Going live on the right side of the law
The Covid-19 pandemic has caused the cancellation or postponement of the majority of concerts and live events, leading to an unprecedented crisis in the events and live music industry. In fact, although the streaming of music through dedicated platforms and apps has boosted the music industry in recent years, a great deal of an artist’s revenue still comes from live performances.
However, even during the months of lockdown, music did not stop, as the absence of live music events has stimulated artists and fans to reinvent the live concert experience by creating and supporting new platforms to discover, listen and share music while social distancing. The music industry has thus recently embraced new ways to encourage fan engagement by introducing the public to what could take the stage as the new normal for live events for a while: remote concerts and tours.
In this scenario, new legal challenges arise. Some of the most relevant issues concern the copyright protection of the works involved in streamed concerts, as well as the arrangement of the relevant compensations.
Firstly, the artist’s right to perform their copyrighted work in front of a public (whether in person or remotely) stands as one of the exclusive rights that a copyright owner is entitled to, along with the right to reproduce and distribute their work. But what if the concert is played by different artists, each from a different location and playing their own part and then synchronised to the moving images of each player or to different images? This is what happened, for instance, in the #Italiasuona flashmob recently organised by Filarmonica della Scala. The outcome of the performance will likely be considered a new audio-visual derivative work including a new live execution.
Thus, those who wish to share these kind of works with the public must check whether their new or existing agreements cover all the new normal rights (eg right of performance, right to communicate to the public through online means new executions of the same work, synchronisation rights over the concerned work). Not to mention the authorisation to use the image rights of each performer and share the content by each performer to maximise the audience.
The most important concern is making sure the livestreaming platforms involved only use authorised content
Further, such rights might run the risk of being infringed: the most important concern will be to make sure the livestreaming platforms involved only use authorised content in each online event. In this regard, some online music platforms and social networks have already been provided with algorithms which are able to automatically detect copyrighted music. Further, making the same performances of an artist available on demand, and thus on a continuous basis, would also involve the need to establish licences from right-holders, as well as licences related to synchronisation, in case videos are involved during the streamed events.
The compensation of artists and staff operating in the live industry is another crucial point of change for the future, which also needs to be taken into account in agreements. In this regard, although a different experience from the usual live concert atmosphere could justify a lower price for each single ticket sold, the online-based approach of such events will undoubtedly profit from a much wider and more diverse reach.
In this new era, the compensation of artists and staff has to be scrutinised under a different – and more digital – tax approach.
In principle, the OECD Model Tax Convention emphasises the need to assess the existence of a close connection between the income and the performance. Such a connection will generally be found to exist where it cannot be reasonably considered that the income would have been derived in the absence of a performance of these activities. The right to receive a remuneration for musicians and artists is strictly connected to their exhibitions.
These issues are high on the agenda of international music managers and artists, as well as tax professionals and authorities.
In this new era, the compensation of artists and staff has to be scrutinised under a different, more digital, tax approach
A recent case involved the analysis of tax treatment of income received by two musicians (tax residents of Germany and Switzerland) engaged by an Italian foundation to perform at two concerts outside of Italy.
According to the agreement concluded between the foundation and the international artists, though remuneration was due in connection with the participation in the concerts outside of Italy, all preparatory activities, such as concert rehearsals, had to be carried in Italy and no specific remuneration – nor a reimbursement of the expenses – was due.
The Italian tax authorities’ view can be summarised as follows: the income paid to the musicians is treated as income from artistic performance carried out entirely outside the Italian territory, regardless of the days present in Italy for concert rehearsals. Therefore, such income is not subject to Italian taxation in the hands of the non-resident musicians. As a matter of fact, concert rehearsals carried out in Italy should not be treated as separate activities from the concert (they are an essential part of it). The conclusion appears consistent with the clarifications provided in the OECD commentary on article 17 of the aforementioned model.
What about the legal and tax issues of compensation deriving from the streaming platforms? These issues might need to be explored more in detail, in light of the new key role of the digital tools for the live industry, especially in the case of concerts involving renowned international artists. Possible means to be considered to assess compensation include earnings calculators, which are unofficial tools already used by influencers, providing earning potential guidelines by taking into account the number of interactions, followers and reach of the shared content.
Antonio Longo and Elena Varese are lawyers in the Milan office of DLA Piper, a global legal firm. This article originally appeared on the DLA Piper website.
This article forms part of IQ’s Covid-19 resource centre – a knowledge hub of essential guidance and updating resources for uncertain times.
Law firm launches team to advise music stars
Shoosmiths, one of the leading law firms in the UK, has launched a new team to specifically focus on the needs of high-net-worth clients from the industries of media, music and sports. The firm hope to attract new clients in the form of agents, athletes and entrepreneurs.
As part of this new Elite Advisory Team, the firm has announced Haydn Roberts, former Manchester City head of player liaison, will take the lead.
At a launch event for the new team, where speakers included UK festival veteran Jon Drape (Ground Control/Broadwick Live), Roberts commented on his new role: “It is no secret that the quality of legal advice given can make or break careers in the world of sports and entertainment.
“At Shoosmiths we have specialist, full-service expertise which is not only rare but integral for these industries who require a full spectrum of legal advice.”
“The pressures on high-profile performers, whether in sport or music, are greater now than ever”
Present at the launch event was also former England international David Platt, who highlighted why the law firm was perhaps undertaking this new venture. Speaking to an audience of experienced people from the fields of music, media and sports, he explained that stars in the entertainment industries needed ready access to expert advice more so than in the past: “The pressures on high profile performers, whether in sport or music, are greater now than ever and they need 24/7 access to trusted, expert counsel.
“Haydn’s team and the team at Shoosmiths will be able to provide exactly this kind of service.”
The move is a collaborative effort between Shoosmiths’ private client and commercial practice groups. The specialist team will seek to maintain current trusted relationships between the law firm and high profile clients, as well as forge new relationships with prospective ones.
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APM lawyer: Google “surprised” at extent of touting
Gabriel Rossy, lawyer for Spanish Association of Music Promoters (APM), has praised Google’s recent crackdown on unscrupulous ticket resellers – and revealed the tech giant previously had “no idea” of the extent to which its search engine was being used to tout tickets.
Speaking to IQ, Rossy – APM’s long-time attorney, who has previously represented the association in a dispute over tariffs with collection society SGAE – explains how Google execs were unaware of the dominance of secondary ticketing sites on its search listings before APM and others first brought the issue to the company’s attention.
“We realised, by asking victims who did not get into concerts, ‘Were you aware you were buying a resold ticket?’, and them replying, ‘No, I just went to Google’, how crucial the position of Google was in that fight,” he explains.
“You had these websites misleading customers about their reliability, calling themselves ‘official’ ticket sellers, but they needed the cooperation of Google to get where they are. When people end up on a resale website, 90% of the seller’s misleading work is already done, so Google played a big part.”
Responding to pressure from promoters’ associations and politicians in Spain, Britain and more, Google announced in December it will, as of this month, include ticket resellers in its ‘other restricted businesses’ AdWords category, requiring them to be certified with Google before they can advertise through its AdWords service, which is key to topping search results. To be certified, secondary ticketers must, among other things, make clear they are not the primary seller of the ticket and list the face value of the tickets being resold.
The campaign in Spain was spearheaded by APM and Neo Sala’s Doctor Music, with FanFair Alliance also pressuring Google in the UK and promoters such as Michael Chugg and Michael Gudinski leading the fight in Australia.
“You were unaware of this, but now you know – so it’s up to you to do something about it”
Rossy says his interpretation of the Spanish criminal code led him to believe that Google was unwittingly breaking the law itself by serving as a “mediator” between fraudulent ticket resellers and consumers.
“But they were not aware, so we decided to go to Google and inform them officially,” he explains. Rossy and APM set up their first meeting with Google in May, and discovered execs were “honestly surprised” how their search engine was being used to facilitate ticket resale: “they had no idea”.
Another letter (“a long one”) followed in November, outlining “four different types of crime I believe most resale websites were committing and they [Google] were cooperating with”.
“We told them, if you go to any big event or concert and stand at the gate and ask people where they got their tickets from, you’d realise just how important Google is to misleading people,” he says. “I offered them all the information we had, from hundreds of victims [of ticket fraud or voided resold tickets] and said, ‘I’m sure most of them would be happy to come here and discuss it with you.'”
“They were completely honest – that was my impression – and obviously Google doesn’t want to test the limits of the law,” Rossy continues, “so I was sure they would want to be on the right side of this.
“And that’s why I pushed them with the letter in November: I said, ‘I believe you were unaware of this, but now you know – so it’s up to you to do something about it.”
“When people end up on a resale website through Google, 90% of the seller’s work is already done”
Rossy doesn’t take sole credit for the sweeping changes announced in December, saying FanFair are also “doing a great thing” in the UK and that Google may have been planning an overhaul of its AdWords policy anyway. “I don’t know to what extent we changed things,” he says. “But I’m sure we gave them a push.”
While he echoes the sentiments of FanFair and the MMF in welcoming the new restrictions, Rossy says, “like anything”, there is still room for improvement – taking particular issue with the term “secondary ticketing”, which he believes is misleading for consumers.
“I don’t like the language of ‘primary’ and ‘secondary’, which isn’t understood by most ordinary fans,” he explains. “I would prefer Google to require ticket sellers to use the terms ‘official’ and ‘resale’ instead: I like calling a spade a spade!”
He would also like to see a requirement that secondary sites include a disclaimer that buying resold tickets is never 100% secure – as well as forbidding them from selling tickets to shows where resale is expressly forbidden.
Despite this, Rossy emphasises that the new AdWords policy is “very positive” step forward for consumers – and that Google’s flexibility on the issue shows its willingness to work with the industry in the future.
“These potential improvements do not overshadow the fact that these measures prove Google is on the side of both the music industry and consumers,” he concludes. “And I am sure they will be receptive to any future suggestions.”
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