In 2007, Stefanie Lenz uploaded to YouTube a 29-second clip of her 13-month-old son dancing to Prince’s “Let’s Go Crazy.” Universal Music Corp., the owner of the copyright of the song, filed a takedown notice in accordance with the Digital Millennium Copyright Act, or DMCA, to YouTube. In response, YouTube removed the post.
What followed was a legal battle that ultimately was decided before the U.S. District Court for the 9th Circuit. The court’s decision in Lenz v. Universal Music Corp. drastically changed the landscape of digital music.
Panelists Dan Dymtrow, an executive at Maverick, Dina LaPolt, an entertainment attorney at LaPolt Law, Wade Leak, senior vice president and deputy general counsel to Sony Music Entertainment, and Valerie Pensa, vice president of marketing at RCA Records, discussed the ruling in Lenz and the effect it has had on the music industry over the past decade.
The impact of Lenz
“Before the implications of Lenz, when there was an infringing file, we’d pull it down,” LaPolt said. Her firm, along with other businesses, the Recording Industry Association of America, or RIAA, and the International Federation of the Phonographic Industry, or IFPI, in Europe, all worked to remove infringing files from the internet.
The 9th Circuit ruling put an end to the quick removal of infringing files and introduced “fair use” analysis into takedown decisions, Leak said. “The case literally tells the content owner that before you issue that takedown, you have to do some type of fair use analysis.”
The thought process has changed from preventing “leaks” of material to assuming there will be leaks, Dymtrow added.
“Nowadays with this issue, we’re planning for a leak, just as much as we’re planning for release,” Dymtrow said.
The music industry has tried to come up with solutions to prevent leaks, a large number of which come from physical copies of the music, Leak said.
“For the artist and company there’s still a lot of revenue in physical out there,” Leak said. “Certain countries, like Japan and Germany, have robust physical markets. It would be a mistake to not still leverage that market.”
But physical copies aren’t the only source of leaks, Dymtrow said. “We’ve held back the music part, but it’s still our artwork, the package, the track list, and all of that stuff is out there, and it’s going to be all over the internet as well,” Dymtrow said.
Pensa said there have been leaks in the marketing material and that music videos have also been leaked. “We have had video leaks that are not approved by the artist. Some of the people in the company haven’t even seen the music video and it is all over the internet,” Pensa said.
Confiscating cellphones of employees on set for music video shoots has been one solution, LaPolt said, and having agreements in place for people who need to have their cellphones on the set is one way to prevent leaks.
Another option is to look at streaming music, LaPolt said, especially with its increasing percentage of market share.
“Sixty-two percent of revenue from recorded music in the U.S. is now from streaming, and it’s going up,” LaPolt said. “By 2024, we estimate it will be over eighty-five percent.”
LaPolt said there are three sources of streaming music: 1) non-interactive digital streaming, like Pandora; 2) SiriusXM and any corresponding terrestrial internet radio; and 3) interactive digital streaming services, such as Spotify, Apple Music, TIDAL, and YouTube.
The introduction of Spotify and other streaming services has eliminated the arguments the record companies frequently faced before courts, Leak said.
“One of the things we kept confronting in the early days of this litigation was courts saying, ‘There’s no alternative. You don’t offer a legitimate alternative to these people.’ So we’re happy now that that argument is gone,” Leak said.
Reclaiming fair use as a defense
The 9th Circuit’s opinion in Lenz changed how entertainment and music lawyers had long viewed fair use, LaPolt said. Before Lenz, LaPolt said she would advise clients that they could not use fair use as a defense when another artist sued them for infringing on their copyrighted materials. But Lenz changed that stance.
“The 9th Circuit said that thinking it’s a defense is actually a misnomer,” LaPolt said. The opinion said, “Although the traditional approach is to view fair use as a form of defense, it’s better to view it as a right granted by the Copyright Act of 1976.”
This interpretation of fair use is what has led to the current struggle to prevent leaks before the official release, Leak said.
“You couple that with the fact that the Copyright Act says that fair use applies to unpublished material—which his why what we’re talking about requires us to go through that fair use analysis.”
Having a system in place for fair use analysis was much different in 2007 when Lenz was first ruled upon, Leak said.
“In 2007, the number of things that were online with potential leaks was so minimal compared to what they are [today]. The landscape changes and law and business try to catch up to it,” Leak said.
With the increased amount of potential leaks being posted at anytime, Leak said it might be time to look at fair use again.