A major streaming service apparently is trying to get labels to grant them a direct license for webcasting on the service. A “direct license” in this context means that the direct license replaces the statutory license available under the Copyright Act at the rates negotiated with SoundExchange.
It also makes an end run around some of the protections in the statutory license. For an service (and an industry for that matter) that complains about the difficulty of licensing music to try to trump one of the success stories for licensing online. One that actually produces significant revenue for artists, working musicians and vocalists, and also for sound recording owners. In the indie world, those sound recording owners are often the artists themselves.
The whole point of having a statutory license is to reduce the transaction costs of licensing administration. Bear in mind—these direct licenses are all with labels or artists whose catalogs are already available through the statutory license. This time it is the service that is creating the licensing headache and increasing the transaction costs for the artist and label solely to benefit the service because the service wants to shift some of their costs onto the artist and the label.
Why do the transaction costs increase? When an artist or label has their work performed under the statutory license, they receive royalties from SoundExchange. Period. What they get they keep.
Under this side deal, the service is now wants the artist or label to waive payment by SoundExchange. That allows the service to stop accounting and paying SoundExchange for the particular tracks at the proper royalty rates. If what I hear is true, the rate that the service wants to pay is a rate that is deeply discounted from the correct rate—a rate that applies to people like Pandora which the service is not.
It also seems to be the case that in the fine print, the service is asking the unsuspecting label to represent that the label controls all rights necessary to play their tracks in what sounds like it will be a near-on demand service.
This means that the label is taking the burden of paying artist royalties, producer royalties, and publishing royalties. In fact, it would not surprise me in the least if the service is planning on claiming a direct license from these labels on the ASCAP/BMI/SESAC monies due to the songwriters for these performances. The direct deal would cover all sound recordings of the label or artist, so if you have any cover recordings or samples, you are being asked to represent that you have rights you probably don’t have. And of course, you’d have to indemnify the service for any claims that cause a breach of your representation that you do control all rights.
If you’ve received this letter, you know who you are. Read the fine print and run the numbers. There’s no point in arguing with this service, and this isn’t the first time that they’ve tried to slip one by.
These are not music people and no matter how hard they try to make you believe it, they’re never going to be.
Semaphoremusic.com Staff picks:
Unsurprisingly, Google lost the first round of the Google Books case. What was somewhat surprising is that the main reason for Google’s loss was its failure to take into account the reaction of the authors–the Court noted that “[n]ot only are the objections great in number, some of the concerns are significant. Further, an extremely high number of class members — some 6800 — opted out.”
Of course, looking only at those who opted out does not squarely address those who did not feel they needed to do anything to enjoy their rights–such as EMI Music Publishing and Sony-ATV. These two companies alone represent over one million songs. (What do songs have to do with books? Google attempted to sweep lyrics into the settlement.)
We will have much more to say about this decision. But there is one very, very important point worth noting. There was about as much highly paid legal horseflesh at bar as it may be possible to muster. Many academics and lawyers, even countries, had their say.
But the Court seemed most persuaded by individual authors who wrote opt-out letters to the Court:
“An author from the United Kingdom states, very simply: “I do not want my books to be digitized.” A 79-year old nature writer and author of 23 books illustrated with photographs of animals in the wild worries that the loss of control over her works could result in their being used to “vilif[y] the wildlife I spent my life trying to help the public come to understand and protect.” An author from Canada writes: “I am opting out because I believe in the integrity of copyright. I believe that only I, myself, should have the right to determine how my work can be used.”
Finally, an author from Texas gives the example of her grandfather. He self-published a memoir, Dust and Snow, in 1988. He passed away in the 1990s, and the copyright to the book passed to his three daughters. The author observes:
From Google’s point of view, Dust and Snow is an “orphaned” book. If and when Google scans it, the company is likely to be unsuccessful in trying to locate the publisher, since the book was self-published and my grandfather is now deceased. In essence, the way the settlement is written, such “orphaned” titles are automatically handed to Google free of charge to do with as it will. From my family’s point of view, Dust and Snow is not orphaned at all. It is very clear who owns the copyright. So why is Google being granted the automatic right to take over the copyright of books like my grandfather’s?”
Easy answer to that.
At least not today.
All authors reading this decision should be heartened by the Court’s concern with their views. This is what the Court is supposed to do. The Court is supposed to protect those who cannot fight the Leviathan. The Court is supposed to protect the innocent who cannot protect themselves when they are set upon by vileness and the tyranny of evil.
It seems that in the quiet moment in chambers when the Court considered the magnitude of its decision it was these voices–not the high priced ones–that were most persuasive.
It is important that creators be heard and that creators fight back to protect their works, even if it seems that the odds are long, the chance of success remote and the cost of the fight may be dear.
I see Google is still hawking the Chris Brown wedding video as though it were spontaneous (the centerpiece of Von Lohman’s sermon). I had to sit through this drivel at a panel not too long ago and tripe remains tripe despite repetition. Why don’t they choose something that’s a true YouTube sensation like “Chocolate Rain” or the treatment that grotesque “YouTubers” gave Rebecca Black?
Another fallacious statement is that “YouTubers” upload more video every month than the entertainment industry created in the last 60 years. I wonder if he’s counting YouTube uploads like multipart uploads of “Casablanca full movie Part [x]” or other clips from the programming that the entertainment industry created–and paid for–in the last 60 years? And as usual with the Google crowd, they continue to completely and utterly miss the question: Does anyone care about all these videos that are not those that are simply ripped off? For every “Simon’s Cat” how many “Fire Farts“?
There is no evidence that Fred Von Lohman was throwing eggs with the best of them in the…ahem…”spontaneous” outpouring of support for Google by Germans in the grand European tradition of violent demonstrations in support of multinational American corporations. (See “Egginghaus and German Street View“.)
Now why in the world would Eric Schmidt want to take a job where he is subject to Freedom of Information Act requests? Even if he can explain away his truly bizarre comments about privacy? Or, as Consumer Watchdog put it “Consumer Watchdog To President Obama: Tapping Google CEO For Commerce Secretary Is Like Appointing Madoff To Head SEC“. That appointment would definitely be crossing the “creepy line”.
SXSW 3/19 Picks: Nikki Rowling award, Guy Forsyth, Ghost of a Saber Tooth Tiger, Givers, Cary Brothers, In Tall Buildings
Special event: Nikki Rowling receives the Cindi Lazzari Artist Advocacy Award from the State Bar of Texas. According to the press release from the Texas Music Office:
“Long-time music professional Nikki Rowling will receive the 2011 Cindi Lazzari Artist Advocate Award from TESLAW, the Entertainment and Sports Law Section of the State Bar of Texas. The award will be presented during the Austin Music Awards at the Austin Music Hall on March 19 (Saturday during SXSW) at 7 p.m.
Rowling was unanimously chosen by the TESLAW committee to be the 2011 Recipient. Although Nikki has a long history of commitment to developing artists and the music community, it is her recent work as Chair of the Creditor’s Committee (representing over 500 musicians and songwriters) against Texas Music Group, Antone’s Records and affiliates in bankruptcy court that TESLAW would like to recognize as an extraordinary effort that has produced remarkable results.
Antone’s Records—which bears the name of Clifford Antone but which he had sold many years before—and their affiliated labels had not paid royalties to the vast majority of its artists in over a decade. The companies filed Chapter 11 bankruptcy in an attempt to re-organize the company and continue doing business as it had for the last fifteen years.
Over the objection of the debtors record labels, Rowling was able to form a Creditor’s Committee to represent the rights of all the artists, songwriters and publishers and give them a powerful voice in negotiations over the reorganization. She worked with attorneys to force the debtor labels to hand over bank statements and financials through the bankruptcy process, and she poured over the labels’ books and bank accounts, attended depositions, gave testimony, and led the outreach to find as many affected artists as possible.
Most importantly, she oversaw the creation of a new reorganization plan submitted by the Creditor’s Committee that its members felt would best represent the interests of the artists, and which was in direct opposition to the label’s reorganization plan. She then led three exhaustive voting campaigns to defeat the debtor labels’ reorganization plan—resulting in court approval of the Creditor Committee’s plan.
The Creditor’s Committee plan called for a sale of all assets belonging to Antone’s Records and it’s affiliated companies, including all recordings, to a third party through an open auction conducted by the federal bankruptcy court. The assets were successfully sold to New West Records, one of the most highly awarded mid-size labels in the country which also has ties to Austin through its partnership with the world famous Austin City Limits television show.
In addition to a new label home, these artist creditors will receive:
- A funding pool of $275,000 to pay past creditor debt and attorneys fees, which is more than twice the funds Antone’s Records had proposed
- All previous unrecouped artist balances reduced to zero dollars on a go-forward basis
- Significantly higher rates for both artist royalties and mechanical royalties.”
It’s what Clifford would have wanted.
And now, on with the show.
Be safe out there.