LYRICAL RESTRAINT: LYRICS SITES AND COPYRIGHT INFRINGEMENT

By Sam Guthrie, University of Virginia School of Law

I. Introduction

On October 9, 2012, a federal district court ordered the owners and operators of www.lyricsdownload.com and other websites that publish unlicensed lyrics to pay $6.6 million in damages to publishers for willful copyright violations.1 In a nearly identical case, Peermusic, III, LTD v. Motive Force LLC,2 the owners of www.lyricwiki.org agreed to pay $150,000 in damages to settle copyright infringement claims for hundreds of thousands of . Most recently, on November 11, 2013, the National Music Publishers Association (“NMPA”) sent take-down notices to fifty lyrics sites, demanding that the owners either obtain licenses or remove the infringing lyrics from their sites.3 The landmark cases filed by Peermusic bolster the NMPA’s warning salvo with a volley of legal precedent. That is to say, lyrics site owners who do not obtain licenses for the song lyrics they publish may find themselves embattled against the NMPA in courts unsympathetic to their cause. The battle over publication rights to lyrics springs from the seemingly obvious assumption that song lyrics are valuable independent of songs. Indeed, lyrics must have inherent value: lyrics spawn lucrative , which may incorporate all of the lyrics and none of the of a song. It is less obvious, however, that published lyrics, which lack acoustic accompaniment, could still generate revenue outside of songs. This is especially true for songs written in the last decade, as record sales have declined dramatically, while demand for more immersive, audio-visual experiences, like concerts and music videos, has risen.4 In other words, music customers are less content than ever to purchase physical copies of songs, which sometimes include printed lyrics; thus the value of lyrics increasingly depends on other kinds of products, like music videos and concerts. To exaggerate the case, consider the sensational song and music video, “Wrecking Ball.” If the recording studio scratched out the spectacle of Miley Cyrus swinging nude atop the wrecking ball, and muted the sound of Ms. Cyrus’s voice, leaving the audience with only the lyrics of the song printed starkly on a computer screen, the market for the studio’s product would shrink asymptotically. In fact, the market for music and music videos dwarfs the market for lyrics: in 2009, one of the top lyrics sites generated $10 million in revenue, 5 whereas the music

1 Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009). 2 Peermusic, III, LTD. et al. v. Motive Force LLC et al., No. 2:09-cv-01137 (W.D. Pa. Jan. 4, 2010). 3 Alex Pham, NMPA Targets Unlicensed Lyric Sites, Rap Genius Among 50 Sent Take-Down Notices, BILLBOARD.BIZ (Nov. 11, 2013), http://www.billboard.com/biz/articles/news/legal-and- management/5785701/nmpa-targets-unlicensed-lyric-sites-rap-genius-among. 4 BART CAMMAERTS ET AL., THE LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE, MEDIA POLICY BRIEF 9: A CASE FOR PROMOTING INCLUSIVE ONLINE SHARING 7 (2013). 5 See Christian Kerstetter, Don’t Forget the Lyrics!: A (Fair Use) Defense of Lyrics Websites, 40 AIPLA Q.J. 339 (2012) (“in 2009, MetroLyrics.com (one of the top lyrics sites) generated $10 million in revenue.”). industry generated $16.5 billion in revenue in 2012.6 Nonetheless, lyrics sites have the potential to profit, either from advertisements or user subscriptions.7 While lyrics sites have not yet perfected the model for generating revenue, the market persists, and many of the fifty sites targeted by the NMPA sell advertising space.8 Much is at stake in the war between music publishers and lyrics sites. If music publishers and the NMPA prevail, users of lyrics sites may see an end to the free, crowd-sourced sites on which they rely. As one music law professor noted in an interview with the Washington Post, “the copyright-holders have the law on their side . . . It’s too bad, though, because these sites do a service for people.”9 That is particularly true for free sites like Rap Genius, which does not sell advertising space and publishes extensive user- and artist-written annotations for its lyrics. While existing copyright law provides a rigid, bright-line rule against unlicensed use of copyrighted song lyrics, music listeners’ demand for lyrics sites necessitates a different approach. Lyrics sites satiate public thirst for knowledge of correct song lyrics. If music publishers refuse to license song lyrics to websites at a reasonable rate, then the legal status quo may deprive music audiences of the listening experiences they desire. This note outlines the statutory law governing copyrighted song lyrics, discusses the seminal case brought by music publishers against lyrics sites, and argues that a compulsory licensing scheme balances the financial interest of music publishers and the cultural imperative to disseminate knowledge.

II. Statutory Framework

Two kinds of copyrights protect songs: sound recording copyrights and copyrights. Under the Copyright Act of 1976 (“the Act”), 17 U.S.C. § 101, sound recordings are

“works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.”10

6 Eric Pfanner, Sales Rise, and Digital Revenue Gets the Credit, N.Y. TIMES (Feb. 26, 2013) http://www.nytimes.com/2013/02/27/technology/music-industry-records-first-revenue-increase-since- 1999.html?_r=0. 7 Indeed, in 2012 the popular lyrics site “Rap Genius” received “a $15 million investment from Andreessen Horwitz, one of Silicon Valley’s most prominent venture capital firms.” Alex Pham, NMPA Targets Unlicensed Lyric Sites, Rap Genius Among 50 Sent Take-Down Notices, BILLBOARD.BIZ (Nov. 11, 2013), http://www.billboard.com/biz/articles/news/legal-and-management/5785701/nmpa-targets-unlicensed-lyric-sites- rap-genius-among. See also Pfanner, supra note 6 (“Every week there is some new potential income for lyrics…The revenue is not significant now, but it’s just the beginning.”). 8 Alex Pham, NMPA Targets Unlicensed Lyric Sites, Rap Genius Among 50 Sent Take-Down Notices, BILLBOARD.BIZ (Nov. 11, 2013), http://www.billboard.com/biz/articles/news/legal-and- management/5785701/nmpa-targets-unlicensed-lyric-sites-rap-genius-among. 9 Caitlin Dewey, The Music Industry is Going After Rap Genius—and the Law Is on Its Side, WASH. POST (Nov. 12, 2013), http://www.washingtonpost.com/blogs/style-blog/wp/2013/11/12/the-music-industry-is-going-after-rap- genius-and-the-law-is-on-their-side/. 10 17 U.S.C. § 101. In other words, “the sound recording is the aggregation of sounds captured in the recording,”11 or the actual, fixed sounds that the listener hears when she plays the song on her phone or laptop. By contrast, the musical composition consists of the unfixed elements of the song, including rhythm, harmony, melody, and any accompanying words.12 Musical composition copyrights thus protect song lyrics. While it is possible for one person to own both the musical composition copyright and the sound recording copyright for a song, frequently record companies own recording copyrights, while music publishers hold composition copyrights.13 For both kinds of copyrights, the Act provides exclusive rights to copyright holders:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.14

Under section 106, therefore, copyright owners have something of a legal monopoly over their copyrighted works, subject only to the limitations of sections 107 through 122, none of which readily apply in the case of lyrics sites. Commonly, however, would-be infringers claim safe harbor under the fair use provision of section 107, which provides in pertinent part, “the fair use of a copyrighted work, including such use by reproduction in copies . . . or by any other means specified by [section 106], for such purposes as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright.”15 Moreover, section 107 states,

In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-- (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work;

11 T.B. Harms Co. v. Jem Records, Inc., 655 F. Supp. 1575, 1577 (D.N.J. 1987). 12 See UNITED STATES COPYRIGHT OFFICE, CIRCULAR 56(A); 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2.05[D]. 13 Ben Sisario, In Music Piracy Battles, Lyrics Demand Respect Too, N.Y. TIMES, Nov. 11, 2013, http://www.nytimes.com/2013/11/12/business/media/in-music-piracy-battles-lyrics-demand-respect-too.html?_r=0 14 17 U.S.C. § 106. 15 17 U.S.C. § 107. (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.16

While the list of fair use factors is non-exhaustive, in general lyrics sites’ use of copyrighted works does not constitute fair use.17 While the first factor weighs in favor of nonprofit sites like Rap Genius, it weighs against the many sites that sell advertising for profit. The second factor also weighs against lyrics sites, as courts consider use of creative, fictional works such as songs less permissible than use of nonfiction works, like newspaper articles. The third factor is particularly ominous for lyrics sites, which inherently aim to publish copyrighted lyrics in their entirety for the benefit of their users. Finally, the effect of lyrics sites’ use is to saturate the market for lyrics, potentially diminishing the financial value of published lyrics to naught. The Act also provides for statutory damages, which take the place of actual damages at the election of the copyright owner. Under 17 U.S.C. § 504(c), a copyright owner may elect before final judgment to recover statutory damages for all infringements of any one work, “in a sum of not less than $750 or more than $30,000 as the court considers just.”18 That is, for all claims of infringement concerning a particular work, aggregate statutory damages range from $750 to $30,000. In the case of willful infringement, however, the court may increase the award up to $150,000. Likewise, in a case where the infringer proves that she “was not aware and had no reason to believe that . . . her acts constituted an infringement of copyright,” the court may reduce the minimum award to $200.19

III. A Claim Against Lyrics Sites: Peermusic v. LiveUniverse

As lyrics websites began to flourish just recently, case law concerning copyright claims against such sites is only beginning to blossom. A 2010 case, Peermusic III, LTD v. LiveUniverse, Inc. (“LiveUniverse”), brought by music publishers against the owners of www.lyricsdownload.com, was the probably first of its kind.20 Reflecting the tenuousness of lyrics sites’ legal position, defendants in LiveUniverse opposed the suit primarily by delay rather than legal argument. The court ultimately entered a default judgment against the defendants after numerous pretrial delays, but several court orders shed light on the court’s likely ruling should it have decided on the merits. In LiveUniverse, the plaintiffs were a number of music publishers holding copyrights to millions of songs by thousands of artists.21 The plaintiffs sued LiveUniverse and Brad Greenspan, the owners and operators of www.lyricsdownload.com,

16 Id. 17 But see Kerstetter, supra note 5, at 363 (arguing that each statutory factor weighs in favor of fair use). Strangely, Kerstetter argues that “because the market for song recordings is unlikely to be affected negatively by lyrics websites,” the fourth factor weighs in favor of fair use. In the case of song lyrics, however, it is the musical composition, and not the sound recording, that might be negatively affected by lyrics websites. That is, “fair use” publication of song lyrics deprives the composition copyright owner of revenue for publishing those same lyrics. 18 17 U.S.C. § 504(c)(1). 19 17 U.S.C. § 504(c)(2). 20 Kerstetter, supra note 5, at 344. 21 Complaint at ¶ 5, Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009). www.completealbumlyrics.com, and www.lyricsandsongs.com, alleging that the infringing websites copied, distributed, and publicly displayed “the lyrics from hundreds of thousands of [the plaintiffs’ songs], without permission or licenses although such licenses [were] readily available.”22 Moreover, the plaintiffs averred that the defendants “knowingly assist[ed] and induce[d] their website users’ infringement of [the plaintiffs’] rights” by allowing those users (1) to contribute copyrighted lyrics to the lyrics sites, and (2) to incorporate copyrighted lyrics on the users’ own websites.23 Despite the allegations concerning website users, the plaintiffs did not bring a separate action against any individual user. Pursuant to the statutory damages provision of the Copyright Act of 1976, the plaintiffs in LiveUniverse sought damages in the amount of $150,000 for each instance of infringement.24 In light of the defendants’ publication of “over 700,000 lyrics with hundreds more added daily,” the plaintiffs essentially aimed to decimate the defendants’ websites. More concerning, an award of that amount would obliterate any unlicensed lyrics site that published enough lyrics to be useful to its users. After the LiveUniverse defendants ignored multiple discovery requests and court orders, the plaintiffs moved for imposition of sanctions, and eventually for default judgment against the defendants. Due to the defendants’ litigation strategy (or lack thereof), the court’s final judgment does not provide significant insight into the court’s reasoning. In a tentative ruling on the plaintiff’s motion for preliminary injunction, however, the court evinced its general line of thought. To prevail on a motion for preliminary injunction, a plaintiff “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”25 First, the court addressed the plaintiffs’ likelihood of success on the merits of the case. Concluding that the plaintiffs established ownership of the infringed material, and that the defendants directly infringed the plaintiff’s “exclusive right to reproduce, publicly distribute, and publicly display the lyrics to [the infringed] songs” under 17 U.S.C. § 106 (1), (3), and (5), the court concluded that the plaintiffs had shown a likelihood of success on the merits.26 The court’s holding as to rights (1) and (5), reproduction and public display, respectively, would obtain in virtually any claim against lyrics sites. As to exclusive right (3), however, the court was probably referring to the defendant’s practice of providing users with pre-written computer code, called “widgets,” which allowed users to add hyperlinks to the lyrics on the users’ personal websites.27 Notably, the court did not consider the defendants’ publications “derivative works” under 17 U.S.C. § 101, though in the case of websites that publish annotations to lyrics, the published lyrics could constitute derivative works.28

22 Id. 23 Id. 24 Id. at 44. 25 Order on Motion for Preliminary Injunction at 2, Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009) (quoting Am. Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009)). 26 Order on Motion for Preliminary Injunction at 2-3, Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009). 27 Complaint at ¶ 36, Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009). 28 See 17 U.S.C. § 101 (“A ‘derivative work’ is a work based upon one or more preexisting works, such as a . . . musical . . . or any other form in which a work may be recast, transformed, or adapted. A work The court next noted that the plaintiffs were entitled to a presumption of irreparable harm, which the defendants had not rebutted. Considering the balance of equities, the court cited a Ninth Circuit case for the premise that “a defendant who knowingly infringes another’s copyright ‘cannot complain of the harm that will befall it when properly forced to desist from its infringing activities.”29 With respect to the public interest, the court cited another Ninth Circuit case, axiomatically concluding “[t]o neglect the public interest in the protection afforded a copyright is to forget the purpose of copyright law.”30 Finally, the court held that the requested injunction was overbroad, as it targeted songs not owned by the plaintiffs, but the court granted the plaintiff’s motion as to the songs at issue in the case.31 On October 9, 2012, the court issued a permanent injunction incorporating the terms of the preliminary injunction, and awarded to the plaintiffs statutory damages of $12,500 for each of the 528 songs that the plaintiffs showed to be infringed, for a total of $6.6 million, plus costs and attorneys fees.32 Notably, in determining the amount of statutory damages, the court requested information as to the defendants’ ordinary licensing fees, which the defendants did not provide.33 In future cases, courts may find such evidence relevant in determining the amount of statutory damages, notwithstanding licensing fees’ closer relationship to compensatory damages.

IV. Finding a Chord: Compulsory Licensing

While the plaintiffs in LiveUniverse heralded the award as a victory for music publishers and alike,34 the ultimate effect of such judgments is not entirely clear. The nature of song lyrics makes them an awkward fit for the rigid protections of the Copyright Act of 1976. For instance, the publication of other literary works, such as books, magazines, and newspapers, creates independent markets for those works. When someone infringes a book copyright, the infringer directly harms the market for that book and deprives the author of a sale. Song lyrics, on the other hand, depend on the songs in which they are written and the general demand for music. When a website infringes a composition copyright by publishing unlicensed song lyrics, the website may actually bolster the market for that song by enabling familiarity among users, who may then venture out to see a concert, benefitting the composition copyright holder,35 or decide to purchase a copy of the song, benefitting the recording copyright holder.36 Despite the optimism of some scholars,37 the fair use defense to infringement probably does not apply to unlicensed lyrics websites, due to the nature of the copyrighted works and the consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a ‘derivative work.’”). 29 Order on Motion for Preliminary Injunction, supra note 25, at 4 (quoting Design Sys. v. Avant! Corp., 125 F.3d 824, 830 (9th Cir. 1997)) (internal quotations omitted). 30 Order on Motion for Preliminary Injunction, supra note 25, at 4 (quoting Triad Sys. Corp. v. S.E. Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995)). 31 Order on Motion for Preliminary Injunction, supra note 25, at 5. 32 Final Ruling on Motion for Default Judgment at *4, Peermusic III, LTD. et al. v. LiveUniverse, Inc. and Brad Greenspan, No. CV09-6160-GW (C.D. Cal. Aug. 24, 2009). 33 Id. at *1-2. 34 Press Release, Arent Fox, Arent Fox Wins Landmark $6.6 Million Copyright Damages in Judgment in Song Lyric Infringement Lawsuit (October 11, 2012), available at http://www.arentfox.com/newsroom/press-releases/arent-fox- wins-landmark-66-million-copyright-damages-judgment-song-lyric. 35 See 17 U.S.C. § 106(4). 36 See 17 U.S.C. § 106(3). 37 See generally Kerstetter, supra note 5. fact that lyrics sites publish lyrics in their entirety. Under the legal status quo, courts must treat song lyrics as they treat other literary works, even though lyrics occupy a distinct niche in the market for the written word. To be sure, the Copyright Act provides composition copyright holders the same rights as the copyright holders of other written works. As Justice Stewart wrote in 1975, “[t]he immediate effect of our copyright law is to secure a fair return for an author’s creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.”38 The general public good would best be served, however, by a compulsory licensing scheme, such as the compulsory license for phonorecords under 17 U.S.C. § 115. Specifically, section 115 allows people to make and distribute phonorecords of nondramatic musical works by obtaining a compulsory license, thus circumventing the strictures of section 106.39 The license applies to musical compositions, but only includes distribution of phonorecords of such works, defined as “material objects in which sounds . . . are fixed by any method . . . and from which the sounds can be perceived, reproduced, or otherwise communicated.”40 In short, section 115’s compulsory licensing scheme allows for an artist to “cover” a previously released work, so long as the artist does not fundamentally alter the work. If the legislature adopted a compulsory license for publication of song lyrics, then composition copyright holders and artists would profit from lyrics sites, and the general public would benefit from the subsequent dissemination and availability of song lyrics. A compulsory license would also obviate concerns about record companies hoarding the rights to song lyrics, or charging users exorbitant fees. While some websites currently have a sufficient user base to fund the attainment of licenses, either through donations or advertising revenue, a compulsory license must take into account the significant barriers to entry in the song lyrics market. Namely, lyrics sites benefit from a network effect; that is, the more lyrics a site publishes, the more users it gains, and vice versa. If licenses are not priced affordably, new lyrics sites will have difficulty attracting the necessary funds to build viable databases. Without an affordable, compulsory license, barriers to entry, coupled with the exclusivity of copyright holders’ rights, may deprive millions of listeners the musical experience they desire, whether to Miley in their cars, or at home watching a controversial awards ceremony.

38 Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). 39 17 U.S.C. § 115. 40 17 U.S.C. § 101.