Majors pay out millions to settle Canadian mechanicals dispute

By CMU Editorial | Published on Wednesday 12 January 2011

The Canadian divisions of the four majors have agreed to pay $47.5 million in damages into the country’s songwriting community to settle that previously reported lawsuit filed by the estate of late jazz man Chet Baker in 2009 which alleged the big record companies were routinely failing to pay songwriters and publishers when their songs appeared on compilation albums.

The lawsuit claimed that major record companies in Canada frequently release compilations carrying recordings of songs without securing the appropriate licence regarding the literary and musical copyrights that exist in said songs (ie in the lyrics and musical score). Officially, the labels are assuming there will be no problem securing a mechanical licence for those songs, and are just putting off the paper work, and payment, until later, by plonking the name of the unlicensed track onto a “pending list”. However, lawyers representing the Baker estate claimed many label execs who follow this practice just hope no one in the songwriting or publishing sector will notice one of their songs has slipped through the net, meaning no royalty payment will ever have to be made.

The Baker estate’s lawyers claimed some 300,000 unlicensed works were now on the four major’s collective pending list, and pushed for their lawsuit to become a class action so that any songwriter with a song on that list would be due damages. Had the lawsuit gone all the way through court, and had the major labels lost, and had statutory damages been applied under Canadian copyright law, the damages bill for the country’s record industry could have been as high as $6 billion.

Though that was never likely to happen, the labels clearly took this lawsuit seriously, hence the multi-million dollar out of court settlement. According to reports the four majors will pay the following amounts in damages: Universal Music – $17.5million, Sony Music – $17.3 million, EMI – $7.3 million and Warner Music – $5.5 million. Assuming the settlement gets court approval, the Canadian publishing collecting societies CMRRA and SODRAC – who were initially named as defendants in the lawsuit – will now administer the distribution of the damages to songwriters whose works were on a pending list.

As part of the deal the four majors have also committed to review their internal processes for sorting out mechanical licenses on all releases.