors and Choreographers Society and The Broadway League, the national trade association for producers in the Broadway and touring industry, said in their announcement that the agreement, which covers directors and choreographers on Broadway and League productions in North America and the British Isles, now includes associate directors and choreographers.
(Source: Deadline Hollywood, January 3, 2024)
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Wall Street Analyst Known as Movie Theater Bull Turns “Increasingly Cautious on Stock Performance in a Down Box Office Year”
B. Riley analyst Eric Wold, who has stayed generally bullish on the movie theater business despite its recent trials, is now warning investors that the arrival of a “down box office year” has made him “increasingly cautious.” In a note to clients about his 2024 outlook, Wold wrote that he expects the stock performance of many companies in the sector to remain lackluster given the thinning of the overall release slate. About $1 billion in projected box office revenue has shifted from 2024 to 2025, he estimates, in large part due to the impact of the dual strikes in 2023.
(Source: Deadline Hollywood, January 2, 2024)
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Nirvana Must Face Child Porn Lawsuit Over Naked Baby on ‘Nevermind’ Album Cover, Appeals Court Rules
A federal appeals court on Thursday ruled against Nirvana and revived a child pornography lawsuit filed by the man who appeared as a nude baby on the cover of the band’s 1991 album Nevermind. Spencer Elden, now in his 30s, claimed the photo – one of the most iconic album covers in rock history – violated federal child pornography laws by displaying a sexualized image of a minor. But a lower ruled last year that he had waited far too long to bring his lawsuit. In a decision overturning that ruling, the U.S. Court of Appeals for the Ninth Circuit ruled that each new republication of the image – including a highly-publicized 30th anniversary re-release in 2021 – could constitute a new “injury” to Elden that would reset the statute of limitations.
(Source: Billboard, December 21, 2023) [Subscription may be required]
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Warner Bros. Discovery and Paramount Global Have Held Meeting to Discuss Possible Merger
The next entertainment mega deal may be on the horizon. Warner Bros. Discovery CEO David Zaslav and Paramount Global CEO Bob Bakish held a meeting this week, a source confirms to The Hollywood Reporter. The moguls discussed the possibility of a merger between the companies, though the source added that it was “very, very early” in talks. Spokespersons for both WBD and Paramount declined to comment.
(Source: The Hollywood Reporter, December 20, 2023)
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SiriusXM Sued for Allegedly Trapping Customers in Unwanted Subscriptions
SiriusXM is the target of a lawsuit from the New York attorney general’s office accusing the satellite radio company of trapping customers in subscriptions and finding ways to prevent them from cancelling. On Wednesday, New York AG Letitia James announced she’s suing SiriusXM after an investigation discovered that the company “forces its subscribers to call or chat online with an agent to cancel a subscription, then deliberately draws out those interactions as part of its strategy” to prevent subscribers from cancelling their packages. In a press release, James said that a company’s difficult cancellation process is illegal.
(Source: CNN, December 20, 2023)
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January 1, 2024 Is Public Domain Day: Works From 1928 Are Open to All, as Are Sound Recordings From 1923!
On January 1, 2024, thousands of copyrighted works from 1928 will enter the US public domain, along with sound recordings from 1923. They will be free for all to copy, share, and build upon. This year’s highlights include Lady Chatterley’s Lover by D. H. Lawrence and The Threepenny Opera by Bertolt Brecht, Buster Keaton’s The Cameraman and Cole Porter’s Let’s Do It, and a trove of sound recordings from 1923. And, of course, 2024 marks the long-awaited arrival of Steamboat Willie – featuring Mickey and Minnie Mouse – into the public domain.
(Source: Duke University School of Law, December 19, 2023)
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Mark Mulligan of MIDiA’s 2024 Music Industry Predictions: The Algorithm Is Not Listening
The MIDiA team pool their collective brainpower to formulate our end-of-year predictions.
(Source: Hypebot, December 18, 2023)
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NCAA, States Aim to Extend TRO Letting Transfers Play Immediately
One December 15, a bipartisan state-based coalition and the NCAA filed a joint motion requesting an extension ofa temporary restraining order against the NCAA's transfer policy. The motion would convert the temporary restraining order to a preliminary injunction, allowing student-athletes to play immediately without the possibility of the rule being overturned.
(Source: ESPN, December 15, 2023)
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Clash Over Luminate’s Record Sales Data Shows Importance Of Vinyl
After a decade and a half of growth, vinyl is now reestablished as a significant part of the music business, bringing in well over $1 billion in revenue last year. Over the past couple of months, an argument has been brewing over the reporting of vinyl sales data that indicates the renewed importance of vinyl to the industry, even as changes to sales data reporting planned for the end of 2023 carry the risk of delegitimizing the data.
(Source: Forbes, December 14, 2023)
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Live Music Thrives Despite Economic Challenges, But How Long Will The Good Times Roll?
Two years removed from the closure of businesses due to the coronavirus pandemic, the live music industry is booming and doing so at a record pace. The concert-going experience is so hot right now that we’ve reached a point where this period can only be described as a “Golden Age,” and rightfully so. Live Nation, the industry’s top promoter, is on pace for a record year with a reported revenue of $8.2 billion in the third quarter and a whopping $16.9 billion so far this year, a 36% increase from 2022, and other companies in the business are also seeing record figures as the world’s top artists continue to make up for lost time after being unable to tour due to COVID-19.
(Source: Pollstar News, December 13, 2023)
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Michael Jackson Estate Says Digital Sale of Early Jackson Recording Violates Estate Rights
The Michael Jackson estate isn’t happy about a recently-announced digital sale of an early Jackson 5 recording, warning that it “violates the Jackson Estate’s rights” and could lead to a lawsuit. A Swedish company called anotherblock announced Wednesday (Dec. 6) that it would digitally release a 1967 version of the song “Big Boy,” claiming it represented the first time Jackson’s voice had been put on tape. But in a letter sent Thursday, the estate’s attorney, Jonathan Steinsapir, pointedly advised the company about several problems that might “expose you to liability to the Jackson Estate.”
(Source: Billboard, December 8, 2023) [Subscription may be required]
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Music expresses that which cannot be said and on which it is impossible to be silent.
—
Victor Hugo
