The Copyright Time Bomb

If you are a record label or publishing exec, you knew this day was coming. Still few made plans for what would happen when some of the provisions of the U.S Copyright Act of 1976 came due until now.

What's the problem? Only that the act gives authors or their heirs the ability to terminate copyright grants, which means that the lucrative catalog income (the only major income stream for some record labels these days) could come to a crashing halt.

So why does a law passed way back in 1976 strike fear into the hearts of industry execs today? Under the Copyright Act, if an artist or author sold a copyright before 1978, they or their heirs can take it back 56 years later. But if the artist or author sold the copyright during or after 1978, they can terminate that grant after only 35 years. That means that record labels could lose any sound recording copyright they purchased in 1978 beginning in 2013. For music from 1953 and before, those grants can already be terminated.

Many superstar acts (including the powerhouse The Eagles) are already preparing termination notices that they intend to file by the end of the year, according to Law.com (there's a five year window in which you can file notices). While superstar acts may be better off going it alone without a record label since many already have distribution infrastructure in place, many B and C level acts will probably just renegotiate for a better deal and leave their copyrights in place, which is what the labels are hoping for. Still, it's going to cut into their income stream big time, just when they can least afford it.

The Copyright Act isn't just about music though, it covers any type of copyright, so every facet of the entertainment industry will be affected. But the entertainment lawyers are already smiling since their big payday is just beginning. If you ever wanted to go to law school, now is the time.