Legal Issues In a Livestreaming World

This article appeared in Entertainment Law & Finance, your monthly source for real-world news and strategy from major players in entertainment, contract and intellectual property law — serious analysis of the issues and case law that affect your practice.

 

It is no revelation that the entire music industry is struggling due to the unexpected arrival of COVID. From the cancellations of shows and festivals to album release delays, COVID created a ripple effect the likes of which have been unparalleled — felt by musicians, venue owners, promoters, record labels, music publishers, booking and management agencies — and the list goes on. The large players such as the major labels, music publishers, agencies and talent buyers, while not emerging from this pandemic unscathed, will most certainly survive.

However, many musicians and independent music businesses will not fare as well as their larger-player counterparts. Because live performances with an audience have been next to impossible since March 2020, many musicians have pivoted to livestreaming performances for their social media audiences to experience.

While the livestreaming of music performances is not an entirely new phenomenon, the COVID crisis has transformed the live performance landscape, compelling artists from around the world to reach their fanbase by producing “quarantine streams,” in which they livestream their sets on platforms such as Facebook/Instagram, YouTube and Amazon-owned Twitch. Make no mistake, even when this pandemic is vanquished, talent will continue to livestream shows to their social media audiences due to the downright ease of setting up a livestream, along with monetization opportunities that will continue to expand.

Given this sudden pivot to livestreaming over social media, unsurprisingly many questions have arisen from talent — from “Can I perform a cover song on Facebook” to “Can I play a DJ set over Twitch,” to “Am I completely covered with respect to livestreaming content on YouTube since YouTube has Content ID?”

As can be expected, each of these questions requires thorough analysis, involving an understanding of basic music licensing principles and knowledge of the licenses which the platforms have in place. Additionally, platforms have different interpretations of the licenses needed to host livestreams. Some other interesting issues regarding livestreaming will certainly begin to present themselves over the upcoming months, such as ownership issues and whether certain kinds of livestreaming earnings may be commissionable.

All of these questions will be explored in this two-part article which is organized as follows: 1) the explosion of livestreaming content; 2) music licensing in connection with audio-visual works; 3) archived versus non-archived livestreams; 4) a summary of the licenses the major livestreaming platforms currently have along with the tech specifics of each; 5) monetization policies; and 6) legal issues related to ownership, revenue sharing and commissions. Part One covers issues 1-4; Part Two, in the February 2021 issue, will conclude the analysis with issues 5 and 6.

The Explosion of Live Streaming

Once creatives were forced into quarantine last March, livestreaming content exploded; just from March to April, the sector increased by 45%. Twitch, the largest livestreaming platform, now boasts a total of approximately 645 billion hours watched per month with its livestreaming watch hours increasing by 50% in March. The Music and Arts category on Twitch rose by 524% that month from an average of 92,000 views to 574,000 views. Facebook livestreaming usage increased significantly as well — by 50% during March.

Despite the sheer increase in livestreaming, particularly music performances, it is not a new phenomenon. Major festivals such as Lollapalooza, Austin City Limits and Coachella have been livestreaming their performances on YouTube for years. In 2019, Coachella was livestreamed for both weekends of performances, involving three stages and more than 60 performers, with a viewership of over 82 million during week one. And though not covered in this article, it is worth noting that artists are also hosting livestream performances on gaming outlets like Minecraft and Fortnite. In fact, over 12 million live viewers watched Travis Scott’s Astronomical show on Fortnite, which brought 27.7 million unique participants.

A Crash Course In Basic Music Licensing Principles

Generally, for an audio-visual work to be able to legally include music, the producer of such a work will need to secure two licenses: a master-use license for the sound recording and a sync license for the musical composition embodied in the sound recording.

The master-use license will be issued by the label or distributor that controls the sound recording. If an artist is signed to a label, the label will issue the master-use license. If the artist is unsigned and is using a distributor or an aggregator like CD Baby, Tunecore or Distrokid, it may be that such a distributor or aggregator will issue the master-use license (ultimately depending upon the terms and conditions of the distributor/aggregator’s policy), or the artist may issue the license, herself.

The sync license will be issued by the music publisher or publishing administrator that controls the musical composition embodied in the sound recording. If the artist is signed to a publisher or uses a publishing administrator, then those parties will typically issue the sync license. If the songwriter uses an aggregator, depending on the one used, either the aggregator or the songwriter would issue the sync license. Both of these licenses will define the use of sound recording and musical composition in the audiovisual work — the amount of the work used in connection with the project, scope of the use and compensation for the use. This process is not always the “be-all end-all,” particularly when concerning user-generated content (UGC) on streaming platforms (third party uploads of videos containing works they do not own the rights to). This shift from having to secure licenses with each rightsholder began with the establishment of YouTube’s Content ID system, which allows rightsholders to manage how their works are used on the platform.

The rights and licenses involved with livestreaming build off of the same principles as outlined above, though the array of licenses needed are dependent upon the type of livestream occurring: 1) a pure livestream that disappears following the performance; or 2) a livestream that is archived on a platform following the conclusion of the performance.

Two Types of Livestreams

Pure Livestream (Not Archived)

If a livestream performance is not archived on a platform following its conclusion (meaning the video cannot be replayed), two licenses may be implicated. In the event a person is livestreaming a sound recording that she does not own or control (like a DJ set), she will need a master-use license from the label/distributor that owns/controls the particular sound recording. This comes into play if an artist wishes to perform a livestream on her own website in which she is utilizing other parties’ sound recordings. Alternatively, if such an artist performs the livestream over a social media platform, the platform will need to have master-use license language in its agreements with the labels and distributors that own or control the pertinent sound recordings, or the platform must have a blanket license with labels that allows labels to choose how their works are used on the platform (which can be facilitated through detection and copyright management technology). Note that while some of the livestreaming platforms have entered into agreements with various labels and distributors that may include master-use rights, the scope of such deals may have time restrictions or multiple song restrictions pertaining to their catalogs that can prevent the livestreaming of non-controlled masters, particularly in connection with DJ sets.

On the music publishing side, if the artist is covering a song that she does not own or control, the artist will not need a sync license because the audio-visual work disappears upon the conclusion of the performance. The exception to this rule is if a party pre-records a performance and later replays the performance via livestream (this scenario is classified as an archived livestream). However, the platform that exhibits the livestream will need public performance licenses with the various performing rights organizations such as ASCAP, BMI, SESAC and GMR because the livestreaming of a musical composition constitutes a public performance. Also note that if the artist’s exploitation of non-owned or controlled musical compositions during a livestream is theatrical or dramatic in nature, public performances licenses will not cover these uses, as these licenses do not grant grand rights. In such a case, the platform would need to have agreements with the relevant music publishers covering grand rights and in the event the artist plans to exhibit the theatrical performance on her website, she would need to request licenses from the relevant publishers.

On a practical note, it is possible in YouTube’s and Twitch’s settings to broadcast a livestream without it being archived on the platforms.

Archived Livestream

If a livestream is archived on a platform and is available on demand following the performance’s conclusion, meaning it remains on the artist’s page or channel on the platform, three licenses may be potentially implicated. The sound recording implications are the same as with a pure livestream. In the event the artist performs a cover over a livestream that is later archived: 1) the platform will need to have sync license language in their agreements with music publishers; 2) the platform will need to have blanket licenses with music publishers so the music publishers can choose how their works are used on the platform (which is facilitated through detection and copyright management technology); or 3) the artist will need to secure the sync license herself.

Note that while matching technology like YouTube’s Content ID can recognize and match sound recordings to the applicable rights owners, it is much more difficult for the technology to detect and match musical compositions when they are covered by other performers. This issue will be covered in greater detail in the section to follow. Finally, the platform will need public performance licenses with the various performing rights organizations.

Each of the principal livestreaming platforms (YouTube, Facebook and Twitch) allows its users to archive livestreams. If a YouTube livestream’s length is less than 12 hours, YouTube can archive it on the user’s channel. Facebook automatically archives livestreams on a user’s Facebook page upon its completion, so if one wanted the livestream to disappear, the user would need to delete the archived livestream from her Facebook page.

Summary of Licenses In Place; Tech Overview

It is crucial to be aware of the licenses a livestreaming platform has in place and to have a basic grasp of each’s copyright management technology. For the purpose of this article, we focus on YouTube, Facebook and Twitch — and in that order because Facebook and Twitch have followed the same trajectory of YouTube, as will be seen below.

YouTube

YouTube has blanket licenses with the major performing rights organizations and pays out performance royalties to composers and publishers when videos containing music are viewed.

As a result of National Music Publishers Association’s (NMPA) settlement of its claims in the class action that was a companion case to Viacom v. YouTube, 676 F.3d 19 (2012), YouTube developed copyright management technology called Content ID, which allows certain rightsholders to be able to manage their intellectual property on the platform through YouTube’s Content Management System (CMS), as opposed to the platform or users being faced with the massive hurdles of requesting individual master-use and sync licenses from labels and publishers.

Rightsholders such as major labels and prominent aggregators have the ability to upload into Content ID the files that represent the various sound recordings from their respective catalogs, and also choose whether such intellectual property can be monetized (through ad revenue or revenue from YouTube Premium subscription fees), tracked or blocked when detected in user-generated content. Publishers, publishing administrators and publishing administrator aggregators with Content ID access have the ability to add the data pertaining to the musical compositions embodied in the sound recordings in CMS.

Content ID essentially operates as an IP database, prescribing unique “digital DNA” to each piece of IP (referred to as an “asset” by YouTube) that has been uploaded to its system. To illustrate, when a YouTube user uploads a video to the platform, that video is scanned against the files located within Content ID to see whether it contains any assets recognized by Content ID because a copyright owner previously uploaded the recording to Content ID, like a sound recording asset or composition share asset. If the uploaded video does contain one of these assets, the asset owners can choose whether to monetize, track or block their rights in the video. If asset owners choose different policies, for example — a major label chooses to block the video and the publisher chooses to monetize — YouTube will choose the strictest policy amongst the asset holders and will block the particular video.

For rightsholders who do not meet the criteria for Content ID access, such parties are forced to use an aggregator to upload their files into Content ID if they wish to monetize in connection with user-generated content. If these certain rightsholders do not wish for other users to exploit their IP, then they have no other choice than to submit DMCA takedown notices to YouTube.

Note that as it relates to livestreaming, because the data for musical compositions in Content ID is attached to a particular sound recording reference file, it makes it nearly impossible for covers uploaded to the platform to be detected by Content ID. Because the livestream recording is a different recording, it will differ in tempo, pitch and audio quality from the sound recording reference file, nearly guaranteeing that it will not be detected and matched to the relevant publisher rightsholder(s). YouTube has developed “melody match” software that is used in conjunction with Content ID to remedy this issue; however, it still needs considerable improvement because there is a considerable amount of unmatched cover videos on YouTube.

Facebook

Facebook works in a similar manner, though it is interesting to note that the platform is about six years behind YouTube as it relates to licensing and rights management. While the platform had blanket licenses with the major performing rights organizations, it found itself in “hot water” back in 2016. According to David Israelite, the CEO of the NMPA, in 2016: “In a recent snapshot search of 33 of today’s top songs, NMPA identified 887 videos using those songs with over 619 million views, which amounts to an average of nearly 700,000 views per video,” explaining the issue concerning Facebook’s failure to secure sync licenses with publishers and to provide a pathway for these rightsholders to monetize the use of their works — ultimately amounting to copyright infringement. See, “It’s Time for Facebook to Accept Songwriters’ Friend Request: Op-Ed,” Billboard (Oct. 27, 2016. As a result, Facebook began developing its own version of YouTube’s Content ID and Content Management System. Currently, the majority of the major music publishers have agreements in place with Facebook, which presumably cover sync rights in connection with short and longer- form videos.

There are two facets to Facebook’s copyright management technology: Audible Magic and Rights Manager. Audible Magic is a separate company that provides blocking services to record labels. If a label signs up with Audible Magic, it can choose to have the platform block the use of their sound recordings on Facebook. Platforms like Facebook also hire Audible Magic to assist with copyright compliance issues, presumably because the blocking technologies decrease the volume of Digital Millennium Copyright Act (DMCA) take-down notices that the platform has to manage. Audible Magic does not handle monetization of catalogs whatsoever.

To monetize on Facebook, the platform has developed its own version of YouTube’s CMS, which is referred to as “Rights Manager.” Rightsholders with access to Rights Manager can choose to: 1) block; 2) monetize; 3) apply attribution (which inserts a badge that links the user-generated video containing the rightsholders’ works to the rightsholders’ own content); or 4) report (which will send a copyright notice to the user who uploaded the video in question) in connection with the uses of their works on the platform. Facebook has the same issues as YouTube in connection with the detection of musical compositions in livestreams. Simply put, no company to date has perfected this type of detection and matching technology.

Facebook has also been riddled with controversy during the COVID-19 pandemic. Given that livestreaming increased by 50% on Facebook within a month of the pandemic lockdown and that the lack of education regarding licensing requirements for livestreaming, artists — particularly DJs — began experiencing take down or muting issues in connection with their sets. Additionally, artists and their teams became frazzled when Facebook made the following additions to its livestreaming guidelines: “We want you to be able to enjoy videos posted by family and friends. However, if you use videos on our Products to create a music listening experience for yourself or for others, your videos will be blocked and your page, profile or group may be deleted. This includes Live.”

Consequently, musicians and their teams became concerned that live music performances would no longer be allowed on Facebook beginning on October 1. While YouTube was certainly an alternate option for these musicians, because they had more Facebook fans than YouTube channel subscribers and, further, the extra layer of work that would need to be undertaken to convince fans to watch a livestream on YouTube, musicians were understandably frustrated.

After the musician and media backlash about the policy changes, Facebook issued the following clarification a couple of weeks later:

 “We want to encourage musical expression on our platforms while also ensuring that we uphold our agreements with rights holders. These agreements help protect the artists, songwriters, and partners who are the cornerstone of the music community — and we’re grateful for how they’ve enabled the amazing creativity we’ve seen in this time.

“Our partnerships with rights holders have brought people together around music on our platforms. As part of our licensing agreements, there are limitations around the amount of recorded music that can be included in Live broadcasts or videos.

“While the specifics of our licensing agreements are confidential, today we’re sharing some general guidelines to help you plan your videos better: Music in stories and traditional live music performances (e.g., filming an artist or band performing live) are permitted.

“The greater the number of full-length recorded tracks in a video, the more likely it may be limited.

In sum, Facebook is not banning artists and bands from performing livestream content.

While some questions remain about livestreaming on Facebook, at least for now there should not be an issue if an artist wishes to perform her original musical compositions on a livestream. And even if the artist wishes to cover a song, between Facebook’s licenses with most of the major music publishers, and the lack of detection technology relating to covers, at least for now what appears to be the worst case scenario is the artist’s receipt of a DMCA takedown notice from a songwriter or publisher who happened to catch the performance. DJs are not faced with the same situation; Facebook’s policies directly target a DJ performance as DJs are more likely to be livestreaming sound recordings they do not own and control and the performance of the non-owned music is the prominent feature of the livestream.

And because Audible Magic can identify sound recordings, it will likely result in the muting or taking down of the livestream when the non-owned sound recordings are streamed.

Twitch

Twitch has blanket licenses with the major performing rights organizations but many question whether the company is tracking the use of the compositions used on the platform so that performance royalties are paid out to the correct composers and publishers. Currently, Twitch has no sync licenses with music publishers as it pertains to the streaming platform, which it needs, as Twitch livestreams are archived. It also does not have a copyright management system for music publishers to promote the management and monetization of their catalogs. The platform has essentially been clinging to the DMCA safe harbor shield for dear life.

It is interesting to note, however, that Twitch has agreements in place with over 200 music publishers in connection with its separate karaoke app, “Twitch Sings.” Additionally, while Twitch partnered with Audible Magic to scan livestreaming content for unauthorized sound recordings, it did not use Audible Magic to scan video clips from livestreams sitting on the platform that were uploaded by users other than the livestreamer until June 2020. In fact, Twitch only changed its tune following the Recording Industry Association of America’s (RIAA) submission of over 2500 DMCA takedown notices to the platform in June.

To add to Twitch’s DMCA issues, on October 20, 2020, it sent notices to thousands of its users stating that some of their archived livestreams were removed from the platform due to copyright issues. Twitch users reacted by voicing their frustrations on Twitter, much of which were critical of music owners. Twitch essentially pitted musicians and livestreamers against each other — when both music owners and livestreamers should pin the blame solely on Twitch for refusing to properly license music.

Ultimately, Twitch is about 10 years behind YouTube and five years behind Facebook in terms of music licensing issues. Very recently, Twitch also announced a new feature, “Soundtrack by Twitch,” which provides pre-cleared music to its livestreaming users. This pre-cleared music is not coming in the form of a music library; rather, Twitch will be providing the music in a non-interactive manner on a separate channel from the livestream video. This means that when the video is archived, the pre-cleared music will not be able to be heard, since the music is being played on the separate channel. Twitch’s strategy is two-fold here: By not including the music in the livestream when it is archived, the platform is attempting to avoid securing sync licenses, and further, because the music is being used in a non-interactive way and will not be stored on the separate music channel, Twitch is attempting to avoid securing mechanical licenses.

Look for Part Two of this article, which will cover monetization policies and legal issues related to ownership, revenue sharing and commissions, in our February 2021 issue.

*****

Gwendolyn Seale practices entertainment law at Mike Tolleson and Associates in Austin, TX, where her practice consists of drafting and negotiating contracts related to music, film and sports entertainment, and assisting clients with copyright and trademark matters. In addition to her legal practice, she is on the board of Texas Accountants and Lawyers for the Arts (TALA), and runs the “Arts and Entertainment Legal Clinic,” which provides free consultations to professionals in arts and entertainment. This article is based on the author’s presentation and written materials at the November 2020 State Bar of Texas Annual Entertainment Law Institute. She can be reached at [email protected].

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