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In a new lawsuit, Sony Music alleges it was defrauded of millions when the on-demand service Rdio came to agreement with Pandora and subsequently filed for Chapter 11 bankruptcy last November.
The complaint filed in New York federal court targets Rdio chief executive officer Anthony Bay, Rdio general counsel Elliott Peters and Rdio senior v in charge of content licensing Jim Rondinelli.
The first big bust in the era of streamed music, Rdio sold its key assets to Pandora for $75 million. At the time ofthe bankruptcy filing, Rdio had more than $190 million in secured debt and about $30 million of unsecured debt. The company was losing $2 million each month.
Licensing sound recordings was one of Rdio's biggest expenses.
In 2010, Sony came to a content agreement that enabled Rdio to use music from such artists as Michael Jackson, Bob Dylan, Bruce Springsteen and Beyonce. By the end of 2014, according to the complaint, Rdio owed Sony $5.5 million as a minimum revenue guarantee. Sony says that Rdio's executives approached the label about renegotiating the content agreement and deferring the due date of the payment. Sony agreed to an interim extension.
The complaint states: "Unbeknownst to SME, however, at the same time that Rdio was negotiating the amendment to its Content Agreement with SME, it was simultaneously negotiating its deal with Pandora -- under which Rdio would file for bankruptcy; Pandora would buy Rdio’s assets out of bankruptcy; defendant Bay (as part-owner, executive officer, and director of Rdio’s secured creditor) would expect to be first in line to receive proceeds of the Pandora deal; and SME (as an unsecured creditor) would receive pennies on the dollar for the amounts owed to it under the amended Content Agreement."
Sony says that Rdio purposely kept its Pandora negotiations and impending bankruptcy secret so as to hold back Sony from demanding immediate payment of the $5.5 million and "inducing" extensions and a restructuring of payment obligations. What's more, Sony alleges that one day prior to Rdio making its deal with Pandora, a renewal amendment was made that gave Rdio the right to sound recordings through March 31, 2017.
"A material provision of the Renewal Amendment was Rdio’s obligation to pay SME $2 million on Oct. 1, 2015 — the day after the Renewal Amendment was executed," continues the lawsuit. "This presented a dilemma for Rdio: the Pandora deal would be jeopardized either upon Rdio’s taking $2 million in cash out of its business, or upon Rdio failing to make the payment to SME and putting its ongoing access to SME’s content at risk."
Faced with this situation, Bay and Rondinelli allegedly told Rdio it was raising capital so as to get Sony to extend the due date for the payment.
Sony, repped by Jonathan Sperling at Covington & Burling, is now asserting claims of fraudulent inducement and unjust enrichment. The music major is upset over the $5.5 million it still hasn't received from the 2010 deal as well as the $2 million not received under the renewal agreement. Sony also takes issue with compensation and bonuses paid out to Bay and Peters -- money, it says, that "should have been paid to SME for the rights it licensed to Rdio" -- as well as Bay being "personally enriched" by the sale of Rdio assets to Pandora.
"It would be against equity and good conscience to permit Defendants to retain any benefits that they obtained as a result of their fraudulent conduct," the complaint states.
The defendants couldn't be reached for comment, but we'll update if we hear any response.
Tupac's stepfather, Mutulu Shakur, may be a free man this week after serving 30 years of his 60-year prison sentence "for masterminding a string of deadly armed robberies in New York and Connecticut committed by a militant political group known as 'The Family,'" the Associated Press reports.
Shakur's parole hearing is scheduled for Monday, April 4.
His original release date was scheduled for February 10, yet the 65-year old remains an prisoner at the high risk U.S. penitentiary in Victorville, California.
The Baltimore, Maryland native made the FBI's Most Wanted list after the $1.6 million caper of an armored truck at a Rockland County, New York mall was executed in 1981.
The heist resulted in the killing of a Brinks security guard and two Nyack, New York police officers.
In 1986, he was found in Los Angeles after being on the run for half a decade. He was indicted for racketeering and sentenced to 60 years in prison.
He was also charged with helping Joanne Chesimard, now known as Assata Shakur, escape from a New Jersey prison in 1979, where she was serving a life sentence for the murder of New Jersey state trooper Werner Foerster six years prior. She now lives in Cuba under political asylum.
Mutulu maintains his innocence and has been labeled as a political prisoner to some.
His lawyer argued in court during his 1987 trial that there was no proof that Mutulu was involved with the Brinks caper nor is there proof that he aided Assata in escaping prison.
A #MutuluIsWelcomeHere campaign was started in February in support and preparation of his release.
"There are enemies of our struggle who are intent on proving that Dr. Mutulu Shakur is a threat and danger to the community and society and does not deserve to be let free to come home,"the website says. "It is important that we challenge that narrative with true stories of personal experiences with Dr. Mutulu Shakur and how we have benefited from knowing him. We are asking that you take the time to describe the impact he has had on your life."
Brandy is suing record label Chameleon Entertainment over allegations that the company is holding her to ransom in a bid to force the singer into signing a new deal with Sony’s Epic US.
Brandy Norwood has been working with Chameleon and its founder Breyon Prescott since 2010, and the company released her 2012 album ‘Two Eleven’ via a partnership with Sony’s RCA division.
Then last year Prescott joined Epic as its urban A&R chief, the plan being that Chameleon artists would also work with the Sony label moving forward. But Brandy, who was signed to Epic once before, and things didn’t work out so well there, seems to be resisting that move.
In her lawsuit filed on Tuesday, Norwood alleges that Chameleon, which has the exclusive option on the singer’s next four albums, is refusing to release her next record until she agrees to sign a deal with Epic, which would then put out future LPs alongside Prescott’s own company.
But, say Norwood’s legal reps, the Epic deal is less favourable than her existing arrangement with Chameleon. Plus Prescott pressuring the singer to sign with Sony is basically him ‘double dipping’, they allege, because he’ll earn as owner of Chameleon, and also see bonuses from Epic for securing the new deal.
According to Courthouse News, Norwood’s lawsuit claims that Prescott is basically blackmailing the singer in “a blatantly unlawful attempt to bully Norwood into signing a new recording and distribution agreement containing terms far worse than her current agreement. Defendants have made clear through their actions and words that, unless Norwood capitulates and signs this terrible deal, she will remain ‘trapped’ with a label that won’t let her record or release music”.
The litigation adds that “Prescott owns and operates defendant Chameleon and is employed full time by Epic Records as head of urban A&R. The new recording and distribution deal that he is trying to force Norwood to sign is with Epic, which allows him to ‘double dip’: if Prescott can force Norwood to sign the new deal, he will profit both as an owner of Chameleon and through bonuses and other benefits he will get from Epic”.
This, says the legal filing, is an “outrageous action … based on nothing more than greed”, so much so the court should allow Norwood to terminate her original agreement with Prescott and Chameleon and take her next record elsewhere. The various defendants in the case are yet to respond.
The music industry is tired of playing whack-a-mole and is appealing to the U.S. Copyright Office and Congress to help. Hundreds of artists, managers and industry organizations signed petitions sent to the U.S. Copyright Office Thursday demanding reform of the Digital Millennium Copyright Act, a law they say has placed undue burdens on them to scour the internet for people and websites illegally sharing their work.
The signatories include current stars like Katy Perry and CeeLo Green, as well as iconic artists like Pete Townsend and Garth Brooks. It also includes every major music industry trade group and association, including the Recording Industry Association of America, the National Music Publishers Association and three of the biggest performance rights organizations. In addition to the petitions, the trade groups submitted a 100-page document outlining how they see the DMCA adversely affecting the industry.
“This law was written and passed in an era that is technologically out-of-date compared to the era in which we live,” one of the four petitions submitted reads. “It’s impossible for tens of thousands of individual songwriters and artists to muster the resources necessary to comply with its application.”
The Copyright Office had put out a public call for comments, the window for which closes Friday. While the Copyright Office does not have the authority to change the law on its own, it can make specific recommendations to Congress.
When the DMCA was signed into law in 1998, it was meant to keep the internet an open, innovative space where people could share information and content easily. Thanks to the law’s so-called “safe harbor” provision, websites were not responsible for figuring out whether content shared by their users or hosted on websites violated any copyright laws; they simply had to remove that content if they became aware that it did.
That provision, the music industry argues, essentially transferred the burden of detecting and thwarting copyright violations to copyright owners, a task that amounts to a full time job in and of itself. Today, there are now dozens of firms that exist purely to assist rightsholders in sending takedown requests to sites like YouTube and Tumblr.
Those firms have been kept busy. As the amount of content uploaded and shared on the internet has grown, the number of infringement notices sent by copyright owners has more than kept up. In 2012, Google alone received 54 million individual takedown requests. By 2014 that number had grown to 345 million, and this year, Google says, it has been receiving more than 17 million takedown requests per week.
Rightsholders and other artists claim this growth is proof of a dizzying responsibility that they cannot be expected to handle while continuing to make art. Yet other stakeholders frame that growth as proof the system is working.
The Computer and Communications Industry Association, a trade group that counts Google, Amazon and Yahoo among its members, filed its own comments on the DMCA this week making that exact point, saying filing takedown requests has grown easier, cheaper and more efficient.
“Takedowns are increasing because the system is effective,” Matt Schruers, the association’s vice president of law and policy, wrote in a blog post Thursday. “In short, the increasing use of takedowns shows demand for the DMCA. As notice volume increases, internet services build new tools to make it more efficient. That doesn’t mean that rightsholders are always accurate in their demands.”
The Copyright Office will hold additional hearings on the matter in Palo Alto and New York next month.
Pusha T gave a lecture at Harvard University School of Business on Thursday (March 31)at the Harvard Yard & Yenching Library addressing an array of topics followed by a 45-minute discussion with students.
"It was an amazing experience hearing a Harvard professor recite my lyrics at this lecture thanks for having me @Harvard,"King Push captioned on an Instagram video of a professor reciting the lyrics to his “Momma I’m So Sorry” verse off Clipse’s 2006 album Hell Hath No Fury.
Since Push was appointed President of G.O.O.D Music November of last year one student asked him how he plans on using his new position to elevate the rap game.
"I feel like it’s my job and my duty, as well, to help uplift the new creatives coming in,” the "Retribution" rapper said.
Elsewhere in his lecture, Pusha T touched on other matters such as the glorification of drug dealing versus the reality, issues concerning the Black community and the importance of using music for not only redemption but for social justice among other points.
Christina Aguilera, Katy Perry, deadmau5, and dozens of other musicians are asking the US government to revamp the Digital Millennium Copyright act (DMCA), the piece of law that governs access to copyrighted work on the internet. Musicians, managers, and "creators" from across the industry co-signed petitions sent to the US Copyright Office arguing that tech companies — think YouTube and Tumblr, sites with vast reserves of content that infringes on some copyright — have "grown and generated huge profits" on the backs of material that's illegally hosted. Pusha-T Lectures At Harvard
"The growth and support of technology companies should not be at the expense of artists and songwriters," reads the letter signed by Aguilera, Perry, and their peers. "The tech companies who benefit from the DMCA today were not the intended protectorate when it was signed into law two decades ago."
WHOSE JOB IS IT TO POLICE COPYRIGHT INFRINGEMENT?
This is a complicated issue, but you can boil it down to one key question: whose job is it to police the appearance of copyrighted material where it doesn't belong? When the DMCA was created in 1998, it was much easier for artists and labels to handle isolated incidents of copyright infringement using the act's "notice-and-takedown" system. (It's self-explanatory: the copyright owner files a notice of infringement, it's processed, and the offending post is taken down.) Getting Paid In the Music Industry
It's a lot harder to police the internet c. 2016. It's flooded with new, potentially infringing material every second, and the industry the notice-and-takedown system isn't responsive enough to help musicians' work retain its value. It's also noting that sites like YouTube have thrived on the "copyright black market," earning millions of clicks and views from content sitting in the grey area between posting and takedown. The sites counter by arguing they've given the labels the tools they need (like YouTube's Content ID system) to make DMCA takedowns faster and more effective.
It's unclear exactly what impact the industry's coordinated response will have on the status of the DMCA. Bloomberg notes that the US Copyright Office doesn't have the power to directly change the DMCA; it can recommend a set of changes to a subcommittee tasked with reviewing contemporary copyright law, but that's about it. If you take the industry's word for it, that change needs to happen fast, because the status quo is endangering the future of music. "The existing laws — and their interpretation by judges — threaten the continued viability of songwriters and recording artists to survive from the creation of music," reads the musicians' letter. "The next generation of creators may be silenced if the economics don't justify a career in the music industry."
David Balto is a lawyer and consumer advocate based in Washington, D.C., who previously served as the policy director of the Federal Trade Commission.
In Recording Academy CEO Neil Portnow’s recent op-ed called The Penny Paradox, he asked, “Isn’t a song worth more than a penny?” The problem, as outlined by Portnow, is that artists aren’t being paid enough for their work. However, this is a gross oversimplification of a more complicated issue of payment in the music industry. An issue that, unfortunately, consumers (and artists) are caught in the middle of as powerful and less powerful interests fight over how to divide payments amongst themselves.
When Portnow is talking about a song being worth a penny he is, of course, not talking about someone being able to own a song for an actual penny. He is talking about the cost per listen of a single license. An interactive music streamer like Spotify needs two licenses to serve a single song to a customer, and three licenses under certain circumstances. When a consumer buys a song, they make one payment and own it forever. Streaming a song is not ownership, and royalties must be paid for each listen.
This leads to a complex picture of how artists earn money. They can get one payment from a fan that buys their album or a recurring payment as a fan continues to play their songs on a streaming service. Artists can also get paid both ways from a single fan -- a correlation between internet radio “spins” and sales was found in 2014.
It gets even more complicated. Artists own different copyrights and get paid differently based on whether they wrote the song and/or recorded the song. They deal with different middlemen and the licensing is handled through different organizations: SoundExchange for sound recording rights, a publishing rights organization like ASCAP or BMI for the performance right and individual publishers for each song’s mechanical rights. Pusha-T Lectures At Harvard
ASCAP and BMI are currently regulated through agreements made with the Department of Justice that are regulated by federal courts which stress fairness and transparency. These agreements were necessary because collective bargaining -- like that done through ASCAP and BMI -- is illegal under antitrust laws, but all parties considered it necessary to have a collective bargaining system to cut down contracting costs in a complex industry. In other words, it’s a narrow exception to the general rules of a competitive market.
And now it’s getting even more complicated. Publishers, some of which have market power, are lobbying the DOJ to make changes in the consent decrees to allow them to withhold music from radio, venues and streaming services. These changes would let publishers jump out of ASCAP and BMI when it suits them. So much for fairness and non-discrimination. And so much for fair prices for consumers.
Publishers will also be able to agree amongst themselves not to license a performance right unless all owners of a copyright assent. This will give even small owners of a copyright complete control, not just over performance rights but over the sound recording as well. If a five percent owner of the performance rights toJustin Bieber’s “Love Yourself” refuses to license, for instance, that not only affects other owners of the performance rights, but also Justin Bieber’s royalty payments for the sound recording. A music user has to license all rights to play a song, and if any fractional owner had veto rights they would be able to control the destiny of the entire song and every sound recording, not just what they own.
This didn’t matter when radio and venues could contract with ASCAP and BMI, each of which has to license to all comers at a fair rate. But in a world where publishers can be in and out of ASCAP and BMI, it suddenly matters a great deal. This has the potential to not only hurt consumers, but also artists who can’t get their song played because an owner of a small piece of it refuses to license. Ultimately, both consumers and artists will lose.
I do not agree with Portnow on the simple solution that payments for songs need to increase. This is the solution before the DOJ right now, and it will likely lead to tremendous harm to consumers and potentially artists (we don’t know how much of that increase, if any, will filter through to them and how much will be pocketed by the powerful publishers). However, I do agree that we can do better and that solutions must come from Congress.
Congress, for example, could set up a one stop shop for the complete bundle of rights needed to play a song, and all the rights owners could divide those payments among themselves. This would make it easy to agree on a payment that is good for artists while still allowing streaming services to be profitable (important after the Copyright Royalty Board’s rate increase led to the closure of many smaller independent and local services). Congress also has many more options to make sure the most vulnerable parties, consumers and artists, are protected.