Copyright Infringement Insurance Policies for Songwriters

Occupying the top spot on my Google Reader subscription list, Eric Beall’s Berkleemusic blog (http://ericbeall.berkleemusicblogs.com/) is a go-to music industry resource of mine. Beall is currently an A&R for Shapiro, Bernstein & Co, one of the nation’s most eminent independent music publishers. As someone who has a successful career in the business, he’s able to draw on personal experiences and provide information that you simply can’t get from the majority of music industry pundits. One of his latest blog entries, “Beware of The Suits— Lawsuits, That Is…”, is no exception, and it shines some light on a topic that many newcomers to the industry are unaware of: the fact that songwriters can purchase copyright infringement insurance policies.

There’s a reason why most who are just entering the industry don’t know about this insurance option: it has always been unaffordable for the majority of songwriters. Until now…

Eric’s blog post addresses the proliferation of copyright infringement disputes in the industry today. He concludes by profiling the Nashville Songwriters Association International’s recent partnership with Frost Specialty (an insurance agency) to offer new, more affordable copyright infringement insurance policies to songwriters. Here is an excerpt from his blog post concerning the policies that NSAI and Frost Specialty have created:

On that last subject, there’s a new service being offered by the Nashville Songwriters Assn. International, that may make a lot of economic sense for some songwriters. If you’re someone who regularly has songs commercially released, you may want to consider NSAI’s recent partnership with insurance agency Frost Specialty, which has created a copyright-infringement insurance policy for NSAI members.

This group plan allows songwriters to pay relatively low premiums for a moderate level of coverage. In the past, writers often had to purchase at least $1 million dollars worth of coverage, which is very expensive. Under the NSAI policy, writers can pay premiums as low as $1,500 for $100,000 of coverage– most copyright disputes are settled for less than $100,000.

Kudos to NSAI, which is truly one of the most effective songwriter organizations in existence (and one to which every songwriter should belong anyway) and to NSAI president (and legendary country songwriter) Steve Bogard for taking on a very challenging problem. Remember– in our society, anyone can sue anyone for anything, with or without cause. The plaintiff may not win, but for the accused, who finds his or her money frozen, legal fees mounting, and reputation damaged, it may not matter who wins. If you’re making a living at songwriting, I would strongly suggest that you consider the necessity of the NSAI-Frost policy. Check it out at:

http://www.frostspecialty.com

The full blog entry can be found here: http://ericbeall.berkleemusicblogs.com/2009/08/03/beware-of-the-suits-lawsuits-that-is/

And here’s another article (from InsuranceJournal.com) that covers the new NSAI/Frost policies and how they compare to other policies being offered in the marketplace: http://www.insurancejournal.com/news/national/2009/07/16/102268.htm

Upon learning about these policies, you may be wondering if copyright infringement insurance is only a concern for songwriters who retain all (or a portion) of their copyrights. If, for example, a songwriter entered into a standard publishing deal that saw him assign 100% of the ownership in his copyrights to an outside publisher, would he still be liable in the event of a copyright dispute, or would the publisher be assuming all of the risk?

This is what first ran through my mind, and I decided to do some investigating. Eric was nice enough to offer some insight on that question, so I’ll be paraphrasing from our exchange as well as from some legal texts that I consulted.

Copyright infringement insurance is, in fact, a concern for writers who have standard publishing deals. This is attributable to the WARRANTIES AND REPRESENTATIONS and ACTIONS AND INDEMNITIES clauses that virtually all publishing agreements contain. A warranties and representations clause sees the writer assert that no composition covered by the agreement infringes upon any existing works and that each composition is free of any legal entanglements. An actions and indemnities clause states that the publisher can charge the writer back for any legal expenses/damages payable/settlements that may arise if the ownership of one of the songs is ever brought into question, even if the writer is found innocent of copyright infringement. An actions and indemnities clause also states that, once presented with a claim related to a composition covered by the agreement, the publisher has the right to withhold any royalties (and other payments) that may become due to the writer, pending the result of such claim. Sometimes the amount withheld will be enough to recoup the publisher for the legal expenses it may incur related to the claim, sometimes it will not.

Note: The above only refers to claims that are presented against the publisher. If, on the other hand, the publisher were to take action against an alleged infringer, the contract should state that the publisher would bear any resulting legal expenses itself.

As you can see, copyright infringement disputes can be incredibly damaging for songwriters, even for those who have standard publishing deals.

Although the new NSAI/Frost Specialty policies are better deals than their competition and could turn out to be lifesavers in certain situations, they’re still not cheap. It’s important to note (as Eric does in his blog post) that copyright infringement insurance is really only a concern for writers whose material has been/will be commercially released; the chances of getting into copyright infringement disputes over unsuccessful songs are slim.

Special thanks to Eric Beall for his assistance with this blog post.