Archive for November, 2011

Independent Austin artists speak out against rogue sites: It’s Not Victimless

November 29, 2011 Comments off

Fascinating interviews with Austin artist Guy Forsyth and other independent Austin artists.   From Creative America.

Creative Commons Corporation: Because it sure seems to cost a lot of money to give things away for free

November 28, 2011 Comments off

By Chris Castle reposted from August 2010

Creative Commons License

Hey Jude by John Lennon and Paul McCartney is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Based on a work at
Permissions beyond the scope of this license may be available at

Quotes regarding “the Commons”

“What we [copyfighters] want to tell Hollywood is get over it….They want to break the Internet….We don’t have to change the essential character of the Internet to protect this one tiny industry.”

Lawrence Lessig

“All of these people — commoners — are driving a huge, robust and expanding phenomena of global culture. It is no exaggeration to say that we constitute a great emerging superpower.”

David Bollier of the Norman Lear Foundation, On The Commons: The Digital Republic

“Business will overcome its opposition to Creative Commons or perish.”
Joi Ito, Chief Executive Officer, Creative Commons Corporation

Google’s $1.5 million contribution to Creative Commons

Well, well, well. So much for the wonders of utopian narcissism in the garden of radical extremes.
In Part 1 of this piece (“News from the Goolag: Free Culture, Free Beer and Free Money“), I noted that there were some inherent drafting mistakes in licenses from Creative Commons Corporation that we’d get into explaining later. Users may find mistakes in the Creative Commons Corporation license to be unwanted news, or may find it difficult to understand how it could be true that mistakes were made—and are being made—by the much trumpeted Creative Commons Corporation.

I did, too. I actually found it incredible that so many lawyers could spend so much money drafting a contract with such big holes that they knew would be used by millions of people. I also find it difficult to understand why the Corporation has yet to fix the problem, even though some of these mistakes have been pointed out in the literature several times. The fix is easy, admitting you need the fix is what’s hard.

Where is Paragraph 8(f)?

It is important to understand that the mistakes are not concerned with the general idea of a license that modifies existing copyright law. Conceptually, Creative Commons Corporations licenses are old news and are not that different conceptually from hundreds of millions of licenses issued by the Harry Fox Agency—another widely used license that modifies the U.S. Copyright Act.

The mistakes are structural and at least in music, go to the heart of the deal. So it would appear that there are potentially millions of flawed licenses currently in use—probably not by Nine Inch Nails or other big artists who are represented (at least I hope not). The flawed licenses are in use by those who give Creative Commons Corporation its greatest justification—the millions of amateur creators who perhaps unwittingly participate in a variety of commercial activities and create value in the owners of the “hybrid economy” companies that exploit their works.

Our tunes are all Creative Commons. Someone, is there something to use them?” Tweet by a commoner

Before you think I’m talking about the big categories of rights the license purports to grant—meaning the “sharealike” and other Corporation terms—I’m not concerned with those, at least not in this writing.

Rather, I’m focused on the fundamental rights that are the subject of the Corporation terms—the things that are being shared alike if you will. Meaning if you say I’m granting rights in a song on a sharealike license, you would hope that the sharealike rights actually attach properly to something. Meaning that if you want to grant rights to the song “White Room” you haven’t actually granted a white elephant by mistake.

This is particularly true because the license completely disclaims any representation by the grantor as to what rights are being granted and the consequent disclaimer of any liability. One of the fundamental rights that most recipients of a license, i.e., “licensees”, expect to get is a representation and indemnity that the person granting the rights actually has the rights to grant. Meaning that the person granting the rights promises they have the ability to grant rights and they agree to protect the licensee from harm if it turns out that they don’t. That promise is usually the main thing that ensures honesty in the deal. That’s going to be difficult with the Corporation’s license as it is essentially anonymous unless the person granting the rights volunteers their identity and the license itself absolves (maybe entirely) the grantor from liability.

Who Cares?

I really detest “unscripted” television programming, or what’s commonly called “reality TV”. I think it’s the worst thing that ever happened to television. I don’t deny that it’s popular, but that doesn’t make it good. Flag pole sitting was popular, too. And what’s worse than reality TV? How about “user-generated content”? Again, no doubt that it’s popular, but that doesn’t make it good. And there is probably no one more firmly in the UGC game than the Creative Commons Corporation except maybe Google. People have to have something to search for, right?

The truth is that if anybody in the professional music business actually cares about using Creative Commons deeding or whatever they call it, they are keeping it to themselves. Sure there are a handful of professional artists who use it occasionally but that’s only occasionally for specific titles and these people are represented so any downside is taken into account in the larger context of the artist’s catalog.

So the subject of Creative Commons Corporation as a license just doesn’t come up much with professional music folk.

But people should inquire about it when co-writing and licensing for a few reasons. Professional songwriters probably don’t like it because the Creative Commons Corporation “deed” is so poorly written that it’s almost not workable at all for songwriters and it may require sound recording owners to give away more than they have.

That’s not a shot, it’s a fact. Even if you don’t know anything at all about the law, let me give you two facts and see what you make of it.

Each recording of a song contains two copyrights, want to guess what they are? The sound recording copyright, maybe? Right, that’s the ℗.

What’s the other one? Want to guess? The song, maybe? Right, that’s the ©.

Should You Care?

The Creative Commons Corporation “deed” for “audio” is for which copyright, the song or the sound recording? It’s for the “audio” copyright. Which one is that? Good question. That’s an answer you would think that a lawyer would know, right? And of course, the Corporation will tell you that they are big believers in copyright and that their licenses exist within the copyright law and depend on the copyright law—I would say for effect, not sure if they would go that far.

Unfortunately, I’m just a country lawyer from Texas and I’m not as smart as these city fellers. When I look up the “audio” copyright in the Copyright Act (that’s Circular 92 available from the U.S. Copyright Office for those of you who are reading along), it’s just not there. I find a lot about sound recordings (“phonorecords”) and songs (“non-dramatic musical works”), but I don’t find an “audio” copyright. Neither will you find a “video” copyright for that matter, another of the Corporation’s licenses that have similar problems because of music embodied in the soundtrack of the video. But we’ll just stay focused on audio for now.

The Fundamental Problems

So here’s a few of the more important fundamental problems with the Creative Commons Corporation “deed” from the perspective of someone who shepherds the flock past the tyranny of evil–it makes no sense for people who create sound recordings of songs. Meaning it may not be gibberish, but it’s close to it and misses out the following situations:

1. No Definition of Noncommercial Use: This is the biggest gaping hole in the Corporation’s license. For purposes of this writing, I reviewed the Corporation’s “Attribution, Noncommercial, No Derivatives” license. While the thrust of the “sharing economy” is supposedly “noncommercial”, this critical and material term is not defined in the “lawyer readable” version of “noncommercial” license. Paragraph 3 is the basic grant of rights:

“License Grant. Subject to the terms and conditions of this License, Licensor hereby grants You a worldwide, royalty-free, non-exclusive, perpetual (for the duration of the applicable copyright) license to exercise the rights in the Work as stated below:

a. to Reproduce the Work, to incorporate the Work into one or more Collections, and to Reproduce the Work as incorporated in the Collections; and,

b. to Distribute and Publicly Perform the Work including as incorporated in Collections.
The above rights may be exercised in all media and formats whether now known or hereafter devised.

The above rights include the right to make such modifications as are technically necessary to exercise the rights in other media and formats, but otherwise you have no rights to make Adaptations. Subject to 8(f), all rights not expressly granted by Licensor are hereby reserved, including but not limited to the rights set forth in Section 4(d).”

So let’s look at paragraphs 8(f) and 4(d). 8(f) is easy.

It’s not there.

I wonder what it said? Maybe someone in the White House knows?

Paragraph 4(d) is there (although it’s actually “4.d”). Whew, good one! Paragraph 4.d isn’t much help (it essentially concerns royalties from waivable and non-waivable statutory or blanket licenses) and refers back to paragraph 4b which states: “ You may not exercise any of the rights granted to You in Section 3 above in any manner that is primarily intended for or directed toward commercial advantage or private monetary compensation. The exchange of the Work for other copyrighted works by means of digital file-sharing or otherwise shall not be considered to be intended for or directed toward commercial advantage or private monetary compensation, provided there is no payment of any monetary compensation in connection with the exchange of copyrighted works.”

I would suggest to you that this paragraph is a good example of what Lessig calls the “hybrid economy”—that is you can have commercial gain from activities by the company that uses the licensed work, but you can’t have any commercial gain from the licensed work itself. So the distinction is the difference between the sale of a company or its stock with a valuation that is based upon the works made available under the Corporation’s license (the “company level”), and a sale of a particular work subject to a license (the “work level”).

Meaning, if you sell Flickr (still the largest user of Creative Commons works with over 1/3 of works under the Corporation’s license) for $35 million, you can argue—although I think it’s a weak argument—that you haven’t violated any of the Corporation’s licenses because you haven’t sold any particular work. You have gains at the company level, but not at the work level.

If you sell advertising on Flickr you also haven’t violated the Corporation’s license because…not sure. An even weaker argument for commercial uses at the company level but not at the work level.

This is like when a record company is sold for billions but none of the artists participate because the gains were at the company level and not at the work level.

As an aside, note that the license as drafted does not prohibit a file barter company such as the Pirate Bay or Limewire to profit from the sale of advertising. Note: “The exchange of the Work for other copyrighted works by means of digital file-sharing or otherwise shall not be considered to be intended for or directed toward commercial advantage or private monetary compensation, provided there is no payment of any monetary compensation in connection with the exchange of copyrighted works.” Selling advertising at the company level does not violate the license as there never is money paid for the exchange on the typical illegal service like Limewire.

Now you would think that if the purpose of the Corporation’s license was to promote a “sharing economy” considerable attention would be paid to defining what this noncommercial business is all about, right? I guess it must all have been in the missing paragraph 8(f).

Maybe 8(f) said something like this: “No commercial gain may be sought by websites offering digital files of our music, whether through advertising, exploiting databases compiled from their traffic, or any other means.”

That’s from the Grateful Dead’s notice to “MP3 Site Operators.” Maybe that’s what the drafters of the Corporation’s “lawyer readable code” meant to put into the missing paragraph 8(f). Maybe Barlow knows.

Of course, a broad statement like the Dead came up with would kind of rule out that “hybrid economy” thingy. Particularly since the Corporation’s CEO seems to think that Creative Commons Corporation will cause all businesses who do not genuflect properly to perish.

2. Co-writes. The co-write situation is a problem because there is no provision in the “deed” for more than one person being the “Licensor” or “Original Author” at the grant stage (although Creative Commons Corporation makes you represent that whoever is clicking through is the “Licensor” (meaning “the individual, individuals, entity or entities that offer(s) the Work under the terms of this License.”) That’s great from the Licensee’s point of view (which is, I would argue the entire point of the existence of Creative Commons Corporation). But how can a click through agreement deal with multiple licensors—like in the most fundamental collaboration in our business, the co-write.

It doesn’t.

This is not a trick question, it just doesn’t work.

3. Gaming. As you can see, I have created a fake Creative Commons Corporation audio license for “Hey Jude” by John Lennon and Paul McCartney. Nobody checks to see if the person obtaining the grant is actually the person who owns the work. Why? That would require a human and a real infrastructure. I know, I helped to build one once. This is also known alternatively as a “red flag” and as “overhead” two things that the licensee beneficiaries of the Creative Commons Corporation license want nothing to do with.

4. The Horse Is Out of the Barn: Professor Jane Ginsburg of the Columbia Law School has an excellent critique of “public licenses” and specifically the Creative Commons Corporation licensing regime (“The Gift That Keeps on Giving”). This is an excellent read for the layperson by a highly respected academic, and breaks down the issues very well. One issue that Professor Ginsburg focuses on is the irrevocable nature of the Corporation’s license:“It must be emphasized that once the author has granted a public license, there’s no going back. Once publicly licensed copies are made available, they will generate more licensed copies, and it will be too late to reverse course. While the author can cease to offer the work herself with the license, or can re-offer it with a more restrictive Creative Commons [Corporation] license (for example, to exclude derivative works where once she allowed them), she will not be able to stop the circulation of copies previously accompanied by prior terms of the license.

Downstream users whose copy of the work incorporated the prior version of the license may be entitled to rely on – and further propagate – that version. In that case, confusion will reign if different versions of Creative Commons [Corporation] licenses with regard to the same work are simultaneously circulating.”

Professor Ginsburg has identified an excellent question— what it would really mean to retain the ability to grant an exclusive license after having granted a public license in the same work? Not much.

In fact, retaining that right is largely meaningless because the author “will not be able to stop the circulation of copies previously accompanied by prior terms of the license.” Granting exclusive licenses to distributors, book publishers, music publishers or digital aggregators is an important, if not crucial right, for a creator to retain, there’s not much left to parlay if the work is subject to a prior public license.

5. Cover Recordings

Let’s say you recorded “Hey Jude” and you wanted to make that recording available under a Creative Commons Corporation “audio” license. Let’s also assume you’re not an heir of John Lennon and that you are not Paul McCartney. If you can figure out how to make that “audio” license apply to the song, I’m all ears. But interestingly, the licensee probably gets no relief because of this quitclaim paragraph (which reads like it was lifted from a software license):


300 million works on a quitclaim. And counting. Genius, eh?

Buyer Beware

There are plenty of places on the Corporation’s website where they admonish users of their licenses to be sure of their rights, and of course the licensees have no protective rights under the license—no indemnity at all. Maybe just in case someone might think that the Corporation had some responsibility for flaws in the license they drafted, essentially for non-lawyers? So buyer beware, eh? Well, no kidding. If the buyer was really going to beware, there’d be no need for the Corporation’s license in the first place because licensees would just contract directly with licensors and do their own diligence. So chanting “buyer beware” becomes a bit iterative. But then of course, it’s far less likely that the Corporation would be raising all those millions, would they?

Prohibit Public Licenses in Co-Creator Situations?

Anyone who is carefully building a catalog that they hope will feed their family and grandchildren some day would want to know for the foregoing and other reasons what their co-writers were up to regarding Creative Commons Corporation or other public licenses. The idea would be to have agreement among the co-writers (or other joint creators) to prevent one co-owner of copyright from granting a public license without the approval of their co-writers. (There are some technical reasons why this grant by a co-owner of an undivided interest might be binding on the co-writer, but let’s assume it would be.) This isn’t to say that the co-writers could not just as easily agree to use the Corporation’s license—but they’d all have to agree. And then they’d have to figure out how to fill out the form.

What’s The Situation with the Poker Prof?

If you watch the beginning of Steven Colbert’s interview with Lester Lawrence “Ace” Lessig III promoting Lessig’s book “Remix”, there is an “aha” moment—the basic principle of the hybrid economy is that regular folks (lawfully or unlawfully) create content and post it, or give up their privacy to enrich the Web 2.0 company. The company gets rich and the users who create the content do not. (“Colbert: [laughing] The hybrid economy is where everybody else does the work and Flickr makes the money! Lessig: Don’t tell anyone!”)

Who would do this? Maybe those who Mark Zuckerberg apocryphally referred to “Dumb F*cks”? Let’s call them “Zucks”. So maybe it is about the Zucks. Lessig pretty much says this to Colbert’s great amusement, but watch the video and ask yourself if Lessig’s smugness says it all. Maybe it’s just me, but I thought it was pretty funny, too. (PS, never try to outfunny a comedian, especially not on the comedian’s own TV show. It will not work out so well.)

It Sure Does Cost A Lot of Money to Give Things Away For Free

What does free content mean to Web 2.0 companies? Profit. Imagine the board room conversation: “So if we could just find a way to get these Zucks to create the content for free and then we sell it!”

So you can see that there is an inexorable drift toward something like Creative Commons Corporation licensing due to the market forces of Web 2.0. If there wasn’t a Creative Commons Corporation, someone would have to invent one because there isn’t enough advertising money to pay arms-length licensing fees for all that content—and then, of course, you’d have to take the time to negotiate the licenses.

You think that there’s enough profit in there to make it worth giving $20 million to Creative Commons Corporation? Particularly given that Ito seems to think that all businesses who refuse to do business with Creative Commons will perish?

Meet The Man 2.0. Or perish. (“Мы вас похороним!”)

Stay tuned for Part 3 where we will look at how they managed to screw up I’m glad Ito limited his threat to businesses.

See also Part 1: “News from the Goolag: Free Culture, Free Beer and Free Money

See also: Carefully Co-Writing Without Creative Commons

See also: An Inconvenient Truth: Songwriters Guild President Rick Carnes talks about the effect of piracy on American songwriters


I’m told that there are a couple people out there who would have folk believe that in this post I “put” “Hey Jude” under a Creative Commons Corporation license, or that somehow I “committed fraud” in the section above entitled “Gaming” that warns of potential fraud due to a lack of security in the Creative Commons Corporation licensing process.

Obviously–neither assertion is true. First, in order to “put” a work under the license one would have to put the work under the license. No work is involved in this post. So I’m not quite sure what that means.

As far as “committing fraud” goes, there are nine conjunctive elements to the common law tort of fraud as generally adopted by the several states and the federal government. None are present. In fact–the place where the reference to the “license” occurs is a paragraph that uses the license as an illustration of avoiding scams that points out a potential problem with the Creative Commons Corporation license. If you’re going to use the big words, look them up so you know what they mean.

But then again, maybe the solution is in the missing paragraph 8(f) and it’s all much ado about nothing. Probably not though–as the Corporation tells us “Since there is no registration to use a CC license, CC has no way to determine what has and hasn’t been placed under the terms of a CC license. If you are in doubt you should contact the copyright holder directly, or try to contact the site where you found the content.”

So like I said–why bother with the whole thing?

United Songwriters Forms in Reaction to Swedish Government

November 27, 2011 Comments off

Helienne Lindvall reporting in the Guardian tells us the latest tripe from Sweden–sorry–not tripe, “meme” is the more correct for hive minders, right?  She says, “Now Swedish songwriters are up in arms after their minister for trade and Centre Party leader, Annie Lööf, came out in favour of legalising illegal downloading “for private use”, in an effort to “increase freedom on the internet”.”   I guess if you can’t understand something through logic, the next step is to understand it through magic.

Ever notice that the prevalence of magical thinking about copyright policy seem to vary directly with speaking tours to a country by Lessig, a/k/a The Poker Prof?   According to certain cables, “U.S. Professor Lawrence Lessing lectured at the Swedish Parliament on November 18 [2009]. Following the discussion he told Swedish media he hopes to shift the focus from illegal file-sharing to means of enabling “remix and creativity.” Lessing maintains that it is important to both compensate right-holders, but also allow remix of certain intellectual property without compensation.”  (Actually, Lessig says that “Hollywood” needs to “get over it” because  “We’re not going to break the Internet for one tiny industry.”)

As Helienne reported, the Swedish Minister for Trade has made public statements supporting that great shibboleth of “Internet freedom” (a euphemism for “we’re taking your life’s work because it’s free for me but not for thee”).  Apparently, “Internet freedom” does not even require an attempt by the government to monetize file barter, as the Minister says that “[The Swedish government] don’t like file sharing – it’s illegal – but we’re pushing for people being allowed to download for private use.”

So you see, it’s not about the theft of your life’s work, no, no–it’s about “Internet freedom” and “remix and creativity”–whatever that means.  Sounds like the Poker Prof could have written the Minster’s talking points for her, don’t it just?  Both have that special brand of twisted logic, or as Lessig would say “We’re not going to break the Internet for one tiny industry.”

Helienne reports that leading Swedish songwriters formed a group called United Songwriters, or “UniSon” , which issued a letter to the Minister of Trade that included this excellent summary:

“‘If the government starts to question the basic democratic right of ownership, surely even people outside of our work force would be worried about what the next step would be. Do you, for example, think patented innovations and medicines should be spread without any compensation for those who created them? Who then do you, the minister of trade, suppose would pay for progress and development? The taxpayer?'”

I shudder to hear the answer to that, because the Swedish government apparently is not thinking that the taxpayer bear the cost–not even of enforcement–but rather that the creators themselves bear the cost.

Just like creators do now.

So what makes a taking a “theft”?  It is when the law recognizes a property right in a good that allows the owner of the good to either enforce that right in a court by a private action or allows the owner to call upon the government to enforce that right.

If your car is stolen you have the ability to call the police and the police have a doctrinal response to that call.  They know what they are to do.  The police have a doctrinal response, in fact, a very well developed doctrinal response.  That doctrinal response is not particular to the US, either, it is true in almost every culture or nation state.

On the other hand, if your life’s work is being stolen online and you call the police, they only recently can say that they sort of know what to do and that really depends on what country you are in.  In reality, they do not.  In reality, you may as well call the police and say “Toasted Suzie is my ice cream,” because they don’t have much of a doctrinal response and if they do anything, they will try to shoehorn your complaint into an existing response plan.

And, I would suggest that is exactly what the Swedish minister of trade is doing–to her peril.  She apparently wants to simply define the problem out of existence.  (Which is what Lessig says, too, remember “stop criminalizing our kids”?)  We can understand that is what a good bureaucrat might do to resolve the dissonance (not lost on Lessig no doubt), but is that really responsible policy making?  Because where does that end?

You have to be able to tell a beat cop what she needs to do in order to make an arrest or enforce the law.  It appears that the Minister does even want to bother trying.

The Triumph of the Middleman: How not to monetize file sharing (in Sweden or elsewhere)

November 26, 2011 Comments off

Update: Helienne Lindvall reporting in the Guardian tells us the latest tripe from Sweden–sorry–“meme” is the more correct for hive minders, right?  “Now Swedish songwriters are up in arms after their minister for trade and Centre Party leader, Annie Lööf, came out in favour of legalising illegal downloading “for private use”, in an effort to “increase freedom on the internet”.”  Ever notice that magical copyright policy ideas seem to vary directly with number of speaking tours to a country by Lessig, a/k/a The Poker Prof?  This piece from earlier this year summarizes a few ideas on the subject and my theory that you can only support legalized file barter if you haven’t thought it through.  Unless you just like Ponzi schemes.

There have been a lot of ideas about what to do about commercial scale “file sharing”.  (“Commercial scale file sharing” means file transmissions that are unlicensed and do not compensate creators while at the same time profiting the rogue web site by means of advertising sales, subscriptions, or other commercial activity–and of course, all those who sell the advertising, subscriptions or other commercial activity.)

Some of these ideas come from people who can’t accept the inevitability of the technology, and some come from people who use the inevitability as a weapon to accomplish a more cynical goal.  Sometimes they come from people who do understand the economics of creativity, but haven’t understood the Kool-Aid really is Kool-Aid.

But the people who have to pick up the pieces of these “visionary disruptors”  also have to deal with the “business models” of these street corner orators that they propose to replace the greedy [FILL IN BLANK], whether it’s authors, songwriters, directors, actors, game producers, directors of photography, knitters or best boys.  We’ll just stick with music for this post.

The most common alternative business model you hear is essentially “make it up on volume”.  One form this takes goes by many names–“global license”, “Choruss”, “ISP license”, “music tax,” or even “equitable remuneration for file sharing”, but it all comes down to the same basic deal points:

1.  File sharing is legalized (either by statute or contract);

2.  Users are charged a small fee for an “all you can eat” music service (streams, downloads, whatever);

3.  Users and the commercial scale infringers who serve them cannot be sued for infringement if the users share with a non-commercial motive (saying nothing about the commercial motives of the Limewires, Pirate Bays, Isohunts who connect the users);

4.  The users pay their small fee (around $3 to $5 a month) to their ISP;

5.  The ISP pays it to some new administrative group to be distributed to participating artists (after whacking off the ISPs vigorish);

6.  Nobody knows what files are actually being shared and nothing is tracked online;

7.  The collecting society uses some chart-based proxy to decide how much of the money to distribute to protect the privacy of the user–even in the legal environment;

8.  The ISP takes a fee for handling the money (which I estimate will be about 50%);

9.  The collecting society takes a fee for handling the money (which I estimate will be at least 10% of whatever the ISP doesn’t keep);

10.  Artists and rights holders sign up with the collective over time;

11.  No one can audit because there are no usage records; and

12.  The commercial infringers continue selling advertising–and don’t miss this part–to an ever growing group of advertisers now that at least users of their platforms have essentially been legalized.  (Even though the Songwriters Association of Canada proposal says it would apply only to “those who wish to share copies of musical works without motive of financial gain” it is quite common for these commercial scale infringers to insist that they are not sharing the files, they are just helping people find each other who do want to share the files with the purest of souls.  So it seems like it’s all about the definition of “those” who are doing the wishing and what they are wishing for).

And who makes the most money off of this?  The middleman–the adserving company.  Because they make their vig from all of the commercial grade infringers, just like they do now.  Followed by the commercial grade infringers who could have a statutory right to transmit content with no restriction on what price they sell that content for to users and no restriction on what else they sell on the site for which they can pocket the money.

So even if you don’t know exactly how all this is going to work, what we do know is that there will be an increasingly large pool of participants getting a share of a fixed fee–regardless how much the formerly rogue site makes from advertising and the like.  Meaning that the amount that each user pays will be kept the same (say $5 a month) but the number of artists, songwriters and other rights holders will increase over time.  This will be true even if you had every rights holder in the universe signed up on Day 1 and they could all be found and paid.  This is true because of new releases if nothing else.

So what that should tell you is that on a per user basis, each artist will always get less of the pie over time–even if they did get a piece of the once-sainted advertising revenue that will continue to flow.

Unless—the number of users increases.  That means the pie gets bigger.  But the share of the pie paid to each artist–the actual pennies paid–will only get bigger if the number of new users increases faster than the number of new tracks and new artists included in the scheme.

The only people who will consistently make money in this scheme are the ISPs and the collecting society—because their cut comes off the top.  And, of course, the people who make the most off of piracy–those serving advertising to the commercial grade infringers–who are never, never mentioned in any of these plans.  Which may kind of make you wonder as to the original origin of the idea.

That being said, does this scheme remind you of anything?  And no, Bernie Madoff did not dream this up.

So the next time someone tells you music is like water, just keep on moving, because it’s not.

Another inherent problem with this ISP license idea is that artists cannot opt out of it in any meaningful way because it does not filter out the tracks of artists who opt out.

Meaning that while the plan promoters tell you that you can always opt out, what they really are saying to you is that you can opt out of getting paid a share of whatever royalties they collect.  This is because the promoters don’t want to support technology that would block trading of files containing the songs or other works of the creators who are opting out.

Of course if they could block, they could track.  And if they could track—then another thing that would happen on Day 1 is that the everyone in the chain would have actual knowledge that there were–or at least were likely to be–some infringing works on their system because they would know who opted out.  And if there is any cure for willful blindness that those in the chain avoid like the plague, it is actual knowledge.

The fix for that is government superseding the rights of copyright owners, allowing all works to be traded and also setting the royalty rates that are to be paid, all without ever actually tracking a thing.  For music, books, movies, software, games—anything that can be digitized.  This is why whenever these plans get discussed, it inevitably comes down to the government mandated global license and royalty rate that was resoundingly rejected in France in 2006.  (Which is why it inevitably comes back to a treaty violation and arbitration at the World Trade Organization.)

Not only do I think that government will be very nervous about doing that, any government that does so will find itself in a massive WTO arbitration for treaty violations by authors from countries who didn’t participate (see the Fairness in Music Licensing Act).  Because if any one government does it, it will have to do it to all the authors of the world.  Kind of like if Google Books was Government Books.  And that went so well.

So be careful of what you wish for.  Remember, when the latest version of this myth started with Choruss it got a lion-sized amount of press and attention.  When Choruss went out with a whimper, nobody heard that the reason given was that it’s very hard to execute.  Like so many other things online, it’s a system that is designed to profit everyone except the artist.

While I accept that they just didn’t think it through carefully enough and don’t question their motives, the Songwriters Association of Canada and some other proponents of this unworkable scheme would do well to think about it again.  There are others involved in these schemes whose motives I do question, and you know who you are.

The Internet was supposed to be about getting rid of the middleman.  These schemes not only keep the middleman around, they enshrine him.

See also Canada: Here Be Dragons–The YouTube Autonomous Zone

Update:  As Helienne Lindvall reported, the Swedish Minister for Trade has made public statements supporting the great Shibboleth of “Internet freedom” (a euphamism for “we’re taking your life’s work because it’s free for me but not for thee”).  Apparently, “Internet freedom” does not even require an attempt to monetize file barter, as the Minister says that “[The Swedish government] don’t like file sharing – it’s illegal – but we’re pushing for people being allowed to download for private use.”

According to certain cables, “U.S. Professor Lawrence Lessing lectured at the Swedish Parliament on November 18 [2009]. Following the discussion he told Swedish media he hopes to shift the focus from illegal file-sharing to means of enabling “remix and creativity.” Lessing maintains that it is important to both compensate right-holders, but also allow remix of certain intellectual property without compensation.”

So you see, it’s not about the theft of your life’s work, no, no–it’s about “Internet freedom” and “remix and creativity”–whatever that means.  Sounds like the Poker Prof could have written the Minster’s talking points for her, don’t it just?  Both have that special brand of twisted logic, or as Lessig would say “We’re not going to break the Internet for one tiny industry.”

Helienne reports that leading Swedish songwriters formed a group called United Songwriters, or “UniSon” , which issued a letter to the Minister of Trade that included this excellent summary:

“‘If the government starts to question the basic democratic right of ownership, surely even people outside of our work force would be worried about what the next step would be. Do you, for example, think patented innovations and medicines should be spread without any compensation for those who created them? Who then do you, the minister of trade, suppose would pay for progress and development? The taxpayer?'”

I shudder to hear the answer to that, because the Swedish government apparently is not thinking that the taxpayer bear the cost–not even of enforcement–but rather that the creators themselves bear the cost.

Just like creators do now.

More Questions for Artists: Record Producer Agreements, Part 9: Grant of Rights–Joint Authorship Issues

November 25, 2011 Comments off

Please note: This is an installment in a multi-part post.  Each post has information relvant to prior posts, so until we get to the “Final” there will be more information to come. See also Twenty Questions for New Artists: Record Producer Agreements, Part 1, Part 2, Part 3, Part 4, Part 5. Part 6 , Part 7 and Part 8.  Watch this space for futher installments, or subscribe to the RSS feed.  A post with all the current parts in one post is available here, and see also “Artist Management Agreements” on the Semaphore Music blog.

14.  Grant of Rights-Joint Authorship Issues

There are good reasons for U.S. based artists to engage the producer to render services as an independent contractor creating a “work made for hire” under the U.S. Copyright Act (with the back up assignment provision if “work for hire” status fails.  (If you live outside the U.S., you should consult your national laws.)  This is an important distinction for a couple of reasons: first, the U.S. copyright law distinguishes between works made by authors that authors may license or assign, and works that are from inception created under an employment relationship or under a “special commission”.  The work for hire status has some benefits and requires some special drafting in order to capture the rights.  U.S. Copyright Office “circular” Number 9 on this subject is well written in simple language (a Copyright Office “circular” is a short handout from the Copyright Office that is designed to educate the public about particular issues in the U.S. Copyright Act.)  The coming battle over work for hire status in the context of termination rights is beyond the scope of this post, but highlights why the standard back up clause is important (if found not a work for hire then assignment).

For reasons that frankly escape me, some artists have an issue with referring to anyone as their employee and view everyone involved in a recording project as a “partner.”  Of all the words that one could choose to use in this context, “partner” is a very unfortunate choice from a legal point of view, because “partner” has an actual legal meaning.  A simple example–was it your intention to allow your “partner” to incur debts in your name?  Another and more apt—was it your intention to co-own your recordings—the ones you paid for and perform on—with your producer?

This raises the issue of joint authorship.  Here’s an example of why an artist would want to avoid an implication that the producer is a joint author:

A producer developed an artist for a period of years and had a rudimentary written agreement that provided that the producer was to be paid a bonus if the artist was signed using the producer’s recordings. The band acknowledged that the producer was actively participating in the creation of the sound recordings and co-wrote the songs. The producer’s share of the songs was not disputed.

The band signed to a major record company (and actually became a multiplatinum artist). No one told the producer that the band was signed until he read it in Billboard. The band’s lawyer refused to pay the signing bonus. She was from New York.

The producer attempted several times to be paid and was rebuffed. This was probably due to a simple reason:  When the masters were sold to the record company, the artist’s lawyer failed to disclose the producer as a joint author. Not only would the artist’s lawyer not deal with the producer, but the artist’s record company also would not deal with the producer and referred him to the artist’s lawyer who would not deal with him.

The producer found a lawyer who suggested it would be a good idea to send copies of the producer’s recordings to leading producer management companies. Particularly to one producer management company that also did artist management and to which the artist was being presented by the record company.

This drew a letter, copied to the record company, from the artist’s lawyer that accused the lawyer—the lawyer—of copyright infringement for distributing copies of these jointly owned recordings. And that’s the punchline.  If the recordings are co-owned, which these recordings arguably were, the artist and producer can both issue non-exclusive licenses in the whole of the recording and each have all the rights of a copyright owner.

The producer’s lawyer responded with his own letter reminding the artist’s lawyer that the producer had the right as a joint author to distribute copies on a nonexclusive basis as one of the rights of a copyright owner of a sound recording.

Within minutes after sending that letter, the producer’s lawyer received a call from the label apologizing and wanting to know how to make this go away. The producer’s lawyer suggested a possible solution was the payment of money. That day.

The artist was then forced by its label to sign a release with the producer that included a withdrawal of the claim for copyright infringement against the producer’s lawyer “as though it had never been sent” and transferred all rights from the producer to the artist.

So if instead of being in this situation—or the rather asinine treatment of the producer’s lawyer by the unknowledgeable artist lawyer who may have been “cool” but had no idea what they were doing when it came to copyright—wouldn’t it have been better to avoid the situation altogether by having a work for hire agreement in the first place?  And maybe if your producer is not clamoring for it because his last line of defense from being taken advantage of is pulling that card?  (Or maybe that’s the plan of his wily lawyer?)

Rep. Gohmert Nails It: Search Engines Should Block Adjudicated Infringers

November 20, 2011 Comments off

At last week’s House Judiciary Committee hearing on H.R. 3261 (the “Stop Online Piracy Act”), former judge Louie Gohmert (R-TX) raised an interesting line of questioning:  If a website is found to infringe by a court order based on probable cause, why should it appear in search results.  Not surprisingly, Rep. Lofgren’s (D-Mountain View) response to the question dutifully set up the straw man of “censoring the Internet”–which wasn’t what Rep. Gohmert said at all, but apparently is the question that the Mountain View representative wanted to answer.

As we know from an October 2, 2009 story from CNET “Google: Pirate Bay Booted Off Search By Mistake”, Google removed the adjudicated criminal infringer The Pirate Bay’s domain from search results due to “an internal mistake.”

So it can be done.

At the time, Google’s public announcement stated “We are now correcting the removal, and you can expect to see back in Google search results this afternoon.”


Rep. Gohmert is simply asking that Google do intentionally that which it previously did unintentionally.

Or actually–that Google do in compliance with a court order that which it previously did by mistake.

The Attack of the Unholy Alliance

November 20, 2011 Comments off

Thanks to artists standing up for their human rights, the ugly truth that publicly traded companies in the US are profiting themselves from the theft of the intellectual property of creators was uncovered last year.  The enormity of this enterprise is difficult to get your mind around at first, but no more difficult than say, Google’s participation in the sale of controlled substances and counterfeit drugs or Google writing a check for $500,000,000 of the stockholders’ money to keep their executive suite (and possibly board of directors) from being indicted for those bad acts.

Confirmation of the scope of the income transfer from artists to giant tech companies comes in the recent written testimony of Google’s lobbyist before the House Judiciary Committee hearing about the Stop Online Piracy Act: “The DMCA notice-and-takedown process continues to be a cornerstone of our content protection efforts. During 2010, we processed DMCA takedown notices for approximately three million items across all of our products. Already in 2011 we have processed takedown notices for nearly five million items, and we have done so more quickly and efficiently than ever before.”  Five million so far in 2011 and that’s just Google.

I used to joke about whether the drafters of the DMCA were intending to provide a little latitude for reasonable people acting reasonably or whether they intended for one company to get a million notices in a year–because that seemed like a high end guess in an environment where we had little information about what was actually happening.  Now we know that my guess was very low–not only was it low, but underestimated the 166% growth rate in DMCA notices on Google alone year over year.

I think we are at the point where the raw number is so startling that it makes it even clearer that there is something radically wrong with this picture and stops looking less like an occasional defense to unwitting infringement by a company whose focus is elsewhere, and starts looking like a company whose entire focus is getting away with massive theft.

The cost of sending a DMCA notice in my experience is approximately $100 without a lawyer’s involvement.  That means that creators collectively spent about $500,000,000 this year alone on sending take down notices just to Google.

In the words of the old Depression-era song, Hey brother–can you spare me $500,000,000?

So ask yourself this:  If the princes and princesses of Silicon Valley can sleep at night knowing they are making blood money from endangering the public health and forcing artists to spend their dwindling resources sending expensive DMCA notices, and knowing that profiting from the human misery of their countrymen paid for their luxury homes and designer fashions, do you think for one second that they lose any sleep over profiting by stealing jobs from “Hollywood”?

The Unholy Alliance

An unholy alliance evolved over the last decade among search companies, ad serving companies, credit card companies and rogue websites.  People seeking illegal digital property use unfiltered search engines to find it, ad serving companies facilitate users by serving ads to these search pages and to rogue sites, and credit card companies facilitate the sale of illegal content subscriptions.

The adservers and credit card companies split their revenue with the rogue sites. Everyone makes money efficiently–except the people who create the stuff that’s  being ripped off, whether its movies, music, high fashion or pharmaceuticals. This is hardly a level playing field.

Missing from this cash machine? Responsibility. Like Sergeant Schultz, nobody sees nothing—nod nod wink wink—rogue sites are all someone else’s fault, and that someone always seems to be a couple steps outside the law in China, the Ukraine or somewhere from which they reach the valuable US market without the burden of US laws. This unholy alliance is a serious economic attack—large commercial interests that are global, well funded (often from the public markets) and cagey.

Should online property rights be different that offline property rights?

Nobody likes the idea of the government seizing private property, but nobody likes having their property stolen, either. The point is to help create a level playing field to encourage the launch of legitimate services which in turn support the jobs of those who produce the legitimate goods.

I’ve worked with many technology companies and creators who struggle to play by the rules. Some gain a toehold. But if  entrepreneurs can’t enforce their rights effectively, that’s not market failure, that’s anarchy. Many give up in despair and will not launch another business in the space or finance another independent movie.

The police investigate organized theft in the physical world, why not online? Thanks to IPEC Victoria Espinel, ICE Director John Morton and many agents, the good guys are starting to turn the tide.

And I would guess that this is what has got companies like Google worried to the point that they are simply inventing horror stories out of whole cloth.  My favorite is that somehow enforcing property rights online will encourage foreign dictators—yes, Robert Mugabe tells his henchmen to hold off executing the resistance until he sees what Leahy does.  Al Zawahiri will say let us guide ourselves by what the Crusaders do.  The Haqqani Network only moves when the American Congress gives them cover to do so.

Floyd Abrams wrote an extensive letter regarding rogue sites legislation to the Senate Judiciary Committee  expressing views he recently affirmed at a House IP subcommittee:

“I am aware that [such legislation] has been criticized on First Amendment-related grounds by organizations such as the American Civil Liberties Union and certain human rights groups, organizations for which I have the highest regard….[But such] legislation does not impair or overcome the constitutional right to engage in speech; it protects creators of speech, as Congress has since this Nation was founded, by combating its theft.”

I’m not the leading First Amendment lawyer of our time, so I will say it a bit more pointedly.

This is the cheapest sort of bunk.

There is No Market Failure if There’s No Market

Creating a new market is difficult–government has largely stayed out of the Internet which is a good thing, assuming the basic legal system provides a reasonably level playing field.

The current state of massive online theft is often referred to as a “market failure”—but it is more than a mere inefficient allocation of resources. It is a serious indicator that property rights are under attack. There can be no market failure without a market, and there can be no market without enforceable property rights.

The online story is not entirely dire, but nowhere near a level playing field. Where entrepreneurs choose to respect property rights, some firms–such as Apple, Netflix and Spotify–attract investment and customers for legitimate business that pays everyone in the value chain. Imagine if these entrepreneurs did not have to compete with stolen?

Somebody Call the Cops

It should come as no surprise then that when Chairman Leahy introduced rogue sites legislation in the last Congress and the Protect IP Act in the current Congress, it was met with broad support from the broader creative community including the Directors Guild of America, the American Federation of Musicians, the American Federation of Radio and Television Artists, the Songwriters Guild of America, Nashville Songwriters Association International, the International Alliance of Theatrical and Stage Employees, the Teamsters, and the AFL-CIO. Chairman Smith has introduced the companion bill in the House, the Stop Online Piracy Act, and Senator Klobuchar has introduced the vitally important Commercial Felony Streaming legislation in the Senate.

All this legislation was a bipartisan effort to bring common sense to the Internet madhouse but has severely raised the ire of the unholy alliance and its bottomless pit of lobbyists.  Think about this:  If Google had to take a $500,000,000 haircut from promoting the sale of illegal drugs, how much of a hair cut do you think that it will have to take from being prosecuted for promoting the sale and distribution of illegal intellectual property?

It is hard to know how much of Google’s profits are made up of revenues from illegal activities. As Santa Clara Law School Professor Eric Goldman told the New York Times, “’How much of Google’s overall revenues are tied to product lines that are questionable?’ he said. ‘For investors, I think they just got a little bit of a jolt that maybe Google’s profits are due to things they can’t ultimately stand behind.’” These potential misrepresentations and the “liar’s discount” are certainly a core claim in the stockholder suit filed against Google in San Diego.

ICE stepped up enforcement actions with court-ordered seizure orders of rogue sites whose illicit activities have exceeded the scope of the DMCA takedown notice. ICE is not a private prosecutor for Hollywood studios as it has been portrayed in some writings–ICE Director Morton confirmed that ICE and the courts sought a court ordered seizure of about 50% of the private sector referrals–seizures subject to full due process protections for defendants.

Rogue sites—who earn revenue for themselves and adserving companies selling all manner of stolen goods–receive thousands, or even hundreds of thousands, of DMCA takedown notices. It is unrealistic to think that entrepreneurs, especially independent creators, can fight this alliance with DMCA notices alone. The DMCA should not be used as alibi for the unholy alliance.

Without the help of the rogue sites legislation and the Commercial Felony Streaming legislation, this “catch me if you can” game requires 24/7 monitoring for illegal copies of everything from movies to pharmaceuticals. Entrepreneurs and small business cannot afford 24/7 policing.

Protecting Property Rights

Not only is rampant piracy a fundamental attack on the rights of American entrepreneurs and workers, it undermines our cherished system of private property. This problem is not just about “Hollywood” or Prada handbags—it concerns the value of many industries, small businesses and jobs to be protected by Protect IP, Stop Online Piracy Act, the Commercial Felony Streaming legislation and ICE, as well as our bedrock economic principles.

Even Senate action on COICA last year and the ICE seizures have already created positive effects.  Right after COICA passed the Senate Judiciary Committee by a unanimous vote, Google announced voluntary changes to its Adsense policy–to determine if Google’s Adsense partners are “bad apples.”  A year later, we see that Google’s voluntary changes are pretty toothless and are, of course, designed to let them keep profiting from online theft.

If—and that’s a big if—they get to buy their way out of jail a second time.

When You’ve Got Them By the Bucks, Their Hearts and Minds Will Follow

When the Stop Online Piracy Act was introduced, I noticed one provision way down in the bill that began to explain why the venture capital community was so up in arms.  Not a lot of attention has been paid to this section, but given the way legislation works, the VCs’ lobbyists no doubt knew it was coming.



(1) IN GENERAL.—Using existing resources, the Intellectual Property Enforcement Coordinator, in consultation with the  Secretaries of Treasury and Commerce, the United States Trade Representative, the Chairman of the Securities and Exchange Commission, and the heads of other departments and appropriate agencies, shall identify and conduct an analysis of notorious foreign infringers whose activities cause significant harm to holders of intellectual property rights in the United States.”

Interesting…but here is the punchline that has no doubt got the VCs all up in arms:

“(b) REPORT TO CONGRESS.—The Intellectual Property Enforcement Coordinator shall, not later than 6 months after the date of the enactment of this Act, submit to the Committees on the Judiciary of the House of Representatives and the Senate a report that includes the following:

(1) An analysis of notorious foreign infringers 11 and a discussion of how these infringers violate industry norms regarding the protection of intellectual property…

(5) A discussion of specific policy recommendations to deter the activities of notorious foreign infringers and encourage foreign businesses to adopt industry norms that promote the protection of intellectual property globally, including addressing—

(A) whether notorious foreign infringers that engage in significant infringing activity should be prohibited by the laws of the United States from seeking to raise capital in the United States, including offering stock for sale to the public; and

(B) whether the United States Government should initiate a process to identify and designate foreign entities from a list of notorious foreign infringers that would be prohibited from raising capital in the United States.

And, dear readers, I would suggest to you that it is that last sentence that has got the venture capital community motivated.  That sentence means that they can’t keep getting richer from the human misery of their fellow citizens.

And that sentence also, of course, begs the question:  If notorious foreign infringers are prohibited from raising capital in the United States, then surely notorious American infringers should also be prohibited.

Yes, laws like that can ruin your whole day.  (See Fred Wilson’s laughable piece about how hard done by the VC community is by not being able to invest in rogue sites “The content industry’s lobbyists have forged two new bills, one in the Senate called Protect IP and one in the House called E-Parasites [huh?]. These bills were written by the content industry without any input from the technology industry. And they are trying to fast track them through congress and into law without any negotiation with the technology industry.”  I guess Wilson didn’t watch the two separate Senate hearings and two separate House hearings on rogue sites legislation–with Godaddy, Verizon, Rosetta Stone and…Google all testifying.  And maybe he isn’t involved in the extensive negotiations over this legislation with stakeholders.  I realize that VCs are used to getting their way, but just because the Google talking points didn’t address these hearings and negotiations…sorry…just because Wilson isn’t aware of these hearings and negotiations, doesn’t mean they didn’t happen.  And Wilson also doesn’t seem to be aware of the public health issues involved that are designed to protect people who are taken advantage of by counterfeit drug sellers.  Wilson’s piece is a prime example of the kind of unsupported and wild accusations and spinning of the facts that frankly seems to demonstrate an extravagant and irrational devotion to the grandiosity of “innovation” attributing near magical powers to these objects of consumption.)

The Importance of the Commercial Felony Streaming Legislation

 I have always been impressed with Senator Klobuchar.  I’ve been an observer of her service on the Senate Judiciary Committee for a while, and have often wondered how someone with such a strong moral compass could tolerate having to deal with some of the people she is forced by courtesy and protocol to endure.

This came home to me yet again at the recent Senate antitrust subcommittee hearing at which Eric Schmidt testified.  If I had to try to read the tea leaves, I don’t think any of the Senators who stayed to question Schmidt were having it.  The Members expressed their views in different ways, some bombastic, some prosecutorial, but as usual Senator Klobuchar often asked the most telling question without a lot of extraneous English on the ball.  (One of her fellow Minnesotans says that the only reason I find that ability remarkable is because I’m from Texas, but that’s another story.)

And so it is with the Commercial Felony Streaming bill.  It is, in many ways, the lynchpin of the whole package.  The criminalization of commercial streaming is another piece that I think is obviously driving them nuts out there in the Googleplex because they just dodged a stretch in the federal pen by paying $500,000,000 of the stockholders money in a forfeiture on a drugs charge.  Under “SOPA”, they also stand a good chance of being denied access to the U.S. public financial markets from which they effectively raised that $500,000,000, not to mention their litigation and lobbying budgets, and they know that video streaming of illegal content is a huge advertising business for them—particularly if a future version of Chrome turns every browser into a Bit Torrent seeder.

It’s the kind of threat to the unholy alliance that could justify ambushing a teenage pop star on a radio interview show with a mischaracterization of Senator Klobuchar’s bill.  (A jock and a popstar walked into a bar, see, and they were talking about like some bill, dude, and then the jock said, “Bill?  What bill?  Is that a $100 bill in your pocket or are you just glad to see me…”)

Senator Klobuchar’s foresight in carrying the felony streaming bill is to be commended, however.  As she has often said in the Senate, she understands the plight of the individual creator when confronted by massive corporate greed.  And judging by her reaction to Schmidt, she also understands that if they will profit from the sale of counterfeit drugs, there is not much else they won’t do.

If all government has to do to attract more entrepreneurs, investments and jobs to the online market is enforce the law against the “bad apples”, it should be done—carefully, but done. That is, after all, one of the main reasons we have government in the first place.

Canadian American Business Council Policy Conference

November 19, 2011 Comments off

Chris spoke last week on international copyright at the Canadian American Business Council policy conference in Toronto with a great group of panelists.  Canadian coverage of their remarks is here.  Piers Morgan of CNN gave the keynote and Michael Rapino of Live Nation was honored.

New Music Weekend: The 99s, Dave Madden, Jensen Reed, Beach Fossils, Small Black

November 19, 2011 Comments off

New music picks by Semaphore Music

1.  The 99s (Manchester) “Oh Me, Oh My”

2.  Dave Madden (Austin) “A Beautiful Night”

3.  Jensen Reed (LA) “After the War” @jensenreed

4.  Beach Fossils (Brooklyn) “Daydream” @beachfossils

5.  Small Black (New York) “Photojournalist”


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