Why I gave the National Association of Broadcasters, DiMA and CCIA the Shirt off my Back during Congressional Panel
Hey Greg Barnes–time to buy a dog, man!
Originally posted on The Trichordist:
Diverse group of Washington DC lobbyists.
The major webcasters and broadcasters decided to convene a nearly secret last minute congressional panel to urge Congress and the DOJ to keep in place the 73 year old “temporary” consent decree that forces songwriters to let companies like Clear Channel, YouTube, Sirius, Pandora, Amazon and Spotify use our songs without any negotiation whatsoever. The consent decree also empowers a single appointed-for-life federal judge to arbitrarily decide what a “reasonable” rate is for songwriters. In effect we have been forced by federal courts to provide subsidy to corporations that have a combined market cap of more than a trillion dollars.
As I demonstrated in this an earlier post as a songwriter I received less than $17 dollars from Pandora for over a million spins of my song Low.
How is this a “Reasonable” rate?
The panel was hosted by Greg Barnes of…
View original 845 more words
Pandora and Sirius have decided to stop paying performance royalties to artists, producers and background performers who recorded before 1972–in other words, the creators (and their heirs) of the greatest music that influenced us all. Billie Holiday, Duke Ellington, Louis Armstrong, Miles Davis, Aretha Franklin, Willie Nelson, Buddy Holly, Jack Teagarden, Johnny Winter and everyone in 20 Feet from Stardom. Just to name a few. The Pandora loophole hurts American artists the worst (because Pandora’s pals at the NAB keep US artists from being paid overseas).
The Pandora loophole is due to a gotcha in the US copyright law–the Pandora loophole–that supposedly does not extend the SoundExchange royalty to recordings made before 1972 because the U.S. did not adopt federal copyright protection for sound recordings until 1972. The only problem with Pandora’s position is that there are lots of Members of Congress still in office who passed the 1995 and 1998 laws that created the SoundExchange royalty–and there is no Member of Congress who thought that they were creating a loophole so that Pandora and Sirius could stiff these legacy artists and their heirs.
This means that if you record a cover of Voodoo Child today, you will get paid by Pandora as a performer but Jimi Hendrix will not.
I know what you’re thinking–who in their right mind would want to stiff old guys and dead cats?
There’s a one-word answer to that question.
The good news is that there’s something you can do about it. If you respect all music, call your U.S. Senator and Member of Congress and ask them to support the RESPECT Act (bill number HR 4772) sponsored by Reps. George Holding and John Conyers. With your help, we can all close the Pandora loophole and play fair with the people who taught us how to swing and showed us how to rock.
Please take a minute to look up your Member of Congress in House of Representatives. There are 435 Members of Congress, and you have one of them. If you don’t know already who that is, go to this link and look in the upper right hand corner of the webpage under “Find Your Representative”.
So you get one Representative and your state gets two Senators (regardless of population). The website for the U.S. Senate is www.senate.gov. There is a list of them at this link. Locate yours, and it’s the same drill.
Two phone calls and two emails.
Ask them to stand with you and #respectallmusic.
In the words of Sam & Dave, “And I Thank You.”
Somehow, I’ve always associated Creative Commons Corporation with the temperance movement campaigner Carry Nation. I think it’s because both Creative Commons, especially the founder, and the 20th Century booze campaigner have similar goals. Creative Commons furthers the purposes of the Google Nation and Carry Nation furthered the goals of the Prohibition Nation.
Both lobbied the government to impose their respective views on society through the force of law and most importantly get the taxpayer to pay for doing so. Creative Commons, though is much more a 21st century campaigning phenomenon and takes millions from a cast of characters that include the Silicon Valley elites, like eBay founder Pierre Omidyar and direct contributions from Google, not to mention the Hewlett-Packard heirs. And whoever is behind the Mozilla Foundation (also rumored to be largely Google.) Professor Jane Ginsburg of the Columbia Law School has an excellent piece on Creative Commons licenses (Public Licenses: The Gift that Keeps on Giving) that I recommend, and ASCAP’s Joan McGivern has a great piece on the subject which is also a cautionary read before jumping into the legal complexity of the Creative Commons system. We also have a post from 2006 that warned of special issues arising from co-ownership of copyrights if one author decides to use a Creative Commons deed.
This pattern of giant contributions in the campaign against “Hollywood” is old news. Now Facebook is joining in and gets out their checkbook as well, directly and indirectly. This is well documented in the Google Shill List and Roger Parloff’s groundbreaking Fortune article documenting under the table payments by these multinational corporations to the Electronic Frontier Foundation in Google and Facebook’s New Tactic in the Tech Wars.
Back to the Commons
Once again, the Creative Commons Corporation’s yearning toward Big Government dominance was on display at the July 16, 2014 hearing before the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet in the form of the testimony of Professor Michael W. Carroll, Director, Program on Information Justice and Intellectual Property, American University Washington College of Law. Of course given the degree of direct and indirect government subsidies that law schools receive from taxpayers to keep paying law professors salaries…I mean keep turning out law students into a disappointing job market for young lawyers, one questions why the taxpayer has to subsidize these institutions. (Particularly since law schools will tell you that the jobless are always some one else’s students.)
But it should not be surprising that Professor Carroll came to the IP Subcommittee looking for taxpayer pork and this time it was the $105 recordation fee the Copyright Office charges those who file notices in the Copyright Office’s recordation section. One example of recordation is when you transfer your copyrights to someone else. In this way, the Copyright Office is like a County Recorder for real estate.
The law also requires that when an author or applicable heirs exercise their termination rights they have to notify the world of the transfer–a transfer to their benefit–by filing a transfer notice with the Copyright Office and paying $105. Seems normal, right? The alternative to the author paying this recordation fee is that the taxpayer should pay for it out of the appropriation for the Copyright Office’s operating budget.
Once the transfer is given effect, the author now has the ability to exploit the transferred work. Creative Commons has identified a theoretical class of authors who will go through the colossal headache of getting the work transferred (which has spilled over to litigation occasionally) but then hand over the work to Creative Commons or essentially place the work into the public domain. Only a law professor could believe that this theoretical class of transferees is big enough that the issue of who pays the recordation fee is important enough to take up the time of the IP Subcommittee and distract the Members from other pressing business of the Republic.
Yes, Professor Carroll’s most recent search for pork involves the Copyright Office having the audacity to charge $105 for recordations of notices by users of the Creative Commons Corporation’s “deeds” or “licenses” or whatever they are calling them this week to signify that the creator wants to put their work into the “sharing economy” (essentially the public domain).
Sharing is Caring for Multinationals
The “sharing economy” is the antebellum underpinning of much of the Web 2.0 monetary system–artists create a work for free and then let companies like Google sell advertising against it and grow their valuations. This is what Lessig calls the “hybrid economy” (Lessig is the founder of Creative Commons after his stunning loss before the U.S. Supreme Court in the Eldred case. Well…stunning to him.)
Of all the canards foisted on the professional creative community by the professional free riders, none has had such a sustained life as the “sharing economy” dodge. I would suggest that the longevity of the fallacy is at the very core of Web 2.0 right alongside another reality: there is no free lunch. If you do not pay for a product, that’s because you are the product.
How are these two frauds connected? Fortunately, Lessig crystallizes the scam with yet another elaborate rationalization, his speciality. Lessig tells us about the “hybrid economy” in his book “Remix”. And what might the “hybrid economy” be?
“Where commercial entities leverage value from sharing economies.”
Think about that: Where commercial entities leverage value from sharing economies–or more precisely, where commercial entities extract commercial rents (a/k/a “profits”) that are not redistributed to the creators of works being “shared”. In other words, the commercial entity is given a supply of goods to sell and resell at no charge by creators, i.e., by use of uncompensated labor, often children. (The use of child labor raises its own issues.)
Nowhere is this rather demonic paradigm more clearly revealed than in Lessig’s disastrous appearance on The Colbert Report. Lessig found himself caught in a trap and tried to laugh his way out of appearing to be yet another exploitation monger from Silicon Valley. I don’t know if Colbert intentionally set the trap, but either way we got to watch Lessig in a kind of verbal Chinese finger puzzle of Colbert’s making, but composed almost entirely of Lessig’s own hubris (at 1:12):
Colbert: “The hybrid economy is that everybody does the work, and Flickr makes the money!”
Lessig: “Don’t tell anybody!”
This actually is not funny, unless you think it’s funny that you are the product. Then you should have a belly laugh.
On the one hand The Man 2.0 wants to say that the “sharing economy” is a noncommercial use of any copyrights that happen to find their way into the “sharing economy” (a/k/a Limewire, Isohunt, Creative Commons or YouTube). On the other hand, The Man 2.0 wants to extract commercial rents from those user created works (a/k/a Limewire, Isohunt, or YouTube). (You may prefer the machine-analog vocabulary that simultaneously draws attention away from free will and also commoditizes creativity, “user generated content”.)
Those user works may be original works, cover songs, family photographs or direct rip offs of other people’s stuff, but the principle is the same. The user gets nothing, an underlying copyright creator gets nothing absent a deal to the contrary, and the “commercial entity” gets all the commercial value it can extract.
Lessig cites Flickr as an example of his “hybrid economy.” So doesn’t this mean that people who give their copyrights away as part of Lessig’s ‘hybrid economy’–through his Creative Commons “sharing licenses”– can have their works exploited to profit commercial entities without compensation? Is that what is really going on here? After all, when Flickr was sold to Yahoo! for millions in 2005 how much of those millions did the executives share with the people who ‘shared’ their content with Flickr?
Given the millions his causes have received from Google, it’s natural that Lessig would want to focus on Flickr as a distraction from Google’s YouTube, the real behemoth in the “hybrid economy”. Ever try searching for “Casablanca full movie” on YouTube? Guess what you get? Casablanca the full movie, sliced into 10 parts. In fact, try that search as “[your favorite movie title] full movie” and see what you get. It’s probably up there and it’s probably sliced into 10 convenient little parts for you to do what you want with.
So is that a noncommercial use? Perhaps if you look at the pages where these clips from Casablanca appear on YouTube you won’t find ads being served. Does that mean that YouTube doesn’t benefit from having people searching and viewing these and thousands of other clips on the site?
These are rhetorical questions. Here’s the fact–anything that weakens copyright or makes it more difficult to enforce (such as overwhelming the system with a sudden and sustained influx of infringers like YouTube) benefits Google, Facebook or anyone else adopting their shakedown business model.
Creative Commons is a key part of obfuscating the rights and fouling up the system even further. For example, if you were to record a version of the song “Yesterday” written by Lennon and McCartney and put the recording out under a Creative Commons Corporation license, there is nothing in the license that grants any rights to the underlying composition–it is essentially a “buyer beware” quitclaim at best. But it creates the impression in the user of the license that they can make that recording available online under a Creative Commons Corporation license.
Follow the Money
It is difficult to determine exactly how Creative Commons Corporation is funded except at the high level from its IRS Form 990 that typically excludes specific donors. Good news, though. A copy of the Schedule B from the Corporation’s 2008 tax return found its way onto the Internet:
Then recall that the mother in law of a Google founder was the President of the Corporation and is still the vice chair. Recall also that Lessig was caught by the press raising Creative Commons contributions through a series of dodgy corporate structures that led back to the founders of an off shore gambling operation who paid hundreds of millions in fines for violating US law and was a key advertiser on Megavideo according to the Megavideo indictment. (See “Poker Money and the Ethics Professor“.)
So keep these numbers in mind when you read Professor Carroll’s testimony, particularly the $1.5 million from Google, which has a direct commercial interest in perpetuating the antebellum “hybrid economy.”
Creative Commons and the Termination Right
Exercising the termination right is overly cumbersome and confusing to many authors and their heirs. Creative Commons created and hosts an Internet based tool still in its beta version that provides those with a potential termination right a means of assessing whether and when they may exercise their termination rights. See http://labs.creativecommons.org/demos/termination/
Creative Commons did this to aid authors or heirs seeking to reclaim their copyrights for the purpose of sharing their works through a CC license.
In that regard, one obstacle is financial. Even after an author or heir has run the administrative gantlet, termination is not effective until they pay the Copyright Office recordation fee of a minimum of $105 for one transaction and one title. See Copyright Office, Calculating Fees for Recording Documents and Notices of Termination in the Copyright Office at http://www.copyright.gov/fls/sl4d.pdf.
While modest for economically valuable copyrights like those in a character such as Superman, this recordation fee is potentially cost prohibitive for scholars, journalists, or others who have created and published many copyrighted works that they would like to share with the public through a Creative Commons license.
Creative Commons USA recommends that the Subcommittee consider a measure that would waive the recordation fee in cases in which the terminating party seeks to reclaim copyright for the purposes of making the work of authorship freely available over the Internet under the terms of an open license.
As noted above, the “termination right” is the right of some authors to reclaim their works in the U.S., which is a good thing that I have always supported. (This is the “time bomb in record company vaults” idea which is a topic for another day.) The general idea is that in order for the termination to be effective, the author must successfully reclaim the rights and then file a notice in the recordation section of the Copyright Office that notifies the world the ownership has changed (in the U.S. only, by the way.)
The Copyright Office charges a fee for this recordation as a means of cost recovery of the appropriated cost of providing this service to the public. Given that the current fee represents about 1.5 hours of Copyright Office time, it is pretty clearly an average charge as some recordations will take more time.
Creative Commons–sitting on its millions–has the brass to come to the U.S. Congress and ask for some pork. This is something that clearly benefits big corporations that want the safety from liability they get from certainty that a work is subject to the “free” license from Creative Commons. So why don’t these giant multinationals write a check?
If you believe as I do that Creative Commons Corporation is just a stalking horse for Google and what Eric Schmidt calls the Gang of Four, you will likely have no sympathy for the taxpayer further subsidizing the tax exempt Creative Commons Corporation or its goals. You might even ask why it is that Creative Commons itself does not subsidize these recordation fees itself given the millions it gets from Google.
Of course, writing a check requires knowing who to write the check to, etc., and Creative Commons has gone the extra mile to avoid actually knowing who is using their system. I wonder why?
Even so, this seems like exactly the kind of thing Creative Commons should be doing with their money. It makes more sense than pounding the table in front of the Congress trying to create the impression that they represent authors and are entitled to pork it up with the best of them. You don’t suppose that’s why they get funded, do you?
Because it sure seems to cost a lot of money to give things away for free.
When Garth Brooks was at his peak the last time around, I remember a story about him that stuck. Garth visited the sales teams at some of the biggest retailers along with his label sales executives to discuss the set up for one of his albums. After they’d all visited for a bit, Garth asked the label execs to leave the room and he stayed with the retailer’s sales teams. “Now tell me what you wouldn’t tell me if they were in the room,” he said (or so the story goes).
That, you see, is a business-savvy artist. This isn’t for everyone, but if artists are interested in their business, this is exactly the kind of thing you should do.
So it’s not surprising that Garth Brooks has held his records back from digital distribution all this time. Apple wanted to commoditize his albums by forcing him to sell on a per track basis, Pandora pays a pittance and Google just steals from all of us. Who would do that who could not? Those who are quick to accuse him of being a Luddite should stop and think–maybe he just didn’t want to take the same hillbilly deal that everyone else got.
And in 2014, it’s gotten even worse. You have streaming services like Spotify that are further commoditizing music and YouTube using their dominant market power to screw indie labels. So it should be no surprise that Garth is only going to make his new record available on garthbrooks.com, and I infer from the news that Garth is going to make some, perhaps most, of his back catalog available digitally for the first time on garthbrooks.com. Apparently Garth is going to price the digital catalog at a low retail price.
Not surprisingly, some of the usual suspects are up in arms about this really smart decision as short sighted, not embracing digital, etc. The future is streaming, yadda yadda. I’d suggest that the critics are actually missing the future in an extraordinarily short sighted way.
Like Louis CK, Garth is able to take advantage of a cream skimming marketing strategy and passes the benefit on to the fans. And naturally, the “mistake” he’s accused of making is that he didn’t cut the digital services in on the release. But this misses the real future for artists like Garth who are already well-known with a loyal fan base. (See my article from 2000, Why Free Agency Matters: The Coming Changes in Artist Relations.)
Garth Brooks does not need iTunes, Spotify or any of the other retailers to reach his fans. He’s going to be on a 3 year tour with all the attendant publicity. He’s going to be promoting his record and tour like there’s no tomorrow. This will drive fans to one place and one place only–garthbrooks.com. That’s exactly what he should be doing. Why should he drive traffic to anybody else?
In the 80/20 world of digital music retail, Garth is telling these services that he’ll take the 80 and they can have the 20. Here’s why: Just like Louis CK’s Beacon Theater video, the important number here is the marginal revenue to the artist. If Garth’s fans were to buy the album on iTunes, for say $10, there’d be about $7.00 wholesale price that the artist would actually take home (assuming no label). What Garth takes home from garthbrooks.com sales would be pretty close to that iTunes sale if the fan bought the record on garthbrooks.com at a $7.00 retail price (at least if you amortize the overhead costs across all the commerce being done on the artist site). All Garth is doing is cutting out the middleman.
You know–the gatekeepers.
And since Garth is telling the press that the price will be low, he clearly intends to pass the saving on to the fans–and he can still make good money because after he pays the songwriters, fulfillment, and some allocation for overhead, what’s left is all his. He doesn’t have to share it with middlemen. Plus he doesn’t have to compete for shelf space on his own website.
There’s an increasing number of in-demand artists who believe that holding their records off of the streaming services actually increases their sales, at least in the initial post-release window. And of course no one is more disturbed about this window effect than the streaming services. They want you to believe that they are the future–and resistance is futile. Streaming services want you to believe that they are a critical part of your release strategy so that they can take advantage of all your marketing efforts on your album and touring set up at a low cost to themselves. Actually–the sum of all the marketing done by all the artists on their service.
Here’s the fact–the retailer may control the price, but the artists set the terms, particularly artists like Garth. Garth’s customer is the fan–not some digital retailer that is uncooperative, entitled, and may be sold to the highest bidder tomorrow. Garth will treat those fans very, very well, just like he always has. I would not think that any artist wants to subject their fans to the customer service experience at YouTube if they could avoid it.
If streaming services want to commoditize music, the services are going to be treated as a commodity, too, just like “special markets” departments or the old record clubs. They’ll get the record eventually, just not when it’s fresh. If you sell music like it was a stale bagel, then don’t be surprised if artists send it right back at you.
At the right moment, Garth will no doubt open up his online presence to digital retailers and streaming services. But they should understand that for artists like Garth, people like them who bought the long tail ridiculousness are just not top of the list for business partners. So have fun chasing that 20% folks.
[Editor Charlie says: This Chris Castle post originally appeared in MTP on Nov. 23, 2010. We are reposting in light of Google's efforts to mobilize public opinion against the "right to be forgotten"--which seems to us to be for the sole purpose of preserving Google's antebellum business model of advertising-supported largely appropriated content. Quite natural that Google would be putting the full court press on legislators in Europe on what they call "privacy" but which in fact is actually the opposite--Google's ability to deny you your own privacy. No better example of how Google deals with "privacy" was the mobs that mysteriously sprang up to egg the homes of Germans who did not want to participate in Street View. Not to mention enlisting the aide of German public officials (see photo above of Bavarian tourism official dragging around Google's "Street View" wifi snooper) to promote Google's Street View launch). You can also expect to see moves like Google pulled in the UK where the former UK privacy regulator with autority over the Street View investigation gave Google a pass before going to work at--Google. Since Google can't buy the judges that ruled against them in the "right to be forgotten" case, they're going to do the next best thing. Perhaps the judges should get ready for an Egginghaus.]
The brilliantly witty Chris Matyszczyk has a fascinating story of lobbing, Google style, in reaction to the launch in Germany of Google Street View. That’s right. Lobbing, not lobbying. Or at least it would appear so. (With apologies to Julius Ebbinghaus.)
Organizing the World’s Information Whether the World Likes it or Not
Apparently, 3% of Germans already want out of Street View 2 weeks after Google launched the intrusive product. But let’s be clear about what “getting out of Street View” means–Google will take pictures of your house and put them on the Internet, but they won’t remove the pictures if you ask them to. They will “blur” (or “pixelize”) the picture of your house to preserve your privacy–whatever that means. That is, they will pixelize the picture of your house as Google sees fit when Google gets around to it. You can check out any time you like, but you can’t ever leave.
People who want to remove their buildings from Street View are becoming known as “pixelators”. Yes. It’s true. The Pixelators: A new group to demonize for the Google PR machine.
And of course, you can see your house right over the notice on each Street View image that says “© 2010 Google, Inc.” Or to paraphrase a noted political figure, you might say “I can see Google’s copyright notice on my house!”
Now you might say that 3% of the population is a lot of people who don’t want something. And you’d be right. That’s certainly enough to throw an election. (For reference, the Pirate Party needed 4% to get a seat in the Swedish Parliament.)
But here’s a different view from the Google press: “Despite Germany Threatening to Sue Google, Only 3% Have Opted Out of Street View“–since the pictures went online 2 weeks ago. With the usual equivocation that is the hall mark of the Google movement, a couple facts are downplayed. About 250,000 people out of 8 million or so have already come forward–in 2 weeks–to say they want out of the whole thing. You can view that as a success if you like, but what that says to me is that there are a lot of people who are going to be telling their friends how to become Pixelators. I’d say let’s check back in 6 months and see how things are going.
And then there’s Jeff Jarvis (author of What Would Google Do? a “…scattered collection of rambling rants lauding Google’s abilities to harness the power of the Internet Age [that] generally misses the mark. While his insights are stimulating, Jarvis’s tone is acerbic and condescending; equally off-putting is his pervasive name-dropping” according to Publishers Weekly). Jarvis is full of pixel and vinegar about anyone who would do what Google would not: “You [pixelators] have digitally desecrated your cities” the noted Google supporter blogged, recounting a Green Party meeting he attended: “As someone in the audience said when I spoke on the topic at a meeting of the Green party in Berlin a few weeks ago, it is as if they [the pixelators] are digitally bombing the German landscape.” “Desecrated”? “Bombing”? Really?
The Incredible Lobbable Egg
In an interesting twist–some of the Germans who had their houses blurred in Street View got their houses pelted with eggs and had signs hung on their doors saying “Google is cool!” apparently by advertising loving “vigilantes” who like the commercialization of their homes. And maybe even their own homes. You can’t buy that kind of loyalty.
An alternate slogan for the sign could have been “Pixelization Doesn’t Scale!”
Grassroots vigilantism in support of American multinational corporations is such a grand tradition in Europe, no one should be surprised that Google evokes this kind of demonstration. Particularly since Google did so well with the German book authors in the Google Books catastrophe (see “German Authors Outraged at Google Book Search“).
I swear, I swear, I swear I’m not making this up–read Chris Matyszczyk’s story. There’s more and he’s much funnier than I am.
But ask yourself this: Given what we have seen of organic rioting in Europe, we know that these free rangers are no chickens. What kind of a self-respecting anti-pixelator would select the humble egg as a weapon of choice in such a situation?
Pixelators of the World, Unite!
In other news from the Goolag, eWeek reports that “Street View in Germany may get a curve ball later in 2010. Germany Interior Minister Thomas de Maizière said the government will introduce a new privacy code in December, inviting Google and other Internet companies to submit suggestions for self-regulation before then.
Street View has had a harrying week. Canadian privacy officials said Google’s data collection in Canada violated privacy law, albeit unintentionally.
The company is now pursuing legal action against the country in the matter.”
No wait. That last sentence should be “The country is now pursuing legal action against Google in the matter.” You caught that, right?
Google told the BBC “‘We respect people’s right to remove their house from Street View and by no means consider this [egg lobbing] to be acceptable behaviour.’” (But you can’t remove your house from Street View…. So Google may respect the right, but they don’t permit the exercise of the right they supposedly respect?)
As Kashmir Hill of Forbes said, “It’s ironic that those who wanted more privacy through blurring their homes wound up getting less of it.” One might also ask if the egg lobbists wore “V” style “Guy Fawkes” masks.
Doesn’t it make you mad enough to pixelize?
See also: Wayward Google fans pelt houses with eggs (Deutsche Welle)
See also: Google Street View Lovers Egg Blurred German Houses (Forbes) by Kashmir Hill
See also: German vandals target Street View opt-out homes (BBC)
The U.S. Copyright Office is conducting a “Music Licensing Study” as part of the government’s overall review of the U.S. copyright law with an eye to potentially overhauling the entire copyright system. (See “The Next Great Copyright Act” by Maria Pallante, the head of the U.S. Copyright Office and the nominal go-to person for the U.S. Congress on copyright issues.) The Copyright Office has received written public comments on questions posed in its Notice of Inquiry and is also holding public Roundtables in Nashville, Los Angeles and New York (in that order).
I filed comments with the Copyright Office and this post is the last of a three part post focusing on each of the three points I made in my comments (see Songwriter Liberty and Audit Rights Under Section 115 and “Successful” Licensing Models and the Opt Out.) This post discusses the out of date ASCAP and BMI consent decrees currently being reviewed by the U.S. Department of Justice.
The Declining Utility of the ASCAP and BMI Consent Decrees
Songwriters also have the government’s boot on their necks in the form of the ASCAP and BMI consent decrees regarding the public performance right for songs. Established decades ago, the consent decrees have been running longer than Phantom of the Opera but, I would suggest, to very poor notices especially recently.
Again, it is hard for songwriters to understand why the government permits companies like Google largely to escape antitrust regulation, but decides that the American people must be protected from those songwriters. (Companies like Google seem to escape scrutiny even when Google uses the dominant market position that the government allows them to enjoy to cram down take-it-or-leave-it terms on songwriters and indie labels.) (See, e.g., Dredge, “YouTube Subscription Music Licensing Strikes Wrong Notes With Indie Labels”, The Guardian (May 22, 2014) available at http://www.theguardian.com/technology/2014/may/22/indie-labels-youtube-subscription-music)
The consent decrees undermine songwriters in three important ways: confusion surrounding withdrawal and direct licensing; use of consent decrees as a club for well-heeled licensees against songwriters in an inefficient manner that prevents the formation of alternative dispute resolution mechanisms; and creates inefficiencies in licensing that are burdensome to both licensees and songwriters.
After the last Pandora rate court decision (In re Petition of Pandora Media Inc., 12-cv-08035, U.S. District Court, Southern District of New York (Manhattan)) it appears that the consent decree requires that publishers withdraw from ASCAP altogether in order to enjoy their rights, although the court did not address what happens to the ASCAP songwriter whose publisher is forced to withdraw but who likes their PRO and wants to keep their PRO.
There is also no assurance that even if a publisher withdrew from ASCAP to pursue agreements in the free market that the government would not pursue claims against the publisher for doing something wrong. Given the disproportionate lobbying and public relations expenditures of songwriters and the “Gang of Four” cartel, (Kafka, “Eric Schmidt’s Gang of Four Cartel Doesn’t Have Room for Microsoft”, All Things D (May 31, 2011) discussion by Google Chairman Eric Schmidt of Amazon, Apple, Facebook and Google as dominating consumer technology, available at http://allthingsd.com/20110531/eric-schmidts-gang-of-four-doesnt-have-room-for-microsoft/) one could easily imagine that Amazon, Apple, Facebook and Google would have a strong interest in keeping songwriters weak. It would be expected that Google would side with Pandora, for example, if for no other reason than because Pandora uses Google’s Doubleclick affiliate for its advertising sales. Pandora acknowledges that its agreement with Doubleclick exerts considerable influence on their business. (“We rely upon an agreement with DoubleClick, which is owned by Google, for delivering and monitoring our ads. Failure to renew the agreement on favorable terms, or termination of the agreement, could adversely affect our business.” 2014 Annual Report of Pandora Media, Inc. (Form 10k) at p. 24, available at http://investor.pandora.com/phoenix.zhtml?c=227956&p=proxy)
The consent decree also inhibits the market from developing robust alternative dispute resolution mechanisms that will reduce transaction costs for all concerned. My office has conducted an ad hoc review of recent rate court decisions and my preliminary view is that there certainly seem to be a lot of the same names on the playbill. I respectfully suggest that it might be a good use of Copyright Office resources to conduct a formal study of the consent decree process with an eye toward determining if it is beneficial to all concerned or whether it actually produces an expensive slugfest only affordable to the rich and unduly costly to songwriters and publishers.
Such a study could identify the parties, the lawyers, the rates before and after and the decision and an estimate of the transaction costs involved including legal fees. There is a view in the songwriter community among those I speak to who are familiar with the process that the rate court process is so expensive that songwriters are actually worse off by far for engaging in it—a fact not lost on those who view negotiation as a road bump along the way to litigation. However—and this is where Franz Kafka comes in—songwriters did not ask for it, cannot escape it, and are forced to participate.
It would be helpful if the Copyright Office could produce a review that would either demonstrate that these perceptions are cynical and unwarranted, or that they are exactly on point and that the consent decree process has become yet another club that well-heeled corporate opponents can use against creators in a rush by public companies to commoditize art. As Radiohead’s Thom Yorke told The Guardian:
“[Big Tech] have to keep commodifying things to keep the share price up, but in doing so they have made all content, including music and newspapers, worthless, in order to make their billions. And this is what we want? I still think it will be undermined in some way. It doesn’t make sense to me. Anyway, All Watched Over by Machines of Loving Grace. The commodification of human relationships through social networks. Amazing!”
In fairness to the digital retailer, the current consent decree process prohibits songwriters from allowing ASCAP or BMI to license both the performance and mechanical rights for interactive streaming. This is an undue and another rather Kafka-esque burden on the digital service. The service must acquire licenses and produce statements for the identical uses from two different sources. What is the principled reason why ASCAP and BMI cannot license the bundle of rights that the service needs to operate with one statement for all the uses involved?
Consent decrees may have made sense in 1941, but I would respectfully suggest that those who toil in the vineyard have lost the page as to the contemporary justification.
We should also be aware that publishers, particularly major publishers, can take advantage of the economy of scale and grant these rights themselves—if it weren’t for the uncertainty that the consent decrees induce in the market.
At the end of the day, not only do songwriters and publishers have to bear the rather staggering legal costs of the rate court process, but they also have to pay administration fees to third parties on licenses that some could easily administer themselves if they were allowed to do so.
It is difficult to imagine an argument for maintaining the rate court procedure that does not also ignore the progress in the market since 1941. I respectfully suggest that rate courts are an idea whose time has passed, and it is high time to do all we can to convince the relevant government authorities to terminate them and return to the free market.
If it works for Google, it can surely work for songwriters.
An Interview with Andrew Shaw of PRS for Music on Negotiating with Google, a guest post by Jonathan David Neal
[Editor Charlie sez: BASCA came out in support of indie labels being bullied by YouTube as well as YouTube's own bullying of songwriters by demanding a deal with PRS for Music that is soooo secret the PRS can't even tell its own members what the terms are! This is absurd and BASCA is to be commended for PRS to refuse to continue its culture of secrecy--in the age of "transparency".
This post is by Jonathan David Neal and originally appeared in The Score, the membership publication of the Society of Composers and Lyricists. You can read his blog at Composer's POV. PRS for Music is the principal music licensing body for performances of music in the United Kingdom and is roughly the equivalent of ASCAP, BMI and SESAC for UK residents. Although this interview is from 2009, it gives you some insight into Google's over the top negotiation tactics and how they use the withholding of content as a negotiation tactic in the press (that Chris discussed in his commentary to Larry Crane's complaint about YouTube "apologizing" for taking his work). The emphasis is largely from MTP and is for the most part not in the original.]
An interview by composer Jonathan David Neal with Andrew Shaw, Managing Director of Broadcast and Online of PRS for Music.
In the summer of 2007 PRS For Music, the UK PRO, licensed You Tube, owned by Google, for music use on a per download basis. That contract ended at the end of December 2008, at which time Google and PRS entered negotiations to renew the contract. In March 2009 while continuing negotiations Google, without warning blocked premium content access to users in the UK and few weeks later did the same thing in Germany. I interviewed Andrew Shaw (who is one of the PRS negotiators) in London on May 15, 2009. This story has strong implications for composers, songwriters and lyricists all over the world, since we are in a continuing struggle to maintain our rights as creators and copyright owners.
Neal: Please give us a short back-story to the [PRS's] struggle with Google & You Tube
Shaw: Well, I think that to understand what is happening now you need to understand the history of where it all came from. You Tube as you know was started in December 2005 and was bought by Google in early to mid 2006 and that’s the time it really started getting some traction in the market place. The service had evolved from very humble beginnings as a way for private individuals to share their home videos. But over a period of time, the content that was being uploaded was copyright content rather than people having dinner parties and they were for a long time relying on their DMCA (Digital Millennium Copyright Act) protections and equivalent protections in Europe to say they had no liability for the content.
Neal: For the readers please explain DMCA.
Shaw: Digital Millennium Copyright Act, that is essentially the US law that says if you are a mere conduit you don’t have any responsibility for what’s transmitted over your pipe provided that if someone notifies you that you are hosting illegal content, you take reasonable steps to take it down as soon as possible [Ed. Charlie: And without knowledge of infringment and if you terminate repeat infringers]. Google was saying, “Look we are just a big electronic notice board that some people around the world decide to post things onto and other people around the world decide to come and have a look at these notices and we’ve actually got no idea what’s going on.”
Part of the business logic was that there is a huge community of users out here and “if we take the Google experience and knowledge of digital advertising sales and sprinkle some of that pixie dust onto You Tube, you’ve got excellent digital advertising sales married with a huge user base and massive traffic scale.” I think one of the reasons it hasn’t worked in that way is you’ve got millions of individual pieces of content that are all being viewed, the majority of which are being viewed a relatively small number of times.
The whole principle of Google’s advertising is it’s contextual advertising but they couldn’t actually identify what the content is, so if you tag a video as, for example, “Madonna,” You Tube or a computer has no idea whether that is a pop video or something about the Catholic church.
Advertisers were finding that adverts were appearing next to content that they weren’t quite aware of what that content was. They wanted their brand to be associated in certain places and not with others types of content. [Ed. Charlie sez: like an implied endorsement.] So the whole business model of advertising and targeted advertising required a much greater level of precision of knowledge of what was in the video.
Now as soon as you get into a level of knowledge about what’s in the video, by default you know what that video is and therefore, you start to lose your potential defenses that you are just a mere conduit and you don’t know what’s going on.
So there is a sort of process whereby, I suppose you call it “dancing around the handbags,” where they came to us and said, “We would like to have a license, but, of course, we don’t need one.” We said, “We’d like to give you a license, but we need to know what you’re doing.” They said, “Well we can’t tell you because we don’t know, because if we knew…” and there was a sort of Kafkaesque situation.
But we took what I think was a pragmatic view at the time and said look, at the end of the day we’ve actually got two choices. We can either license You Tube and try and get what we believe is a fair and equitable remuneration for the works being used and pass that back to our members or we can go down the litigious route and sue them like Viacom had done or we can do nothing. We felt that doing nothing was sort of tacit approval that this was all acceptable.
We took the pragmatic view that licensing was preferable to litigation, for a number of reasons. First of all, getting into litigation was always going to be extremely expensive, extremely time consuming and take a long time to get resolution. The Viacom case proves that point. At the end of the day the outcome was very uncertain. An uncertain outcome might have been great, it might have been not so good and in a worst case, it could have been not so good with a knock on impact on all sorts of other areas of our business. We took the view that licensing was the best approach, so we licensed them.
We were the first society in the world to license You Tube, which was a major coup for us. But, I think that it was also, a major turning point for You Tube because it was the first time, that they had, actually, by default, recognized that they required a license, where if they didn’t require a license and they were so sure of that they certainly wouldn’t take one out. So, we licensed them in the summer of 2007. The license expired at the end of last year, 2008.
During the two years of You Tube’s license they were a model licensee. They did absolutely everything they said they were going to do, they went above and often beyond the call of duty in terms of trying to work with us to develop standardized reporting mechanisms, reporting tools, and we enjoyed a very good working relationship with them.
So, we’re now in a position at the end of 2008 where our license comes up to expire, we’ve got 18 months worth of data about what is actually being used on the service.
We’ve also seen a big transition in the content that’s been on the service over that 18 month period. They had realized that a very large number of videos being watched over a relatively small period of time, with no knowledge of what’s going on, was not going to generate big advertising revenue. Where the advertising money was going to be was in sponsorships and professional content. And so they started actively acquiring what they called seeded content, so they went to the BBC and did a deal to get clips of programs and previews. They’ve now expanded this to all sorts of different content owners, whether it be Hollywood studios, music labels, the White House, Downing Street, whatever.
[Ed. Charlie sez: The evidence against YouTube in the ongoing Viacom case and class action suggests that YouTube knowingly and purposely seeded their website with illegally obtained and distributed premium content for the purpose of profiting from the users attracted to the seeded content.]
A large proportion of the value of what is being generated by YouTube is actually around seeded content [Ed. Charlie: that is the revenue to YouTube], notwithstanding the fact that it accounts for a relatively small proportion of the usage. So you’ve got a sort of asynchronous pattern there. And, clearly music has been a very big area for them; they’ve done deals with all the labels except Warner Bros. and the labels have actively created channels for their artists on YouTube, where artist videos can be shown/promoted.
Now as far as we’re concerned, when you use a generated content, it’s pretty hard to value as far as the music, for instance, from the copyright point of view because you don’t know whether the music is in the foreground, the background, whether it’s incidental, whether it’s 30 seconds, 5 seconds or is it the whole point of the piece or is it just incidental to it. Then if you sort of move up the hierarchy of value, as far as music is concerned, you get into the professional seeded content where clearly there is some economic benefit being derived either by YouTube or the content user or both as a result of making that content available.
But still, music is a supporting ingredient to the finished created work. And then the “top end” of value from our perspective, is something like a pop video where music is actually the whole essence of it. If you then relate that to our regulatory framework, we have something called a “joint-online” license, which is our licensing scheme for digital music, and it was the subject of a copyright tribunal decision back in 2007.
The copyright tribunal (UK Copyright Tribunal-similar to the US CRB) set a rate which was sort of equivalent to the American CRB, and the rate that they set for digital exploitation of music, pure music, like a pop video, was the greater of 8% of revenue or 0.22 pence per work streamed. So, every time a video was shown, we should have been paid at the greater of 8% or 0.22 pence.
The rates that they (the UK Copyright Tribunal) published in the summer of 2007, would only be applicable for a 2-year period, and it would expire in July 2009; they didn’t say what would happen after that. So, it is obviously incumbent upon us to do extensive market analysis and then come to a decision as to whether anything material had changed between then and now that would justify amending those rates or the structure of those rates, and if so to put that into place. So, we’ve been going through this process, and we are close to publishing what our new rates will be in the next few weeks. But YouTube, and Google has, and again, this is not confidential because they’ve said it publicly, said their position is a per-stream minimum for a service like You Tube doesn’t work, the only thing that works is a percentage of revenue. On a superficial level, their argument sounds very plausible. They say, “We’re trying to create this brand new business model, we’re giving exposure to all of these artists and these musical works, all we want to do is share in the revenues that we’re able to generate with the creators of those works. We absolutely believe the creators should be paid, but they should be paid a percentage of what we can make.”
Our view is that music has a value, irrespective of whether or not someone else is able to generate revenue out of it. If [music] didn’t have a value, then, [Google] wouldn’t be using it.
And it is very important for a number of reasons, including that the rights of creators are respected and they are remunerated a small amount of money every single time the music is played. There are a number of reasons why it’s important, one is, as I’ve said, it has a value.
The second is that specifically with respect to YouTube, any person who is uploading content has 3 choices when they upload that content. It gets fingerprinted and they can choose to monetize it, they can choose to not monetize it, or they can choose to block it. But, we don’t believe that if a third party makes a decision not to monetize content that it can be fair to the creator of that content not to get any sort of remuneration; a decision over which they (the creators) have no control.
The third reason is that with respect again to YouTube, there is a huge amount of crosssubsidization going on. Before the internet came along, there were lots of areas of commerce where as product or services become commoditized, what their provider does is bundle them with other products and services. So whether it’s handsets and minutes for mobile phone tariffs, whether it’s cable television and telephone and broadband connection from a cable TV provider, or whether it’s Google, whose business actually is all about the monetization of data.
To a large extent they don’t care whether the data they have about you comes from your email usage, your calendar, your search patterns or what you’re watching on You Tube. All of that has a value to them that is far greater than the sum of the parts. And therefore, simply looking at how much advertising is sold against one particular page of showing a video on YouTube is not an accurate and reflective economic analysis on which to base an appropriate remuneration for creators. That fundamentally, is a difference of opinion between the two of us.
We believe creators should be paid a small amount of money every time their music is used.
They [Google] believe that creators should be paid a percentage of what they can make in terms of advertising.
So, what happened after that is that we had been having our negotiations and had a meeting scheduled for, a series of meetings scheduled and a plan to try and come to some resolution, when on a Monday afternoon, I received a phone call from Google saying “We have made a decision that we are going to block all premium music content with effect from 6pm tonight.”
Neal: No notice? [Ed. Charlie sez: Welcome to the Googleplex.]
Shaw: No, this call came at 2:30 in the afternoon. This was clearly a very calculated and premeditated tactic on their part, because first of all, we had actually had a meeting with them the previous Friday where we had been consulting with them on what their views were for our new joint online license. The next negotiation meeting had actually been penciled in for the following day, a Tuesday, so it was rather strange that 2:30 in the afternoon, I get this phone call, and within 5 minutes of me putting the phone down, I started getting calls from our press office, who were receiving calls from every single media outlet in the UK, saying “We’ve heard that Google is about to block all music videos in the UK tonight-what have you got to say about it?”
Chris Smith: Big Day . . .
Shaw: Now, what they actually did was very highly targeted, and designed to create a much bigger story than the actual impact on the user experience. If you go on to YouTube even today in the UK, you may not be able to find every single version of a particular pop video, but I would pretty much bet that whatever video you wanted to find, you could find a version of it somewhere. So, they have not blocked all music videos in the UK. What they have purported to do, is to block what they call Premium Music Content. Premium Music Content by their definition is content that is either being uploaded by record labels or claimed by record labels, either some label uploaded or it seems someone else has uploaded it, they’ve owned it and they’ve said we own the copyright in this and therefore it’s part of our pot.
I think there are 3 reasons why they honed in on these two. Number one, it was the only part of the content set that actually disrupted other people’s revenue funds. So, if Joe Blog gets their video blocked, they get pissed off, but, so what? If Universal Music gets their video blocked, they stop receiving revenue every time that video is played.
So, the tactic, one has to assume, was to put pressure on other people who were being affected, to put pressure on us, to concede our position. So, one was it was disrupting other people’s revenue flows.
The second was that it was highly targeted, as I said, on the Premium Music Content, which actually accounted for a relatively small portion of all usage on YouTube. So, the videos concerned, and we don’t know exactly how many there are, because it seems to change on a daily basis, but it accounts for probably single digit percentage of total views or streams viewed on YouTube.
The third reason was that they will still at some point claim that as far as user generated content is concerned, (as opposed to) user uploaded content, because they are two quite different things, they would still want to fall back on some sort of “We’ve got no responsibility for this.” As soon as you start blocking something because it fits into a certain category then you have to know what it is in order to block it.
So, by leaving all of the user uploaded content alone they preserve their position with respect to DMCA protections and a lack of obligation to take responsibility for that content.
So they have blocked some of these videos, a few weeks later they did the same thing in Germany. They publicly said that the reason they did it was because they were unable to reach an agreement with us, although, we were still in the middle of a negotiation and we certainly did not ask them to take this action, and take content down.
They also said they felt uncomfortable being in a position where they were not licensed. Now, I find that quite ironic, given that the other 200 or so countries in the world don’t seem to pose such a moral dilemma for them and their content is still available there. Since the date of the take-down, or the blockage, I think March, about 2 months ago now, so early March, we have continued to talk to them and we do continue to talk to them, but there is still a fundamental difference of opinion over what they are responsible for and what is the appropriate mechanism to judge that.
Neal: At this point, you don’t really know what kind of effect it’s had? Have you heard from publishing members or record labels complaining that they’re losing money on this?
Shaw: No. I have to say we’ve been extremely pleased by the support that we’ve got from a wide variety of constituents and stakeholders in the industry, and actually, not just in our industry, but across all creative industries.
This is not an issue between Google and PRS Music: this is a battle that we happen to have stuck our head above the parapet, being in a large territory that’s important to them, perhaps having been the first to license them, but, we are being made an example of in a battle that applies equally to record labels, it applies to journalists, it applies to book publishers and photography.
Any type of content that is being exploited over the internet, where there is a very fine line between a company providing an ability for consumers to find what they’re looking for, that other people have put there, and a company that is actually providing that content as a service provider. There is a fine line between data and/or information and content. If you go on to Google’s corporate website and look at their strategy file, their mission statement, one of their strat lines is “Don’t be evil” but another is there that is the corporate mission, (I can’t remember it verbatim) but it’s something like “to make all the world’s information available to anybody who wants to find it,” something like that. And that word, “information”, was probably put in there when that’s exactly what they did, but the line between information and content has become very, very blurred.
And if you look at what’s going on in the US with the book settlement, you look at what’s going on all over the world with newspapers and the Google news aggregation service and Google books as well, there are lots of areas where that line is becoming very blurred and probably being overstepped.
Conclusion by Jonathan David Neal
This is just one example, in one part of the world of how some corporate giants are trying to devalue the work and content of creators, and ultimately respect of composers, and songwriters. It’s happening all over the world. Their mantra has been, “you need us.” However, they need our content, which is just as important. A second observation is, “if they devalue our intellectual property, they undermine the value of their own intellectual property, their services and everyone loses.”
It’s very short sighted. We as composers, songwriters and lyricists need to take an active stand against those who would devalue our work and demand respect for our craft and ourselves.
Note: On September 3, 2009 PRS for Music announced a new licensing agreement that covers music contained in videos streamed via the online video platform. Premium music videos have now been reinstated to YouTube in the United Kingdom.
Thanks to Dan Foliart and UK Composer Chris Smith, for helping me make this interview possible. Chris sits on the board of PRS-MCPS and arranged the interview, which took place at PRS For Music’s London office in May of 2009.