X’s Copyright Problem: A Look at Music Publishers’ $250 Million Copyright Lawsuit Against X
On June 14, a group of seventeen music publishers filed suit against X, formerly known as Twitter, in the Federal District Court alleging copyright infringement on 1,700 songs and demanding up to $250 million in damages.[1] The lawsuit adds to the growing list of issues that X has faced since Elon Musk took over the company in 2022. The platform has suffered from numerous outages and reportedly has seen its value drop by two thirds since the purchase.[2] The publisher’s lawsuit alleges that Twitter violated copyright law by failing to adequately remove copyrighted material which in turn helped their business interests.[3] The lawsuit comes after failed negotiations with music publishers over a licensing agreement and will test Musk’s opposition to American Copyright Law.
Background and the DMCA:
X is the lone major social media company to not have a blanket licensing agreement with major music publishers.[4] The need for such licensing agreements come from the “safe harbor” rules of the Digital Millennium Copyright Act of 1998 (DMCA). The DMCA sought to balance the interests of copyright holders afraid of large-scale copyright infringement in the internet age against the interests of internet companies who wanted their users to be able to freely post content.[5] To balance these interests the act provides shelter to online service providers (including social media companies like Twitter) from liability for indirect copyright infringement on their platforms so long as these providers meet certain conditions.[6] To satisfy the conditions for the safe harbor, companies must implement systems to take down copyright infringing material on user posts and police their platforms for offending posts.[7] So long as these conditions are met, platforms are protected against copyright infringement claims.[8]
While social media companies could reasonably remove all the copyrighted content on their platforms, it would also destroy their business and their coveted ad revenue. [9] Many users use copyrighted material in their posts which helps to drive social media platform’s growth.[10] Thus, since they couldn’t remove the content, social media companies have negotiated licensing agreements with music labels to allow the copyrighted music to be used on the platform without any restrictions.[11] These licensing agreements are either “revenue sharing agreements” where the social media company shares advertising revenue with the music rights holder or “buy out agreements” where a social media company pays an up-front lump sum for the rights to use music.[12] TikTok and the Warner Music Group recently agreed to a “multi-year” product licensing deal in July that allows TikTok users to use Warner’s collection of copyrighted music.[13] These deals can vary, but can cost over $100 million a year for established social media platforms.[14] While expensive, these deals are mutually beneficial as they allow rights holders compensation and viral marketing while social media platforms can use popular songs to drive user engagement.
Elon Musk was not as enthusiastic about such agreements as his social media counterparts. Prior to the current lawsuit, X explored licensing music rights from three major labels before Musk took over the company and ended the negotiations.[15] According to former employees at X, Musk viewed the price of such agreements to be too high given the company’s recent financial struggles.[16] With no licensing agreements in place, X could have still sought safe harbor under the DMCA but Musk has taken issue with this as well. Musk once tweeted that “[c]urrent copyright law in general goes absurdly far beyond protecting the original creator” and added that the “[o]verzealous DMCA is a plague on humanity.” [17] Therefore, X carried on without paying a licensing fee and allegedly without properly policing their platform for copyright infringement.
The Lawsuit and X’s Response:
In response to X’s lack of enforcement, seventeen music publishers––a group that includes Universal, Sony, and Warner––filed the current lawsuit. According to the complaint, X “consistently and knowingly hosts and streams infringing copies of music compositions” and “profits handsomely from its infringement.”[18] X infringed the music publishers copyright by failing to remove infringing content. The publishers provided evidence that they have notified X of over 300,000 copyright infringing tweets since December 2021.[19] In addition to the publishers, Twitter has received hundreds of thousands of notices per year from other copyright holders for musical compositions and sound recordings.[20] In response to these infringements, Twitter takes a case-by-case approach to determine what content is removed.[21] While Twitter claims that they take copyright infringement seriously and remove violating content in minutes, the complaint shows that Twitter routinely takes much longer with “thousands of instances where Twitter waited 30 or more days” to take action on content flagged by the publishers.[22]
The complaint specifically cites more than 1,700 songs that have been improperly used on X. For example, the publishers identified 240 tweets that used the song “What a Wonderful World” without authorization.[23] 120 of those tweets were still available a month after X was notified.[24] The suit alleges that by delaying action, X intentionally seeks to maximize the benefit it receives from the infringing content.[25] While other social media companies pay hundreds of millions of dollars in licensing fees to use content, X has given themselves an unfair competitive advantage by paying nothing and promoting infringement.
In August, X filed a motion to dismiss the suit. The company cited a 2005 Supreme Court case MGM Studios Inc. v. Grokster. While the holding of MGM was narrow, it stood for the proposition that one who takes affirmative steps to foster infringement on their platform is liable for resulting third-party infringement.[26] Relying on this holding, X argues that the publishers “do not allege that X encouraged, induced, or intended to foster the infringement of Plaintiffs’ works.”[27] The motion claims that X’s DMCA policies informed its users of the platform’s infringement policy and thus the platform could not have intended to cause infringement. [28] Further they argue that there is no “obvious and direct” financial benefit to X.[29] The court has not yet decided on the motion.
Future Outlook:
Overall, this lawsuit could impact the future relationship between social media companies and the music industry. The suit represents a litmus test for the DMCA and music licensing agreements. If X is successful in their suit, other social media companies may not feel the need to re-sign licensing agreements with creators and may even delay the removal of infringing content as X has. These moves would help the bottom line of social media companies but would hurt creators and give them less control over their copyrighted material. The music industry and social media platforms alike will be watching this case closely.
Footnotes
