The legal underbelly of livestreaming concerts

Obligatory disclaimer: I am a journalist, not a lawyer! This article is for general informational purposes only, and does not, nor is it intended to, constitute legal advice.

Event cancellations and shutdowns due to COVID-19 have wiped out hundreds of millions of dollars in revenue from the hands of artists, promoters and venues. In response, music livestreams are popping up globally at a rate we’ve never seen before — from artists doing spontaneous performances and DJ sets from their living rooms, to major initiatives like UnCancelled and Minecraft’s in-game showcases bringing the exploratory, all-you-can-eat, multi-stage experience of a festival into a virtual environment.

Amidst this ongoing surge in activity, one important element has been surprisingly under-addressed: Licensing.

Most of the livestreams that have filled the void of in-person concerts have been free of charge or built on a somewhat frail donation economy around Venmo, PayPal and Cash App, raising the much-needed debate around whether livestreaming will ever become a sustainable source of income for artists.

What I want to drive home is that you cannot talk about the financial longevity of livestreaming in the music business without also talking about rights.

More specifically, because livestreams sit at the intersection of recording and live performance — especially if the streams are archived after the fact — they can involve literally every kind of license in music: Masters, mechanical, sync, performance, trademark, name/likeness, the list goes on. It’s actually a powerful lens for understanding how most of the music business works.

We shouldn't necessarily hold back emerging, talented artists from sharing their performances with the world today because of licenses that may take weeks to get. But the fact that most people who are scrambling to livestream are probably not clearing their performances beforehand potentially leaves a lot of money on the table for music rights holders — including the artists themselves, not just labels, publishers or performing rights organizations (PROs). Moreover, none of the open livestreaming platforms that are popular today (Instagram, Twitch, Facebook, YouTube, etc.) have the proper legal infrastructure to close that financial gap yet.

In this environment, I thought it would be helpful to summarize the legal issues that artists, event organizers and tech platforms have to consider if they want to expand into livestreaming and/or make a proper income from the format. I also examined this complexity through the lens of three different, equally realistic case studies:

  1. An artist doing a spontaneous live session on Instagram, YouTube or Twitch.
  2. An artist striking an exclusive, direct livestreaming deal with a paywalled platform (like Nugs.net).
  3. A major festival brand like Coachella broadcasting its in-person event to the world for free, or constructing a virtual festival lineup from scratch.

Again: I am not a lawyer, and this document is meant to be more of an informative conversation-starter than a 100% comprehensive list of every possible scenario you could possibly find yourself in as a livestreamer. I hope it’s helpful nonetheless; please reach out if you think any important info is missing or incorrect!

THE RIGHTS

As I mentioned, the licenses required for a musical livestream might touch literally every kind of copyright and IP in the music business, depending on a number of factors such as which platform a streamer uses and whether they plan to make a stream available on-demand after the fact.

I briefly discuss each of those kinds of licenses below, weaving in some historical examples. (I’m assuming some level of prior knowledge about music copyright in my discussions; if you’re new to some of the terms, Songtrust’s music publishing glossary is a good place to start.)

Master and mechanical licenses

Including a preexisting recording of a song in your livestream implicates master rights on the label side, and mechanical rights on the publishing side.

Some concrete examples:

  • If you livestream a multi-song DJ set on Instagram or Twitch featuring mostly tracks that you do not own, you’re technically on the hook for a separate master and mechanical license for each third-party song in the set.
  • Playing songs radio-style in the background of your stream while doing something else (e.g. gaming, chatting with audience members of friends) also requires master and mechanical licenses for those songs. Note that streaming background music from a consumer subscription to a streaming platform like Spotify or Apple Music is technically illegal.
  • In contrast, if you perform only cover songs in your livestream — without incorporating any preexisting instrumental tracks or other musical recordings owned by third parties — you do not need a master or mechanical license.

For more recent context on the role of master and mechanical rights in live broadcasts, I’d recommend looking into the historical tensions between labels and late-night TV shows. Taylor Swift’s dispute with Scott Borchetta and Scooter Braun over her right to perform a medley of her old songs at the American Music Awards (which she ultimately did) also underscores a master owner’s rights both in a major, live, televised event and in its on-demand and rebroadcast availability over time.

Sync licenses

If you want to rebroadcast your livestream in the future or make it available for on-demand viewing after the fact, you’ll need a separate sync license for every third-party song you feature in the stream (regardless of whether it’s in the form of a preexisting recording or your own cover version). In this sense, the legal distinction between an on-demand archive of a livestream and a prerecorded film or TV show largely goes away, in terms of the licenses the uploader needs to obtain for synchronizing music to visual content.

If you have no rebroadcasting or on-demand plans — i.e. if viewers can only watch the livestream once, in real time — you could potentially make the argument that the inclusion of music in your livestream is an instance of ephemeral use. That term refers to incidental, unplanned uses of music that would be impossible to clear in real time as the stream is happening.

But that explanation isn’t universally accepted. Sources tell me that many major publishing companies have taken the position that livestreamed concerts are not ephemeral because most of their set lists are premeditated, and hence should be properly cleared.

Out of all the kinds of music copyright involved in digital media, the general public might be the most familiar with publishing rights (including sync and mechanical rights), given the recent track record of disputes between songwriters/publishers and major tech companies. For instance, over the past two months alone, the National Music Publishers Association (NMPA) settled multimillion-dollar disputes with fitness-streaming company Peloton, which has a livestreaming component, and concert streaming service Wolfgang’s Vault, which has a concert archival component. (TikTok is the NMPA’s next target.)

Public performance license

Public performance licenses cover the right to play a given song in physical locations (e.g. concert venues, hotels, malls, restaurants) or via other forms of public transmission (e.g. terrestrial radio, cable/satellite TV, online audio and video streaming). Concert venues and other brick-and-mortar businesses normally obtain blanket licenses from performing rights organizations (PROs) to play both recorded and live music on their premises.

But those licenses do not cover livestreams, even if said fully-licensed venues are broadcasting online from their own locations. Digital media transmissions in general require separate, dedicated licenses from those for physical spaces.

That said, in many instances, individual artists and event organizers do not have to obtain public performance licenses manually if the platform they are using has already struck such deals on a blanket basis. For instance, Facebook, YouTube and other platforms that focus on aggregating free, open, user-generated content pay licensing fees to all major labels, publishers and PROs to allow music content to stay up on their sites, such that individual uploaders are not on the hook for those licenses separately. Twitch, however, does not yet have deals with all the major PROs in the U.S., let alone in the world, sources tell me.

Closing this gap may be crucial in both the near and long term given that PROs’ core revenues are tied to licenses for brick-and-mortar locations, many of which are currently shut down. For instance, ASCAP recently emailed a statement to members explaining that their next round of payments will be delayed because “every category of ASCAP collections [is] negatively impacted, including television, cable, radio, airlines, hotels, bars, grills and restaurants.”

As both recording and performance activity increasingly shift towards livestreaming, it might make sense to build a marketplace where streamers can pay a one-time, discounted broadcast fee that covers their accounts for a certain period of time, the same way that SoundExchange currently does for online radio and podcasting.

Trademark/name/likeness license

Beyond musical copyrights, you may also have to obtain trademark, name or likeness licenses if you want to feature major brand names or visual imagery in your stream. For instance, artists who livestream from a venue with a certain level of renown (e.g. Radio City Music Hall, Madison Square Gardeun or Fenway Park) often have to pay the venue a usage or origination fee to include their name in the title of the event. If you display a copyrighted painting, album cover or other piece of artwork in the background for the entirety of your stream, you may be on the hook for clearing those visual works as well.

THREE DIFFERENT MUSIC LIVESTREAMS

Now that we’ve gotten the various kinds of rights out of the way, I want to hone in on three hypothetical but highly realistic livestreaming scenarios in the music industry today, each of which requires a vastly different set of licenses to move forward.

1. An artist spontaneously decides to livestream themselves performing cover songs or a DJ set on a platform like Facebook, Instagram or Twitch, either of charge or with donation capabilities built-in.

Many artists around the world are deciding to stage free livestreaming experiences for their fans with only days or even hours of advance planning. As discussed above, a given livestreamed musical performance technically requires a handful of clearances ahead of time, depending on the material involved (e.g. DJ sets implicate different rights from cover song performances).

But these rules are difficult to enforce in the more DIY-leaning livestreaming ecosystem. There’s somewhat of a contradiction at play: While the likes of Facebook, Instagram and YouTube have licensing deals in place with major rights holders, which should technically free individual users from any liability around using that content, those licensing deals only cover on-demand content, not livestreamed content.

For livestreams, many of these same platforms are adopting legal language that puts liability on artists, not on themselves. The big elephant in the room with Twitch, and with its peers in the space that allow for real-time payments to streamers during live broadcasts, is that they make most of their money from these live payments, not from archival content. Because there’s no real-time claim system, none of that majority revenue is shared with music rights holders if their content is included in a high-earning stream.

Currently, there’s no way to claim or mute infringing content in a livestream as it's happening in real time; instead, the appeals process only really begins once a stream becomes available on-demand. For instance, if you didn’t clear all the songs in your DJ set prior to going live on Twitch, your stream won’t get taken down as it’s happening — but once it becomes available on demand on your profile page, part of the stream might be muted, or the entire stream might be taken down altogether.

“The only way you could clear songs as a livestream is happening is if you already have pre-negotiated deals in place with publishing companies anyway,” Deborah Mannis-Gardner, sample clearance expert and president/owner of DMG Clearances, tells me. “You would still need to get a list of the songs you’re performing to make sure who the writers are ahead of time.”

Sources say that Facebook, which has only been licensing major music rights since 2017, is asking artists to coordinate directly with labels and other rights holders to get livestreaming waivers or clearances in place. Similarly, in its community guidelines, Twitch encourages streamers to check their content “for adherence to applicable intellectual property laws and the proper application of principles such as fair use, and to secure all appropriate rights needed” prior to going live, and stresses that multiple copyright-related violations of the platform’s Terms of Service “may lead to a permanent suspension of your account.”

Twitch’s dedicated music guidelines imply that artists and other streamers on the platform are only allowed to play music that 1) they own, 2) they licensed or 3) is available on the fully-licensed karaoke app Twitch Sings. DJ sets of pre-recorded music that the artist did not license, karaoke performances outside of Twitch Sings and cover song performances that incorporate original recordings or instrumentals are all technically not allowed. Moreover, playing music in the background of your stream from a consumer-facing service like Spotify or Apple Music is not allowed, either, because subscriptions to those services only grant users “a personal license to access the content only for your personal and private playback.”

Of course, all of these technically illegal scenarios are happening in full force, anyway. “Legally, it would be great if artists pre-licensed all of their livestreams, but practically that would be ridiculous,” Brad Serling, founder/CEO of pay-per-view livestreaming platform Nugs.net, tells me. “You have people just in their garage, turning on their camera and performing anything they want … You can’t license what you don’t know is going to happen.”

Notably, Twitch has yet to strike licensing deals with all major labels, publishers and PROs, sources tell me; instead, the platform has flat-fee agreements in place with rights holders to avoid litigation for 12 to 18 months as its business matures.

In the meantime, there are some workarounds for those artists who still want to play other parties’ content in their streams without getting muted or flagged. Twitch has an Amazon Music extension that allows streamers who are Amazon Prime or Amazon Music Unlimited subscribers to share music with viewers who also have those subscriptions, without any risk of copyrighted content being muted or taken down once the video goes on demand. Some labels like Monstercat have dedicated subscriptions for influencers and streamers that give them access to whitelisted content that won’t be claimed, while Epidemic Sound’s catalog can be used with Twitch because the company works only with artists who are not members of PROs (somewhat controversially).

2. An artist strikes an exclusive, direct deal with a closed platform to livestream a one-time, pay-per-view show.

Instead of going straight to open sites like Facebook, Instagram and Twitch for their livestreams, some artists are opting for more limited deals in direct partnership with closed platforms. For instance, in the past week, Erykah Badu hosted a paywalled livestream in partnership with white-label platform Maestro, while The White Buffalo hosted a ticketed livestream on Cadenza.

For this piece, I want to highlight another platform, Nugs.net, that has been striking exclusive, pay-per-view livestreaming deals with the likes of Phish, Metallica, Bruce Springsteen and Pearl Jam since 1995. Nugs.net currently has a catalog of over half a million unique performances that are available in audio format for either streaming or digital download. The company’s subscription service, which launched in 2015 and costs $12.99/month or $129.99/year, doubled its paying user base in the last year alone.

Since March 26, 2020, Nugs.net has also been hosting the six-week virtual festival Live From Out There, featuring artists and bands like Twiddle, Pigeons Playing Ping Pong, Langhorne Slim and Billy String sharing never-before-seen concert footage behind a paywall. Within the first two weeks, over 2,200 people paid for $49.99 all-access subscriptions to the festival.

Unlike how Spotify, Apple Music, Facebook and YouTube strikes blanket deals with rights holders, Nugs.net signs separate deals directly with each of its artist clients. Potential sources of revenue for artists include not just a cut of pay-per-view sales, but also royalties from digital downloads and on-demand audio and/or video streaming of the show after the fact.

Every deal for every show looks different, depending on which copyrights the artist does or does not own per their agreements with their label, publisher and/or PRO. “Luckily, in our case, the client is typically granting us exclusive performance and broadcast rights for the show, so the biggest hurdle is already taken care of,” Serling tells me. “On the composition side, many artists like Phish own the publishing for their own songs, in which case we’re totally in the clear.”

Making shows available on-demand introduces more restrictions into deals, for both recording and publishing. For instance, with Nugs.net’s live broadcasts of Tedeschi Trucks and Bruce Springsteen, the artists’ labels (Concord Music Group and Columbia Records, respectively) have granted the platform only digital-download rights for live concert audio, with no on-demand streaming rights.

Similarly, while Nugs.net has hundreds of thousands of live performance tracks in its arsenal, only around one hundred of them are available on demand in video form, because of the sync licenses that would otherwise be required.

“It would be so costly and time-consuming to put up all the videos, and there’s no clear path to recoup that cost,” says Serling. “It’s not like with audio, where there’s a congressionally established rate on both the streaming and download side, so we can model out the costs. For video, it’s more complicated because there’s no statutory rate, and you have to get a separate sync license for every performance of every song. It’s frankly why you don’t see a lot of on-demand concert video subscription or download services, because the licensing is such a mess.”

The few such services that are up and running today, such as Stingray Qello, lean heavily on “pre-cleared content from DVDs put out in the ‘80s and ‘90s, like from VH1 Classic, which is easier to license,” says Serling. But even that kind of content can be expensive to translate to an on-demand setting.

For instance, Eagle Rock, which produces and distributes music documentary and concert films and was acquired by Universal Music Group in 2014, has faced similar licensing and cost hurdles in bringing its DVDs online. Out of more than 800 titles the company has available to the public in some form (physical or digital), only around 300 are available on streaming.

“Some we do not have the rights to, others could have publishing implications with rights expiring soon,” Rob Gill, EVP at Eagle Rock, told WBUR. “There are also some high costs involved to digitize, deliver and create closed captioning. So, the costs need to be analyzed to make sure it makes sense.”

3. A major festival brand like Coachella broadcasts its in-person event to the world for free, or constructs a virtual festival lineup from scratch.

At the top of the food chain, major livestreamed and televised events —  including major music festivals like Coachella and awards shows like the American Music Awards and the GRAMMYs  — have to go through a much larger and more tedious licensing process for their respective events, given the audience size and advertising dollars at stake.

The publishing and performance side of this rights equation is relatively straightforward: If a major event is making a recording that features performances of several third-party songs, it owes money to the songwriters, publishers and PROs who have the underlying rights in those songs.

The masters/recording side is murkier and still open to debate — and Coachella offers a compelling case study.

Coachella’s livestreams on YouTube attract tens of millions of viewers every year. While the streams are not made available on-demand after the fact, the festival is still making and transmitting recordings in the process.

Should labels own part of that stream? The answer is a matter not just of copyright law, but also of contract law.

“As a matter of contract, major labels have exclusivity in the right to make their artists’ recordings, and to block anyone else from attempting to make recordings with them,” Rand Levin, former SVP, business & legal affairs at Universal Music Group (UMG)who currently oversees operations and strategy for media and entertainment at Raven Capital Management, tells me. “For instance, no one else aside from Republic Records should be making a record with Post Malone.”

Should AEG/Goldenvoice (owner and promoter of Coachella) have the right to make and transmit a recording with an artist who’s already in an exclusive recording contract with a major label like UMG, even if that recording won’t be made available to the public after the fact

 “If you’re a major festival making a recording of your event and doing something with it — even just transmitting it online in a more transient manner — that arguably implicates recording rights,” says Levin. “You could be interfering with the contractual relationship between an artist and their record label.” (Common legal terms for this scenario are “tortious interference” and “intentional interference with contractual relations.”)

Levin tells me that many of UMG’s contracts with both U.S.-based and international artists now include rights to block third-party livestreams, and no Coachella livestream can legally exist without the proper licenses from all performing artists’ major labels and publishers. Coachella also gives labels and publishers a cut of its ad and sponsorship revenue, given the large audiences that the livestreams draw every year.

“Our argument [at UMG] was: We pay millions of dollars to build up the value of our artists, and if you as a promoter are going to record those artists, we should be partners with you on that,” says Levin. “Coachella and similar festivals might feel that the value they bring in from sponsorships is because of their success at creating a brand-name event. But it’s not like the artists on their lineup were unknown before. They were some of the biggest names in the industry. How did they become the biggest names? We spent millions of dollars developing them. The artists themselves also played a big role.”

For most of the deals UMG struck with Coachella and other festivals and concert promoters, UMG owned the rights to the archival recordings of their artists’ sets, with little to no long-term revenue share with promoters on those recordings, Levin tells me. That said, “there was always a deal to be made with labels that still left [promoters] with their core business,” says Levin. “No one at the major labels was asking for a share of T-shirt or Coca-Cola sales.”

Likely due to pushback from promoters, though, not many of these kinds of deals exist — which is why you likely don't see many Coachella recap videos available on the festival's YouTube channel post-livestream.

"You could argue that making streams available [on demand] would drive down the value of a live event, but we need these archives now more than ever," says Levin. "Both labels and promoters would have had a lot of additional material to tap into to stem their losses if they had those deals."  🌊

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