European Creative Community Unites Against Google and Facebook and Calls on EU Lawmakers to Stop Big Tech’s End Run Around the Value Gap Solution in Article 13

December 13, 2018 Leave a comment

[We don’t often reprint other people’s letters, but this one on closing the value gap in Europe is crucial.  No surprise, Google and Facebook are pushing back hard with all their multinational corporate lobbying power.  Artists, songwriters, indie and major labels and a broad cross-section of creatives are fighting back, but need your support.  Remember–Google and Facebook are not in our business–make no mistake–they are in the addiction business and safe harbors are addiction accelerators just like coumarin in tobacco.]

Brussels, 13th December 2018

We are writing to you as a group of organisations representing European authors, composers, songwriters, featured artists, picture agencies, book publishers, academic publishers, audiovisual producers and broadcasters, independent and major music producers and publishers, and news and media companies.

We have reviewed the European Commission text/non-papers on article 13 and we have serious concerns about the direction of travel.

As we reach the very final stages of this process, and negotiators seek to finalise a compromise text, we urge you to remember that the overall aim of the original European Commission proposal was to correct the distortion of the digital market place caused by User Upload Content (UUC) services, which enable users to upload content onto their sites and then profit from the availability of creative content without returning fair revenues to rightsholders, who create and invest in such content.

The fundamental elements of a solution to the Value Gap/Transfer of Value remain, as acknowledged by all three institutions in their adopted texts, to clarify that UUC services now defined as Online Content Sharing Service Providers (“OCSSP”) are liable for communication to the public and/or making available to the public when protected works are made available and that they are not eligible for the liability privilege in Article 14 of the E-Commerce Directive as far as copyright is concerned. We continue to believe that only a solution that stays within these principles meaningfully addresses the Value Gap/Transfer of Value. Moreover, licensing needs to be encouraged where the rightsholders are willing to do so but at the same time not be forced upon rightsholders.

Therefore, proposals that deviate from the adopted positions of the three institutions should be dismissed.

Unfortunately, for a number of reasons, the text now put forward by the European Commission would need fundamental changes to achieve the Directive’s aim to correct the Value Gap/ Transfer of Value.

For example, solutions that seek to qualify or mitigate the liability of Online Content Sharing Service Providers should be considered with an abundance of caution to avoid the final proposal leaving rightsholders in a worse position than they are in now.  Any “mitigation measures”, should they be offered to OCSSPs, must therefore be clearly formulated and conditional on OCSSPs taking robust action to ensure the unavailability of works or other subject matter on their services.

To that end, while it may be appropriate for rightsholders or their representatives to give services access to reasonably necessary identifying information concerning unauthorised works or other subject matter, unclear or open-ended provisions potentially obliging rightsholders to play the main role in preventing unauthorised uses of their works fail to provide the necessary legal certainty and therefore fail to provide a meaningful solution to the Value Gap/ Transfer of Value.

Furthermore, any proposal whereby services can effectively choose the level of diligence which will shield them against liability would perpetuate the Value Gap/ Transfer of Value and wholly undermine this crucial draft legislation.

We trust that you will take this into consideration when discussing the draft Directive.

Yours sincerely, the undersigned.

CANAL + – media group

CEPIC – Center of the Picture Industry

ECSA – European Composer and Songwriter Alliance

EPC – European Publishers Council

EUROCINEMA – representing the interests of film and television producers to the European Union

EUROCOPYA – European organisation of movie and television producers’ collecting societies in charge of private copy

FEP – Federation of European Publishers

GESAC – European Grouping of Societies of Authors and Composers

IAO – International Artist Organisation

IFPI – representing the music industry worldwide

IMPALA – European association of independent music companies

IMPF – Independent Music Publishers Forum

MEDIASET – media group

STM – leading global trade association for academic and professional publishers

Tf1 – media group

VIVENDI – media group

 

 

All latest press

__________________________________________________________________________________

How EU copyright reform will give the creative ecosystem a boost

Originally published in the Financial Times

 

Boaty McBoatface Uses Fight For the Future Dialer Tool to Lobby Rand Paul on HR 1695 from…Scotland

December 7, 2018 Comments off

We’ve said for years that Google shills use a variety of dodges to create the impression of grass roots support among legislatures–when it really isn’t there.  We think this because all of the snakes in the grass roots seem to be online, so rarely offline that it may as well be never.

One of the big dodges is that the shilleries have autodialing tools that allow anyone to call a number and be connected to “their” Member of Parliament, Senator, Representative.  That way the location of the person making the call is masked from the person receiving the call.  All you need to know is a postal code in the member’s district, state or country and the dialer will connect you.

The assumption is that the calls originate locally in at least the same country, but they don’t.  That way a dedicated group of likeminded people anywhere in the world can, as Susan Crawford once said, “geek around the nation state.”

We saw this entire saga play out in Europe over Article 13 where millions of phone calls and emails were lobbed at the Members of the European Parliament, yet less than 1,000 people showed up to protest across all of Europe.  Article 13 sailed through its vote as Members of the European Parliament voted down the Google version of the bill–emphatically.

Well…now we are seeing Google shills Fight for the Future pulling the same stunt in the United States.  Another “break the Internet” situation being blown out of proportion using Google’s usual scare tactics.  A bad look in a post-Cambridge Analytica universe.  Here’s how it looks (lobbyists behaving badly):

Boaty

Fortunately–Boaty McBoatface, that wizened Scot, decided to help out his American cousins by placing a call to “his” representative, Senator Rand Paul.  And he recorded the entire event to demonstrate just how low down these people will go:

 

Boaty demonstrates perfectly the entire scam, and guess what–it works both from Europe to the States and from the States to Europe.  And frankly, probably from anywhere to anywhere.

Well…just one thing to say to Mr. McBoatface: Alba gu bràth, laddybuck.

Google Goes After Children as Lobbyists: What is to be done?

December 6, 2018 Comments off

Our friend and long-time artist rights advocate Karoline Kramer confirms what we’ve been seeing around the world–Google is trying to turn kids into lobbyists for their corporate interests in lobbying against safe harbor reform in Europe.  It was entirely predictable that YouTube’s efforts would come to the US in short order.

While it’s really difficult to understand how pre-teens could find the rebarbative Lyor Cohen to be an appealing influencer, the indiscriminate scare tactics may indicate an even deeper problem–inducing Internet addiction and then manipulating that addiction for profit.  Now where have we seen that business model before?

Andrew Orlowski confirms in the Register that it’s not just happening in the US–YouTube’s campaign drove one German teen to threaten suicide.  This is why nations protect children from all kinds of manipulation by unscrupulous adults who should know better.  It’s also another reminder of just how insidious Internet companies really are.  I’ve said it before but it’s worth repeating:

Google, Facebook and their ilk are not in the media business or the music business–they are in the addiction business.  And with this manipulation campaign against children to profit Google and Facebook, these charlatans are starting to reveal themselves for all the world to see.

How do we know this?  Aside from Sean Parker (and other Facebook executives) telling us that Facebook intentionally set about to create massive addiction through manipulating levels of dopamine in the brain chemistry of users, there are an increasing level of studies that demonstrate the behavioral addictions created by social media in particular (see, for example, the Bergen Facebook Addiction Scale, and also Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked.)

YouTube appears to be manipulating trending topics to favor its seeded video messaging against Article 13 like this one.  To state the obvious, none of these manipulation videos are age-protected and YouTube is favoring its own content–exactly what Google is being fined by the European Commission billions of dollars for doing.

You have to ask–surely this children campaign violates some laws?  If we are going to permit Google and Facebook to operate their addiction-producing business, do we want to allow them to target children?  Imagine if an addictive drug company directed a public messaging campaign toward children to get their parents to vote against elected officials who wanted to regulate that company?   Would we not be shocked?

And given what Google and Facebook know about their users, would it come as a shock that they weren’t just targeting all kids, but were specifically targeting specific children because their parents were influencers or elected officials?  And before you scoff, how would we ever know?

Google and Facebook’s sleazy tactics and manipulation of children demonstrate yet again that they need to be regulated and that they think they have grown beyond the power of the nation state to regulate any of them.

What is to be done?  The answer is obvious.

 

 

 

Fair Winds and Following Seas All the Way Home

December 4, 2018 Comments off

The Bonin Islands are about 500 miles due South of Tokyo, Japan and about 700 miles due East of the island of Okinawa.  The Bonins do not appear to have ever been connected to a continent and are known in some circles as the “Galapagos of the Orient” due to their unique flora and fauna, such as the giant squid.

There is also a 25 meter radio telescope on Chichijima, one of the Bonins to the East of its more famous counterpart, the island of Iwo Jima.  That telescope is part of the Exploration of Radio Astrometry (VERA) project, and is operated by the National Astronomical Observatory of Japan.

Coincidentally, during World War II there was another important radio tower on Chichijima as well as a substantial garrison under the command of Lieutenant General Yoshio Tachibana.  General Tachibana was an unremarkable graduate of the Imperial Japanese Army Academy, and commanded the 109th Division of the Japanese Imperial Army.  He was tasked with the defense of the Bonin Islands against the much anticipated invasion of the Japanese home islands (the eponymous Operation Downfall).  Specifically, General Tachibana led the 1st Independent Mixed Brigade stationed on Chichijima, a combined arms unit.

General Tachibana’s forces operated a significant relay and surveillance radio tower that encroached on Allied activity, and specifically supported other elements of the 109th that opposed the 3rd, 4th and 5th Marine Divisions, the 147th Infantry Regiment of the Ohio National Guard, the 7th Air Force and the 5th Fleet in their assault on Iwo Jima,  a few hundred miles due West of Chichijima, on 19 February – 26 March 1945.  After the fall of Iwo Jima, the radio towers on Chichijima became even more strategic as the Americans began the advance on Okinawa.

Right about this time, Tachibana’s forces began torturing their prisoners, including dismembering the men while living and eating their organs and flesh.  Then they beheaded their prisoners at the General’s orders.

As the Pacific war continued, on the morning of 2 September 1944 four Grumman TBM Avengers launched from the USS San Jacinto and joined four Hellcats launched from the USS Enterprise for daylight bombing missions against those radio towers. Each plane carried four 500 pound bombs.  One of the Avengers delivered its bombs on target, but was hit by antiaircraft fire on its run and lost power on a reverse vector flying away from Chichijima causing the pilot to order the crew to bail out and ditch.

The Naval aviator also bailed out of the Avenger, striking his head on the plane’s stabilizer.  It’s important to realize that when airmen “hit the silk” in WW II era planes, there were no ejector seats.  They were often leaping old school from a burning and diving aircraft.  This particular pilot was more fortunate than his crew, all of whom perished.

Thanks to a fair wind and following seas, this pilot managed to survive the shoot down, paddled like hell away from Chichijima and was picked up by an American submarine. He returned to active duty.  His Distinguished Flying Cross citation tells the 19 year old volunteer’s story best:

For heroism and extraordinary achievement in aerial flight as Pilot of a Torpedo Plane in Torpedo Squadron FIFTY ONE, attached to the U.S.S. San Jacinto, in action against enemy Japanese forces in the vicinity of the Bonin Islands, on September 2, 1944. Leading one section of a four-plane division in a strike against a radio station, Lieutenant, Junior Grade George Herbert Walker Bush pressed home an attack in the face of intense antiaircraft fire. Although his plane was hit and set afire at the beginning of his dive, he continued his plunge toward the target and succeeded in scoring damaging bomb hits before bailing out of the craft. His courage and devotion to duty were in keeping with the highest traditions of the United States Naval Reserve.

George H.W. Bush went on to a life well lived and a job well done.  Oh, and after surrendering the Bonin Islands, General Tachibana was tried and hanged.  The Pacific winds that day could have blown the other way, but they never met.

As of today, President H.W. Bush was the last combat veteran to serve in the White House.  That may not seem all that significant but I can tell you that it is very significant to veterans, families of veterans and especially to the children and grandchildren of veterans to have someone giving the orders who understands.  It matters when the old man gets it.  And he did and it does.

901122-O-ZZ999-221

May he have fair winds and following seas to take him all the way home.

 

 

YouTube Recruits Children to Lobby Against Article 13

December 3, 2018 Comments off

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No one should be surprised that Google and Facebook are now recruiting children for their lobbying campaign against copyright reform in Europe.  They’re using an old pimp’s scare tactic–get them addicted and then threaten to cut them off.  As former Facebook President Sean Parker said, “God only knows what [Facebook is] doing to our children’s brains.”  Actually, you don’t have to go as high as God–Google, YouTube and Facebook know exactly what they’re doing to our children’s brains.  (Kind of old news to MTP readers–see But Do Their Eyes Glow: The Children of the Lessig God and the Viking Pirate Kings from 2006.)

This has come up recently in two different ways in Europe through Google and Facebook’s lobbying campaign against the Directive on Copyright in the Single Digital Market, also known as “Article 13.” (“Article 13” refers to the section of the draft directive that gives Google, Facebook et al the most agita).  Article 13 would go a long way to closing Europe’s version of the highly profitable safe harbors for Google and Facebook.  Thus stopping the biggest income transfer in history, also known as the “value gap,” or as I call it, the alibi.

Pirate Party Member of the European Parliament Julia Reda has been a leading voice against Article 13 in the European Parliament, although she’s actually done a super job of self-destructing.  Her latest foot in mouth was a smug celebration of Google’s child lobbying techniques:

Julia Child Lobbying'

And then there’s the pop-up ads on YouTube that come up in that nagware prompt asking you to subscribe to YouTube premium (no matter how many times you decline)–the popup now has a prompt to “learn more” about Article 13:

youtube popup

Who do you think this is directed at, hmmm?   And then YouTube uses its seeding accounts on other social media to praise the lobbying campaign and create spin.  Sometimes the connection is with Twitter users like this person who actually appears to work at the Google Digital Garage in Manchester:

Emma Gray

And there you have it.  But this is really old news–who can forget Jimmy Wales’ admonition to the young plagiarists who copy their homework assignments directly from Wikipedia (ask any teacher, it’s true).  His warning of the Wikipedia blackout for the fake SOPA campaign was pretty clear (as reported in the Hollywood Reporter):

“Student warning,” Wales wrote. “Do your homework early. Wikipedia protesting bad law on Wednesday! #sopa”

This is not to overlook the “Young Pirates“, the Pirate Party’s own generational campaign that has some really unsavory historical overtones, although one has to believe those overtones are unintended.

But the worst of this is what appears to be a campaign targeting the children of MEPs.  According to European researchers, there were calls made to some of those children trying to convince them to convince their parents to vote against Article 13.

None of this should come as a surprise–YouTube has a long history of failing to protect children from a host of unsavory activities on YouTube.  A must read post by James Bridle tells us of the truly bizarre goings on at YouTube Kids.

I’ve also been aware for some time of the increasingly symbiotic relationship between younger children and YouTube. I see kids engrossed in screens all the time, in pushchairs and in restaurants, and there’s always a bit of a Luddite twinge there, but I am not a parent, and I’m not making parental judgments for or on anyone else. I’ve seen family members and friend’s children plugged into Peppa Pig and nursery rhyme videos, and it makes them happy and gives everyone a break, so OK.

But I don’t even have kids and right now I just want to burn the whole thing down.

Someone or something or some combination of people and things is using YouTube to systematically frighten, traumatise, and abuse children, automatically and at scale, and it forces me to question my own beliefs about the internet, at every level. Much of what I am going to describe next has been covered elsewhere, although none of the mainstream coverage I’ve seen has really grasped the implications of what seems to be occurring.

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In a recent interview with Kara Swisher on Recode, YouTube CEO Susan Wojcicki got this question from the audience:

[My] nine year old [daughter], she uses YouTube essentially as her search engine.  Obviously the parent company Google is incredible at search and the search always comes up good even though there’s a lot of crappy web pages.  When it comes to YouTube she watches kids oriented videos and then the “recommended” list comes up, there’s some really disgusting stuff in there….It seems really bad, and my kid is well under 13, she’s not supposed to be able to see this stuff and she sees it all…

Senator Ben Nelson commented on content that Google allows to be “readily available and promoted by Google” like wine tasting tips, how to make sulphuric acid and toxic chlorine gas, and some of the YouTube videos that James Bridle discovered.  The answer?  Parents can notify Google of problems and Google will help parents restrict what their children can see.

Senator Nelson asks why should parents have to do any of this?  (Sort of like why should any artist have to monitor the Internet 24/7 to send DMCA notices?)  Imagine how he would feel if his children (or grandchildren) were contacted to lobby against him?

So on a certain level, not only is YouTube recruiting kids to lobby their parents, they are actually recruiting kids to lobby for YouTube on an issue that actually could address some of the problems that their parents may have with YouTube itself as parents.

Let’s be clear–this is all about the money.  Google and Facebook have produced the addiction in their users, adults and children alike, that they are now trying to exploit through scare tactics.  Because let’s face it–as Sean Parker tells us, these companies are not in the media business or the music business.

They are in the addiction business, make no mistake.

And now they are twisting that addiction for a corporate lobbying campaign with one purpose–enriching themselves through the greatest income transfer of all time and doing so at any cost.

Weekly Key Dates and Accomplishments for the Mechanical Licensing Collective Under the Music Modernization Act (11/30) by Artist Rights Watch (The “Countdown to Modernity”)

December 2, 2018 Comments off

As best we can tell from the outside looking in, this chart has the dates for key events in the critical path to launch for the Mechanical Licensing Collective as required by the Music Modernization Act.  We have called the chart the “Countdown to Modernity.”  Obviously, this chart is not intended as legal advice, and you should consult your own attorney about any of these dates or events.  Note:  After 1/9/19, this chart, updates and analysis will be available to premium subscribers of MusicTechPolicy.

Recall that the Register of Copyrights gets to pick the entity to operate as the Mechanical Licensing Collective. The Tennessean reported that the first fully-formed candidate to emerge is the American Music Licensing Collective or the “AMLC”.  (AMLC’s website is songrights.net.)  Within days, Digital Music News also reported that two AMLC board members have left the organization for reasons that their source says were “directly tied to threats”.  Digital Music News continues to report on these alleged “threats.”

The appearance of multiple candidates for the yet to be designated MLC raises another question–what about any existing black box?  MTP and ARW readers will recall that the MLC is allowed to invade the black box to cover certain administrative costs that exceed the “administrative assessment” to be paid by the blanket licensees:

INTERIM APPLICATION OF ACCRUED ROYALTIES.—In the event that the administrative assessment, together with any funding from voluntary contributions…is inadequate to cover current collective total costs, the collective, with approval of its board of directors, may apply unclaimed accrued royalties on an interim basis to defray such costs, subject to future reimbursement of such royalties from future collections of the assessment.

Digital Music News also focuses on this issue:

According to the MMA’s language, mechanical licenses [presumably meaning royalties] that remain unclaimed after just one year will be largely mopped up by major publishers according to marketshare, an arrangement that has drawn protest.  The value of the initial unclaimed tranche of funds has been estimated to be as high as $1.5 billion, at least according to a report by Variety.

We’re not big believers in this $1.5 billion number and it’s not exactly right that Variety reported that number–the Variety story has changed several times and is still a bit murky.   Due to a later update to the article concerned it’s a bit unclear exactly what Variety meant in the original unsourced reporting.  The original story as reported in Artist Rights Watch stated the industry-wide black box was $1.5 billion:

The DSPs are holding some $1.5 billion in unmatched mechanical royalties. If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Variety subsequently changed that language in the story at least twice that we know of, but never actually retracted the $1.5 billion number as far as we can tell, although they may have depending on your point of view of what constitutes a “retraction”.  In any event, the story now reads:

The DSPs are holding millions in unmatched mechanical royalties — the sum of all Notice of Intent (NOI) filings currently parked at the U.S. Copyright office, while unknown, is climbing. If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Note–there’s still no source for either the “$1.5 billion” or the “millions” or for the “update”.  Remember that in the MMA Senate Judiciary Committee hearing, Senator Feinstein said that the black box could be hundreds of millions.

Remember that the “initial administrative assessment shall be effective as of the license availability date” which is 1/1/21.  It is not clear whether the initial administrative assessment will cover the MLC’s prospective costs, its startup costs, or both.  One fair interpretation of the MMA is that the initial assessment shall be prospective and shall not cover startup costs, although the parties can, of course, agree to pay more than they are obligated to incur by statute.  It is unclear if those additional costs would be passed down to all blanket licensees (who may object to paying more than the statute requires).  You would think that this important issue would be clearly stated in the statute, but it is not.

The following chart is a work in progress, and if anyone sees anything wrong in it or something that should be clarified or corrected, please let us know.  It should be considered a draft, but we hope that it will solidify over the next few weeks.  We expect activity to pick up once the MLC filing deadline arrives.

Due to the formation of the AMLC, there are now two candidates for the MLC, there may be more coming.  The COUNTDOWN TO MODERNITY chart needs to distinguish AMLC from the competing NMPA/NSAI MLC which does not have a name as far as we know.  Until the NMPA/NSAI collective adopts a name, we will refer to it as the NMPA/NSAI collective.

The main takeaway from this chart should be the clock is ticking and time is going by.  Our prediction?  Time will become the MLC’s biggest enemy, if there isn’t already a time bomb in the drafting of the Music Modernization Act.  What we don’t see in the MMA is any discussion of what happens if a deadline is blown for whatever reason.

But mark your calendars–we see the first key date as January 9, 2019 when the Copyright Office will request filings from MLC candidates, which so far include the AMLC and the collective to be formed by NMPA/NSAI.  That’s 38 days from now and holidays count.  The countdown to the License Availability Date: 761 days from now.

ARTIST RIGHTS WATCH
COUNTDOWN TO MECHANICAL LICENSING COLLECTIVE LAUNCH
WEEK 7

KEY DATES SCHEDULE FROM ENACTMENT DATE (10/11/18)

TO LICENSE AVAILABILITY DATE (1/1/21)

EVENT ACCOMPLISH WHO OWNS? TIME EXPIRED   BEFORE LAD TIME REMAINS TO LAD
REQUEST FILING TO BE MLC STATUS UNKNOWN—Deadline  1/9/2019 COPYRIGHT OFFICE 90 DAYS AFTER ENACTMENT 723 DAYS FROM DEADLINE
DESIGNATION OF MLC STATUS UNKNOWN—Deadline  7/8/2019 COPYRIGHT OFFICE 270 DAYS AFTER ENACTMENT 543 DAYS FROM DEADLINE
FORMATION OF MLC NONPROFIT AMLC nonprofit formed

NMPA/NSAI STATUS UNKNOWN

MLC STATUS UNKNOWN 543 DAYS FROM LAD
SUBSTITUTION OF BLANKET LICENSE FOR ALL VALID EXISTING COMPULSORY LICENSES AUTOMATIC 10/11/2018

 

COPYRIGHT OFFICE 761 days
MLC BUDGET STATUS UNKNOWN

(Assume deadline of 1/9/19)

MLC/DLC/CRJ 45 days 770 days
INITIATE ASSESSMENT PROCEEDING w/CRJs [MUST COMMENCE NO LATER THAN 7/8/2019]

STATUS UNKNOWN

MLC/DLC/CRJ 219 days 545 days
ASSESSMENT RULING [PUBLISHED IN FR NO LATER THAN 7/8/2020] MLC/DLC/
CRJs
585 days 179 days
APPEAL OF ASSESSMENT RULING 30 DAYS AFTER PUBLICATION OF ASSESSMENT RULING MLC/DLC/
CRJ/ DCCOA
616 days 149 days
MLC BUSINESS PLAN STATUS UNKNOWN

(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 723 days
ANNOUNCED BOARD NOMINEES AMLC board announced (see DMN and above)

NMPA/NSAI called for nominations.

The deadline for NMPA nominations passed on November 15  see NMPA.  NSAI are accepting nominations for songwriter board member seats with a December 15 deadline.  (these are nonstatutory deadlines) Songwriter board selection by Steve Bogard (NSAI), Rick Carnes (SGA), Lynn Gillespie Chater (SGA), Dallas Davidson (BMI), Chris DeStefano (NSAI), Bob DiPiero (BMI), Dan Foliart (ASCAP), Adam Gorgoni (SONA), Michele Lewis (SONA), Paul Williams (ASCAP)

(Assume final deadline of 1/8/19)

MLC 39 DAYS 723 days
APPOINTED BOARD AMLC Board Announced (DMN reports Howard and Mestel depart):

John Barker (founder, president & CEO of ClearBox Rights, LLC).

Brownlee Ferguson (founder, Bluewater Music).

George Howard (co-founder of both Music Audience Exchange and TuneCore and CIO of Riptide Publishing).

Lisa Klein Moberly (founder and president of Optic Noise).

Benji Rogers (singer-songwriter, founder of PledgeMusic and co-founder of dotBlockchain Media)

Jeff Price (founder of Audiam and co-founder of TuneCore)

Henry Gradstein (music industry attorney at Gradstein & Marzano, P.C.)

Larry Mestel (founder, Primary Wave)

Ricardo Ordoñez (founder and president of Union Music Group)

NMPA/NSAI: STATUS UNKNOWN

(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 723 days
APPOINTED DLC STATUS UNKNOWN—Deadline  7/8/2019 COPYRIGHT OFFICE 270 days AFTER ENACTMENT 545 days
ENGAGED  MLC VENDORS AMLC:  Clearbox Rights, Audiam (others?)

NMPA/NSAI: STATUS UNKNOWN

(Assume deadline of 1/9/19)

MLC 39 DAYS 723 days
PAID MLC VENDORS AMLC: See board members above

NMPA/NSAI: STATUS UNKNOWN (ASSUME 7/8/2020 IF NO APPEAL OF ASSESSMENT)

MLC 270 days 545 days
ANNOUNCE MLC DATA STANDARDS STATUS UNKNOWN MLC/DLC
REGULATIONS* STATUS UNKNOWN COPYRIGHT OFFICE
COMMENTS AND REPLY COMMENTS ON REGULATIONS STATUS UNKNOWN ALL
EXPLANATION OF OPERATIONS: HOW TO REGISTER WITH MLC AND COST OF REGISTRATION STATUS UNKNOWN

(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 726 days
REGISTRATION START DATE STATUS UNKNOWN

 

MLC=Mechanical Licensing Collective

DLC=Digital Licensee Coordinator

CRJ=Copyright Royalty Judges

DCCOA=District of Columbia Circuit Court of Appeals

CO=Copyright Office

LAD=License Availability Date

*Topic areas to be updated as announced

The Ethical Pool Future: Will Fans Cut the Cord to Big Streaming Services if Artists Leave?

November 30, 2018 Comments off

Everybody knows that the boat is leaking
Everybody knows that the captain lied…

From Everybody Knows by Leonard Cohen

I wrote up my take on “user-centric royalties” a few weeks ago in a post titled “Arithmetic on The Internet: The Ethical Pool Solution to Streaming Royalty Allocation.”  The post has been widely read in the artist community and stimulated conversation about the current model of royalty allocation by streaming services that artists like Sharky Laguana have led the debate on.  I argue that the current model results in the hyper-efficient market share distribution of streaming revenues that effectively bypass the independent artists who fans listen to on the subscription streaming services.

Hyper-efficient marketshare distributions can have unintended pernicious effects due to the impact on the per-stream rate.  If you have a big market share, you don’t care much about per-stream rates because you get minimum guarantees and probably non-recoupable “technology fees” that help protect your downside and defray your accounting costs.  (Particularly important to independent labels whose streaming accounting costs may exceed streaming revenue.)  If you are an independent or “niche” artist, the per-stream rate is everything because you won’t be getting advances or technology payments.

Crucially, that hyper-efficient distribution almost guarantees to a mathematical certainty that per-stream rates will decline over time if service revenue fails to increase at a rate that exceeds the increase in the total number of streamed recordings.  The Trichordist has documented that the per-stream rate has declined by 16% over the 2014-16 period–which happened at the same time as we are told that streaming accounts for over 50% of industry-wide recorded music revenues.  If streaming revenue declines on a per-stream basis while expanding to a larger share of over-all recorded music revenues, the negative effects on the per-stream rate will almost inevitably hurt independent artists, as well as genres like instrumental jazz and classical.

As we found in a recent reader poll, many fans–even many MTP readers–are unaware that an overwhelming share of their streaming service subscription revenue is paid for music they didn’t listen to (and performed by artists they don’t care for in some cases).  Assuming that MTP readers may be more aware of these inequities than the average fan, many if not most consumers may be in the dark about where their money actually goes, which may have an effect their buying decisions and a ripple effect through the market.

question 1

question 2

There’s little doubt that the status quo is unsustainable even though the transition from high to low-or-no margin goods may be irreversible.  Recently, Canadian artist and producer Danny Michel wrote a must-read op-ed for the current edition of the Vancouver Weekly that highlights the motivation behind the Ethical Pool.  Titled “The Expiration Date on Music”, Danny describes his own experience, which of course is echoed by a chorus of independent artists and songwriters around the world:

I’ve been a full-time musician for 25 years. It’s been nothing but hard work, but I love hard work. My songs bought my home, my studio, paid the bills and more. Through it all, the conversations backstage with other musicians have always been about music, family, guitars, friends, art, etc… But in 2018 that conversation changed. Everywhere I go musicians are quietly talking about one thing: how to survive. And I’ve never worried about it myself UNTIL 2018. What I can tell you is my album sales have held steady for the last decade until dropping by 95% this year due to music streaming services.

And therein lies the rub:  You cannot trade a high margin sale at a wholesale price of $5-$10 for a replacement with a wholesale price of a fraction of a fraction of a penny without an unrealistic corresponding exponential boost in activity.

The math is stacked.

Based on the Trichordist’s Streaming Price Bible, it takes roughly 1,600 streams on Spotify, 950 streams on Apple Music, or over 10,000 on YouTube to replace one physical or digital album that sells at a venue or retailer with $7 of net revenue to the artist.  (This revenue variation across services is one reason the TEA math doesn’t really work.)   Venue sales are incremental revenue–you’re already spending to market the show.  Due to streaming, venue sales have all but evaporated in the last few years at an increasing rate as Danny Michel observes.

The fan at the show is in direct contact with the artist in real time when the fan comes to a show the artist is already promoting.   If the fan leaves the show empty handed, it will probably be difficult to get that fan to remember to stream the new artist when they launch their service player.

Getting fans to stream the record usually requires additional effort if not expense–a key reason why it’s important at the show to get that fan’s email at least or some other way to get in touch with them outside of the music service.  As one astute independent label put it, “if the devil made me choose between selling 25 CDs at a show or getting 25 fans to sign up to an artist’s email list, I’d have to think about it for 5 minutes.”  The email signups are a hope for future revenue to make up a shortfall that will likely never be made up on streaming.

Absent getting that fan’s email, independent artists are largely at the mercy of playlist gatekeepers to the point that many are asking if they really want to continue to participate in the major streaming services.  As long as those services have little interest in allowing subscription rates to increase or pay royalties at a level that allow independent or niche genre artists and songwriters to sustain themselves, there’s less and less reason to participate.  And hyper-efficient market share distributions are already causing some artists to like cutting the cord with big services–the only question is how to get their core fans to follow them.

 

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