MTP readers will no doubt remember the rather bizarre history of the Industry Canada “music study” which purported to demonstrate that file sharing is good for you yum yum. Not surprisingly, it turns out that other economists didn’t believe it either–a new study of the study was recently released that comes to a different conclusion. Using the same data. That’s always nice.
I’m reading the new release (The True Price of Peer to Peer File Sharing) but these paragraphs in the executive summary caught my eye:
“This report…re-examines the data and results recently published by Birgitte Anderson and Marion Frenz (AF) in the report, Don’t blame the P2P file-sharers: the impact of free music downloads on the purchase of music CDs in Canada, featured in the March 2010 issue of the Journal of Evolutionary Economics (JEE). The AF study purports to measure the extent to which P2P file-sharing activities act as substitutes or complements to music purchases in markets for CDs….In the 2007 study, the key claim emphasized by AF was counter-intuitive and highly controversial at the time, being that “our analysis of the Canadian P2P filesharing subpopulation suggests that there is a strong positive relationship between P2P fi le-sharing and CD purchasing.” This was both a very strong claim (i.e. “strong positive relationship”) and a very precise claim (i.e. “one additional P2P download per month is to increase music purchasing by 0.44 CDs per year”). The 2010 report now significantly revises this conclusion from 2007. (It is important to note that the 2007 study is the only one available on the Industry Canada website.) Andersen and Frenz now make the weaker claim that their research finds “no association between the number of P2P files downloaded and CD album sales.” Nevertheless AF go on to comment: “this paper show(sic) that P2P fi le-sharing is not to blame for the decline in CD markets. Music markets are not simply undermined by free music downloading and P2P file-sharing.” The fact that AF’s work was commissioned to support or inform and influence the design of copyright law in Canada warrants a careful review of their methodology….The main conclusion arising from our analysis is that, contrary to the much publicized results from both the AF studies outlined above, their own survey data showed that individuals would increase their consumption of paid music if songs were not available on P2P downloads.” (emphasis mine)
Or in the words of Chico Marx (Duck Soup), “Who are you going to believe? Me, or your own eyes?”
Excellent post on IPKat of comments by Mary Ellen Field on the Hargreaves Review (and we are very suspicious of the Hargreaves Review around here due to Google’s extraordinary influence on the Cameron government through Tory advisor and Google PR chief Rachel Whetstone among others–attention UK Uncut). There have been various formal and informal studies at Westminster for a good 10 years of which I am aware that fall along the lines of –why can’t we be like Silicon Valley. Which has been good for Silicon Valley lawyers being flown over to pontificate, and now appears to be culminating in this latest of the interminable “reviews” lead by Mr. Hargreaves.
What’s most telling about Ms. Field’s comments is her experience in trying to get in the door to offer the committee what will be invaluable advice, I’m sure. As IP Kat’s title would suggest (“The System’s Fine But Where’s the Money?”) getting the input of brand managers of small and medium sized enterprises (or “SMEs” as they are known in cratspeak) is probably one of the more important things Hargreaves can do. If–and that may be a big if–Hargreaves wants to turn in a complete report that considers, among other things, what really fuels Silicon Valley and what the UK could do about it.
Instead, Ms. Field tells us that “It is very sad that there was little input from SMEs at the meeting last week, but not at all surprising. SMEs are trying to keep their heads above water when the banks won’t lend and they are often fighting off attacks on their IP from counterfeiters and larger well funded companies with clever aggressive lawyers. They are in my opinion effectively excluded from the Hargreaves report by virtue of the makeup of the panel and the language used….The fact is that SMEs are not usually populated by lawyers and academics, the wording in the review document suggests that unless you are a lawyer or an academic, your opinions count for nothing….”
But this is the real nub: “Perhaps it is because I am Australian but I get extremely annoyed when the British do whatever the Americans tell them to do. It drives me nuts. Who cares what Google wants? They don’t care about innovation in the UK, they just want it made easier for them to make money here. This UK has never been short of innovators and it isn’t now, it’s just extremely bad at supporting its innovators, forcing many to move abroad or giving up their innovations for next to nothing because it’s not polite to fight back.”
I recall sitting in a waiting room at one of the European Commission buildings in Brussels waiting for a meeting. Out of a large wall of EC publications available to me in the waiting room, a brochure on entrepreneurship caught my eye. It was about 20 pages long, a very expensive looking publication. In the first paragraph, the author (I can just imagine who that was, or should I say they were) equated entrepreneurship with “self-employment” and spent the rest of the brochure–an official EC brochure given to everyone from school children to startups–essentially talking about lemonade stands as though entrepreneurship was a phase you grew out of.
I could not stop myself from word checking the entire brochure to see if the words “startup” or “venture capital” appeared once. They did not.
For some reason, I found this all very illuminating, so am not surprised at all that Ms. Field’s entrepreneurs are not being addressed by Ian Hargreaves. They are just in a phase, why bother spending time on them when you can have lunch at the Googleplex courtesy of Rachel Whetstone?
As the Canadian Parliament labors over a far-reaching revision of the Canadian copyright law, the old mailbox is filling up with interesting items. MTP readers will recall that we have a healthy skepticism of the blurred line between academia, non-governmental organizations and government, whether it’s the FCC or Industry Canada.
MTP has previously pointed out (see links below) the rather curious series of contracts between Industry Canada and Michael Geist, the odd communications regarding the questionable “p2p study”, dubious letter writing campaigns sponsored by modchip resellers that were promoted by Geist and regurgitated by the Canadian bureaucracy. And now—now, yet another “report” paid for by the Canadian government to compliment the “piracy is good for you yum yum” p2p study and perpetuate some rather bizarre assertions.
And it’s not just that it was paid for by the government—Industry Canada in this case (which will come as no surprise to you if you have been following along in previous posts here). It’s paid for in that extra special way that many of Geist’s contracts (through his Lawbytes, Inc. company) and the p2p “study” was paid for. Always just a little bit less than the amount required for public disclosure. Indeed, not just disclosure but an amount that would require a public “tender” of the contract for open bidding on the project.
Meaning that if the amount paid goes over the minimum, Industry Canada could not designate the person who would do the writing who presumably would produce the result they intended. Why else would they do it that way so consistently? Which, of course, is the whole point behind having these rules in the first place—the public is not benefited by results oriented work product.
Of course, it’s not my money and not my country, but it all goes into the pot of bootstrapping studies, surveys and academic literature that is designed to weaken artists, including American artists, and that makes it our business, too.
The McGill University Conference
McGill University is a well-respected institution but like so many academic settings, it has been the scene of rather strange and results-oriented conferences on the subject of copyright and the music industry. One such conference was the 2007 “Pop and Policy” conference that included the traveling copyleft performers mixed with a few music business folk to provide the veneer of credibility. There were no gluttons for punishment—meaning there was no panelist from a major label, although major labels were apparently a subject of much discussion and vitriol.
How do I know this? According to internal correspondence at Industry Canada, Susan Bincoletto, the Director General of Industry Canada apparently wanted to support the conference. It appears that Industry Canada’s lawful options to express this support were limited.
So Industry Canada commissioned a report that is essentially a transcript of the conference panels avec le spin—for $9,500. Actually, just under the $10,000 limit that would have required public disclosure of the payment (see Treasury Board of Canada Contracting Policy Section 5.1.4 “Deputy heads are required to publicly disclose quarterly, within one month after the close of each quarter, contracts entered into or amendments valued at over $10,000.”)
$9,500 was offered and accepted—apparently no negotiation. Yes, very cooperative people at McGill. And who did Industry Canada pick to author the report? Tina Piper, who used to work for Creative Commons Canada, and seems to have never met an IP right she didn’t want to criticize. Meaning that her selection generally seems to be just about as likely to produce the desired result as the selection process for the bizarre Industry Canada “music study”. You know, the one that says copyright theft actually stimulates sales and is good for you yum, yum (See The Industry Canada Music Study Part 1 and Part 2). And if this was the intention, the Industry Canada crowd was NOT going to be disappointed because the eventual “study” was a tour de force direct from the copyleft playbook.
The McGill Conference Report
Like so many of these academic papers and conferences, the McGill report has some pretty major errors which would be startling if it wasn’t such a common occurrence. The report is divided into two sections, the first being the summary of the panels written by Piper, and the second being a more direct play by play of the panel topics themselves. Typical of the anti-copyright crowd, many of the errors are statements of fact that one could only believe if one did no fact checking whatsoever or accepted uncritically propositions that should seem questionable to the most casual observer.
Like so many gatherings of technology fans and anti-copyright activists, the fundamental false start is confounding the record company’s distribution role with the record company’s role in identifying, developing and investing in artists. It should be abundantly clear to anyone who actually works in the music business that not every artist wants to be self-distributed, the long tail is a myth as applied to the music business, and record companies are still the dominant investors in artists regardless of how distribution is given effect.
Aside from a few who believed that somehow they could pick hits based on some measure of past “popularity” indicating future success, most tech companies have steered clear of the music creation end of the business.
Another myth that the conference report accepts uncritically is the idea that there is no market in sample clearances. It should also be abundantly clear to anyone who is even a casual observer of record sales or the charts, that hip hop sells records. A lot of records. Hip hop also utilizes samples. There has been a market for sample clearances since the late 1980s or early 1990s. That is a good 20 years now.
Artist Development vs. Distribution
The panels also made another fundamental mistake so common to tech-heavy conferences—they confound artist development with distribution. Yes, recording costs have come down. Yes, the cost of Internet distribution is lower than physical. For example, one panel was entitled “The Paradise of Infinite Storage”. What in the world does storage have to do with artist development or selling records to anybody?
And then we are regaled with a panel on the proposal by the Songwriters Association of Canada which we have discussed in some detail on MTP (most recently in “The Triumph of the Middleman: How not to monetize file sharing”). Most of these proposals are regurgitations of McGill conference participant Terry Fisher’s proposal in his book Promises to Keep. Despite its curious title, my view of the book is that it abrogates every promise the government has ever made regarding copyright and to a certain extent private property rights. The relevant section is this one:
“In brief, here’s how such a system would work. A creator who wished to collect revenue when his or her song or film was heard or watched would register it with the Copyright Office. With registration would come a unique file name, which would be used to track transmissions of digital copies of the work. The government would raise, through taxes, sufficient money to compensate registrants for making their works available to the public. Using techniques pioneered by American and European performing rights organizations and television rating services, a government agency would estimate the frequency with which each song and film was heard or watched by consumers. Each registrant would then periodically be paid by the agency a share of the tax revenues proportional to the relative popularity of his or her creation. Once this system were in place, we would modify copyright law to eliminate most of the current prohibitions on unauthorized reproduction, distribution, adaptation, and performance of audio and video recordings. Music and films would thus be readily available, legally, for free.” (Emphasis mine.)
Now with all due respect to the U.S. Copyright Office, recall that there is a backlog of hundreds of thousands of registrations at the Copyright Office. Also recall that the Copyright Office was opposed to being tasked with maintaining an archive of orphan works due to the administrative burden—and cost. Fisher’s idea—which formed the basis for Noank Media, a private company that was promoted at the McGill conference and in the Industry Canada report—is essentially a couple steps removed from the nationalization of the entertainment industry. While Fisher doesn’t really say if he thinks that the government should own works of authorship, he pretty clearly states that the government would set the price at which the works could be “sold”. And if the government could set the price at which works could be sold on otherwise illegal p2p transmissions, why stop there?
So Fisher’s idea is at best a poorly thought out, ivory tower, Rube Goldberg cartoon, and is at worst a bright and shiny object that the anti-copyright crowd can point to as a “solution”—and yet this is the core idea of the Songwriters Association of Canada and Noank Media, both of which are promoted in the Industry Canada conference report. And unless you’re big on Chinese repertoire, you could safely say that Noank has hit the market with a resounding thud.
In a word: Bunk
The report uncritically makes assertions like “clearing the rights to one song may involve negotiations with 10 or more rights holders inevitably limiting innovative solutions.” This is, of course, an equivocation. First of all, the report speaks of a “song” and appears to confound “song” with “sound recording”. While it is true that there are some recordings that have 10 or more owners, it is not true that all recordings have 10 or more owners. This is a quantificational fallacy called proof by example (this apple is red so all apples are red).
Even if you didn’t know that most songs don’t have 10 or more owners, wouldn’t you ask yourself if having multiple writers on a song is a natural function of the creation of that song, or due to a sample? That is, that there is some understandable reason for it and that having a bunch of creators on a work is not a plot by a multinational corporation—just maybe?
So isn’t the assertion that the natural creation process itself is opposed to “innovation”—and we all know that anything that opposes “innovation” must give way to innovation, especially at places like Creative Commons (and its backers like Google, who contributed $1.5 million to CCC in 2008)? If the nature of creation itself suppresses technological innovation, how do you explain the success of iTunes, Amazon, Netflix, and so on? Is there something magical about these companies that enables them to rise above the stifling nature of creativity? Or is it more likely that the Industry Canada report is just poorly and uncritically thought out? Or as we say in the trade, bunk.
Will You Believe Me or Your Own Eyes?
Once again, Industry Canada is perpetuating and funding extreme views that undermine artist rights. They are doing it by funding “reports” that are little more than straight repetition of a very one-sided advocacy of platforms from the ivory tower. And Industry Canada bureaucrats do it—once again—by manipulating the rules to further a results oriented agenda that undermines the rights of Canadian artists and any other artist whose works are being stolen online.
Industry Canada decided they wanted to “support” the conference and then the bureaucrats tried to find a way to justify spending the money on a “deliverable”—“same/similar to the UofO [University of Ottawa] conference”. And we know at the University of Ottawa?
See also: A handy chart of government contracts with Lawbytes, Inc. f/s/o Michael Geist
See also: The Professor Has No Clothes
Outstanding post by Andrew Keen on TechCrunch: “My Message to Google: Stop Cheating“. A good summary of the search neutrality issue and why Google doesn’t make the grade.
If you want to get in the mix, DM us your links to @semaphorebands
Mother Falcon (Austin, TX)
Dog is Dead (Nottingham, UK)
Echo Lake (Topeka, KS)
Dutch Uncles (Manchester, UK)
Laki Mera (Glasgow, Scotland)
The MTP Monthly subscription newsletter for February is coming next week! We have an interview with the founder of the dot Music top level domain, more 20 Questions for New Artists, music picks and artist news. Sign up at www.musictechpolicymonthly.com!
If you haven’t seen the excerpt from Portlandia featuring Aimee Mann and Sarah McLaughlin, you really must. (When the time comes to cast Lessig in the inevitable movie, I know who’s on my top 5 list of actors.)
The only unfortunate thing is that they didn’t write in a part for YoYo Ma flipping burgers at the local Mickey D’s with Eric Clapton asking if you’d like fries with that.
By all accounts, 2011 will be the year of “the cloud.” Again.
We’ll be discussing in the next few weeks the somewhat predictable affects of “the cloud” on the entertainment industry, and particularly the music business. As usual, too little attention is being paid to the lessons of history and we hope to shine some light on the most important part of the cloud from the musician’s perspective—getting paid for your work. This short piece will address the headline topics that should be on every negotiators checklist.
The simplest version of the cloud is a digital locker where users can store files of indeterminate origin. This is not remarkable in and of itself. The problem is that unless there is much more scrutiny of what goes into the locker, the user could obtain tracks from illegal services, put them in their Google Music locker (for example, although Google won’t be the only one) and then stream the tracks to their Android phone or desktop. This model is kind of old news in terms of development, and we have seen several companies develop this technology over the last few years.
And of course this very model is at the center of the major piracy sites. If a company such as Google, which clearly profits from piracy by selling advertising in search results pointing to, in popups on the way to, or actually on pirate sites, could wave a magic wand and “legalize” this business model, one would have to believe they would jump at the chance.
It is also important to recognize that once the creative community allows Google to “license” the cloud, then they will also be allowing Google to connect to the cloud through their Android mobile phone division—which, after all, is the division of Google where Google has placed their music service. So you could conclude from that choice that Google sees music as merely an add-on to a cell phone.
1. Android Phones Promote and Monetize Piracy: As Glenn Peoples identified in a recent Billboard article “Suspicious Finds: Rogue MP3 Apps Present New Challenges for Legal Music Services”, the Android Market is different than iTunes App Store: “Because the Android Market lacks the more stringent vetting process of iTunes App Store, these [Android] apps [for pirated music] are listed alongside better-known, legal music services like Pandora, MOG and mSpot.” These pirate apps include “mp3musicbox” which Glenn says is the 74th most popular free app on Android Market, well ahead of USA Today, Kindle and the New York Times, and well ahead of legal music apps.
Not surprisingly, some of these app developers have for-sale “premium” version of their apps with even faster speeds (just like many of the “subscriptions” for the criminal cyber locker services that allow users to pay for faster download speeds–with a Visa or Mastercard). Glenn identifies MP3 Online Premium, an app for illegal mp3s that sells for $9.99—and Google gets 30%, after the artists are paid. No wait—the artists aren’t paid.
And then many of these are advertising supported—with ads sold by guess who?
(From a law enforcement perspective, shutting down these apps will be a lot easier than shutting down a rogue website. Unfortunately, Google’s arrogant refusal to testify at the recent rogue sites hearing in the U.S. Senate Judiciary Committee suggests that Google does not intend to give up its profit from piracy quietly.)
2. Licensed vs. Unlicensed Uses: Why is Google’s Android Market relevant to their “cloud” scheme? Based on its practices with Google Video and YouTube, it is clear that Google has no intention whatsoever of filtering out illegal services–and profiting from piracy until someone takes them down. This is confirmed by the recent announcement by Google of “changes” to their copyright infringement policies–which are flimsy at best and a con job at worst. Why is that important? Because once they have licenses for any content, they will use those licenses to mask, or as the EFF would say, “obfuscate”, illegal content.
3. What is behind the cloud? It seems extremely unlikely that for GIGO reasons alone, a commercial cloud service is going to actually stream the actual track that a user uploads to their locker. It is far more likely that the user will upload a track to the locker, it will be recognized in some manner (fingerprint or metadata) and then a pristine copy of that track will be linked to the user’s account from another server on the network if it is recognized, a “side server”. If it is not recognized, then we will have to assume that the track will be copied and stored in the background on the side server for the next user who uploads that track, perhaps even a “best copy” as determined by a machine. Of course—if it is not already on the side server, then it is likely that the recording is not licensed. So if the service uses this “side server” infrastructure for both licensed and unlicensed recordings, then they are in the business of reproducing pirated copies.
4. Edge Server Caching: Even if these cloud services don’t use side servers, it is common practice to cache copies of certain tracks on Akamai-type edge servers for a variety of reasons, especially to facilitate streaming. Sound familiar? In order for the cloud to replicate this practice, edge server copies of frequently used material (including from a side server) will likely be hosted on edge servers. Still more pirate copies. (See diagram, but remember that the “Acme image” could be an illegal copy.)
5. Non Display Uses: The real value of a cloud music service, certainly to a company like Google, is not just the actual music that is being sold, but the database that is being created. Make no mistake—Google would be fools not to try to capture as much of this usage as possible to resell and to perfect its search algorithm, particularly if negotiators completely miss this issue and allow Google to make non-display uses without penalty or contribution. If you combine this idea with Google’s already announced policy “change” of displaying “previews” of indeterminate length, you can see that the music industry could easily be handing Google an asset that it will resell back to the music industry several times over. All the recordings plus all the songs plus ownership data? That’s the brass ring of database management. Should they get this for free?
The real tragedy for creators, of course, is that service like a Google Music will come with the usual big advances and terrible accounting that are the hallmark of their company. Where does the big advance go? Into the general account of the licensor. What happens when the ridiculous accounting comes in? Not much, because the licensor is not required to pass through the initial advance and then has little incentive to get the accounting statement that would allow them to pay creators a share of the advance in earned royalties. Meaning if you get a $10 million advance and get an accounting statement that reports on 5% of the usage, you only pay out $500,000 of the $10 million and keep the rest.
6. Accounting for the Cloud: Once your recordings and songs go behind the cloud, finding out what happened to them will get very cloudy indeed. If you think that YouTube’s accountings are, to be kind, sub par, just wait until you get the cloud accountings. Before anyone gets licensed any music for any cloud music service, they need to demonstrate they have the ability to actually account for the licensed usages. Which they don’t. Otherwise, the cloud will be the couldn’t.
7. Hybrid Economies: Remember Lessig’s slip on the Colbert Report—hybrid economies mean that someone else does all the work and the tech company gets all the money. This is called YouTube, Flickr, Facebook, Twitter. Do these companies provide value? Sure. Do they provide value to the musicians, filmmakers, artists, and users whose work and personal information are the data that frame the sale of advertising? Hardly.
New Music Weekend 2/19/11: Bosque Brown, My Name is John Michael, Soft Landing, Esben and the Witch, Family of the Year
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Soft Landing (Brooklyn)
Esben and the Witch (Brighton)