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Archive for March, 2010

Answer to Controlled Compositions Problem

March 31, 2010 Comments off

For those following our substantive music business postings, the answers to the problem on controlled compositions will be in the April 13 edition of the monthly (signup under the Artist Authorized button), and will be posted on MTP at the end of the month.

For the last few weeks, we have posted sections from the article “20 Questions for New Artists” by Chris Castle and Amy Mitchell some of which has been posted various places. If you are interested in getting a free copy of the basic article, write to semaphoreindustryquestions@gmail.com. (Given the level of interest, the deadline is extended until they have the next version “Another 20 Questions for New Artists.”)

20 Questions: Artist Glossary of Industry Terms: Controlled Compositions Clause, Part 1

Twenty Questions for New Artists Series by Chris Castle and Amy Mitchell:

See also Publishing Company/Marital Status/Instruments and Inventory/Passport and Work Permits

See also: Insurance/Legal Names/DOB and Nationality

See also: ISRCs/Unions/Side Projects

See Also: Pre-Existing Contracts and Aggregators

See Also: Band Administrator/Split Sheets

See Also: Social Networks and Domain Names/Trademarking the Band Name

See Also: Performing Rights Society Affiliations

See Also: Bank Accounts/Tax Returns/Accountants

See Also: Have you Registered with SoundExchange?

Gquote of the Month

March 31, 2010 Comments off

“We won’t (and shouldn’t) try to stop the faceless scribes of drivel, but we can move them to the back row of the arena.”

Jonathan Rosenberg, Senior Vice President, Product Management, Google, Inc.

Yesser, I got your net neutrality right here.

DOJ Criminal Resource Manual: Bedside reading for YouTube Fans

March 26, 2010 Comments off

We will get into this in more detail, but YouTube fans may enjoy reading the handy Criminal Resource Manual published by the United States Departement of Justice (of Google Books fame, among other things). In particular, Chapter 1847 “Criminal Copyright Infringement“:

“There are four essential elements to a charge of criminal copyright infringement. In order to sustain a conviction under section 506(a), the government must demonstrate: (1) that a valid copyright; (2) was infringed by the defendant; (3) willfully; and (4) for purposes of commercial advantage or private financial gain. Attempts to infringe are prohibited to the same extent as the completed act. Conspiracies to violate the Act can be prosecuted under 18 U.S.C. § 371.”

Although not at all unexpected, the YouTube discovery has revealed a couple of things. First, this is some really unambiguously depraved correspondence, far worse in my view than anything we saw in the Grokster case and makes the intent to infringe (that the Supreme Court required in Grokster) very clear, but then I’m a “copyright bastard” at heart. What is also clear from Grokster (and more recently, the Isohunt case) is that the DMCA safe harbor is not an alibi.

While I’m sure that these disclosures are embarrassing for the more junior folk, the first question that comes to my mind is where was the board? Particularly the YouTube board pre the acquisition, but also the Google board. The next question is what in the world was the legal advice? This is the kind of thing that should make a lawyer resign. There should not be different spanks for different ranks in this thing. There is plenty of blame to go around—up and down the chain.

You also have to wonder how it was that YouTube claimed—and still does claim—that it had no control over what users uploaded when there is an extensive discussion in the internal emails that seems to suggest the exact opposite. YouTube seems to have had an extraordinary degree of control over what was made available.

The post-acquisition evidence clearly supports the view that many have of Google—they will take everything that they can until they are forced to stop by a court order after vigorous litigation. That means that they run roughshod over everyone (like authors and artists) who can’t afford to fight while they use their access to the public markets to essentially print money to fund their litigation strategy. That’s not what Wall Street is there for.

This may also explain why Google’s vast public market resources are being devoted to shrouding the case in as much secrecy as possible–the latest example being the all out attack on Robert Tur, the hero helicopter pilot who along with his camera operator saved 54 souls from disaster by flying through 60 kt winds and rain–because he was asked to do it. One of the things I haven’t been dumb enough to do is fly through the air in 60 kt winds, but I have sailed through those heavy airs–the main reason why I don’t want to fly through that soup.

Of course, these are things that will not be understood by his present company at bar.

Tur is accused of leaking an unredacted version of Eric Schmidt’s deposition. Given the apparent reeking spoliation of evidence by YouTube and the dog ate my homework, “I know nothing” amnesia by the Don’t be Moral executives at Google, it is rather refreshing to see someone doing the right thing in the case. It is a sad commentary on Google’s influence that a whistleblower hero is being pursued to preserve the “privacy” of a two Gulfstreamer.

How’s that ACLU award looking, Dr. Schmidt? Pretty transparent?

Is Disconnection the Digital Native’s Alternative to Speed Dating?

March 25, 2010 Comments off

“‘Disconnection would be the best thing to happen to some of these people,” he told me. “They’d get out the house, meet girls, and go for a walk.'”

Wonderful coverage by Andrew Orlowski of the Pirate Party’s latest effort to get themselves arrested. Thankfully, the Metropolitan Police didn’t take the bait. That’s what CCTV is for, anyway, right?

Artist Glossary of Industry Terms: Controlled Compositions Clause Part 1

March 23, 2010 Comments off

Record companies must license the right to sell reproductions of songs in records (or what the Copyright Act defines as “phonorecords”). Record companies (and I use the term broadly to include any distributor of phonorecords) typically will negotiate the maximum mechanical royalty rate that they must pay on records they release. These terms apply to songs written, owned or controlled by the recording artist. These special terms are found in a clause in the recording artist agreement which is called the “controlled compositions clause.” The terms typically will include a maximum cap, a reduced mechanical rate applied as a percentage of a fixed rate and a limitation on the types of records for which a mechanical is paid. For example, a maximum rate of 10 times ¾ of the minimum statutory rate on the date of delivery of the record concerned applied to sales of records for which an artist royalty is also paid would be a fairly customary (and low) controlled compositions rate.

Controlled compositions clauses do not apply to sales in the world outside of the United States and Canada, and even in the United States and Canada there have been developments that reduce the effects of certain controlled compositions clause provisions, especially for digital sales.Controlled compositions clauses must be carefully negotiated, particularly in light of the prevalence of 360 deals.

Example:

The deal memo for your record deal has this section:

Controlled Compositions: 10 x 3/4, 5 on EP, 2 on Single, bumps to 87.5 and full at gold and platinum, full on digital and club, 3/4 of 3/4 on mid and budget, protection for 2 outside, rate fixed on delivery, no crossing, paid on royalty bearing, US and Canada.

What did you just agree?

Answer next week.

The Loneliness of the Hybrid Economy

March 22, 2010 Comments off

Remember Lessig’s hysterical defense of the “hybrid economy”? How about hybrid economist and public record remixer Lonelyclassmates.com? According to Wired, yet another site preying on the isolated and disconnected as been on the receiving end of a user lawsuit and a $10 million or so settlement.

Here’s a tip for the plaintiffs: Get the money, get the money, and be sure and get the money.

When the typical Web 2.0 company hits the wall, they flip the keys to the first bum on the street and head for mommy’s couch.

CMW/SXSW Recap

March 21, 2010 Comments off

Canadian Music Week: I was able to introduce Jaron Lanier at the Global Forum which was very well attended. Jaron is a brilliant guy and I learned a lot from both his book and his speech. Jaron gives the bedrock of Web 2.0 (as well as the singularity movement) a good shake, and that naturally stimulated good discussion. I’m always impressed with CMW as a platform for Canadian music and enterprise (and since I lived up there for many years, I’m always glad to go “home”).

SXSW: Another great year for SXSW, in the educated rumor mill, Interactive exceeded Music in number of badges sold (which may mean more people with expense accounts go to Interactive than to Music). SXSW is truly becoming a premier international festival and conference, and I frankly think that unless you live in Europe or you’re a publisher, there’s not much point in going to MIDEM if you go to CMW and/or SXSW. My panels were on graduated response and on the NMPA settlement.

We had a good international turnout for the graduated response panel sponsored by IAEL, and it was great to have Dina LaPolt and Susan Abramovitch on the panel to give the perspective of the international artist community. Part of the discussion focused on the Isle of Man project, which is a form of the global license that the copy-mad types tried to get going in France except at 1 euro a month instead of 5. I don’t get the impression that there is a copy-mad element to what they’re doing, but I still think that trying to have a network focused solution is going to be very difficult to get off the ground. I also still have a problem with flat fee licensing for all the usual reasons.

The panel got some great audience questions, particularly from people who pointed out some of the technical problems with the network licensing model. There was a particularly good question that prompted the question of examining online theft in the larger context of cybersecurity and net pollution.

Jay Rosenthal did a superb job of moderating the NMPA Settlement panel, which made a pretty process-oriented (read “dry”) topic a lot more fun and even funny at times. Jay and Steve Englund discussed the details of the deal they negotiated, and my role was to fill in the “how we got here” part.

Jay also moderated a very good CLE panel on legislation with Terrie Bjorklund from AFTRA and Lee Knife from DiMA that focused on net neutrality and the Performance Rights Act. The panel had an in-depth discussion of artist rights and the ability of artists to be equitably remunerated for their labor (See Artist Rights are Human Rights).

I also heard Feargal Sharkey, CEO of UK Music, give a great talk about the future of music online and the importance of UK Music. What is different about UK Music is that it represents all the rightsholders in the UK which gives Parliament one voice to listen to, an idea we should pay attention to in the US. I was very impressed with this idea from a legislation strategy perspective (and I know that forming the organization wasn’t easy). I also think that it’s great that someone with an artist background like Feargal is running the show.

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