Guest Post by @schneidermaria: Content ID is Still Just Piracy in Disguise: An Open Letter to Rightsholders and a Music Industry Ready to Renegotiate with a Monster
Content ID, YouTube’s digital fingerprinting technology, is under fire lately for very good reason. Originally touted by YouTube as an effective method of blocking illegal uploads, Content ID was ostensibly the service’s way to protect copyright holders. But Content ID quickly morphed into a self-serving massive moneymaker. Their pitch goes something like this: “Hey, advertising is good for you. Why not use Content ID to cash in on all the piracy by getting a share of revenue we can generate from ad placement?” Well, they don’t call it piracy – but make no mistake, in the end, their whole scheme still depends on a culture of piracy.
Since the media presents YouTube’s misleading talking points without challenge, it’s up to us to expose what’s really going on. There’s a lot to sift through when one digs deep, so bear with me. In the end, ask yourself if jumping on board, monetizing through YouTube’s Content ID, makes us all complicit in perpetuating the piracy racket that YouTube created to make billions for itself.
1. YouTube’s 3 Billion Figure is all Smoke and Mirrors
YouTube dangles Content ID and monetization in general in front of music creators to lure us to participate. YouTube’s line is that if we jump on the monetization bandwagon, they’ll share ad revenue with us. Sounds like a good deal, but YouTube’s ad revenue has proven paltry when compared to the real cost of producing music. Like an Atlantic City casino, YouTube wants us to believe that we just might hit the jackpot. Stories of viral videos make the news and seem like the new brass ring for rights-holders, but this insightful article explains how rare “viral” is. And of the very, very few who achieve viral, who can sustain it and make a career of it?
The real truth is that most music creators on YouTube are making nothing or next to nothing from the use of their work. YouTube acknowledges that out of all people in the world with videos/music on its service, only 8000 “partners” qualify for Content ID. The rest of us can put ads on the videos we ourselves post, but likely the majority of us are never paid anything, not reaching the $100 threshold YouTube requires of us to receive the first check. And our own uploaded content is competing with pirated uploads of our music that we’re left to police. The mountain of cash from all the music creators who haven’t yet reached $100 must be creating one hell of a “float” for YouTube.
YouTube boasts of $3 billion in total payouts, but dig slightly below that surface, and you see a shameful number. They’ve admitted it’s really less than $1 billion per year. And think about it: YouTube has over a billion users each month, and over 12 billion users a year, so do the math. The measure of fairness is not how much YouTube has paid out in total, but it’s whether those who make the music that fuels YouTube’s fortune are getting paid adequately. Here would be important questions to ask:
1. How many rights-holders are represented on YouTube? (That number must be astronomical, and likely impossible to calculate.)
2. How many rights-holders can actually pay for the budget of a record from revenue they receive from YouTube?
3. How many music creators never reach the $100 threshold?
4. Of all the music-rights-holders represented on YouTube, how many make even minimum wage on an ongoing basis, year after year, for their life’s work that sits, year after year, on YouTube’s massive servers?
Every musician knows that as long as music is available on YouTube for free, it won’t likely sell very well elsewhere, especially with all the available apps that can rip mp3s right from YouTube videos into your personal library. And hey, what happened to the mechanical royalty for all of this, guys? (I’ll be writing about that soon.) So, if YouTube is going to corrupt all other income streams for those who invest their lives and means into the making of music, then YouTube should at very least pay a living wage, right?
We’ve had plenty of time to test the ad model, and one thing is for certain: Ad revenue does not pay for the making of music – not even remotely close. The music industry should quit banging its head into that same wall looking for results. Face the facts folks – ads will never fuel the music economy.
2. YouTube Has Us Haggling Over Popcorn Prices, While They Walk Away With All the “Main Event” Revenue
While we’re haggling over paltry ad revenue, we’re diverted from the far greater value that is being generated from our music. Every month, our music drives billions of users to YouTube’s platform, and the data that Google then gathers from following our fans around the web is where YouTube’s true value lies. Google and Facebook didn’t get their billion dollar valuations from ad revenue. YouTube’s valuation largely comes from the mountains of hoarded data collected on the backs of all musicians and creators. Therefore, part of the value of the YouTube empire should fairly belong to musicians. Not only should musicians and creators share in the value of data gathered, but they should also have access to the data their creations generate. Why in the world is it fair for YouTube to keep all of this data as a “trade secret” when it’s generated from our own fans, often through piracy YouTube expressly facilitates?
3. YouTube’s Dirty Secret about Content ID
Content ID is available only to those whom YouTube chooses – and YouTube runs the place like an exclusive country club. The simple fact is that the vast majority of independent musician-rights-holders are not accepted into Content ID. I’ve received five GRAMMY® Awards, and even testified about the DMCA next to Google’s counsel, Katherine Oyama, listening to her boast at length about the virtues of Content ID and its ability to block uploads. But when I came home from testifying in D.C. and applied for Content ID, I was denied. Content ID is reserved for big record companies with big catalogues, and probably selected independent artists whom YouTube believes will make YouTube a heap of money. And who even knows to what degree artists or companies with YouTube contracts are allowed to “block” uploads, as those contracts are under NDAs. Are we seriously to believe they’d permit independent artists to join, only to block their entire catalogue from being uploaded?
In the press, YouTube has fought back against the recent flood of criticism, saying that all rights-holders can access Content ID – that they can get it through “third-party vendors.” These third party vendors often take between 20% to 50% of the revenue paid by YouTube—after YouTube takes its share. That means the rights-holder is paying two overpaid gatekeepers. So yes, it’s available, but at a completely unreasonable premium. If big record companies are complaining about their bad revenue from YouTube, they should try being an independent musician, paying yet another middleman!
But here’s the most relevant fact that YouTube keeps hiding: BLOCKING UPLOADS THROUGH CONTENT ID IS NOT AVAILABLE THROUGH THIRD PARTIES. The use they bragged about before Congress – that they imply is available to everyone – does not exist. The reason is obvious – without ad revenue, there’s zero incentive for the third-party vendor or YouTube to partake. The third-party vendors would have to charge a fee big enough to pay YouTube and itself to simply block uploads. What a sick game that would be – paying some third-party company and YouTube to block the pirated uploads YouTube promotes.
Why can’t a rights-holder protect his/her work from illegal exposure on YouTube according to his/her Constitutional right, and then go sell it where he/she wants, for the price he/she chooses to set? That’s reasonable, right? Why is that such an unattainable dream for people like me and hundreds of thousands, if not millions, of my colleagues?
If an independent rights-holder wants to keep all their work off of YouTube and keep clear of YouTube’s ad-based, piracy-driven, self-serving, dirty, lawless racket, he or she is screwed. Is there a single independent artist that YouTube has allowed access to Content ID for the sole purpose of “blocking” uploads? Katherine Oyama should stop the bragging about Content ID until her company makes it available to “every” rights-holder for blocking. And certainly, misleading Congress with false claims and self-aggrandizement in a Congressional hearing, and similarly misleading the American public through a calculated propaganda campaign, is in my opinion, deeply unethical.
4. Content ID Legitimizes Piracy – We Shouldn’t Be Complicit
Music creators who succumb to the false appeal of “monetizing” on Content ID, or those whose record company has made that deal for them, have been swayed by YouTube’s line of baloney that illegal uploads are good and aren’t really illegal as long as YouTube offers a pittance from the ads they generate. Clearly, the infringement orgy YouTube has sponsored for so many years has brought independent musicians and record companies to their knees, as they accept bad deals to monetize the crumbs that are left on the floor from a devoured industry.
Our music industry’s acceptance of the “monetization” tool from Content ID only serves to “legitimize” the piracy that YouTube systematically breeds. Monetization erases any last vestige of guilty-feeling-illegal-uploaders. Content ID actually makes them feel good about themselves as they upload to their hearts’ content with zero inquiry. “Look! I’m making the artists money AND giving them needed exposure, AND I’m offering the public free music at the same time!”
I’ve heard this logic again and again from young people with bloated YouTube channels. We’ve all fallen into YouTube’s trap: By making a deal with the devil, right-holders are basically condoning the piracy that has destroyed the music marketplace. Content ID monetization is steamrolling our Constitutional right to control our own creative works. We shouldn’t buy into YouTube’s piracy scheme for the few scraps it might offer.
5. Content ID Offers a Pathetic Deal
With a straight face, YouTube tells you and the media that they give 55% of ad revenue to the rights-holder and only keep 45%. But they calculate that percentage split after they first reimburse themselves for their own expenses, which they calculate behind their green curtain. So the 55% figure is not of gross income. An article by East Bay Ray explains that after YouTube pays itself about 37% for its expenses, rights-holders receive only about 35%. That’s not a split, that’s a fleecing.
YouTube’s approach reeks of hypocrisy. Sure, YouTube has expenses. But has anyone discussed our expenses in making the recording? Costs should be figured on both sides. We all agree that when a potter sells a bowl, the price reflects the cost of clay, glaze, the kiln, firing, etc. When a clothing designer sells a pair of pants, the wholesale price covers the cost of fabric, thread, pattern design, etc. But YouTube, or rather, Google, the richest company in the world, wants us to accept a business model where the “price” they pay for our music has no rational relationship to the actual costs of making the music. Who cares about how much they say they pay out. Their site contains almost the entire world’s library of music, and it’s not even coming close to paying the cost of making that music. We invest all we have – time, talent, training, technology, and more. We have the right to expect a reasonable return on that investment. YouTube is an imperialist tycoon that is finger-flicking less than third world pay at musicians and the music industry for a product that YouTube shouldn’t even have access to in the first place.
6. Who is Clearing all the Rights for Music on Content ID Anyway?
The answer is, probably no one. When a record company puts out a record, the record company (assuming the artist hasn’t negotiated for ownership) likely owns the copyright to that recording. And if the record company has struck a Content ID deal with YouTube, chances are they will monetize the record. But what about the other copyright-holders? Likely there are songwriters whose works are represented on the record, too. Often there are several or more collaborators on any given song. So, what about their right to block uploads? Where are their royalties? How are they accounted? Are they accounted? Who asked for permission? Where is the transparency? This is happening to me, and my answers are: none, nowhere, not, no, no one, and none. YouTube is a jumbled, colossal rights violations mess that leaves independent rights-holders with the impossible task of doing DMCA takedowns, where YouTube publicly exposes our identities, leaving us open to repercussions from fans or record companies. The intimidation leads us to do nothing but accept the loss. There must be millions upon millions of such copyright violations on YouTube. Maybe that’s why they don’t allow all of us to have access to the Content ID blocking mechanism, because they fear most records would have some rights-holder that won’t allow it to be monetized. Well, if there was economic incentive, that wouldn’t be the case. Isn’t that how a free market economy works?
7. YouTube’s Use of Content ID is Un-American
Here are the bigger and broader questions for our industry and government. Why aren’t musicians and creators allowed to be a part of the American free market, where we set our prices based on the cost of producing our own product? That’s how manufacturing works in any freedom-loving country. Why can’t a music creator set the valuation of his/her work in the same way one sells visual art? Why are the Department of Justice and government, (all of whom are tarnished by their whirling revolving doors with Google – read it!) who are setting most of our prices for us, doing so based on failed ad revenue models from usurious companies? Why are the DOJ and our government at large intent on propping up a bogus “freemium” model? And why are they blind to the simple fact that big data companies operate freemium ad-based models all to the greater end of gathering invaluable data to become the biggest player in the AI (artificial intelligence) race?
Why is the survival of theft-enabling, ineffective, ad-based internet businesses more valued than the future of music or livelihoods of musicians? Why are we collectively not screaming our bloody heads off? Our songs and music have shaped our culture and the world’s culture for centuries. Music has brought people and cultures together, serving as the worlds’ ambassador without fail: a voice for freedom, for the oppressed, for change, for comfort, for celebration, and for transformation.
Music creators should be treated like the valuable citizens of this country that we are. We should be allowed to set our own price at very least! We aren’t the indentured servants of YouTube, here to make the Google empire rich and powerful. Given a fighting chance, the market would show how much our fans value our work, as it has for nearly a century. Taylor Swift and Adele proved exactly that with their quite recent releases that sold millions of good-old fashioned CDs at regular prices. But when we’re forced to try and create that market in a society with a complicit government that’s allowed copyright theft to run rampant, it’s an almost impossible situation.
When YouTube serves the world mountains of pirated content on a silver platter without having to take a single step to stop the piracy, or Google is allowed to prioritize pirates in their ‘search’ algorithms (even after rights-holders send takedown notices), how could there ever be a true marketplace?
8. Without an Ability to Block Illegal Uploads with Content ID, We’re All Screwed
For the vast majority of us that are unable to protect our music against piracy, we’re stuck playing Whack-A-Mole with an outdated and anemic DMCA takedown process, fighting a tsunami of piracy from a company that does all they can to keep the flood-waters flowing.
So, let us ask ourselves as composers, songwriters, performers, producers, publishers, and record companies: are we willing to be complicit in this whole scheme, cementing piracy as an acceptable norm, all for the measly pocket lint they’re offering us? I’d sooner fight piracy to the bitter end, and lose, than do that deal with the richest and scariest (“don’t be evil”) company on earth.
9. YouTube Should Lose Their “Safe Harbor” for Withholding “Standard Technical Measures”
The DMCA’s safe harbor provision requires that companies like YouTube must ensure that “standard technical measures” “are available to any person on reasonable and nondiscriminatory terms” to identify and protect their copyrighted work. (17 U.S.C. Sec. 512(i).) YouTube is not allowed to discriminate as to who gets access to tools that have become “standard” in protecting copyright. If YouTube does discriminate, it is supposed to lose its safe harbor.
It’s right in the DMCA. This is a point no one has yet pressed. Content ID has been around and used billions of times to make billions of dollars for years now. “Audible Magic” is available at a very reasonable price to any company wanting to offer blocking of illegal uploads. And on Audible Magic, content owners can upload their content for free. Apple has now created “iTunes Match,” and Facebook is rolling out its own similar fingerprinting technology, so it’s obvious that fingerprinting technology has become a “standard technical measure.” YouTube can’t deny it’s become the core of their business. And, if they also tout that it’s widely available through third parties, as they have in numerous publications, that suggests “standard,” too. Digital fingerprinting is a standard technology that’s now very accessible, it’s just that YouTube stiff-arms most of us who want to use it to block pirated uploads. And most other sites that allow music uploads from their users, pretend like Audible Magic doesn’t exist, because they don’t want it to exist. And though the DMCA safe harbor provision requires YouTube (and all internet companies that also allow public uploads), to use the available fingerprinting technology, no one is yet enforcing this application of the law. It’s high time.
YouTube reserving its copyright protection feature for hand-picked rights-holders, blocking the masses’ ability to fully protect their Constitutional right, even though the technology is right there in YouTube’s dirty fingers, is like denying a rope to a drowning person. Sounds like clear grounds to take away YouTube’s “safe harbor” protections to me. It actually feels criminal by my own estimation, when you consider that the violated rights are Constitutional rights.
I wish record companies would step away from their Content ID contracts entirely, and fight a noble fight to enforce this statute in the DMCA that would protect all rights-holders equally, rather than being a complicit partner in the pathetic and dirty Content ID piracy racket.
10. Content ID Should Be Made “Open Source” for All Internet Platforms
People are starting to wake up to the dangers of allowing a company to amass such power from data and artificial intelligence (AI). There’s a movement to quickly develop AI technology and algorithms as ‘open source,’ in an effort to keep a few all-powerful hipster tycoons from having AI power over the entire world. It’s called Open AI, and many seriously talented scientists are flocking to it. Thank God there are a few people out there scared stiff by the power of those that are controlling AI.
Since Google’s empire is built on the premise that “open” and “free content” is such a grand idea for us little folk, then it’s high-time it puts its money where its mouth is, and make Content ID fingerprinting technology for blocking illegal uploads available to us little folk as “open source” too. YouTube likes to say how much it has spent developing Content ID, but that’s exactly the point: if you won’t share YOUR works with us for free because you want to recover YOUR investment, why should you expect us to give away our works for free, without having recovered OUR investment?
And YouTube, don’t dictate how we rights-holders can use this now-standard technology. Let rights-holders use it as they wish – to block or to monetize – no NDA’s, backroom deals, or intimidation. Let’s make it all free and open, and see what a real marketplace looks like when we actually take measures to control infringement.
YouTube/Google wants the public to believe that certain “copyright” protection somehow harms the internet. But when their own trillions are made on their own “copyrighted” software, through their own “copyrighted” algorithms and databases, and through their own “trade secret intellectual property,” they suddenly guard it like Fort Knox. Somehow, YouTube’s and Google’s own copyrights are “good,” but musicians’ copyrights are “bad.”
Here’s the simple truth: protecting copyright doesn’t hurt the internet, it only hurts piracy. And in the final analysis, Content ID is really just another sneaky way for YouTube to get rich off of piracy, and to try to appear like they’re throwing us a helping hand. It’s underhanded and deceitful. We as a music industry shouldn’t negotiate away the true value of our work out of desperation, giving way to the powerful grip of a racketeer (in my opinion) that just wants to keep us quiet.
Are you a performer, songwriter, composer, producer, or fan, who wants to to help protect the future of music? Sign on at musicanswers.org.
Read Maria Schneider’s ‘YouTube’ Installment #1, YouTube, Pushers of Piracy
The MTP Interview: Alan Graham’s Artist’s Guide to Blockchain, Open Music Initiative, Smart Contracts and Dark Social (Part 2)
This post is Part 2 of the MTP Interview with Alan Graham. Read Part 1 here.
Chris Castle: How are licensing payments fulfilled using blockchain?
Alan Graham: Hard to say exactly without examining an actual business model, but for the sake of argument, currently the mechanism for this would require the use of a crypto currency. One of the benefits of something like Bitcoin is that parties who require payment can have what’s called an “address” and payments can be “instantly” made to this address.
There are a few a negative sides to this however.
Nothing is free. In order to ensure a prompt delivery of payment, there is a cost associated. The party sending the payment is the one who pays the fee.
For large payments, this isn’t cost prohibitive, but once you start delving into a micropayment world of fractional pennies per “play” this cost is quite significant. Now you can do “free” transactions, but there are drawbacks to that and not a topic worth going into at this point.
So if we looked at a DSP platform like Spotify, it would be pointless for them to send billions of payments out each month, which is why PROs would still be a critical partner in this process. Spotify could perhaps use addresses to identify works and therefore improve the efficiencies of the accounting, but it would make more sense for them to just pay one party who has the expertise of paying rights owners.
But that’s not all. Seeing as there is this general idea of using blockchain to generate a database of works and the ownership data associated with it, it is important to note that there would be a cost associated with registering all of these works. Going forward, this might be a negligible cost of business, but for legacy catalogue, the costs associated with this could be prohibitive for many, if not all, labels and publishers. And seeing as we need both the label and publishing data, who will pay this cost?
Lastly, cryptocurrencies tend to be volatile markets. The value of it can go up and down on any given day, typically prone to greater swings than fiat currencies. That means you could have a $10,000 payment made to you one day that by the time you remove it was worth $15,000 or $5,000.
Castle: Spin out the “dark social” concept that you mentioned in your article. How does your company solve for that problem?
Graham: Dark social is something I’ve been banging on about to those in the music industry for the past two and a half years. While everyone was going on and on focusing on the web and the YouTube issue, I was trying to point out that apps and private social networks are the primary problem on the horizon.
Apps, for example, are closed and walled environments. You can’t crawl them like the open web we’re use to today to search for infringement or improper use. Adding to that complexity is that we’re also heading into a world where peer to peer encryption is becoming commonplace. That means that even if you could analyze what is going on behind these walls, you cannot audio or video fingerprint an encrypted file. So the Content ID type model that has become so popular as a way to monetize infringement, becomes pointless.
Extrapolate this out a few years with current safe harbor protections, the importance of privacy, and the likelihood of fully encrypted networks and new hybridized P2P networks, how would you as a rights owner be able to prove, enforce, or monetize your rights? The answer is you can’t. So simply fighting over YouTube and the open web is a distraction from what’s coming.
This is a massive issue that goes ignored by almost everyone I meet in both tech and the creative industries. Well, actually, I’m not sure it is ignored by tech, so much as it isn’t advertised as something to be concerned with. I think they’d rather surprise rights owners with it after it is too late to do anything. That day is almost upon us.
I won’t bore you with how we deal with this issue, suffice to say we started working on that solution two and half years ago, figured out how to solve it, built that solution, and we’ll ship that code/solution this year.
We knew it was coming so we prepared for it. We’re actually capable of identifying works behind these walls and in encrypted systems without using any fingerprinting at all. In fact, our method is many factors more accurate than YouTube or anything else on the market. Efficient, requires fewer computing cycles, indemnifies developers, and creates an automated license between the rights owner and rights user. I like to say we do it faster than instantly. 😉
We built this for creators as a framework so they would finally have their own technology, with the added bonus of building bridges between developers and citizens.
Castle: If Spotify had blockchain technology, would blockchain allow them to license shares of songs for writers who did not participate in the blockchain ledger?
Graham: Well let’s clarify this a bit in that we’d first have to think about how Spotify would utilize blockchain technology. I’m not sure the current models being proposed solve any issues without creating other complexities. I think there are certain methodologies that could be addressed which might lend themselves well to aiding DSPs like Spotify, but those have to come from the industry itself. I touched on some of these in a piece I wrote back before the first meeting of the OMI: https://thetrichordist.com/2016/06/16/thoughts-on-the-open-music-initiative/
Frankly, however, I don’t see how you can simplify licensing with blockchain without some type of collective agreement via a collection society, for example (rights not rates).
That said, I do think there are ideas to be borrowed or lifted from blockchain that could immensely aid both DSPs and rights owners, especially when it comes to accounting and the efficiencies of processing payments, but again, I recommend people go read my other piece because I believe many of those guidelines need to be addressed first and foremost.
Castle: Since the U.S. government likes to compel songwriters to behave in certain ways, could the government mandate that all songwriters participate in blockchain?
Graham: Who can say what the U.S. government might attempt to do, but the challenge with that is the last time I looked we were a round planet where technology was making it harder and harder to respect borders. I’m not generally an anti-regulation person, however, in this case I feel a hands off approach by the government would be a smarter strategy. You simply cannot legislate this at the speed of technological advancement.
The U.S. government doesn’t own the bitcoin blockchain nor any blockchain for that matter, they can’t control it, and they certainly can’t tell European or (ahem) Brexit…er British songwriters what to do.
A smarter approach would be for the music industry to stop jerking around trying to maximize their bonus checks and start getting serious about fixing some of these issues before there isn’t a music industry left. As an outsider who has now worked with the music industry for 4 years, I find the level of disfunction amazing. This needs to stop. Labels, publishers, artists, songwriters, developers, and citizens all need each other. We need to stop thinking about what camps we’re in and recognize we’re all in this together.
Castle: If I understand what little information there is about OMI, it is not a payment fulfillment mechanism. If that is correct, how does OMI help artists and songwriters get paid?
Graham: My interpretation from participating in the first meeting of the OMI was that their primary goal is not to wade into issues of rates or payments, but focus strictly on data. I think this is a smart approach, since the moment you dip your toe in the rates pool, you realize it is a pool of acid and acid resistant piranha.
What I found encouraging from the first meeting was the thought that this is about working on details of how do we get good data into the industry so that we can improve not only on just efficiencies, but also create new opportunities.
The OMI wants to see some standards evolve, but they aren’t looking to force them, just encourage the market to discover what might work best.
Now to their credit, while MIT is experimenting with blockchain and crypto currency solutions, OMI isn’t pushing everything in that direction. Their view is whatever wins, wins. Forced standards are hard to establish, but market traction tends to drive new standards pretty well.
Castle: If a company like Spotify fails to take advantage of the existing means of licensing under compulsory licenses, how would blockchain force Spotify to license and pay for all the apparently millions of songs or song shares they have failed to license so far?
Graham: It won’t. Again, blockchain can’t enforce anyone to do anything they don’t want to do. I guess in a perfect utopian world, Spotify wouldn’t be able to access and provide music to their customers if smart contracts prevented them, unless they obeyed the set rates and terms enforced by the smart contracts…the hundreds of millions of smart contracts. We don’t live in this world and even if possible it is years away. Who knows if Spotify will even be around?
Castle: How would an artist conduct a royalty compliance examination of a smart contract?
Graham: I’m not entirely sure, as it isn’t a database. Let’s just speculate on how something like this might work, and ignore the complications that currently make this impossible. If you have a public immutable ledger, and all transactions are written to the ledger via a smart contract, then as long as you can prove you are who you are (cryptographic proof from the rights owner), you can see every use of the works in question. This would require every system on earth using this process, whatever it may be. This is theoretically doable.
The question isn’t so much compliance and being able to automate a trusted audit, it is more about is it even feasible from the view of scalability? We’re talking about hundreds of trillions of different types of transactions per year, which will represent petabytes of data that would absolutely bring all current blockchain based systems today to their knees. So even if you can do the smart contract aspect of tracking and auditing, you can’t currently handle the scale.
Castle: I noticed that the companies participating in OMI include Spotify and YouTube, two of the biggest offenders in trafficking in unlicensed material as well as Pandora whose name is synonymous with litigating against songwriters. Given that so few people trust one, two or all three of these companies, why should anyone have any confidence that OMI is not just a delaying tactic to continue the status quo?
Graham: I think what’s important is having them in the room. While the major labels didn’t show up, to their credit, YouTube and Spotify did make an appearance for the first part of the meeting. I was later disappointed, however, that they didn’t stick around for the technical talk, which was less really about technology than process. It would have been important to see their participation at that level.
I don’t believe the OMI is a delaying tactic, but that’s not to say those who participate may or may not cause delays. If the majors put their name on it but don’t show, and the tech giants show but don’t stay, we’re not going to get very far. But it is early days. Let’s see where we are at six months to a year from now.
Castle: At SXSW this year, I went to a panel with Panos Panay who leads the Berklee OMI program. That panel was hosted by the lobbyist for the MIC Coalition which is dedicated to blocking the Fair Play Fair Pay Act and any other legislation that would pay artists fairly. MIC Coalition includes Google and Pandora, two of the OMI members.
That lobbyist asked Panos whether Berklee students complained (I think she actually said “whined”) as much as their older counterparts. Panos replied (and I’m paraphrasing now, but just a bit) that what was refreshing about Berklee students who grew up in the post Napster era is that they don’t have a sense of loss in the same way that older musicians do, so their expectations were lower. I guess they can’t lose what they never had.
So does blockchain and the OMI respond to these lower expectations to keep them low, or should we think of the effort as technology that can facilitate negotiations, licensing and collection?
Graham: I can’t speak to what Panos meant at that moment, but from my own conversations with him, and some of the feedback from the first meeting of the OMI, my impression is that when you’re expectations are already so low, then there’s a lot of incentive to go up. That said, there were a lot of hard won battles by artists that many people likely took for granted that have been eviscerated in the past 15 years. Here’s a group of kids that have nowhere to go but up. However, they still need the infrastructure and the opportunities and the rights afforded to them in order to go up. Plus we need the diversity provided by an entire spectrum of artists and songwriters. We can’t just have a world of Kanye’s augmenting their income with fashion lines or branding deals. Not everyone gets endorsements or sync deals. They need to be recognized and protected from becoming exploited by the system we’ve become accustom to, which in all fairness was really an accident born out of piracy.
The MTP Interview: Alan Graham’s Artist’s Guide to Blockchain, Open Music Initiative, Smart Contracts and Dark Social (Part 1)
Chris Castle: Tell us a little bit about your background and your company. How did you come to be involved with the Open Music Initiative?
Alan Graham: For 25 years I’ve worked as a technologist, author, editor, designer, and producer. I became active in technology because I believed it could be force for equality, however the idealism of my 20’s has taken a more pragmatic view. I feel the desire to free ourselves from gatekeepers has only created more gatekeepers.
Three years ago I had a moment of inspiration via a conversation with my friend and co-founder, the legendary Producer/Artist/Songwriter Rupert Hine, on how to solve the issues around user-generated content. Billions, if not trillions of improper uses of all forms of creative works occur every day, a majority of which have no proper tracking or monetization. This lack of accountability creates massive animosity and distrust between citizens, rights owners, and developers.
That needs to stop. We need to unify and bring a balance between all the parties involved. We need to be partners, not adversaries, and that requires more than technology, it needs new methodologies. We need to question the accepted models we’ve found ourselves in, because we’ve failed to find the balance we need. We cannot simply continue “business as usual,” because business is bad.
Since the music industry never had any of their own technology that tech companies could utilize (or wanted), they did a Faustian deal with YouTube which set a precedent we’re all still paying for today. This deal was stating that instead of letting tech companies be tech companies, we made them gatekeepers of rights, and we said…”advertising is how we’ll pay for everything.” How’s that working out? Every year the music industry has to work twice as hard to make the same dollar off of advertising.
Conversely, there are millions of developers out there who want access to creative assets. The majority have no venture capital, nor the knowledge or time to secure the necessary licensing. Even if they had the time or money, they don’t have the expertise or knowledge, and they in fact should not be in charge of determining how to handle rights.
One thing a developer understands is paying for services, if only creative assets were packaged for them as a service. But you’d need a mechanism that could grant permissions, deliver media, handle accounting and payments for disparate rights owners with different assets across millions of apps.
If you could do that there’s hundreds of millions in revenue sitting on the table today for rights owners that is not being collected. Why? Because no one has a unified mechanism to collect it. You have vastly fragmented industries of disparate rights and owners, all trying to solve these issues individually, and they can’t. I once calculated it would take a team of 1,000 people 8 years to negotiate and approve of just 10% of the apps and platforms out there now. When you think about that you quickly realize that no label or publisher can handle this type of volume, and without a united technology and methodology that allows them to work together, you’ll just see more improper usage because you can’t get developers into an approved program. That means stagnate development and a lack of innovation. That’s a major reason why there are no sustainable and successful music startups.
We’ve built a framework called TOTEM, to give rights owners their own technology that solves all of the above, and we’ll ship that code in 2016 for rights owners and developers to use together. No more safe harbor or DMCA hassles, no app takedowns, no improper use, and new markets and ecosystems for both developers and rights owners to explore together as partners.
As for the OMI, I heard of it from Jonathan Taplin who knew of the work we were doing with our project. Typically I’m skeptical of projects like this, but as complex as the issues are surrounding the music industry, you have to start somewhere, and facilitating a dialogue between many stakeholders is a good place to start.
Castle: Most people have no idea what “blockchain” refers to. Without getting into any particular application to our business, what does “blockchain” mean?
Graham: Let’s skip the rabbit hole and dumb it down as much as possible.
You can’t talk about blockchain without mentioning what gave birth to the idea, and that’s the cryptocurrency Bitcoin, which I’m sure everyone has heard of to some degree. The blockchain is in essence a “chain of blocks” of data written into an immutable public ledger. It describes the transactions that occur surrounding bitcoin. This ledger is distributed across multiple computers around the world, all of which hold an duplicate copy of the data. Because of this model of distribution and immutability, somewhere along the line, a few clever people started to think, what if we used the blockchain to record other types of transactions, like the record of an occurrence or the validity of an asset or ownership?
Eventually people got around to talking about using this to record music rights ownership in such a way so that this data would serve as the solution that the GRD was intended to become. In fact it was likely the failure of the GRD which led to this idea.
Castle: What is a smart contract and how would a smart contract work as a license, i.e., a “smart license”? Is the license smart enough to operate for writers or artists who do not want to participate in the smart license for whatever reason?
Graham: Again, to dumb this down to the basics, a smart contract is really just an autonomous program designed to mirror the function of an agreement, and therefore can be made to self execute based on the requirements of a third party, whether that is a person or another smart contract or “bot”. So say a music service like Spotify could interact automatically with a smart contract to gain access to a track for their user, and then simplify and automate the process of accounting and payments. You might also use this as a mechanism for user-generated content. This entire process might be done via a relationship to a blockchain or running in a layer above one.
As for the second part of this question, is the license smart enough to operate for writers or artists who do not want to participate in the smart license, the short answer is no.
I’ve been studying these issues for three years, and while I’m generally optimistic and support a lot of the ideas around blockchain technologies (we use a lot of blockchain cryptography), I’m skeptical on smart contracts in music and rights.
The idea of using a smart contract as a licensing mechanism has been proposed by many people who look at the mess involved with managing rights and being able to automate the process of granting rights for any use imaginable. It sounds like the perfect utopian execution of how we should be doing things, but anyone who really has worked on both the personal and data sides of music know this is just not feasible. The reason is that in order to build effective and powerful smart contracts for the music industry, complexity is required and complexity increases the possibility that something will break. Complexity is also the enemy of security.
As an illustration of this, you only need look as far as the recent hack on the smart contract known as the DAO which was built to run off the Ethereum blockchain, where someone was recently able to exploit the code in the contract to make off with over $50M in cryptocurrency. This was not officially what you might consider a hack, as it simply took advantage of the way the contract code had been written.
I’m sure many in the music industry will now likely look at this exploit with concerns over smart contracts while thinking, what if that were my royalties? It took the Ethereum crowd nearly a month to solve the issue. Imagine if the music industry just shut down for a month.
The music industry is all about people and anyone who understands the “people” side of the music business, get that this is an ecosystem fraught with nuance.
Bots and AI aren’t good with nuance, and artists aren’t typically good with contracts, smart or otherwise. Perhaps eventually this can be worked out and I’ll be proven wrong, but I don’t see that in the immediate future. We’re years away.
Castle: It seems that blockchain and smart contracts will still require negotiation, rate setting and rulesets. How would blockchain facilitate negotiation?
Graham: Let’s just break down an argument I often use to illustrate the complexities involved with automating “negotiations”. In this case let’s just tackle one user who wants to create a UGC video using a song with footage from their 4th of July BBQ and post it to YouTube.
As we all know, we’re talking about a sync license here. For the sake of argument we have two songwriters representing the work, and five band members representing the recording. We’re already at seven individuals with multiple expressions of rights over this track, and at the very least have moral rights.
You’d have to have a smart contract(s) that could consolidate and approve usage between each of the parties, but then also be able to clear that usage for the UGC use. So let’s complicate things a bit.
What if one of more of the rights owners:
Doesn’t want anything on YouTube?
Doesn’t want their music associated or connect to advertising or a brand?
How about one of the rights owners is vegetarian, so no videos with meat in them.
We’re talking about a sync, but what’s the rate everyone has agreed to?
What about special circumstances (charity)?
Politics and political use of music or a cause?
And the ultimate…what if the video contains visual copyrights you need to clear as well?
So you’d have to work out a process whereby all of these things can be automated, considered, and cleared in a span of seconds, just so someone can post a fan video. And it is likely the social media app and the platform would also have to interact on some level with this system.
So if the idea is simplification…
I think most people who look at this idea are thinking about the atypical singer/songwriter, who might in fact own 100% of their compositions, so in this case it would be easy, but that’s not the world we live in.
There are over 100 writers credited on Kanye West’s last album. Imaging having to work out how to encode all of the moral rights alone with all of those works.
@music_canada Wins $66 million Settlement Against Massive Infringer Isohunt and Founder — Artist Rights Watch
Massive infringer Isohunt and its founder Gary Fung agreed to a consent order with the Supreme Court of British Columbia finding him liable for infringing the copyrights of over two dozen Canadian and international labels. The court found that isoHunt and Fung were liable for $55 million in damages and an additional $10 million in punitive damages, plus another million in court costs.
The Return of the $50 Handshake: Spotify is Selling Your Fans Data Out the Back Door — Artist Rights Watch
What this comes down to is that you are driving fans to Spotify, Spotify is capturing their identifiable information, scraping that into data categories through pattern recognition and other data mining techniques and then profiling your fans to be resold to brands. It’s hard to believe that Google is not involved with this deal somehow. (Don’t forget that Kara Swisher reported in Re/Code that then Google head of business development joined the Spotify board.)
Last week, however, under Assistant Attorney General Renata Hesse (a former Wilson Sonsini attorney — Google’s law firm), the DOJ announced that, going forward, it intends to interpret the Consent Decrees to require ASCAP and BMI to only issue licenses for songs they control 100%, up-ending decades of custom and practice. The DOJ’s intention, presumably, is to make life easier for companies like Google, Apple, and Spotify. In doing so, DOJ has created an unworkable solution to a non-existent problem.