Professional Documents
Culture Documents
Plaintiffs YESH MUSIC, LLC and JOHN EMANELE by and through their attorneys at
GARBARINI FITZGERALD P.C., bring this Class Action Complaint and Jury Demand against
Defendants AMAZON.COM, INC. (AMAZON) and AMAZON DIGITAL SERVICES, INC.,
(ADS) based on Defendants primary and secondary infringement of Plaintiffs and the
Putative Class copyrighted musical works pursuant to the Copyright Act and Copyright
Revisions Act, 17 U.S.C. 101 et seq. (the Copyright Act or Act), and Defendants
deliberate scheme to withhold royalties owed Plaintiffs and a Putative Class of copyright holders
that received royalties.
Plaintiffs are the beneficial rights holders to one hundred and eighteen (118)
copyright registrations covering one hundred and forty eight (148) musical recordings.
2.
Defendant ADS owns and operates an internet music streaming service which can
only be accessed through Defendant AMAZON and its Amazon Prime product. Defendant
AMAZON is one of the worlds largest retailers and sells a bundle of products called Amazon
Prime.
3.
recordings of Plaintiffs and the Putative Class by reproducing, and offering the copyrighted
recordings for streaming, permanent digital download, and for use in Defendant ADS Locker
Service. Defendants failed to serve a valid notice of Intent for a Compulsory License (NOI)
pursuant to Section 115 of the Act prior to exploiting Plaintiffs and the Putative Class
recordings.
4.
nothing by: (i) illegally manipulating the per stream royalty rate, (ii) miscalculating the all-in
payable royalty pool, (iii) obfuscating the nature of its service to qualify for a lower statutory per
user rate, (iv) deleting the run-times of 25-45% of the recordings on its service by classifying
them as unknown, (v) physically changed the run-times of some recordings to avoid paying
extra royalties, (vi) illegally allowing six month royalty free periods to students, (vii) failing to
include revenue in certain calculations and illegally excluded revenue in others, and (viii)
deleting stream information, or failing to report stream data, to the Professional rights
Organizations (PROs) prior to payment,
5.
The laundry list of frauds, and misdeeds, perpetrated by the Defendants shocks
the conscious. Defendants altered records, misstated information, and systematically infringed
the copyrighted recordings of Plaintiffs and the Putative Class, while simultaneously engaging
in an illegal scheme to reduce its royalty obligations to almost nothing in violation of the
Copyright Act.
PARTIES
6.
At all times material hereto, Plaintiff Yesh Music, LLC (YESH) was, and is, a
limited liability company organized under the laws of the State of New York, with its principal
offices located at 75-10 197th Street, Flushing, New York. YESH is engaged in, among other
things, the business of music publishing and otherwise commercially exploiting its copyrighted
sound recordings of the band The American Dollar. The sole members of Plaintiff are Richard
Cupolo and John Emanuele, who are also the sole composers of the Copyrighted Compositions.
7.
and is, an individual and resident of Queens. EMANUELE released two albums under the name
Zero Bedroom Apartment, which Defendant elected to make available to the public without
service of an NOI or payment of royalties.
8.
its principal place of business in Seattle, Washington. AMAZON owns and operates the
Amazon.com website, and equivalent international websites. AMAZON claims to have more
than two hundred and fifty million active customers, and nearly eighty million monthly
subscribers who are allowed access to Defendant AMAZON DIGITAL SERVICES, INC. Music
Service.
9.
corporation with its principal place of business in Seattle, Washington. ADS owns and operates
an interactive music streaming service, MP3 service, and music locker accessed through
Defendant AMAZONs Amazon Prime product.
JURISDICTION AND VENUE
10.
The jurisdiction of this Court is based upon 28 U.S.C. 1331 and 1338 in that
this controversy arises under the Copyright Act and Copyright Revision Act of 1976 (17 U.S.C.
101 et seq.). This action is a civil action over which this court has original jurisdiction.
11.
complained of herein occurs or has occurred in this District, and Defendant is subject to personal
jurisdiction in this District because they maintain a headquarters in this District located at 7 West
34th Street, New York, NY.
12.
reasons, on the grounds that Defendants, through its interactive web-based subscription service,
caused the unlicensed distribution of the Copyrighted Compositions throughout the State of New
York, including within this Judicial District.
13.
The Court has personal jurisdiction over Defendants pursuant to CPLR 302
(New Yorks long-arm statute) due to their continuous and systematic business activities within
New York as described below. Defendants have conducted and do conduct business within New
York. Defendants, directly or through intermediaries (including distributors, retailers, and
others), ship, distribute, offer for sale, sell, and advertise products in the United States, and
specifically to New York. Defendants purposefully and voluntarily distributed and reproduce
Plaintiffs and the Putative Class recordings in New York.
14.
Venue in this District is proper under 28 U.S.C. 1391(b) and (c) and/or 28
U.S.C. 1400(a).
15.
Plaintiffs have the right to bring the within action pursuant to 17 U.S.C. 501(b).
16.
The copyright in every musical composition at issue was registered in the United
Copies of each certificate issued by the U.S. Copyright Office to Plaintiffs and
assignments registered with the U.S. Copyright Office are annexed and incorporated hereto
respectively as Exhibits A and B. Alternatively, the registrations for the groupings are attached
as Exhibit C.
18.
of publication, or prior to the infringement, and satisfies the registration prerequisite under 17
U.S.C. 412(c). A list is attached as Exhibit D.
CLASS ALLEGATIONS SUB-CLASS I
19.
Plaintiffs brings this action on behalf of themselves and on behalf of all other
similarly situated owners of mechanical rights for registered musical compositions, which rights
21.
This action may be properly brought and maintained as a class action because
there is a well-defined community of interest in the litigation and the members of the proposed
class are clearly and easily ascertainable and identifiable.
22.
The class for whose benefit this action is brought is so numerous that joinder of
all class members is impracticable. Plaintiffs are informed and believe that there are thousands
of class members and that those class members can be readily ascertained from Defendants
database files and records, and via discovery in this action.
23.
Upon information and belief, Defendants have maintained records of the musical
The Putative Class Members can be readily located and notified of this action.
25.
The claims of Plaintiffs are typical of the claims of the members of the Putative
Class, and his interests are consistent with and not antagonistic to those of the other Putative
Class members they seek to represent.
26.
Defendants have reproduced and/or distributed without license and without providing
notification to Plaintiffs.
27.
Plaintiffs, and all members of the Putative Class, have sustained actual pecuniary
loss and face irreparable harm arising out of Defendants continued infringement as complained
of herein.
28.
Plaintiffs have no interests that are adverse to, or which conflict with, the interests
of the absent members of the Putative Class and is able to fairly and adequately represent and
protect the interests of such a class.
29.
Plaintiffs have raised a viable copyright infringement claim of the type reasonably
expected to be raised by members of the Putative Class, and will vigorously pursue those claims.
30.
If necessary, Plaintiffs may seek leave of the Court to amend this Second
Amended Complaint to include additional class representatives to represent the Putative Class or
additional claims as may be appropriate.
31.
Common questions of fact and law exist as to all members of the class that
predominate over any questions affecting only individual members of the class.
33.
These common legal and factual questions, which do not vary from class member
to class member, and which may be determined without reference to the individual
circumstances of any class member include, without limitation, the following:
(a)
(b)
(c)
(d)
(e)
(f)
34.
A class action is superior to other available methods for the fair and efficient
adjudication of this controversy since individual litigation of the claims of all class members is
impracticable.
35.
The claims of the individual members of the class may range from smaller sums
to larger sums, depending upon the number of infringements. Thus, for those Putative Class
members with smaller claims, the expense and burden of individual litigation may not justify
pursuing the claims individually. Even if every member of the class could afford to pursue
individual litigation, which is highly unlikely in the independent artist community, the court
system could not.
36.
numerous cases would proceed. Individualized litigation would also present the potential for
varying, contradictory, or inconsistent judgments and would magnify the delay and expense to
all parties and to the court system resulting from multiple trials of the same factual issues.
37.
On the other hand, the maintenance of this action as a class action presents few
management difficulties, conserves the resources of the parties and of the court system, and
protects the rights of each member of the class.
38.
action.
CLASS ALLEGATIONS SUB-CLASS II
39.
Plaintiffs bring this action on behalf of themselves and on behalf of all other
similarly situated owners of mechanical rights for registered musical compositions, which rights
were improperly infringed by Defendants systematic and unlawful reduction in the all-in royalty
pool, payable pool, and per-stream allocation.
40.
41.
This action may be properly brought and maintained as a class action because
there is a well-defined community of interest in the litigation and the members of the proposed
class are clearly and easily ascertainable and identifiable.
42.
The Putative Class for whose benefit this action is brought is so numerous that
joinder of all class members is impracticable. Plaintiffs are informed and believe that there are
thousands of class members and that those class members can be readily ascertained from
Defendants database files and records, and via discovery in this action.
43.
impracticable. While the exact number of Putative Class members is unknown at the present
time, it is estimated that there are thousands of members in the Putative Class.
44.
Despite the numerical size of the Putative Class, the identities of the Putative
Class members can be ascertained by mapping. Plaintiffs and their counsel do not anticipate any
difficulties in the management of this action as a class action.
45.
Plaintiffs will fairly and adequately represent the interests of the Class. Plaintiffs
are committed to vigorously prosecute this action and have retained competent counsel
experienced in class action litigation. Plaintiffs are Class members and have no interests
antagonistic to or in conflict with other Putative Class members. Plaintiffs are represented by
lawyers who have had extensive experience in prosecuting class actions and will adequately
represent the Putative Class in this action.
46.
The Putative Class Members can be readily located and notified of this action.
48.
The claims of Plaintiffs are typical of the claims of the members of the class, and
their interests are consistent with and not antagonistic to those of the other class members they
seek to represent.
49.
Plaintiffs and the Putative Class hold the rights to many copyrighted musical
compositions which Defendants have reproduced and/or distributed without license and without
proper payment of royalties or accounting for those royalties.
50.
Plaintiffs and all members of the Putative SUB-CLASS II have sustained actual
pecuniary loss and face irreparable harm arising out of defendants systematic and unlawful
diminution of the royalty payments with accounting for those payments as described herein.
51.
Plaintiffs have no interests that are adverse to, or which conflict with, the interests
of the absent members of the Putative Class members and is able to fairly and adequately
represent and protect the interests of such a class.
52.
Plaintiffs have raised a viable claim of the type reasonably expected to be raised
If necessary, Plaintiffs may seek leave of the Court to amend this Second
Common questions of fact and law exist as to all members of the class that
predominate over any questions affecting only individual members of the class.
56.
These common legal and factual questions, which do not vary from class member
to class member, and which may be determined without reference to the individual
circumstances of any class member include, without limitation, the following:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
57.
A class action is superior to other available methods for the fair and efficient
adjudication of this controversy since individual litigation of the claims of all class members is
impracticable.
58.
The claims of the individual members of the class may range from smaller sums
to larger sums, depending upon the number of infringements. Thus, for those class members
with smaller claims, the expense and burden of individual litigation may not justify pursuing the
claims individually. Even if every member of the class could afford to pursue individual
litigation-which is highly unlikely in the independent artist community-the court system could
not.
59.
numerous cases would proceed. Individualized litigation would also present the potential for
varying, contradictory, or inconsistent judgments and would magnify the delay and expense to
all parties and to the court system resulting from multiple trials of the same factual issues.
60.
On the other hand, the maintenance of this action as a class action presents few
management difficulties, conserves the resources of the parties and of the court system, and
protects the rights of each member of the class.
61.
action.
GENERAL FACTS
62.
Traditionally, the major record labels typically had staff (or full departments)
dedicated to securing mechanical licenses by negotiating directly with copyright owner of the
song (or, failing that, by utilizing the compulsory licensing provisions of Section 115). In
addition, record labels frequently outsourced the job of securing mechanical licenses to third
parties who charge a fee for this service. There are a number of third party services that license,
or secure mechanical licenses, in exchange for a fee.
Compulsory Mechanical Licenses
63.
musical compositions, such that an owner of a musical composition is required to grant a nonexclusive license to anyone who wants to reproduce and distribute recordings of a song.
64.
obtain the license under the law. The person or entity seeking a compulsory license must
provide notice, account, and pay royalties to the copyright owner.
65.
As for notice, "[a]ny person who wishes to obtain a compulsory license under
[Section 115] shall, before or within thirty days after making, and before distributing any
phonorecords of the work, serve notice of intention to do so on the copyright owner." Section 1l
5(b)[ 1]. The content and method of service of the notice are prescribed by statute and
regulation. 17 U.S.C. 115(b); 37 CFR 201.18.
66.
With respect to accounting and royalties, the person or entity who obtains a
When a mechanical license is not obtained, the copyright owners of the songs and
the songwriters do not get paid for the reproduction and distribution of their music. For
songwriters, like Plaintiffs, whose songs are not played on the radio, the royalties earned from
mechanical licenses is often the only income they ever earn from their songs.
68.
infringement which may not be cured after the fact by attempting to obtain a compulsory license.
Section 115 further provides that [flailure to serve or file the notice required by clause [1]
forecloses the possibility of a compulsory license and, in the absence of a negotiated license,
renders the making and distribution of phonorecords actionable as acts of infringement. .. In
other words, failure to obtain the compulsory license before recording, reproducing, or
distributing the song in sound recordings is copyright infringement.
69.
70.
Defendant ADS owns and operates three music services, Amazon MP3, Amazon
Cloud, and Amazon Music (also referred to as Amazon On-Demand). This is a bundle of music
products allowing the subscriber to purchase permanent digital downloads through Amazon
MP3, store music in a digital locker through Amazon Locker, and stream music as well as create
a tethered download library of temporary digital downloads through Amazon Music.
71.
Prime product.
72.
Defendant ADS launched Amazon Music on or about June 21, 2014, which gave
paying Amazon Prime subscribers access to a library of songs for no additional cost and without
ads.
73.
Theres only one way to get Prime Music, and thats through an Amazon Prime
subscription, which, in the U.S., costs $99 for the entire year.
74.
75.
If the potential subscriber has a .edu email address, the user can save even
further with Amazon Prime Student, which comes with a six-month free trial and a 50% discount
when the trial ends.
AMAZONS DIRECT INFRINGEMENT
76.
Plaintiff YESHs latest release for free if the user applied for an AMAZON credit card.
AMAZON had no license or authority for this use. All eleven registrations, including the
registration for Mosaic, have been infringed
required to make (2) A clear statement of the information listed in paragraph (d)(1) of this
section requires a clearly intelligible, legible, and unambiguous statement in the Notice itself and
without incorporation by reference of facts or information contained in other documents or
records.
78.
prior NOIs.
79.
All ten of the NOIs that exist on Defendant ADS agents system pertain to
locker services and do not apply to the Amazon Music Service. All ten NOIs clearly state on
their face: Digital Phonorecord Deliveries, as set forth in 17 U.S.C. Sec. 115 including, but not
limited to, interactive streams and permanent digital downloads associated with a paid locker
service and/or a purchased content locker service. (Emphasis added).
80.
Defendant AMS cannot convert the NOIs to fit whatever purpose they choose.
When the CRB created the five new products -- Limited Offerings, Mixed Service Bundles,
Music Bundles, Paid Locker Services and Purchased Content Locker Services, it required each to
comply with Section 115.
81.
paid locker.
Here, the undeniable purpose stated for the use all ten NOIs are associated with a
82.
The fact that Defendant AMS included the statement but not limited to, does
not change the legal purpose because but not limited to is not a clear an unambiguous use as
required by law.
83.
As a direct result, all ten NOIs cannot be used to secure rights for the Amazon
Music Service.
84.
Further, the NOIs were untimely with the exception of the November 2015 NOI
which was uploaded to the Music reports system, but never mailed as required by law. They are
therefore facially invalid.
85.
Defendant ADS has infringed each of Plaintiffs 118 copyright registrations, and
do so with clear intent. Intent can be inferred from Defendants actions, and includes willful
blindness and reckless disregard to Plaintiffs rights.
AMAZONS, THROUGH ITS AGENT MUSIC REPORTS, INC., MATERIALLY
ALTERED ELECTRONICALLY STORED PREVIOUSLY SERVED NOIs TO COVER
DEFENDANTS INFRINGEMENTS
86.
Eight of the subject NOIs are invalid because they were materially altered in an
attempt to deceive Plaintiff YESH into believing its recordings on Defendant AMS Music
Service were there subject to a valid license.
87.
Defendant ADS, through its agent Music Reports, illegally added all of the
Defendants scheme is borne out through a simple analysis of the NOIs which
show over 25% of the identified recordings on eight of the ten NOIs come from albums that
were released years after the NOI was served.
89.
The electronic NOIs are stored on the servers of Defendant ADS agent Music
Reports. Each month Music Reports creates a royalty calculation report for each copyright
holder that purportedly details the streaming data and identifies which previously served NOI
covers each track.
90.
Every month, before the reports are released, Music Reports, at the direction of
Defendants, makes sure every track is purportedly licensed. Instead of licensing the recordings
within 30 days in which they were made available as required by law, Music Reports waits until
the unlicensed track has been streamed at least once, and then adds that track to a previous NOI.
91.
A rights holder would have to go through an intensively time consuming analysis, as Plaintiffs
have done here, to comprehend the full extent of the depth of the Defendants violation of their
exclusive rights under the Act.
92.
In 2014, Plaintiff contacted Defendants agent, Music Reports, and requested the
actual physical NOIs from MusicReports. Music reports employee, Jon Johnson, was delighted
to provide the requested documents. Approximately ten minutes after Mr. Johnson agreed to
provide the originals, R. Johnson sent an email rescinding the prior-approval.
93.
94.
96.
Defendant served NOI Number 515947 dated May 31, 2012 with a purported
release date to Defendant ADS Locker Product of June 19, 2012 (the May 31, 2012 NOI).
Attached as Exhibit E.
97.
The May 31, 2012 NOI covered one track from one release, and was altered to
include:
2 tracks from The Best Of The American Dollar Volume 2 Ambient
December 20, 2012,
4 tracks from Music For Focus And Creativity December 10, 2013,
1 track from Music for Sleep, and
6 tracks from the Five Album Set released May 5, 2014.
98.
Obviously, a 2012 NOI cannot have 2014 recordings unless it was altered.
99.
The May 21, 2013 NOI bears number 551475 and claims a date of first
distribution to Defendants Locker Product of June 3, 2013. See Exhibit F. Twenty four tracks
on the May 21, 2013 NOI were on Defendants system from 2012. The remaining tracks were
released well after the NOI service date, to wit:
11 tracks from Music for Focus and Creativity released on December
10, 2013.
8 tracks from the Five Album Set released May 5, 2014.
100.
Defendant released an NOI No. 554858 on July 9, 2013 with a purported release
date to Defendant ADSs Locker Product of July 16, 2013 (the July 9, 2013 NOI). Attached
as Exhibit H.
101.
102.
All of these releases, of course, were after the purported date the NOI was served.
103.
The April 24, 2013 NOI bearing number 547298 appears to be the go-to NOI
for fraud (the April 24, 2013 NOI). This NOI has a release date to Defendant ADSs Locker
Product of May 6, 2013.
104.
The April 24, 2013 NOI contains the following tracks from releases made well
after the NOI date. In fact, this NOI contains 46 tracks from a release made almost a year after
its service date. Attached as Exhibit I.
22 tracks from Music for Focus and Creativity released December 10,
2014.
2 tracks from Music for sleep released December 12, 2013.
46 tracks from the Five Album Set released May 5, 2014.
105.
Amazingly, Defendant began distributing the above tracks on May 6, 2013, well
Defendant served NOI No. 569297 on October 10, 2013 with a purported release
date onto its Locker Product of October 18, 2013 (the October 10, 2013 NOI). Attached as
Exhibit J.
107.
The October 10, 2013 NOI covers three songs, each of which appeared on
numerous releases. The NOI lists one of the releases in which each of the songs appears is the
May 5, 2014 release titled Five Album Set + Bonus Eps.
108.
This release, of course, was seven months after the purported date the NOI was
109.
The October 10, 2013 NOI was also altered to included one track Plaintiff
served.
EMANUELE for the band Zero Bedroom Apartment, for the album Filmmuzik 2 which was
released to Defendant in October 2014.
110.
All of the tracks from Filmmuzik 2, however, were reproduced by Defendant ADS
Defendant released an NOI No. 570843 dated October 21, 2013 with a purported
release date to Defendant ADS Locker Product of October 27, 2013 (the October 21, 2013
NOI).
112.
The October 21, 2013 NOI covered five songs, each of which was re-released 2-
3 times. (Attached as Exhibit K.) The NOI was altered to include each song on the following
releases;
3 tracks from the December 10, 2013 release titled Music For Focus
And Creativity,
3 tracks from the December 12, 2013 release titled Music For Sleep,
and
1 tracks from the May 5, 2014 release titled Five Album Set + Bonus
Eps.
113.
All of these release, of course, were after the purported date the NOI was served.
114.
NOI No. 585746 dated April 7, 2014 with a purported release date to Defendant
ADSs Locker Product of April 7, 2014 (the April 7, 2014 NOI) appears to be unaltered.
115.
The April 7, 2014 NOI covered four tracks which were re-released an average of
2.5 times in 5 groupings. The April 7, 2014 NOI has not been altered, to the best of Plaintiffs
knowledge. This was the very NOI which was the subject of Rich Cupolos conversation with
Music Reports. Defendant knew Cupolo had the physical copy of the original, and not
coincidently, is one of two unaltered NOIs.
116.
Every track, however, covered by the April 7, 2014 NOI had been used in
Defendants locker service for at least one year prior to the service date. Accordingly, the NOI is
facially invalid.
117.
Defendant released NOI No. 611933 dated January 7, 2015 with a purported
release date to Defendants Locker Product of January 7, 2015 (the January 7, 2015 NOI).
118.
The January 7, 2015 NOI covered one song which appears on two releases. The
track, Intro, was on Defendant ADSs system for two years prior to the NOI service date.
Consequently, the January 7, 2015 NOI is facially invalid.
119.
Defendant released an NOI No. 671937 dated November 2, 2015 with a purported
release date to Defendant ADSs Locker Product of November 2, 2015 (the November 2, 2015
NOI).
120.
The November 2, 2015 NOI covered one track which was released twice. The
track, Intro, was on Defendant ADSs system for two years prior to the NOI service date.
Consequently, the November 2, 2015 NOI is facially invalid.
121.
Defendant released an NOI Number 676251 dated November 16, 2015 with a
purported released to Defendant ADS Locker Product on November 16, 2015 (the November
16, 2015 NOI).
122.
The November 16, 2015 NOI covered eight tracks. Seven of those tracks are on
Plaintiffs latest release which came out on December 10, 2015, and was released to Defendant
on the same day. The other track was on Defendant ADSs system for two years and the NOI is
accordingly invalid as to that track.
123.
Defendant directed its agent, Music Reports, to change the electronically stored
NOIs to ensure future copyright royalty statements show ever track is covered by an NOI.
124.
Worse, all NOIs are invalid because they pertain to Defendants Music Locker
product, not to Prime Music. Defendant has attempted to take invalid NOIs and materially alter
them to cover all of the tracks. There is no reason for recordings from a 2014 to be on a 2012
NOI. Defendant fabricated the NOIs, and has infringed Plaintiff YESHs exclusive rights under
the Act to 116 Registrations.
125.
It is impossible to tell which tracks, other than later releases, were added to the
NOIs. Based on Defendant ADS behavior, it is safe to assume the majority of tracks.
126.
All of Plaintiff YESH music was up on ADS system by December 2012 (with
the exception of the later releases.) All of the 2013-2014 NOIs are invalid as they claim to
compel a license for those tracks.
127.
128.
This level of deceit warrants an award to Plaintiffs and the Putative Class at the
Defendants were well aware of their legal obligation to serve NOIs prior to
***
***
the specter of statutory damages for failing to timely send NOIs under the
Section 115 licensing process exposes digital music service providers to
levels of risk that are not equitable under the circumstances.
See Exhibit L.
131.
Mechanical Royalties. Defendant won incredible concessions in that negotiation, including the
ability to serve the US Copyright Office if the artist could not be found.
132.
Knowing its legal obligations, and also knowing its agent was not sending out a
large portion, perhaps all, of the NOIs (discussed below); Defendants elected to break the law
rather than comply.
133.
Defendants also knew their agent MusicReports cannot, and certainly does not,
Music Reports admitted that fact to the Copyright Royalty board. In an official
Defendants knew exactly what was going on, but made a tactical business
decision. This is not the first time a class-action against AMAZON has been brought to remedy
the same behavior. See Blagman v. Apple, Inc. et al, No. 1:2012cv05453 (S.D.N.Y. 2012). This
is a clear indication of intent on the part of Defendants.
138.
Defendant ADS violated the Act and supporting regulations each month Plaintiffs
and the Putative Class received a royalty calculation report from Defendants agent
MusicReports.
139.
The MusicReports royalty calculation report consists of three aspects, the first
was recently a bogus certification from a purportedly independent small accounting firm Baker
Tilly Virchow Krause LLP.
140.
The Baker Tilly certification is, however, just a rouse. Amazon is responsible for
It must be noted that Baker Tilly prepared the repots for Amazon ADS, but relied
142.
The Baker Tilly certification makes it appear as if the royalty reports are valid and
certified is an independent auditor. Again, Baker Tilly only certifies the calculation.
143.
The first page is now just an affirmation by Steve Bloom. See Exhibit M.
144.
The second page consists of the royalty pool and per stream calculation page. See
Exhibit N.
145.
The final page is the detail report which highlights the fraud perpetuated by the
all-in royalty pool calculation is accurate, and this is impermissible under the Statute and
enacting regulations.
147.
Defendant ADS is subject to the Music Bundle for purposes of the calculation
for the all-in royalty pool which is the greater of (i) 11.35% of the revenue (Defendant ADS,
however, claims no revenue.)
148.
Defendant can also calculate the pool as 21% of the service payments to record
companies if licenses are not pass through, or 17.36% of the service payments to record
companies if songs are pass through.
149.
The all-in royalty pool minus the payments paid for performance royalties equals
the payable royalty pool. The payable royalty pool divided by the total streams equals the perstream allocation rate.
150.
The per-stream allocation rate is how most artists survive. To allow Defendants
151.
If every company followed the Defendants in its bogus calculations, many, most
of the entertainers, who rely on this revenue would no longer be able to make music.
152.
ADS has woefully failed to provide the statutorily required information sufficient to establish its
calculation of the all-in royalty pool.
153.
ADS has woefully failed to provide the statutorily required information sufficient to establish its
calculation of the all-in royalty pool.
A
Service Revenue
154.
B Service Revenue subject to Promotional
Royalty Rate
C Service Revenue subject to All-In
Royalty Calculation
D Number of Subscribers
E Label Payments, where label pays
publishing
F Label Payments, where service pays
publishing Performance Royalties
G Performance Royalties
H Applicable Service Revenue Rate
I
All-In Royalty, by Revenue Calculation
J Applicable Per Subscriber Rate
K All-In Royalty, by Subscriber
Calculation
L Applicable Label Rate, where label
pays publishing
M Applicable Label Rate, where service
pays publishing
N All-In Royalty, by Label Payment
Calculation
O Applicable Service Type Minimum
Lesser of K or N
P All-In Royalty
$0.00
N/A
A-B
$0.00
4,435,288
$0.00
$4,664,503.00
C*H
D*J
$405,629.25
10.50%
$0.00
N/A
N/A
17.36%
21.00%
(E * L) + (F * M)
$979,545.63
$979,545.63
Greater of I or O
$979,545.63
R
S
155.
P-G
$573,916.38
D*R
25.00%
$1,108,822.00
Greater of Q or S
$1,108,822.00
961,241,639.6
0.0
U-V
961,241,639.6
$0.00
from Defendant to ascertain whether Defendant ADS calculations are correct. Every calculation
Defendant made is predicated on the amount it pays for the sound recording royalties (Line F on
the chart).
156.
Defendant ADS offers no information about how it arrived at this number, and no
Plaintiff contacted TuneCore, the PRO that issues the sound recording royalties,
and requested back up information on how Defendant calculated the sound-recording pool.
158.
confidential.
159.
number that is confidential. This does not satisfy the statute and Defendants obligations.
160.
Plaintiffs and the Putative Class also question the near extortionate reduction in
around March 2014, AMAZON increased the price of its Prime Service from $79.00 to $99.00.
162.
The $20.00 increase was directly due to Prime Music and the planned Prime
163.
The $20.00 increase was the only way AMAZON could add the new services.
Video.
AMAZON had to roll out the increase before Prime Music was released so it could offer it as a
free service months later.
164.
Prime renewal likelihood. Results showed 94 percent of Amazon Prime customers were likely to
renew at the $79 price point, but if price increased by $20, only 58 percent were likely to renew.
165.
What the UBS analysts were unaware of, is the fact that the increase would be
followed by the roll-out of free music and video services. The services were, of course. not
free, they cost $20 per year.
166.
Rolling out Prime Music took six months in programing time alone. Defendants
had Prime Music in the testing phase on the date of the increase, and Prime Video in the
programming phase. Moving the increase to before the services were made available offers
significant benefits. First, it avoids subscribers trying to opt-out of the new service. It also
avoids the ill-will of associating the service with the increase. Finally, the Defendant can create
good-will by offering a new free product for free.
167.
Splitting the increase between video and music, the actual revenue generated, and
54,166,666
11.35%
$6,147,916
The payable royalty pool is the all-in royalty pool minus the performance
170.
Defendant AMAZON reduced its lawful payable royalty pool from $5,742,286.75
to $1,108,822.00.
171.
Plaintiff purportedly had 14,357 streams and was paid royalties of $28.12.
(Plaintiff YESH likely had far more, but the 14,357 is what Defendant ADS reported).
172.
At the correct royalty rate, Plaintiff YESHs 14,357 streams equals $91.82.
173.
This is the typical practice of Defendants toward Plaintiffs and the Putative
Class. Plaintiffs and the Putative Class are owed tens of millions of dollars in royalties stolen
by Defendants.
Amazon may have as many as 80 million subscribers, see http://www.geekwire.com/2015/amazon-may-have-upto-80-million-high-spending-prime-members-worldwide/. Consumer Intelligence Research Partners, LLC (CIRP)
regularly analyzes buyer shopping patterns on the site to make its own well-educated guess as to how many there
are. "This analysis indicates that Amazon Prime now has 54 million U.S. members, spending on average about
$1,100 per year, compared to about $600 per year for non-members," the research company said in a press
release that looked at Q4 of 2015. This new estimate compares to an estimated 40 million U.S. members at the
end of 2015, or an increase of 35%, according to previous CIRP figures. The
http://www.geekwire.com/2015/amazon-adds-3m-new-prime-members-in-one-week-in-december/.
175.
Defendant ADS made Plaintiff YESHs new single Mosaic and album Across
the Oceans available for streaming on November 10, 2015 and December 10, 2015 respectively.
176.
In the four months since the release of the single and ten other tracks they have
Defendant ADS has failed to report a single track was streamed on its Prime
Publishing Streams
(MusicReport)
6,371
August 2015
19,302
14,305
September 2015
19,296
15,736.2
October 2015
27,159
22,128
November 2015
10,693.60
December 2015
7,995
January 2016
2,714.60
180.
Compare Exhibit O which is the streams for January from MusicReports and
182.
information by MusicReports to eliminate those tracks related to recordings which no NOI was
served.
183.
For example, in August 2015, TuneCore reported 7 entries for the song Age of
new tracks, to old NOIs, MusicReports simply deleted the data from tracks not covered by an
NOI. It also attempted, at times, to add the stream information from an uncovered song to one
that was.
185.
Staying with August 2016, TuneCore reported 61 additional songs that were
streamed that MusicReports did not report. This means either Amazon directly, or Music
Reports on its behalf, deleted the stream data from 25% of the streams.
186.
tracks from its library (with the exception of the latest group) at the apex of success for Plaintiff
YESHs tracks. The removal of the tracks coincides with the wave of publicity over Plaintiffs
case against Tidal. A guilty conscience is a terrible thing.
AMAZON REMOVED RUN-TIME INORMATION
187.
188.
189.
190.
Mysteriously, Defendant classifies the run times for over 30% of the recordings
Taking last month (January 2016) as an example, attached as Exhibit O, the first
of many glaring errors is the bogus unknown playing time appears in 58 of the 263 entries.
192.
Defendant simply ignores the information its own system in order to reduce the
The run-time is important because, by statute, streaming rates increase for all
Plaintiff has eighteen recordings over 5:01 seconds (qualifying each one of those
196.
Defendant is well-aware that every recording on its Music System shows the run-
197.
Plaintiffs and the Putative Class have been damaged by Defendant ADS
time.
Defendant AMAZON offers six months of free service to anyone with a .edu
199.
After the six months, the service is half of the normal price.
200.
email.
The free trial period does not exceed 30 consecutive days per subscriber
per two-year period.
201.
Plaintiffs and the Putative Class have been damaged by this in an amount to be
proven at trial.
FIRST CLAIM FOR RELIEF
COPYRIGHT INFRINGEMENT
202.
Plaintiffs and the Putative Class incorporate the allegations contained in the
Plaintiffs or the Putative Class, reproduced and publicly performed and/or publicly distributed
Plaintiffs Copyrighted Compositions through its interactive web-based subscription streaming
service.
204.
It cannot be disputed that the Plaintiffs and the Putative Class have valid,
registered copyrights, and that Defendants have reproduced and offered the Copyrighted
Compositions for streaming, including permanent and temporary digital download, without a
license, thus infringing Plaintiffs and the Putative Class rights under Section 115 of the
Copyright Act. Irreparable injury is presumed here as Plaintiffs and the Putative Class have
established a prima facie case of copyright infringement.
205.
Even after Defendants were put on notice in a previous action in this Court just
three years ago, Defendant elected to continue to reproduce and publicly perform and/or publicly
distribute Plaintiffs Copyrighted Compositions through its subscription service.
206.
the payment of royalties is actionable as acts of infringement under section 501 and fully subject
to the remedies provided by sections 502 through 506 and 509.
207.
Each time the Plaintiffs and Putative Class were deprived of their statutory royalty
entitlement, e.g., by non-payment of royalties, a distinct harm was done to Plaintiffs and the
Putative Class property interest.
208.
504(c)(2) for purposes of enhancing statutory damages. Defendants knew that their actions
constituted an infringement each time it failed to serve an NOI or make a royalty payment.
209.
Defendants knowledge may also be inferred from its conduct including the
reckless disregard of the Plaintiffs and Putative Class rights (rather than actual knowledge of
infringement), which suffices to warrant award of the enhanced damages.
210.
Every time Defendants materially altered documents to cover their illegal activity,
Plaintiffs and the Putative Class have incurred damages, as described more fully above. Pursuant
to 37 C.F.R. 385, Plaintiffs and the Putative Class are entitled to a per stream statutory
royalty rate of $.01 for interactive web-based streaming services like Defendant.
212.
Plaintiffs and the Putative Class may also elect to recover statutory damages
pursuant to 17 U.S.C. 504(c)(2) for willful infringement of up to $150,000, but not less than
$30,000, for each infringement of each copyright registration identified in Exhibit A and those
that will be produced for the Putative Class, as available under the law.
SECOND CLAIM FOR RELIEF
COPYRIGHT INFRINGEMENT
213.
Alternatively, while Plaintiff YESH does not release traditional albums, in the
event this Honorable Court finds it does, Defendants have intentionally infringed the Copyright
Registrations identified in Exhibit B for the collections of compositions registered to Plaintiffs.
215.
Defendant has, without a mechanical license under Section 115 from Plaintiffs,
It cannot be disputed that the Plaintiffs have valid, registered copyrights, and that
Defendant has reproduced and offered the Copyrighted Compositions for streaming, including
permanent and temporary digital download, without a license, thus infringing Plaintiffs rights
under Section 115 of the Copyright Act. Irreparable injury is presumed here as Plaintiffs have
established a prima facie case of copyright infringement.
217.
504(c)(2) for willful infringement of up to $150,000, but not less than $30,000, for each
infringement of each copyright registration identified in Exhibit B, as available under the law.
Alternatively, while Plaintiff YESH does not release traditional albums, in the
event this Honorable Court finds it does, Defendants have intentionally infringed the Copyright
Registrations identified in Exhibit B for the collections of compositions registered to Plaintiffs.
220.
Defendant has, without a mechanical license under Section 115 from Plaintiffs,
It cannot be disputed that the Plaintiffs have valid, registered copyrights, and that
Defendant has reproduced and offered the Copyrighted Compositions for streaming, including
permanent and temporary digital download, without a license, thus infringing Plaintiffs rights
under Section 115 of the Copyright Act. Irreparable injury is presumed here as Plaintiffs have
established a prima facie case of copyright infringement.
222.
504(c)(2) for willful infringement of up to $150,000, but not less than $30,000, for each
infringement of each copyright registration identified in Exhibit B, as available under the law.
Plaintiffs and the Putative Class reallege and incorporate by reference each and
every allegation contained in the preceding paragraphs with the same force and effect as if fully
set for that length herein.
224.
Defendant ADS had knowledge of the infringing activity, and induced, caused or
Defendant AMAZON has the right and ability to supervise the infringing activity
Defendant ADS has the right and ability to supervise the infringing activity and
Plaintiffs and the Class Members have been damaged, and Defendants have been
unjustly enriched, in an amount that is not as yet fully ascertained but which Plaintiffs are
informed and believe is not less than $150,000 according to proof at trial.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, on behalf of themselves and on behalf of all other
persons similarly situated, respectfully prays for relief against Defendant as follows:
1.
2.
as class counsel;
3.
4.
5.
6.
Injunctive relief that requires AMAZON and ADS to pay for the services of a
third party auditor to identify the owners of all works reproduced and/or
distributed by Defendants despite Defendants failure to first obtain a mechanical
license prior to reproducing and/or distributing the Works, and further requiring
Defendant ADS to remove all such unlicensed tracks from its services until it
obtains proper licenses for them;
7.
profits;
8.
9.
Award statutory damages to Plaintiffs and the Putative Class according to proof,
including but not limited to all penalties authorized by the Copyright Act (17
U.S.C. 504(c)(1), 504(c)(2));
10.
11.
Award Plaintiffs and the putative Class pre- and post-judgment interest to the
extent allowable; and,
12.
Award such other and further relief that the Court may deem just and
proper.
JURY DEMAND