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Microsoft Does the Right Thing In Songwriter Class Actions But Where is the Government?

March 4, 2016

You’ll probably have read a lot about how the Lowery, Ferrick and Yesh Music cases against digital services show how “broken” the music licensing practice is in the U.S.   As usual, instead of focusing on protecting songwriters and helping them actually get paid, the government is focusing on more bureaucracy and making life easy for tech companies.  Because that’s what bureaucracies do–after all, why does the Navy’s Army need an Air Force?

The U.S. Copyright Act produces no incentive for anyone to actually pay royalties–mostly because there is virtually no chance that anything bad will happen to a scoff law who just ignores their obligations under the Copyright Act.  Why?  Because the government puts the enforcement burden on songwriter who can ill afford to bring a copyright infringement case on their own.  And, of course, anyone who does is mocked in the tech press as a “copyright troll” as opposed to a vendor who is trying to collect money from a deadbeat.

Even the government has taken up the same old “blame the victim” whine emanating from Silicon Valley’s “dog ate my homework” excuse manufacturing complex.

What you’ll hear is how difficult it is for these poor digital services that are trapped in a world they didn’t create, a concrete jungle that just keeps pulling them back in.

At least one service does not seem to have been particularly phased by the lawsuit–once the failure of their business practices was pointed out to them in one of the Yesh Music cases, they did the right thing and settled.

Yesh Settlement Status Report

That’s right–Microsoft settled.  Why?  I’m just guessing here, but probably because they realized that whoever was doing their song clearances had, as they say, screwed the pooch.    Microsoft must have wanted to preserve their relations with the creative community and they did the right thing.  They didn’t tell their lobbyist to scare of the New York Attorney General, they didn’t come up with silly excuses and delaying tactics.  They settled the case.

But the settlement motivation could also have been because they did not want the brand damage that comes from making songwriters who can ill-afford litigation do all of the law enforcement work.  Microsoft probably did not want to be seen as a mega international corporation that was out to stiff songwriters.  Microsoft probably thought it was unseemly for an American corporation that has enjoyed so much from this country, it’s public stock market and commercial marketplace, to be seen essentially stealing from songwriters.

Microsoft also might have been concerned about getting pulled into a RICO case, a design defect case or other escalation of the songwriter class actions.

There is an argument that licensing in the US is complex.  But–it’s no more complex than it was when Spotify or any of these other companies planned to enter the U.S. market.  It’s not like the tech community hasn’t been at the negotiating table on all the rates for streaming that have been extensively negotiated.

It’s not like the law has gotten more complex in the last 15 years without the tech companies having been at the table.

But not surprisingly the issue that has not gotten any meaningful attention is GETTING PAID.  And make no mistake–no matter how good a “global rights unicorn database” that is available, it’s only as good as the people who use it and it’s only good if they use it.  And the part you never hear discussed is how the unicorn database would result in songwriters getting paid if the services don’t bother to look them up and then don’t bother to pay them.

Before they go bankrupt or are acquired, by the way.  (See the new fuckedcompany.com, Down Round Tracker, your guide to the bursting of the Second Great Tech Bubble).  Because another name for an unpaid songwriter is “unsecured creditor” and another name for Daniel “Bubbles” Ek is rich.  But is it all his money?  We may never know.

What the government needs to take away from these songwriter class action law suits is that these are acts of desperation.  The problem probably is actually much, much bigger largely because of one huge loophole in the Copyright Act’s statutory licensing regime.  If a music user never pays a penny in mechanical royalties, the only thing stopping them is if a songwriter steps forward and sues them successfully in federal court.  The user can continue using the compulsory license before, during and after that case and can continue to not pay mechanical royalties before, during and after the case.  The only thing that stops them is another songwriter bringing another lawsuit about another song.

Do you think songwriters would have ever agreed to be bound by this system if they’d been at the table when it was being created?

As David Lowery wrote in his 2012 comment on the regulations for payment of mechanical license royalties (that was essentially ignored):

5. Don’t Protect Scofflaws: I am not convinced that these services have gotten all these mistakes done without a plan. Some may be innocent mistakes, but some seem very calculated. Respectfully, the Copyright Office should not allow services who have never complied with the law to get protection of the laws they have evaded.

He also raised a similar point in his 2014 comment to the Copyright Office Music Licensing Study:

I have seen instances where a supposed compulsory licensee has failed to comply with its payment obligations for years, ignored termination notices, and yet is still able to continue to receive the benefits of new statutory licenses for songwriters who await the same fate.

Nothing in the Section 115 license scheme requires any consideration of the creditworthiness or trustworthiness of the compulsory licensee. The songwriter has essentially been compelled by the government to grant a license with absolutely no care given or concern shown by the government as to whether the compulsory licensee is unreliable. The entire burden of determining whether the licensee complies with even the most basic terms is entirely shifted to the songwriter—often after the fact.

David did what he could to alert the government to the problem.  At least Microsoft did the right thing, and hopefully has changed its business practices going forward.

Is anyone surprised with the government’s bad behavior masquerading as cluck clucking over that “broken” licensing system?  Only the songwriters who have to live under it and had precious little to do with creating it.  As with the entire government regulation of songwriters, it imprisons generations of songwriters, the dead, the living and the yet to be born.

As the late Texas Governor Ann Richards used to say, if you’re not at the table, you’re on the menu.

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