Home Uncategorized SoundExchange Files Lawsuit Against Muzak, DMX Alleging Underpayment To Artists, Rightsholders

SoundExchange Files Lawsuit Against Muzak, DMX Alleging Underpayment To Artists, Rightsholders

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image from www.neotoday.org
As a new
lawsuit filed by SoundExchange against Muzak
shows, antiquated laws and rulings governing digital
music
will continue to be challenged in the
courts
, unless and until lawmakers take action.

Digital music performing rights organization SoundExchange has
filed a lawsuit against Muzak alleging underpayment.  The
lawsuit arises from Muzak’s parent Mood Media’s acquisition
of DMX, a Texas-based company that provides music for
cable and satellite television networks; and then paying
for sound recording using Muzak’s older, lower market rates.

Michael Huppe, president and chief executive officer,
SoundExchange issued this statement:

Muzak is playing a shell game to cheat artists
and rights holders out of royalties.
It is bad
enough that a handful of legacy services are
permitted to pay below market value
for the music at
the heart of their business; but with this latest move, Muzak
adds insult to injury by attempting to extend this unfair
rate to newer, ineligible services.

 “Muzak’s attempt at gaming the system
highlights the ineffectiveness of having different rules and
rate standards
for music service companies.

It gives older companies an unjustified
competitive advantage
, and leaves the door wide open
for attempts at abuse.”

SoundExchange provided this technical background for the case:

“The passage of the Digital Millennium Copyright Act of 1998
(DMCA) set forth under the law that most subscription services
(e.g. those services that deliver music content to cable and
satellite television providers) would have their statutory
rates set by a fair market value standard (i.e. willing buyer,
willing seller). When the DMCA was passed, a small handful of
“pre-existing” services, including Muzak and their provision of
music to Dish Network, were grandfathered into an outdated
standard for setting royalty rates – a standard that frequently
results in artists and labels being paid less than a fair rate.

 In 2011, Muzak was purchased by Mood Media who, in turn,
also purchased DMX, a Texas-based company that also provided
music for cable and satellite television networks, including
DirecTV. DMX had previously been licensing music under the
regular fair market standard. In 2014, Mood Media moved DMX’s
cable and satellite music service contracts (including DirecTV)
to Muzak, thereby converting a large part of DMX’s former
business into a faux “pre-existing” service and dramatically
slashing what it paid for the use of the music it was
providing.”

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