A Copyright Ruling in California Could Spell Trouble for Oldies Radio

And for bars and restaurants that play old music, too.

If you live in California and listen to oldies radio, don't be surprised if your favorite station suddenly decides to change its format. Thanks to a court decision that came down this week, it might become a lot costlier for stations in that state to play music made before 1972.

The plaintiffs in the case are the Turtles, a '60s band best known for the song "Happy Together." (More precisely, the plaintiffs are Flo & Eddie, a successor act with a litigious history. They own the rights to the Turtles' name and recordings.) The defendant is the satellite-radio megalith SiriusXM. In a nutshell, Flo & Eddie argue that the broadcaster violated their rights each time it transmitted a Turtles record without their consent.

This is where things get complicated. There is a difference between owning the rights to a song and owning the rights to a recording. (Bob Dylan owns the song "It Ain't Me Babe"; Flo & Eddie own the Turtles' recording of it.) If you own a song, you're entitled to a fee when it is played on the air. If you own a recording, the situation is more complex. You don't get royalties when the record is played on AM or FM radio. You do get royalties when it's played on Internet radio, for reasons related to fears of piracy. Because of the way the law defines "digital transmission," satellite stations have to pay those digital fees too.

But federal copyright protection didn't apply to sound recordings before February 15, 1972. SiriusXM takes the position that this means it doesn't have to pay when it airs music recorded before then. (That covers pretty much everything by the Turtles.) But the Copyright Act of 1976 says the states can still set the rules for those pre-1972 rights. And under California law, copyright holders have "exclusive ownership" to those recordings until 2047. Flo & Eddie argued that this gives them considerable control over what could be done with those old Turtles records. In this week's decision, U.S. District Judge Philip Gutierrez agreed.

"Exclusive ownership," Gutierrez reasoned, means "the right to use and possess the recording to the exclusion of others." California's law, unlike the federal law, puts only one limit on this control: The rightsholder may not prevent someone from recording a remake. Since this is the only exception specified, the judge concluded that no other exemptions were intended. He therefore issued a summary judgment for Flo & Eddie on the parts of its suit related to SiriusXM's broadcasts. (Some other aspects of the case are still to be decided.) The ruling did not determine the damages, but SiriusXM may owe millions now not just to Flo & Eddie but to countless other owners of pre-'72 copyrights.

SiriusXM is likely to appeal the ruling. In the meantime, Flo & Eddie have filed similar suits in New York and Florida. Other copyright holders, including the major record labels, have launched lawsuits of their own.

Most media coverage of Gutierrez's decision has stressed the impact it will have on SiriusXM and on Internet services such as Pandora. But the case could conceivably threaten any ordinary AM oldies outlet that operates in California. The decision doesn't explicitly say AM and FM stations have to pay these fees, and you can expect broadcasters' lawyers to claim that this means they're off the hook. But the judge's whole argument is based on the idea that there are no exceptions to the copyright holder's rights save the single item spelled out in the state's statute. That suggests that radio stations—and, for that matter, restaurants and bars that play recorded music—will have to either start paying steep fees to play pre-'72 music or just take the easy road and play something recorded more recently. (I asked Dennis Wharton, a VP at the National Association of Broadcasters, if his group had any comment on the decision. He replied that they were still reviewing it.)

For years, the record industry has been trying to get Congress to make analog broadcasters cough up the extra fees that digital broadcasters have to pay. It may have just gotten what it wanted through the back door, but only for records that are more than 42 years old, and only in California. Watch for some bizarre distortions in the radio marketplace.