Music Publishers File Copyright Infringement Suit Against Multi-Channel Network

On Tuesday, the National Music Publishers Association, the leading trade association for music publishers, brought a copyright infringement lawsuit against Multi-Channel Network, Fullscreen, Inc.  The suit, filed in the Southern District of New York, addresses Fullscreen’s practice of ignoring royalty payment obligations to publishers and misrepresenting to YouTube that Fullscreen is both licensed and pays royalties to music publishers.  Contrary to Fullscreen’s misrepresentations the defendants have failed to compensate music publishers.

Fullscreen, one of the largest Multi-Channel Networks, aggregates and operates YouTube channels for third party clients and directly profits from the advertising revenue generated by unlicensed music videos. The company was launched under former YouTube alum, George Strompolos, who recognized the “lucrative and emerging business of producing, marketing, and commercially exploiting audiovisual works.” To this end, Fullscreen’s platform provides users with apps and tools to increase their subscriber count and thereby generate revenue.  Like many other MCN’s, Fullscreen’s channels consist mostly of performances of cover songs.  

The NMPA’s complaint alleges four distinct counts, including direct copyright infringement, contributory copyright infringement, inducement of copyright infringement, and vicarious copyright infringement, which stem in part from the defendant's practice of “willfully ignor[ing] their obligation to obtain licenses and pay royalties” and misleading YouTube about their payment practices. Fullscreen has twenty-one days to respond.

The NMPA has been instrumental in making music licensing accessible, both by working with third parties that generate revenue from music licensing, as well as developing innovative means of streamlining the licensing process.  For instance, the suit comes on the heels of a recent settlement announcement between the NMPA and a similar MCN, Maker Studios. On Tuesday the two sides announced that they have agreed in principle to work together to both establish a compensation model for past infringements, as well as to set up a forward-looking licensing regime that encourages Maker Studios to continue their business model in full compliance with the Copyright Act.  The settlement strongly conveys that copyright law is neither a barrier to MCN business models nor an obstacle to profitability.  Additionally, earlier this summer, the NMPA announced plans to partner with the RIAA and create a “micro-licensing vehicle that would make it easier for occasional users of music to get proper licensing at a reasonable rate.”  The joint venture enables small businesses and individuals with the tools to obtain the proper music licenses. 

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