Archive for January, 2017

@shiraovide: Pandora’s Eyes Are Bigger Than Its Wallet

January 13, 2017 Comments off

Remember the rending of garments by Pandora’s overpaid executive team about how they just couldn’t turn a profit because of the royalties they paid under their statutory licenses?   Statutory licenses allow Pandora to operate without paying minimum guarantees like they will need to do for their much ballyhooed on demand service that is yet to launch.   And remember the standing offer we made to pick any MBA lurking in any business school corridor anywhere in the world to help a company with government mandated price controls on the expense side and over $1 billion in annual revenue turn a profit?

Looks like their secret is out–as Bloomberg’s Shira Ovide writes, Pandora is feeling the burn.  This right before (we suppose) that Pandora launches its on demand music service for which they are serving millions of “address unknown” NOIs on the Copyright Office to stiff songwriters on statutory royalties.  The story from Ms. Ovide is thought provoking, but let’s provoke this thought:  What happens if Pandora can’t pay its statutory royalties at all?

At its current rate of cash burn, then, [Pandora] will exhaust its reserves of ready cash in about 10 months.

What happens to the statutory royalties if Pandora goes bankrupt?  Remember–in bankruptcy, artists and songwriters are known as “unsecured creditors” standing way, way behind Pandora’s creditors such as bond holder Texas Pacific Group.  Of course, it’s probably more likely that Pandora’s exit will be a sale–hopefully before it misses a royalty payment and hopefully for more than the $450 million of cold cash it spent on the misguided acqusition of Ticketfly.

Pandora said on Thursday that it was being savvy about how it lures new subscribers without overspending on marketing and that it was finding more ways to automate advertising sales. The company also said its “commitment to cost discipline” — i.e., its willingness to fire people and pinch pennies in nonessential areas — would allow it to devote funds to new products. Using a customized measure of earnings, Pandora said it expects to do better than the losses forecast by Wall Street analysts. The company still doesn’t expect to be profitable under conventional accounting standards.

The best hope to cure Pandora’s ills is a sale. And that’s why Pandora’s stock moves up mostly at any hints a sale might be coming.

Read the post on Bloomberg



SACEM and IBM Join Forces to Deliver New Global Online Music Copyright Management Platform

January 13, 2017 Comments off

[Editor Charlie sez: What? No blockchain?]

IBM and Sacem, one of the world’s leading cultural and creative collective management organizations, announced today a 10-year strategic alliance to develop URights, a world-class copyright platform on IBM Cloud designed to track and capture the value of online music for both creators and publishers.

via @SACEM and @IBM Join Forces to Deliver New Global Online Music Copyright Management Platform — Artist Rights Watch

Association of American Publishers Names Maria A. Pallante as President and CEO

January 13, 2017 Comments off

The Association of American Publishers (AAP) announced today that the former United States Register of Copyrights, Maria A. Pallante, will succeed Tom Allen who is retiring as President and CEO. Pallante, who will join AAP on January 17, 2017, is widely-known as an intellectual property expert with a distinguished record of public service.

via @americanpublish: The Association of American Publishers (AAP) Names Maria A. Pallante as President and CEO — Artist Rights Watch

Facebook’s Misappropriation Problem Selling Artist Names as Keywords

January 6, 2017 Comments off

“Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

Article 27(2), Universal Declaration of Human Rights

What do Prince, The Beatles, The Chainsmokers, Celine Dione, Maroon 5, Jimi Hendrix and Rev. Martin Luther King, Jr. all have in common?  Each of their names are for sale as advertising keywords on Facebook.  (Although we’ll just look at Facebook today, it’s highly likely that the same is true of Google and other advertising networks that profit from the sale of keywords.)

Why should we care?  Because under the law of many states and of the United States, public figures (and some would say every person) has the right to protect the use of their name and likeness (including images) and often their voice.  This protection is typically called the “right of publicity”.  (Approximately 22 states recognize the right of publicity in some form including Alabama, Arizona, California, Florida, Hawaii, Illinois, Indiana, Kentucky, Massachusetts, Nebraska, Nevada, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.)

It’s best to view the right of publicity as an intellectual property right drawing on but distinct from other intellectual property rights.  The right of publicity is distinct from copyright and is more like unfair competition and misappropriation that are most directly analogous to protections in trademark law.  (A good place to start for further reading is “The Right of Publicity” by Professor Nimmer (19 Law &  Contemporary Problems 203 (1954)) and Professor McCarthy’s treatise “The Rights of Publicity and Privacy” and of course the seminal right of publicity case, Haelan Laboratories v. Topps Chewing Gum, 202 F2d 866 (2d Cir. 1953).)

There is a long line of cases involving misappropriation of the right of publicity in the advertising setting, particularly cases where the infringer knew that the artist did not want to perform in a commercial.  In two well known cases, the advertiser approached the artist to perform on a commercial, the artist declined, and the advertiser got a sound alike singer to invoke the artist’s voice anyway.  (Midler v. Ford Motor Co. 849 F.2d 460 (9th Cir. 1989) (misappropriation of Bette Midler’s voice) and Waits v. Frito-Lay, Inc. 978 F.2d 1093 (9th Cir. 1992) (misappropriation of Tom Waits’ voice.)   The advertisers lost.

Rev. Martin Luther King, Jr.’s image was misappropriated in a similar situation where a company sought permission to manufacture a plastic bust of Rev. King and was denied by the King estate, but did it anyway.  (See Martin Luther King, Jr. Center for Social Change, Inc. et al v. American Heritage Products, Inc. et al 296 S.E.2d 697 (Ga. 1982) and 694 F.2nd 674 (11th Cir. 1983).  The 11th Circuit held for the King estate based on the Georgia Supreme Court’s interpretation of Georgia’s right of publicity including the ability of heirs to assert the rights of a deceased person.

Another case along these lines that involved the misappropriation of a celebrity’s persona was brought by the Wheel of Fortune personality Vanna White (White v. Samsung Electronics America, Inc., 971 F.2d 1395 (9th Cir. 1992)).  The defendant in that case produced an ad that featured a robot that invoked a caricatured version of the persona of Vanna White.  (Query whether “Wheel of Fortune” should have sued as well, but leave that to one side.)

So what does this mean for Facebook?  Well, Bette Midler, Tom Waits, Rev. King and Vanna White should all feel included in the discussion as all of their names are available as keywords for sale on Facebook.  Facebook clearly has significant misappropriation risk from infringing the right of publicity of a host of artists and celebrities, or, one might say a “class” of artists and celebrities (including estates).  How do we know that?

One way we know is because Facebook says it does.  In Facebook’s 2015 annual report Facebook tells stockholders in the Risk Factors (at p. 6):

We are subject to a number of U.S. federal and state and foreign laws and regulations that affect companies conducting business on the Internet. Many of these laws and regulations are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy and data protection, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, personal information, electronic contracts and other communications, competition, protection of minors, consumer protection, telecommunications, product liability, taxation, economic or other trade prohibitions or sanctions, securities law compliance, and online payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of people’s data. Foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.

Misappropriation of the right of publicity as practiced by Facebook is not “constantly evolving”–it’s well settled law.  They are not going to be able to take advantage of the “Because Internet” defense.  Like so many other offline transactions that are replicated online, the essential elements don’t change.  If anything, it’s not even a close case in my view.

They take the artist’s name and sell it without permission and they acknowledge that they have the risk (because their senior management and lawyers know that Facebook is doing it).  And essentially the same language appears in the Facebook annual reports for 2014 (at p. 7), 2013 (at p. 10) and 2012 (at p. 13) which is the first year that Facebook filed a public annual report after its IPO.  I would bet that the Facebook pre-IPO investor reporting to its private company investors probably had the same or similar language.

So they know what they are doing.  And we haven’t even mentioned the moral rights of artists yet.

For a company that is entirely unlicensed on its uses of music, Facebook is starting to look like a blatant infringer of a host of artist rights.  Mark Zuckerberg recently announced he was planning on traveling to the 50 states to see how the 99.999% live.  Before he packs a sandwich for the trip, he should look into his company’s advertising practices–starting with one he acknowledges to his investors.



GhostShip: Mourn the Dead: Fight Like Hell For The Living- Guest Post by Marc Ribot — The Trichordist

January 2, 2017 Comments off

Marc Ribot is an American Musician a member of NYC artists rights group MusiciansACTION Photo by Webb Traverse at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons The initial horror evoked by Oakland’s GhostShip fire is now turning into self questioning and anger at those who placed the victims in harms way. […]

via GhostShip: Mourn the Dead: Fight Like Hell For The Living- Guest Post by Marc Ribot — The Trichordist

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