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Will Congress Bring Songwriters a Lump of Coal or Justice?

October 17, 2017 1 comment

It is axiomatic that as government expands, liberty contracts. Songwriters are among the most highly regulated workers in America, so on the continuum of liberty, guess where songwriters score? Most people are surprised by that unadulterated, and rather bleak, fact. After all, songwriters don’t make anything toxic or build in places they shouldn’t or dump chemicals in a waterway. Songwriters don’t have monopoly power. Songwriters don’t even get to set their own prices—the government largely does that in a very expensive and Kafka-esque process. They just write songs.

Not only are songwriters highly regulated workers and are forced by the government (or to use a term from political theory, “the Sovereign”) to bend a knee, the Sovereign has abdicated the enforcement of the laws protecting songwriters to the songwriters themselves except in rare criminal cases. Not only has the Sovereign failed to afford songwriters the same level of protection as the desert tortoise, the Sovereign actually requires songwriters to enforce the laws themselves. Sounds like a reality show.

So rather than getting even more government, songwriters are due for either getting the Sovereign out of their commercial lives, or if justice fails them yet again, at least getting the Sovereign to actually enforce the law.

Why is this important now? Because the Congress has conducted a “review” of the laws affecting songwriters and it’s possible that the Congress now is about to actually do something in the waning days of the current session of Congress. For songwriters, the holiday season is a good time to remember the most terrifying words in the English language: I’m from Washington and I’m here to help.

The Royalty that Time Forgot

The Sovereign compels songwriters to license their songs in two principal ways: The compulsory license for “mechanical” copies (Section 115 of the Copyright Act) and the rate courts (under a 1941 consent decree for ASCAP, the longest running consent decree in history, and a comparable one for BMI dating from 1964). The government set the mechanical royalty rate for the compulsory license at two cents per song per copy in 1909 and then forgot to raise it until 1976 when in its largesse, the Sovereign raised the rate to 2.75 cents per copy—inflation alone would have put the mechanical at 12 cents in 1976. That shadow of that injustice has dogged songwriters ever since and to this day.

Imagine for a moment if the Sovereign had set any other wage in 1909 and then forgotten to raise it for 67 years.

Today that same rate is 9.1 cents where it was set and forgotten in 2006—eleven years ago. So songwriters live in the shadow of that “minimum” statutory rate for which they never got relief from the Sovereign.

The Current Landscape

The main threats to songwriters from Washington come from one bill and the failed administration of two agencies: The Copyright Office and the Department of Justice. All these threats emanate from what is likely the largest lobbying cartel in history, the “MIC Coalition” an organization created for one purpose in my view: to crush songwriters once and for all. The MIC Coalition seems devoted to fixing prices for songwriters at zero or as close to zero as they can get them as far as I can tell.

The bill in Congress is the proposed Transparency in Music Licensing and Ownership Act (HR 3350) which is fully backed by the biggest of big businesses (MIC Coalition) to the detriment of the smallest of small businesses (songwriters). This legislation would impose yet another formality on songwriters by creating a massive database that would supersede the current copyright registration system for one purpose—denying songwriters the right to sue for statutory damages and attorneys fees in cases of copyright infringement. According to this legislation, if your song is not on the government’s list, then you can’t use the one big stick to drive compliance with the Sovereign’s own rules governing compulsory mechanical licenses.

Why is that? Because you are most likely to be suing a member of the MIC Coalition, or more precisely suing a member of one of the several trade association members of the MIC Coaltion—the DIgital Media Association (or “DiMA” in the logo above). The Digital Media Association is comprised of Amazon, YouTube, Apple and Spotify among others and has long been a stake in the side of the creative community. That’s right—one trade association member of the MIC Coalition represents three of the biggest corporations in the commercial history of the United States.

One alternative to statutory damages would be for the Department of Justice to assume a greater role in the enforcement of the copyright law. But the MIC Coalition has no intention of allowing that. No, no, no. The plan is to create a Gargantuan “gotcha” in order to take away statutory damages and attorneys fees as a right of any copyright owner to sue and replace it with….nothing.

Agency Failures

It is well to remember that the U.S. Copyright Office is a pre-New Deal legislative branch agency that has none of the civil or criminal enforcement powers we have come to associate with post-New Deal regulatory executive branch agencies. While the Copyright Office issues regulations, the Sovereign predominately leaves the enforcement of these rules to creators, publishers and labels to enforce at great expense. This is the one place that the Sovereign seems to want the market to work—the part where the Sovereign abdicates its primary purpose, that of protecting the people. Like I said, the desert tortoise fares better than the songwriter.

The Copyright Office does have power to affect the market by refusing or failing to act, however. For the last two years or so, the Copyright Office has permitted over 50 million and counting “address unknown” notices to be filed on compulsory song licenses using a backwater loophole of the Copyright Act. The loophole deems a song owner to be “unknown” if the owner’s contact information and song ownership is not available in the public records of the Copyright Office. This means that unless you have gone through the expensive and lengthy formality of registering with the Copyright Office for all your songs, you are “unknown”. If a cover recording of your song appears on a digital music service, then rather than track you down before using the song, the service can simply file—at great expense—an “address unknown” notice with the Copyright Office. This has resulted in approximately $5 million in filing fees to the Copyright Office to date according to an estimate from Paperchain.

And who is filing these notices and paying these fees? Google, Spotify, Amazon, iHeart, Pandora—all members of the MIC Coalition price fixing cartel. Think that’s a coincidence? Using this loophole, these corporate giants pay a zero royalty for their compulsory licenses. Hence, the cartel attempts to fix the price for songs at zero or as close to it as they can.

The Copyright Office permits these filings to occur and to my knowledge has raised no objection to it. They are unmovable on this point while they watch songwriters burn down. (I have a longer article on this “address unknown” issue here.)

The Department of Justice is currently engaged in a massive charade called “100% licensing”. This new and abrupt change in the way the DOJ interprets the ASCAP and BMI consent decrees was brought about under the auspices of a former outside lawyer for Google who was installed as a senior official in the antitrust division of the DOJ. What this interpretation means is that on co-written songs, the longstanding practice of each songwriter on a co-write administering their share of the song is thrown out the window. Instead, each songwriter is required to license 100% of the song, including their co-writer’s share. (Recall that Irving Azoff challenged Google by forming Global Music Rights and requiring a separate license for his writers who withdrew from the government-regulated PROs.)

The BMI rate court judge ruled against the DOJ—but the Sovereign is now appealing that ruling. The DOJ’s handling of the situation was so bad that songwriters actually sued the DOJ.

What is to be Done?

First—the DOJ should drop the appeal of the BMI rate court ruling against 100% licensing.  It’s a waste of time and creates substantial hostility among songwriters.

Second—the Copyright Office should stop accepting address unknown filings and refer the matter to the Congress to close the loophole. Digital services could also refuse to post recordings for which they have no publisher information, which is action most likely to produce unknown information from the market.

Most importantly—the Congress should not introduce yet another distortion in the market with some unicorn database that will never work.

As we approach the season of hope, it is well to echo what songwriters and publishers have told Congress for years: Songwriters need more liberty, not less.

The Flaw Behind Zuckerberg’s Universal Basic Income Scam

October 15, 2017 1 comment

I’m from Facebook and I’m here to help….

Royalty deadbeat Mark Zuckerberg has a new scam that goes way, way beyond “Russian” propaganda.  As he told the assembled elites at…where, else…Harvard:

Our generation is going to have to deal with tens of millions of jobs replaced by automation like self-driving cars and trucks.  But we have the potential to do so much more than that.

Stop there for a moment–what exactly does the last “that” refer to?  What is its antecedent?  The automation, the mass firings…those things that the ruling class would address it self to in its interactions with the common people, the hoi polloi, those poor little Epsilons?  Or the drudgery of dealing with the great unwashed?

But he goes on:

Now it is time for our generation to define a new social contract….we should explore ideas like Universal Basic Income to make sure everyone has a cushion to try new ideas…

His new social contract can be summarized thusly:  Bend over.

A “cushion to try new ideas”?  Really?  You mean when you get fired off off a good paying middle class job because you trained a robot to do your job, a robot owned by say royalty deadbeat Zuckerberg, that you feel great about it because you’ve got a “cushion to try new ideas” like not losing your house.

And just who might pick up the tab for these costs directly attributed to automation?  Directly attributed to the profitable robots owned by Zuckerberg, Sheryl Sandberg, Eric Schmidt, Larry Page and Sergey Brin?

Is the proposal that the cost be borne by the corporations that caused the harm?  Or by all the taxpayers to keep the Great Unwashed under control so they don’t burn down Facebook?

And since the royalty deadbeat brought up self driving cars, who is going to pay for the self driving roads for those self driving cars, you know, the “smart highways” or whatever they call them?

These 21st Century Robber Barrons will expect the taxpayer to pay for those smart roads or if the beneficiaries of the infrastructurer will pay, they will expect to own the roads, no doubt.  So the taxpayer will pay for the roads for the driverless cars that create the automation to creat mass firings and so that the taxpayer will pay Universal Basic Income to quiet down the clingers.

And all with the hand wringing and smarmy piety, the whinging of fake philanthropy.

Now that’s a shakedown Silicon Valley Style.

Must Read Post by @miramulholland on the Significance of the Loss of Professional Creators

October 14, 2017 Leave a comment

If you’ve ever been in a job interview for coders, you’ll understand when I tell you that it’s like a cross between the beginning of 2001: A Space Odyssey and the hacking-on-shots employment interview scene in The Social Network that is a crude version of Socrates assaying for gold in your veins if Plato were Don Julio.

 

Whichever simile you prefer, one thing is clear:  hackers value skills.  So when Big Tech and the Silicon Valley shilleries take shots at professional musicians and other creators for being “elites”, it’s actually quite comical.  Not to mention hypocritical.

Miranda Mulholland is one of the most articulate advocates for artist rights.  Her talk at the Economic Club of Canada is among the top essays on the economic realities of being a professional artist in the post-Google creative apocalypse.  In particular, Miranda tells the story of the independent “niche” artist who lacks the big advances from major labels because she creates outside of the Katy Perry-Coldplay-Rhianna style lock.

In her recent must-read post, Digital Revolution Fosters More Hurried, Less Skillful Creative Process Miranda points out the important negative effect of the algorithms that surround us (reminiscent of Cathy O’Neil’s groundbreaking Weapons of Math Destruction) and how an algorithmic life is antithetical to creativity and how creativity is the antidote to the algorithmic life.

It’s unfortunate that Google has actually attacked her in some twisted logic suggesting that supporting professional creators is somehow elitist.  Given Google’s own vaunted personnel practices (for which it is currently being sued), and the smarter-than-thou hacker culture, you would have thought Google would embrace a call for professionalism among creators especially one from a professional creator who somehow manages to make a living in the current algorithmically compromised environment.

 

 

 

Google’s Racketeering Challenge

October 9, 2017 Leave a comment
schmidt senate

Eric Schmidt confers with some confused witnesses

According to a recent civil lawsuit, a plaintiff is suing Google for violating the racketeering laws (aka “RICO”).  (Attia et al v. Google et al, Cal. Sup. Ct. (Santa Clara) Case No. 1:14-cv-270143.)  I’ve been waiting for this since 2012 when it dawned on me one day that Google is running a criminal enterprise (see “Google’s Guide to RICO“).  So what does this RICO business mean?

If you’re even occasionally exposed to contemporary crime movies you’ll have heard of “RICO”.   The “RICO” statute is the acronym for the Racketeer Influenced and Corrupt Organization Act which allows a criminal prosecution against the leaders of an “ongoing criminal enterprise”, particularly where the leaders of that organization order others to commit crimes, often called “RICO predicates”.  The loophole was that leader didn’t do the crime, but ordered or assisted others in committing it.  (Recall the Senate hearings in The Godfather II, and see the first major RICO criminal case, US v. Scotto, 641 F.2d 47 (1980) for those reading along.)  You know, that thing that happened with those guys down at that place we used to go back in the day.

Often overlooked is the civil cause of action that may be brought either by the government or by private citizens under both the federal RICO statute and the 33 or so state law versions of RICO.  This allows private citizens who have been harmed by corrupt organizations to sue for treble damages and attorneys fees.  The Department of Justice civil RICO manual is also instructive for government action under the statutes:

Civil RICO, 18 U.S.C. § 1964(a), authorizes potentially intrusive remedies, including injunctive relief [typically sought by the government], reasonable restrictions on defendants’ future activities, disgorgement of unlawful proceeds, divestiture, dissolution, reorganization, removal from positions in an entity, and appointment of court officers to administer and supervise the affairs and operations of defendants’ entities and to assist courts in monitoring compliance with courts’ orders and in imposing sanctions for violations of courts’ orders.

RICO remedies are ample and were intended to be applied against white collar criminals as well as organized crime bosses.  The statute was drafted by Professor G. Robert Blakey–remember that name–now the William J. and Dorothy K. O’Neill Chair in Law Emeritus at the University of Notre Dame School of Law.  As Professor Blakey told Time magazine:

“We don’t want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas.”

Or whose collars are white, have Ivy League diplomas and live in Silicon Valley.

According to reports, Professor Blakey is advising Mr. Attia in filing an amended complaint in Mr. Attia’s case against Google alleging RICO violations in addition to the core claims of bad behavior by Google against Mr. Attia (The Verge has a good summary of the pre-RICO filing here).

What is particularly interesting about the RICO filing is that it turns on the RICO intellectual property theft predicate (at p. 28):

1. Defendants [meaning Google and certain Google executives and affiliates] have a long history of theft of others intellectual property which continues to date and which constitutes a pattern of racketeering activity 

112.  Defendants have engaged in a pattern of racketeering activity, as defined in 18 U.S.C. § 1961(5), through the repeated, relentless, and purposeful theft of other companies’ IP and trade secrets. 

113. Defendants have engaged, and continue to engage, in a pattern of activity whereby Defendants: 1) seek out inventors; 2) promise such inventors that Google will invest in, partner with and/or seek to acquire a license for any proprietary inventions of the investor; 3) sign a non-disclosure agreement (NDA) with inventors; 4) upon inducing inventors to reveal trade secrets and other confidential information, Google disregards the NDA and misappropriates the trade secrets; and 5) Google then subsequently attempts to box-out the victim inventors from the market by filing numerous patent applications which result in the unauthorized disclosure of the inventors’ trade secrets and the subsequent granting of a monopoly on the technology by the issuance of the patent. Where no NDA is required, Google has simply copied and criminally stole other inventors’ copyrights….

115. Google, Inc. and its executives—among others—have repeatedly had criminal and anti-trust investigations brought against them by governments around the world for their repeated theft. For example:

• Google was fined $500 million by the U.S. government for its role in the promotion of piracy through illegal online pharmacies;

• In June of 2017, Google was hit with a $2.7 billion fine from the European Union for its anti-competitive conduct in skewing search results. Google is still under investigation for its conduct with regards to its AdSense and Android software and business model which may lead the company to face even further fines;

• The U.S. Federal Trade Commission concluded that Google “used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals”;

• Google was charged by the FTC with engaging in deceptive privacy practices for stealing and publishing consumers email contact lists and was ordered to submit to regular independent privacy audits for the next 20 years;  and

• Google was investigated by numerous countries when it was learned that Google’s street-view illegally stole persons’ wifi information, passwords, names, addresses and emails among other personal information….

c. Theft of others intellectual property is the Google and Flux Factory Enterprise’s regular way of doing business 

153. Violations of RICO predicate acts (e.g. theft of trade secrets and criminal infringement of copyright) are the regular way of conducting Defendants’ businesses. The previous non-exclusive list of acts of racketeering evidences a pattern of racketeering, the acts of which are related, not isolated, and continue to date by threat of further operation of Defendants’ business and through Defendants continued use of already stolen trade secrets for profits. Based on all of the following, Defendants have demonstrated that their regular way of doing business is through racketeering (e.g. by theft of trade secrets and criminal infringement of copyright) such that they are liable for harm done to others by their acts of racketeering under the Federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq.

6. Larry Page, Sergey Brin, Google, Inc., and its associates have participated in a criminal enterprise 

154. Each Plaintiff is a “person” within the meaning of 18 U.S.C. §§ 1961(3); 1964(c).

155. Each Defendant is a “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1962(c)….

168. Plaintiffs hereby incorporate in the pattern of racketeering shown in ¶¶ 112–153. This pattern of racketeering evidences an intent by Defendants to continuously conspire to make income from acts of racketeering (e.g. theft of trade secrets) and to invest and/or use those funds within the greater Google Enterprise.

169. Moreover, Google, the Individual Defendants, and Flux Factory, Inc., conspired with certain venture capital firms (Does 1, 2, and 3) in order to assist in the development of the Flux Enterprise.

Sound familiar?  I’m not a RICO expert, but the RICO portion of the complaint seems to be very well-pleaded and a systematic application of the law and facts.  It’s also important to remember that Eric Schmidt, Larry Page and Sergey Brin have absolute control over Google (and Alphabet, the holding company) through Google’s bizarre voting rules as explained by the Motley Fool:

Google prevents activist investors from pressuring the company to do anything via its share class system.

There are currently three classes of Google stock — A, B, and C shares. Everyday investors can only buy A or C shares on the open market. A shares (GOOGL) are entitled to one vote, while C shares (GOOG) are entitled to zero votes. The C shares split off the original class A shares last year during its 2 for 1 split. Google uses A shares to pay its employees and fund acquisitions. Meanwhile, B shares, which are entitled to ten votes each, are only owned by Google’s founders and their inner circle.

Simply put, B shares give Google’s top brass the power to defend against any shareholder revolt. Shareholders united against that plan at a previous meeting, casting 180 million votes in favor of the elimination of share classes. Larry Page, Sergey Brin, Eric Schmidt and others crushed the proposal with 551 million votes.

Not only does the voting structure mean that insiders can block any shareholder revolt, it also means that insiders are totally responsible for any of the company’s bad acts.  That may explain why Eric Schmidt essentially “took the 5th” under questioning by Senator John Cornyn about Google executives’ narrow escape from criminal prosecution for violating and conspiring to violate the Controlled Substances Act.  Schmidt later claimed neither he nor his legal team “understood” the Senator’s questions and were “confused.”

This is, of course, another reason why Google was sued by its stockholders after insiders authorized the payment of $500,000,000 of the stockholders’ money as a fine for the bad behavior of insiders such as Larry Page.  In fact, the U.S. Attorney for Rhode Island told the Wall Street Journal that Larry Page was directly implicated in profiting from illegal drug advertising–which may have something to do with why the RICO claim refers to the $500,000,000 fine.  That stockholder settlement has one bizarre requirement that may shed some light on the RICO claims:

2.7 Criminal Activity Reporting

Google’s General Counsel shall be responsible for reviewing every situation in which a  Google employee is convicted of a felony under U.S. federal or state criminal statutes in connection with his employment by Google and for reporting to the Board (or an appropriate committee of the Board) with respect to that violation. Presumptively, any employee convicted of a felony under a U.S. federal or state criminal statute in connection with his employment by Google shall be terminated for cause and receive no severance payments in connection with the termination. If the General Counsel determines that such termination is not warranted, he shall so recommend to the Board (or an appropriate committee of the Board), which will act upon his recommendation in its discretion.

Leave aside how strange it is to have such a requirement in the settlement of a shareholder lawsuit in the first place–if it turns out that any of the Google insiders have actually been or get convicted of felonies as part of the racketeering case, the shareholder settlement will require the company to terminate that insider’s employment and  that will be that.  Aside from the whole money laundering for ISIS thing.  But ISIS is another story.

Where does it go?  Before you laugh it off, remember this:  If you had told a room full of MBAs in the mid 1980s that in a few years time Master of the Universe Michael Milken would be in prison and Drexel Burnham Lambert would be bankrupt, you would have been laughed out of the room as a quixotic buffoon.  But on March 29, 1989, Michael Milken was charged with 98 counts of racketeering and fraud and was facing life in prison.  That’s right–racketeering under the RICO Act.  Milken copped a plea to six lesser included crimes of securities and tax fraud, paid a $600 million fine and served 22 months in a federal pen on a 10 year sentence.

mike252520milken

He’s still rich, just not as rich as he was.  But Drexel never would have claimed the “don’t be evil” brand.  Even though unlike Google and the drug case, Milken paid his fine himself.  Drexel’s stockholders didn’t pick up the tab.

Of course, Milken was being prosecuted criminally and Attia is a civil case.   Different proof standards, no doubt, and different remedies, but otherwise, making a civil RICO case and a criminal RICO case are not wildly different.

Watch this space.

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RIP Tom Petty

October 4, 2017 Leave a comment

The Shelter Records office in Hollywood was in the 5000 block (a very unfashionable block) of Hollywood Boulevard.  When you went in the door the first thing you saw was a huge portrait of Tom Petty.  I remember thinking that was what every record company should be like.

Holding the Line on Tradeoffs for Statutory Damages

October 1, 2017 1 comment

It is very likely that we will hear about a move to make significant amendments to the Copyright Act at some point before the beginning of campaign season in 2018.  There are a high number of copyright-related bills that have been introduced in the House of Representatives in the current session, so brace yourself for an “omnibus” copyright bill that would try to cobble them all together Frankenstein-style.

A Frankenstein omnibus bill would be a very bad idea in my view and will inevitably lead to horse trading of fake issues against a false deadline.  Omnibus bills are a bad idea for songwriters and artists, particularly independent songwriters and artists, because omnibus bills tend to bring together Corporate America in attack formation.

MIC Coaltion

The MIC Coalition

When you consider that Google and Facebook are part of Corporate America (not to mention Apple), the odds of the independent songwriter and artist, but really any songwriter and artist, just holding onto the few crumbs they currently have crash and burn.  The odds of actually righting wrongs or–God forbid–getting rid of the legacy consent decrees that protect Big Business vanish into the limit.

Of course, what certain elements of Big Tech would really like to do is push all licensing of music into one organization that they could then control through consent decrees or other government regulation and supervision by exercise of the massive lobbying and litigation muscle of the MIC Coalition and DIMA.  While I realize that may actually sound anti-competitive, it is typical of monopolists to use the antitrust law to destroy competition (as Professor Taplin has taught us).   That’s certainly what has happened with the PRO consent decrees–reduced competition and lower royalties.  Not to mention such a licensing organization would collapse under its own complexity.  This is probably why the Copyright Office envisioned a “Music Rights Organization” that would combine the PROs and mechanical rights licensing but provided the relief valve of an new opt-out right so that songwriters could escape the madness.  (“Under the Office’s proposal, except to the extent they chose to opt out of the blanket statutory system, publishers and songwriters would license their public performance and mechanical rights through MROs.”  Copyright Office Music Licensing Study at p. 9)

If you want some ideas about the kinds of property rights that Big Tech wants the government to take away from songwriters and artists, just read Spotify’s most recent filing in the songwriter litigation in Nashville where their lawyer tries to define away mechanical royalties (unsurprisingly, the lawyer is a long-time protege of Lessig).  Why?  Because they are being brought to a trial by their peers on statutory damages for copyright infringement and the potential for having to pay the songwriters’ lawyers due to a statutory right to recover attorneys fees.  (Statutory damages for copyright infringement has long been an attack point of Big Tech and we get a preview of where they want it to go in Pamela Samuelson’s “Copyright Principles Project”–essentially abolished.)

One way or another, the Big Tech cartel (which includes all the companies in the MIC Coalition and MIC Coalition member the Digital Media Association which itself has members like Spotify and, curiously, Apple) is very likely going to go after statutory damages and try to create yet another “safe harbor” for themselves with no burdens–a “friction free” way to infringe pretty much at will because the actual damages for streaming royalties will be pennies.

If the cartel succeeds in eliminating statutory damages and attorneys fees awards, this will truly make copyright infringement litigation toothless and entirely eliminate the one tool that independent songwriters and artists have to protect their rights.  It will neuter massive copyright infringement as alleged in all of the Spotify class actions, not to mention cases like Limewire.

Oh, you say–did you just switch from song copyrights to sound recording copyrights by referencing Limewire?  Yes, I did–because that’s exactly what I predict the DIMA and MIC Coalition have in mind.  Why do I say this?  Because that’s what these companies are backing in the radioactive Transparency in Music Licensing and Ownership bill (HR 3350).  And if you blow up all the current separate bills into one omnibus copyright “reform” bill, the pieces may reconstitute in forms you didn’t expect.

But realize that in almost all the many copyright bills currently before the House of Representatives, the other side is trying to bootstrap unjust harm into a negotiation chip to shakedown creators.  And it’s not just pending legislation–the shakedown is especially observable with the millions of notices of intention to rely on statutory mechanical licenses for songs filed with the Copyright Office.  That’s a nice song you got there, it would be a shame if something happened to it.

Big Tech’s basic negotiation method is to rely on a loophole, bootstrap the loophole to build up the pressure on people who can’t fight back, then run the shakedown to get concessions that should never be made.  This is what Google has done with the DMCA and is the same shakedown tactic on mass NOIs taken by Google, Amazon, Pandora, Spotify, and others–but curiously not Apple.  Somehow Apple has made it work with the most successful digital music platform in history.

Let’s go down the issue list:

Bootstrapped Issue Fix Bill
Pandora and Sirius stopped paying artists for digital royalties on pre-72 recordings—because of loophole based on federal copyright protection for sound recordings Start paying artist royalties on classic recordings made before 1972 CLASSICS Act
Terrestrial radio created a loophole so they don’t have to pay performance royalties to artists on sound recordings; stop artists from opting out Start paying artist royalties for broadcast radio (with protection for noncommercial and small broadcasters) Fair Pay Fair Play Act, PROMOTE Act
Big tech suddenly started using a loophole to file millions of “address unknown” NOIs with Copyright Office after indie songwriters filed class actions Require Big Tech to use existing databases to look up copyright owners or don’t use the songs or recordings. None
No “central database” that has all songs (but no requirement to actually look up anything), requires double registration If songwriters and artists don’t register, then no statutory damages Transparency in Music Licensing and Ownership Act

Blown up into parts:

–Avoid raising mechanical royalty rate or paying artist royalties on terrestrial at all

–How to use the lack of the mythical “central database” as a bright and shiny object to avoid paying royalties and shirk liability for not doing copyright research, an absurd position for companies that owe much of their wealth to their unprecedented ability to profile people around the world and “organize the world’s information”

–Avoid paying statutory damages

–How to avoid paying royalties that should have paid anyway (pre-72, terrestrial, mass NOI) through distorted interpretations of the law or even safer harbors

–Avoid an obligation to actually look up anything (new databases)

–Use any work they want if all they have to pay is actual damages and no attorneys fees

–Keep songwriters and artists from opting out

–Create biggest black box possible

It should be apparent which way Big Tech is trying to push the creative community.  It is important for creators to understand that any legislative concession that the MIC Coalition or DIMA win against songwriters or artists they will then turn around and try to extract in the next shakedown–authors, photographers, film makers, all the copyright categories.

It is in everyone’s interest to support a healthy creative community that will continue to engage fans and do enough commerce to create value for the tech monopolies.  But–it is crucial to understand that it doesn’t work the other way around.

The purpose of the creative community is not to create value for tech monopolies.  It is to support compelling artists and help them engage with fans, and sometimes it is art for art’s sake alone.  If those artists throw off some commercial gain that the tech monopolies can turn to profit themselves, fine.  But creating profit for these monopolists is not the goal of artists.

Instead of creating fake problems to try to extract concessions that further undermine creators like offering ice in winter, the tech monopolies like Google, Spotify, Amazon and Pandora should identify real problems and work with us toward real solutions–and not a loophole-driven shakedown.

 

 

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