Four Tet case concludes – the way forward for legacy contracts in the digital era?

“Sam … is a highly intelligent and strategic barrister. He also is passionate about music and was committed to the greater goals that this case could achieve for other artists.”

Sam Carter
Sam Carter

Statement from Aneesh Patel (Four Tet’s legal advisor)

“For a high level recap, the disagreement was about how to treat streaming and download income under a contract that was signed 20 years ago, before those channels of music consumption came into existence. Kieran argued that streaming and download income should be treated as a licence, and therefore he should be paid a royalty of 50% under the agreement. Whereas, Domino argued it should be treated the same as a sale, and therefore the 18% rate that applied to CD and vinyl sales should be applied. Domino have now agreed to treat streaming and download income as licensing income and will apply the 50% rate to streaming and download income going forward, and have reimbursed Kieran for the underpayment over recent years.

Litigation is time consuming, costly and risky. Sometimes the legal costs and relative financial resources of the parties can act as a deterrent to bringing a claim, even when the claimant has a strong case. Kieran brought the case in the Intellectual Property and Enterprise Court (IPEC), where there is a scheme for cost capping and a more streamlined process. This was a particularly important factor in levelling the playing field with Domino, who have significantly more resources than Kieran. Kieran brought the claim himself and was superbly represented by Sam Carter of Hogarth Chambers, who took the case on a direct access basis. Sam works for a prestigious Chambers, and is a highly intelligent and strategic barrister. He also is passionate about music and was committed to the greater goals that this case could achieve for other artists.

The case came at an important time whilst there was a government enquiry into the economics of streaming and the Broken Record campaign has been gaining increasing momentum. It was mentioned in parliament by MP Kevin Brennan. Recently, the Competition & Markets Authority (CMA) has launched an inquiry into the music streaming industry and will look at the roles played by record labels amongst other things.

Record labels have seen significant growth over recent years primarily driven by streaming revenue. A record label wields significant control over access to an artists’ work, particularly when they have signed a life of copyright deal like Kieran did. At one point, only a month away from the trial date, Domino pulled down Kieran’s music from digital music services in an attempt to have the case struck out. It was an extreme, and even confusing move, to say the least. Kieran’s fans were outraged at being deprived of his music, and many in the music industry were left puzzled. In my opinion, it was an example of a record label not acting in the best interests of their customers, let alone their artists.

Domino were not successful in getting the case struck out. Instead, the case became over-complicated. The trial date had to be postponed, the claim then amended to cover breach of release commitments, amongst other things. Domino threatened to move the case to the High Court, which would have prohibited Kieran from pursuing the case any further.

Kieran took the case as far as he could. The Part 36 settlement offer he received more or less offers what he was asking for from the beginning. The way a Part 36 works is that, if he declined the offer but achieved the same result at trial, he would have had to pay all of Domino’s legal costs from that point onwards. Whilst it’s not the same as a judgement, it’s as close as he’d get to a public result. Importantly for Kieran, it was not a confidential settlement, meaning he could share the result with others.

I hope that Kieran’s actions and the successful outcome he has achieved will give other artists more confidence to make fair challenges. I hope that the awareness this case has brought will also help add momentum to the ambitions of the Broken Record campaign.”

“We’re delighted to see that Kieran Hebden’s (aka Four Tet) case with Domino Records has reached a conclusion. The settlement which has been agreed reflects the fact that legacy recording contracts are not fit for purpose in the digital era. That record labels continue, unilaterally, to apply analogue contract terms to streaming is inappropriate, unfair and legally questionable. Other record labels must use this opportunity to act on modernising the royalty rates which artists receive for the exploitation of their work in the digital landscape.”
David Martin CEO Featured Artists Coalition & Annabella Coldrick CEO Music Managers Forum

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