UMG - The Story So Far

:: Posted by Sid Smith on Mon., Sep 3, 2012

UMG has been selling King Crimson material for years without rights or permission. UMG has been told of this on many occasions and has promised to cease. UMG continues to register sales of the material, reporting sales, as recently as April 2012. UMG is in the midst of a takeover of EMI. This has been referred to the European Commission as it would give UMG (already the largest record company by far), near monopoly status in many EU countries. It is also being scrutinised by the FTC in the USA. 

In August, UMG offered to sell some of its catalogues and some EMI catalogues in an effort to placate the EC. Listed among those catalogues as circulated for sale was the same King Crimson material that UMG has been selling without permission. When this was discovered we approached UMG who told us it was due to “an error of inclusion on an early list that had been corrected and the EC was aware of this”. The EC rejected this, stating that it had only circulated material “provided specifically by UMG” and “not by error on an earlier version”. To the best of our knowledge the King Crimson material was only removed from the EC lists following a complaint from Panegyric.

We wrote again to UMG. The senior lawyer who told us of the early lists (responding on behalf of the UMG CEO), wrote to us again yesterday repeating UMG’s “early list/error” position and refusing to address the broader issues of UMG copyright infringement. Panegyric’s latest response to UMG on the EC submissions and related copyright infringements on behalf of King Crimson, DGM and the label is detailed below:


Dear Mr. Carmel,



Thanks for your reply.



The "substantive difference" between the EC position and your own is that you sought, both in your initial reply on behalf of UMG CEO Mr. Grainge and now, to distance yourself from responsibility for the inclusion of King Crimson material with this "two lists" sideshow to which you appear to be the sole subscriber.

The European Commission sees no uncertainty here. Again, let me quote from the EC reply:

I would also like to indicate that contrary to Universal's claim the Commission relied on the formal documentation provided specifically by Universal for the purpose of the market test with third parties and not by error on an earlier version.

"Formal documentation provided specifically by Universal" - It's worth repeating as your stated position on behalf of your CEO contradicts this.



"Specifically", in my understanding, is not a word that leaves room for misinterpretation.



Furthermore, my specific understanding is that the King Crimson material was only withdrawn from the fully circulated list after I saw the lists and complained to the EC. Perhaps this is incorrect? I'll copy the EC officers on this reply in case I am mistaken.

It’s important that we can all be clear about the sequence of events.



By your own admission, UMG placed King Crimson rights, which the company does not control, on a list submitted to the EC for divestment purposes as part of its assurances to the EC that UMG’s takeover of EMI represents no threat to competition in the industry.



Irrespective of how many lists were submitted, the fact that rights to King Crimson still appear, incorrectly, on internal UMG lists in July 2012 is at the heart of many of the problems that UMG continues to cause to the musicians, owners and licensees of this material.



UMG's inaccurate rights lists have circulated within the company since the takeover of Sanctuary in 2007.



The reasons why this is important are numerous, but I'll briefly detail just three of them here:



1) Such inaccurate lists must be, in part, the basis for UMG's continued digital sales of the material up to and including sales in 2011, often without payment. Again I remind you that UMG never had such rights. Such sales may continue. We have no way of knowing just as UMG appears to have no way of determining whether or not such sales continue and no apparent method of stopping them if they do. Physical sales also continued into 2011, including sales recorded in the UK.



2) This is indicative of a systemic and continued failure within UMG to control its own digital or physical sales of the material and a key reason why the EC should take a more robust view of any plans for further expansion. If UMG cannot, in 2012, distinguish between that which it does and does not control as a result of a takeover dating from 2007, what chance is there that a far larger takeover now proposed can be managed correctly?



3) UMG's lawyers, Mr. Smith and Mr. Fisher, gave us repeated assurances that such sales could not continue. Sales continued. Mr. Smith in 2007, Mr. Smith (again) in 2008, Mr. Fisher in 2009 and later – each was adamant that sales would not continue. Sales continued. We complained. UMG chose not to address the issues but instead to appoint an expensive external lawyer, a Mr. Howard who, in the words of Mr. Fisher in 2010 "may take a far more aggressive stance". Mr. Fisher's solution did not correct the inaccurate documents claiming rights, did not prevent UMG's digital rights departments offering or accepting payment from further sales and did nothing to stop subsequent physical sales taking place. Mr. Fisher's appointment of Mr. Howard merely established a further block between the two companies with an implied bully boy ethos via the threatened "far more aggressive stance". Sales continued. These actions raise serious questions about UMG's ability to deal with its acknowledged copyright infringements. These actions raise serious questions as to the manner in which UMG deals with smaller competitors in the marketplace.

UMG CEO Mr. Grainge is copied on this correspondence. Perhaps he could let me know if it’s acceptable for his legal representatives to hire outside lawyers who "may take a far more aggressive stance" to deal with legitimate complaints of copyright infringement, said infringements acknowledged as having occurred and accepted as continuing, in preference to dealing with the issues raised and preventing further infringements?

Is this official UMG corporate policy for dealing with such matters?

If not, what does Mr. Grainge, as CEO, intend to do to about it?



You state "we (UMG) do not think it would be constructive once again to go over old ground."



UMG reported sales of this material to DGM as recently as April this year. How recent do copyright infringements have to be in order for UMG lawyers to address them and not dismiss them as “old ground”?



Your statement is also somewhat at odds with that given by UMG representatives to The Financial Times (August 3rd 2012) in response to an interview given by Robert Fripp, although some of the wording is curiously familiar:



"This is very old ground. We have been working with Robert Fripp for some time to try to clear up some issues that he has raised with us and we believe that we are very close to completing that process."

Robert Fripp is unaware, as are our legal representatives, as am I, of any initiatives by UMG to resolve these issues.

Your letter makes it clear that UMG regards such issues as “old ground”

Is “old ground” some form of euphemism for copyright infringements that UMG refuses to address or resolve?



These are the "areas where you remain irreconcilable" referred to in your letter regarding Sanctuary/UMG and us.



UMG, the world's largest record company, sold (and may still be selling) King Crimson material without permission from the band, the copyright owners or the legal licensees of the material.

This is just one of several such examples of issues of copyright infringement by UMG labels of King Crimson/Robert Fripp copyrights, your “old ground”.



UMG offers no apology, solution, payment (beyond that made in 2009 for some of the sales) or, despite promises to the contrary from a variety of lawyers, ability to stop further sales.



Not content with mere copyright infringement and individual track sales, UMG recently included the very master rights to this material is its lists of proposed divestments to the EC.



As a senior lawyer, writing on behalf of the CEO Mr. Lucian Grainge, you don't wish to address any of this “old ground”, save to assure me that UMG is sorry for "the initial mistake" regarding the EC list inclusion, such expression of regret entirely dependent on acceptance of your "two lists" scenario which is, in turn, directly contradicted by the EC to whom the information was submitted.



Such avoidance of the issues that led to this on behalf of a senior lawyer representing the CEO of UMG, Mr. Grainge, is distinctly at odds with the publicly stated position of the UMG Press spokesperson who assured The Financial Times that the company “has been working with Robert for some time”.

Your statements, made on behalf of the CEO are contradicted by the EC, by UMG’s own PR representatives and by sales statements issued by UMG’s royalties department.

Who is to be believed in such a situation?

I am drawn again to UMG lawyer Mr. Smith's statement to me in December 2008 that “.. a company the size of UMG could not be expected to read or apply the details of  every contract of every catalogue it acquires."



It is a plausible, if hardly laudable, explanation for some of these incidents.



Had my company been selling UMG material without permission, full payment, or complete cessation when alerted to the true rights position, over a period of 5 years, repeatedly but inconclusively assuring UMG that such copyright infringing sales would stop, only for me to continue with the sales and then offer to sell the master rights to said material to a third party in order to justify another acquisition, I suggest that you, Mr. Grainge and the various other lawyers involved would be far less sanguine about the situation, far less prone to clichés about not wishing to go over “old ground”.



I have made a formal complaint to the EC detailing concerns about the issues raised above.

I am copying this response to the EC case handling officers as an addition to material previously submitted.



Kind regards,



Declan Colgan
Panegyric Recordings.


30/08/12

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