Yesterday Congressman Jerrold Nadler (D-NY) (Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet) and Congressman Marsha Blackburn (R-TN), (Chair of the Energy and Commerce Subcommittee on Communications and Technology), along with Judiciary Committee Ranking Member John Conyers, Jr. (D-MI), Chairman of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet Congressman Darrell Issa (R-CA), Judiciary Committee Member Congressman Ted Deutch (D-FL), and Congressman Tom Rooney (R-FL) re-introduced the Fair Play Fair Pay Act.
This is a purposeful mix of bi-partisan support that’s so refreshing in the current climate. What brought these Members together was a desire to modernize the U.S. rules governing music licensing for both digital and terrestrial radio broadcasts. Fair Play Fair Pay brings justice to the artists and musicians whose performances are exploited every second of every day on terrestrial radio with no compensation.
Not only would FPFP disrupt the antiquated legacy rules, it would plug the unintended consequences that has spawned seemingly endless litigation and commercial disruption. The new bill would establish a performance right and royalty for broadcast radio (with suitable protection for noncommercial stations), give guidance to courts that Congress recognizes that pre-72 recordings should attract a royalty like any other recording, and protect artists and producers for their share of statutory language while making a clear statement that nothing in the bill is intended to reduce payments to songwriters.
Here is a link to the prior version of the bill from the last session of Congress (HR 1733), and here is the summary of the new bill from Congressman Nadler:
The Fair Play Fair Pay Act would:
Create a terrestrial performance right so that AM/FM radio competes on equal footing with its Internet and satellite competitors who already pay performance royalties. This would resolve the decades old struggle for performance rights and ensure that—for the first time—music creators would have the right to fair pay when their performances are broadcast on AM/FM radio.
Bring true platform parity to radio so that all forms of radio, regardless of the technology they use, pay fair market value for music performances. This levels the playing field and ends the unfair and illogical distortions caused by the different royalty standards that exist today.
Ensure terrestrial royalties are affordable capping royalties for stations with less than $1 million in annual revenue at $500 per year (and at $100 a year for non-commercial stations), while protecting religious and incidental uses of music from having to pay any royalties at all.
Make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use, while we closely monitor the litigation developments on this issue.
Protect songwriters and publishers by clearly stating that nothing in this bill can be used to lower songwriting royalties.
Codify industry practices streamlining the allocation of royalty payments to music producers.
Ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license.
If you’ve been following the YouTube advertising debacle, you may have seen reports that YouTube is planning on offering discounts (aka refunds) to the advertising accounts it burned by showing ads on terror, hate and other videos in violation of Google’s promises (aka contracts) with those advertisers. What kind of videos would those advertising discounts be on, you may ask?
“Premium content”. Also known as the official music videos.
So why is YouTube having this problem? Because they forgot the basic rule of advertising–context is everything. You may be able to target a user based on the goals of your advertising client, but if the video against which your ad is published is simply awful, the context damages the brand. You know, like brand sponsored piracy that was under such discussion with SOPA, aka the apotheosis of bullshit.
That’s why YouTube promised not to serve ads in those places in the first place.
What’s intriguing about the advertisers’ problems with context on YouTube is that there is one place on YouTube where accounts can get only premium videos. That’s called Vevo (a joint venture of Sony, Universal, Warner, Abu Dhabi Media…and, oh, yes, Google).
Vevo’s Kevin McGurn (head of sales) posted a reminder about this to advertising accounts. In a nutshell:
With over 350,000 pieces of content, Vevo makes up less than 0.5% of all videos on YouTube, yet according to data from comScore, 43% of YouTube’s monthly audience is watching Vevo content. With Vevo content, a brand can more effectively target where, when, and what it associates with in reaching an audience on YouTube. Vevo’s content is not UGC, it’s premium, licensed, and professionally produced, with an enormous and unique global reach. In fact, when we looked at an average video buy on Vevo and YouTube, we saw less than 10% duplication across the audiences reached.
The content is vetted through multiple layers of quality control to ensure the safest environment possible for advertisers including:
- Automatic categorization if the word “explicit” is in the title or content tags.
- Manual categorization if the content includes any of the following:
- Vulgar language
- Violence and disturbing imagery
- Nudity and sexually suggestive content
- Portrayal of harmful or dangerous activities
What this categorization process does is give brands greater transparency into where and how their campaigns run, and the ability to customize how they target. With Vevo, a client’s advertising only runs on premium content, and can be targeted specifically to over 55,000 artists in our catalog. Our customers also have the option to exclude explicit content. Overall, we believe our clients are better served in the safer environment that Vevo offers on YouTube and other platforms. This approach allows them to maximize reach and minimize risk as they tap into the enormous audience consuming music videos online.
Or as Charlie Daniels might say, that’s how you do it, son.
As MTP readers will recall, Representative Jerry Nadler has been a true voice for artist rights in Congress, particularly on artist pay for radio play. He was an early fan of the #irespectmusic campaign and took time to speak at the first #irespectmusic show at the Bitter End in New York.
Rep. Nadler introduced the Fair Play, Fair Pay bill in the last session of Congress. Fair Play Fair Pay would have established a performance right and royalty for terrestrial radio and fixed a number of other hangnails. The bill was, of course, met with fierce opposition by the National Association of Broadcasters and Big Tech, which resulted in the formation of the MIC Coalition–to stop fair pay for creators.
After the MIC Coalition formed to stop his legislation, I was, frankly, wondering if he’d come back for more to fight against companies with over $2 trillion in market cap like Google, Pandora, Clear Channel (now iHeart) and crucially multiple trade associations that themselves represent trillions more.
But today he is back! Rep. Nadler has reintroduced the Fair Play, Fair Pay bill and we keep the fight for fundamental fairness going. And Rep. Nadler is joined by a bi-partisan line up of co-sponsors with other long time supporters of the creative community like Representatives John Conyers, Marsha Blackburn, Darryll Issa, Ted Deutch and Tom Rooney.
None of this would be possible without the tremendous outpouring of support for artist rights from music makers and music lovers across the country–and indeed around the world. Because as a great man once said, things are only impossible until they’re not.
That support is measured many ways from the 14,000 of you who signed the #irespectmusic petition, to the thousands of you who read and shared posts by Karoline Kramer Gould, Janita, Blake Morgan, David Lowery, Mark Ribot, East Bay Ray and the growing number of voices demanding that the U.S. joyfully turn the page on this historic abnormality and the crony capitalists at the MIC Coalition. All of you who created and follow the #irespectmusic groups in Buffalo, Athens, Austin, Nashville, New York, Minneapolis, Pittsburg and Los Angeles. All the students at schools like Cal State Chico, NYU, American, Georgetown, Syracuse and Temple.
The musicFIRST coalition and Executive Director Chris Israel also deserves a huge vote of thanks for their efforts at getting this bill introduced. We’re all looking forward to working closely with Chris Israel and his team to get this passed. You haven’t stopped believing this can happen and neither have they.
This all comes down to a simple concept:
We will be back with more as the cause moves forward, but we couldn’t ask for better champions in the Congress to fix these glaring loopholes: fair pay for airplay and paying all artists regardless of whether the recording was made before or after 1972.
You can send Rep. Nadler a message @repjerrynadler, more info to follow.
This is a joyful moment, so let that joy become enthusiasm as we all pull together to get this done. We don’t stop until we win.
I asked Blake Morgan for his thoughts:
The hard work of thousands upon thousands of music makers is paying off. That work––in classrooms, at concerts, at rallies, on the street, online, with petitions, and on Capitol Hill––has now brought us closer that we’ve ever been to winning fair pay for American artists when their work is played on the radio. The “Fair Play Fair Pay Act” would ensure all music makers are paid fairly at all forms of radio. Music is one of the things America still makes that the world still wants. The people who make that music should be paid fairly for their work.
When is an “ad credit” actually a refund? As Chris wrote on MusicTech.Solutions, Google advertisers should be entitled to refunds stretching back years for Google’s failure to live up to its promises to protect advertisers from their ads appearing in terror videos.
According to multiple sources including the London Times, the UK’s Solicitor General floated the possibility that Google executives may face criminal prosecution for revenue share agreements with terrorist supporters posting videos on YouTube that Google monetized with advertising. So not only would Google be in breach of its promises to advertisers, Google might also have breached the UK’s terror laws, money laundering statutes, or committed the usual list of lesser and included crimes.
Google could be prosecuted under anti-terrorism legislation if it fails to remove illegal content from its YouTube video platform, ministers said yesterday.
Robert Buckland, QC, the solicitor general, said that the internet giant could be criminally liable if it was found to have “recklessly” disseminated videos posted by extreme groups such as National Action, a far-right group proscribed as a terrorist organisation in December.
Mr Buckland also revealed that the government was considering adopting a German law which would allow huge fines to be levied on social media companies that failed to crack down on hate speech and illegal content.
Before you either snicker or drool at the idea of Google executives being frog marched out of their palatial offices in handcuffs and leg irons, remember a few of the examples of corporate crooks and just how long it took to actually get them into the pokey. But also remember this–if you had told a room full of MBAs in 1985 that in a few years time Drexel Bernham Lambert would be bankrupt and Michael Milken would be in prison, you would have been laughed out of the room.
And yet it happened.
Also remember Google came very close to criminal prosecution for very similar failures with the sale of illegal drugs even under the auspices of the very pro-Google administration of President Obama. The Department of Justice allowed Google to pay a fine of $500,000,000 under a non prosecution agreement to stop a Rhode Island grand jury from indicting Google executives–and the U.S. Attorney leading the investigation said that “[Google CEO] Larry Page, “knew what was going on.” I’m sure that deal had nothing to do with the relationship between Google lawyer and long-time Washington insider Jamie Gorelick and then Attorney General Eric Holder, not to mention Schmidt’s own relationship with President Obama.
Google was so apprehensive about their executives exposure to criminal liability for violations of the Controlled Substances Act that Google’s Eric Schmidt took the Fifth on questions about illegal drug advertising posed by Senator John Cornyn in a Senate investigation into Google. (Princeton grad and all-round smart guy Schmidt later claimed he was “confused” by one of the most easily anticipated questions from Senator John Cornyn. Easily anticipated and easily prepared for by Google’s legal team, remembering the crime/fraud exception to the attorney-client privilege).
Morgan Stanley analyst Brian Nowak inadvertently put his finger on another source of potential criminal liability for Google executives, including Eric “RICO suave” Schmidt himself, in a Barron’s interview:
[T]he actual threat to Google revenue is low.] That said, as long as GOOGL addresses these [advertising] issues, we put a low probability on this materially impacting GOOGL’s near-term results. 3 reasons.
First, advertisers who have pulled their advertising dollars from GOOGL are only pulling ad revenue from YouTube and the Google Display Network.
Second, we estimate these businesses in aggregate make up 21% of GOOGL gross revenues (with YouTube 12%) and 10% of net revenue. Even if 10% of this revenue went away (which would seem draconian) it would only impact GOOGL’s net revenue by 1%.
Third, we believe Google’s revenue is diversified across millions of clients – with the top 100 ad spenders likely representing less than 20% of total ad revenue – given the strength of its core search product.
GOOGL stock isn’t expensive (17X ’18 adj EPS for 22% ’16-18 EPS growth) and so the extent to which GOOGL is pressured over the coming days/weeks we would recommend buying the stock. We remain [overweight] on GOOGL with a $1,000 [price target].
There’s a whole lotta “ifs” in that quote, most of which assume that the status quo is static and not dynamic–meaning that the only thing that changes is the really huge accounts pulling out, a kind of “anchoring bias.”
That would leave the bottom 80% of “ad spenders” to continue advertising at the same rates either because they don’t care about their ads appearing on hate videos, they aren’t influenced by big brands jumping ship, or, more likely, they have nowhere else to go because their business is dependent on Google’s advertising monopoly. Those people are also known as “the suckers”.
And you don’t suppose that Google would have reached out to analysts to try to keep them from downgrading the stock, do you? Because that never happened before.
Whatever the case, the one thing that we know is that Google has been sharing revenue with some pretty unsavory characters and Google knows who they are, where they got paid, probably took a tax deduction for those payments and may well have filed an IRS form 1099 or otherwise reported to a local tax authority. If HMRC comes knocking, they may well find some rabbit holes worth going down.
According to the Daily Mail, the Solicitor General said:
‘There is an offence of recklessly disseminating this material, and the criminal law is there is a clear boundary beyond which they should not stray.
‘I think the legislation is clear. It is my hope and expectation that these organisations will indeed come to heel and obey the law but the law is there if necessary.’
Mr Buckland warned Google that the 2006 Terrorism Act could apply to companies as well as individuals.
The criminal side of Google’s business could become very important. I would assume that if the UK Solicitor General is talking about it, an investigation has already started.
“Why does Rice play Texas?”
President John F. Kennedy, the “Moon Speech” Sept. 12, 1962
If you’ve been aghast at the reporting on Google’s advertising problem, it’s important to distinguish which is more shocking–that they did it, that they got caught, or that anyone thought it serious enough to report on. Because it is an entirely predictable problem.
We wrote about the problem on MTP starting around 2012 or so with our coverage of the beginning of “programmatic trading” (“A New Meaning for Real Time Bidding: An artist’s guide to how the brands and ad agencies profit from advertising supported piracy“) with a link to this graphic from Advertising Perspectives post titled “Are Ad Exchanges and Real Time Bidding the Next Big Thing” (http://www.advertisingperspectives.com/adblog/media-technology/are-ad-exchanges-and-real-time-bidding-the-next-big-thing/). The 2017 answer to that rhetorical question asked five years ago is obviously “yes”:
The issue for Google is that ads are served to users and not to the websites that share the revenue. As the Wall Street Journal reported today:
When marketers or advertising agencies buy ads from Google and other online ad providers, those ads are typically targeted to people with certain interests or demographic profiles. In other words, they are buying a target audience, not space on particular websites. It is up to Google to target ads at the desired people. Even when ads appear on sites and videos marketers don’t want to be associated with, there’s every chance they’ve been delivered to people matching the desired profile.
The problem for ad networks utilizing this method is that when it comes to advertising, the context is everything. (That’s why hundreds of the biggest brands in the world are bailing on YouTube.)
Just because you can target the audience doesn’t give much value if the context is wrong. Even though the brand may not technically be buying space on particular websites, Google is serving the ad to an ad publisher which is why ads for certain goods seem to follow you around from site to site in Google’s vast network. (Which is also how Google knows who to share the revenue with.)
In the case of YouTube, Google is serving the ad to itself through its own network–so Google has about as much control over the context as it seems likely anyone could have.
Yet Google is telling brands (and everyone else who will listen) that it’s just too hard to deliver both targeted users and acceptable context. So is everyone just supposed to give up and let Google make the money because winning is hard and Google has a monopoly on digital advertising?
Why does Rice play Texas?
(by Chris Castle)
@thetrichordist: Timely Reprint: Do You Want Your Music Alongside Hate Rock Songs? Artist Face YouTube Music Dilemma
In light of the Google/YouTube boycott by brands whose ads have appeared next to hate speech. We thought we’d reprint this piece from November 2014!! Forget exploitative pay from Spotify! Do you want your music on YouTube Music? Will you be alongside Hate rock songs? Jihadi Recruitment Music Videos? Probably. YouTube is full of this.