Unauthorised Use of Music at Fashion Event - a Real Damage Event
A fashion show where the models walk the catwalk without music – completely unthinkable. That’s also what a clothing company thought when it hired an IT service provider insured through exali to supply the music for a fashion event and record it live. But unfortunately the service provider didn’t pay attention to the fine print in the rather complicated rules for music usage rights. The result: A high claim for damages. Read this article to find out exactly what happened and how the case ended.
Fashion Event with Livestream and Videos
The IT service provider involved in this case works in the field of web design and was commissioned by a clothing company to provide its catwalk show with images and sound. He was also supposed to host a live stream at the same time and integrate it on the company homepage. The live stream recording would then be sent as a video to the company’s worldwide branches and run there for one season on the TV sets in the shops.
The IT service provider knew that a license is always required for the commercial use of music in live streams and videos. So in order to avoid copyright infringement and to secure the commercial use of the music titles, he reported the use to the responsible German collecting society, GEMA.
What is GEMA?
GEMA stands for “Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte” [Society for Musical Performing and Mechanical Reproduction Rights]. It is a global authors’ society (collecting society) for works of music. In Germany, it manages the copyright usage rights for 80,000 members (composers, lyricists and music publishers) as well as almost two million rights holders from all over the world.
GEMA Does Not Cover all Music Usage Rights
GEMA informed the IT service provider in a letter that clarifying the usage rights for the titles as well as the reproduction and distribution rights (i.e. for the type and length of use) could take some time. However, since the IT service provider was busy with the technical aspect of the live stream and integration into the client’s website at the time, he assumed that all rights would be clarified when he registered with GEMA. That was a mistake.
What the IT service provider didn’t know: GEMA’s usage rights contracts cover a large part of the reproduction rights for pieces of music - but not all of them. That’s why GEMA always provides information about the following regulation in its reply letters: GEMA is responsible for clarifying the usage rights, but the actual rights holders (e.g. music labels or composers) can decide whether they want to contact users directly or whether the rights should be calculated by GEMA on their behalf.
Watch Out for Synchronisation Rights!
Caution is also required on social media - despite the flat-rate license fee that GEMA has concluded with most social networks. This regulates the payment of fees between GEMA and the respective platform when a video with licensed music is uploaded to a platform such as YouTube, Instagram or TikTok. As a rule, users do not incur any further costs. HOWEVER: In addition to the license fee, there is also a so-called synchronisation right. This refers to the right to combine a piece of music with a film work as a soundtrack - the length of the “film work” is irrelevant. The type of use is important here: Commercial or private.
Music Label Demands Compensation
In this damage event, the IT service provider received a letter from a music publisher some time after the end of the live stream project, which also contained a questionnaire. It asked about how and for how long he planned to use The Doors’ musical track “Riders on the Storm” in the runway show. When the IT service provider informed the label that he had already registered the use of the title with GEMA and that the song was already part of the live stream recording, the label was anything but thrilled.
The result: A claim for damages of 28,000 euros (based on a total of 426 seconds used) and a cease and desist order threatening a fine of 15,000 euros for any further unauthorised publication. And things got even worse: After the first label, four others came forward, whose music had also been used during the fashion show. Although these songs were not as well known as the song by the Doors or the duration of use was shorter, a further 35,000 euros in damages were collected - including cease and desist letters.
Professional Indemnity Insurance Kicks in
The IT service provider turned to our insurance experts from exali to report the case and the claims for damages. We immediately forwarded the claim to the insurer, who took care of the matter with a specialised law firm. Together they negotiated with the music labels and were able to reduce the first claim for damages to a total of 59,000 euros for all five music titles. All costs - for the insurer handling the case, for the specialised law firm and for the compensation – were then paid by the insurer. The IT service provider only had to pay the deductible of 250 euros.
The reason for this is the passive legal expenses insurance integrated in Professional Indemnity Insurance from exali. In the context of Professional Indemnity Insurance, passive legal expenses insurance means that the insurer bears the costs of defending against and negotiating claims in addition to paying compensation. The costs that the insurer bears include legal and court costs, expert costs, witness expenses and travel expenses. Passive means that it is a matter of defending against a third-party claim (e.g. a claim for damages) and not of (actively) enforcing your own rights - i.e. when you are claiming compensation from someone else.
Daniela has been working in the areas of (online) editing, social media and online marketing since 2008. At exali, she is particularly concerned with the following topics: Risks through digital platforms and social media, cyber dangers for freelancers and IT risk coverage.
In addition to her work as an online editor at exali, she works as a freelance editor and therefore knows the challenges of self-employment from her own experience.