Archive for March, 2018

SXSW Panel on Music Modernization Act’s Reachback Safe Harbor

March 17, 2018 Leave a comment

I was fortunate to moderate an excellent panel at the SXSW Continuing Legal Education seminar this week.  Our topic was “The Future of Mechanical Licensing in the U.S.”  Little did we know when the panel was booked in September that this would be such a hot topic following the introduction of the deeply controversial Music Modernization Act on December 21.

One of the legal process questions the panel discussed was the MMA’s “reachback” safe harbor that retroactively limits infringement claims filed after January 1, 2018 without regard to when the MMA’s blanket license is actually available.  The timing of this is particularly odd given the fact that the MMA was announced on December 21, 2017 and a public version of the bill was not available until mid-January.  I’m willing to be educated on this, but I don’t believe any of the public messaging on the legislation from either the Congress or the supporters of the MMA ever mentioned this reachback safe harbor.   (See, e.g., the December 26, 2017 summary of the bill on Rep. Ted Lieu’s site which does not mention the Jan 1 date.)

If Wixen Music Publishing hadn’t found a draft non-public version of the bill, they would not have known of the proposed January 1, 2018 deadline until after that date had passed.  It was Wixen’s filing on December 29, 2017 that really informed the industry of the safe harbor because the story got attached to the press push behind Spotify’s IPO/DPO announcement which pushed the story in earned media.

Litigators in the panel meeting room were mystified by how this reachback safe harbor would work procedurally.  If you have a ripe claim (such as someone who had a claim against Spotify that arose after the June 26, 2017 cut off of the Ferrick class action but before the January 1, 2018 safe harbor deadline) and you sue after January 1, 2018, if the MMA is enacted after you sue, what happens?  You have to bet that the DIMA companies will raise the safe harbor as a defense, but should they win on that point?  Should the applicable court then bar recovery for statutory damages and attorneys fees?

Nobody knew and my bet is that nobody knows.  It was comforting to have a group of lawyers come to the same conclusion I did–the MMA safe harbor is Kafkaesque at best.

You Can’t Find What You Don’t Look For: Spotify May Not be the Only Source for Aaliyah Bootlegs

March 15, 2018 Leave a comment


Vanessa Okoth-Obbo’s eye-opening and must-read post about possible Aaliyah bootlegs on Spotify confirms a suspicious looking trend on digital music services–bootleggers finding another way to profit from lax policing by the “saviours of the music business” like Spotify.

As Vanessa writes in Factmag:’

Aside from her 1994 debut Age Ain’t Nothing but a Number, most of Aaliyah’s music has never officially been available on major streaming platforms. Ola [a fan Vanessa interviewed for the story] added ‘More Than A Woman’ to Old School Hip-Hop via the album R&B Divas (International Version), one of two compilations with the same title released simultaneously by, itseems, Universal Music International in 2007. While listening to the playlist from his phone last month, ‘More Than A Woman’ came on and Ola idly tapped the song’s title, something that normally takes the user to the source album. But instead of R&B Divas, which features music from artists like Rihanna and Amy Winehouse, Ola says he found himself looking at the full tracklist for what appeared to be a bootleg version of Aaliyah….

The sophistication of methods for getting songs onto the platform in the first place accounts for some of this. Spotify has agreements with most major labels who, in turn, handle the process for their signed artists, and an adjacent economy of content aggregators has sprung up to assist those with no direct label backing. Distributors like CD Baby and TuneCore help independent artists put their music on the leading digital services and collect any royalties resulting from streaming or sales, for varying fees.

It’s highly probable that the Aaliyah albums were bundled in via a similar third-party service…

Taking advantage of his Spotify Premium membership, Ola moved quickly to download his favorite Aaliyah songs to his device while he could. In a blunt reading of his action, it represents money out of someone’s pocket — business is business. Still, the chances of a fan turning down a chance to engage with their idols’ work are slim, in any era or arena.

That leaves Spotify, and whoever is responsible for uploading the Aaliyah albums without permission, open to scrutiny. For Gary Pierson, the matter is clear cut: a service is liable for what it hosts. “This can get more nuanced in the case of ‘user generated content’ such as Youtube videos, but for the streaming services it’s pretty clear,” he summarized. The streaming behemoth has a lot on the line: Spotify recently moved to go public, filing for a direct listing on the New York Stock Exchange in a money-generating step that some analysts have deemed unconventional. While the move could bring in much-needed capital to help the company resist copyright lawsuits (to which they are no stranger), a music streaming service cannot risk the stain of failing to protect artists’ interests…

Well…that ship has sailed.  We all know Spotify has demonstrated a lack of control over what’s on its systems for songs, and it increasingly looks like all of the services have fallen down on making sure that there’s no bootlegs in their catalogs.  So I ran the name “Aaliyah” through the SX Works NOI Lookup to see what came back–because if there’s no license for the sound recording, they can’t get an compulsory license for the song.  (If you’re new to the mass NOI problem, read my article from the American Bar Association Entertainment & Sports Lawyer).  

Sure enough, as you can see from the screen capture above, Google Amazon, Pandora and Spotify have all filed mass NOIs on Aaliyah, which means they are able to avoid  paying royalties on Aaliyah’s songs.  Some of these tracks may be from legitimate sources, but Vanessa’s story makes you wonder and points out yet again the need for the Copyright Office to take some responsibility for allowing these NOIs to be filed in a manner the Congress never intended.



How to Fix The Music Modernization Act’s Flawed “Audit” Clause — Music Tech Solutions

The famous old Russian proverb reminds us to trust but verify. That’s been the story in the record business since the cylindrical disc. All the “modernization” in the world will not soothe songwriter’s genetic suspicion of their accounting statements. Unfortunately, the controversial Music Modernization Act creates a quasi-governmental organization with no oversight, and that has weak and punitive audit clauses for songwriters.   We are told that songwriters should appreciate what they’re given because they never had audit rights under the current statutory license.  Of course, if you run the risk of being financially punished if you exercise a right, that’s not much of a right at all.  So let’s not do the usual two steps forward, three steps back.

via How to Fix The Music Modernization Act’s Flawed “Audit” Clause — Music Tech Solutions

You Can’t Find What You Don’t Look For: Big Tech Can’t Find Austin Artists

March 11, 2018 Leave a comment

You may not know the names Shinyribs, Guy Forsyth, Ray Wylie Hubbard, Grupo Fantasma, Carolyn Wonderland, Sara Hickman or Jimmy LaFave, but we do here in Austin.  You probably know Willie Nelson and so do we.  We even have a street named after Willie.

What else do these artists have in common aside from being some of Austin’s most loved and respected artists and songwriters?  Spotify, Google, Amazon, iHeart can’t seem to find them and have sent “address unknown” NOIs for all of them.  (This issue involves mechanical royalties, not SoundExchange royalties or ASCAP/BMI/SESAC royalties.  For the background on mass NOI loophole see my article from the American Bar Association Entertainment & Sports Lawyer.)  The more we research this issue, the less anyone will believe that the Music Modernization Act is going to solve the problem of not finding what you don’t look for.  (You can search for yourself in the SX Works NOI Lookup database (account registration required) that indexes the 60,000,000 plus “address unknown” notices to the Copyright Office from companies like Spotify, Google, Amazon–although interestingly, not Apple.  Apple seems to be able to run their service on a loophole-free basis.)

Realize that this is not the fault of the songwriter–it’s easy to find these songwriters if you look for them.  The problem is that the only place these services are required to look is in the public records of the Copyright Office and the songs will only be there if the songwriter registered them which they are not obligated to do in order to be paid mechanical royalties.  Seems kind of confusing and circular?  That’s because it is and because it is a loophole that hardly anyone ever used since 1976–up until Big Tech found it in 2016.

It is particularly galling that these giant companies all come to SXSW with a big presence but can’t seem to manage to pay our top songwriters.  And remember–it’s not that there is a deferred royalty or retroactive royalty–until these songwriters either prove that they actually already registered their songs in the Copyright Office or do in the future, they don’t get a royalty at all courtesy of a loophole in the Copyright Act and the abject failure of the Congress to do anything about it.  And remember–there is nothing that requires them to register in order to enjoy all the rights of a copyright owner, including the right to make Spotify rich and Google richer.

That’s right–81 notices on the late Jimmy LaFave:

Jimmy LaFave

Ray Wylie Hubbard has 126:

Ray Wylie Hubbard

Shinyribs got 57:


Carolyn Wonderland racked up 189:


Sara Hickman has 111:

Sara Hickman

Grupo Fantasma gets 62:


Guy Forsyth has 103:

Guy Forsyth

And Willie Nelson has 2,897:

Willie Nelson

So when ya’ll tech bros are in Austin this week, make sure you drop by if any of the songwriters you are stiffing are playing a show.  You could even tip.  Maybe you can find them in the SXSW show listings.

And enjoy your visit.

@musicbizworld: Universal Commits to Sharing Stock Sale Proceeds with Artists

March 11, 2018 Leave a comment

According to Music Business Worldwide, Universal has committed to sharing profits from the sale of Spotify stock.  The exact quote is:


Sources close to Vivendi-owned UMG suggest it may have been corporately restricted from making a hypothetical public statement on the matter until Spotify officially confirmed its intention to float on the New York Stock Exchange.

This is great news and also is the right thing to do.  The trick is, of course, that someone has to buy Universal’s position in Spotify in the public market.

Selling large blocks of shares in the public markets is always a tricky business, but Spotify may have made it exponentially more difficult given the “direct public offering” structure of its IPO (more properly called a “DPO”).  I suspect that there will be a rush for the exits as holders of Spotify stock try to liquidate, and Universal could find itself selling alongside a fully-vested marketing consultant who left the company three years ago, artists who got shares, and of course all the other majors and Merlin.

If you believe as I do that the world of retail investing is not waiting for a Spotify IPO,  this kind of robust selling could cause the price to tank in the absence of buyers or result in the kind of volume patterns you see with some shares of preferred stock (which have the “z” designation after the share numbers on the day in the stock section).

The Vivendi and Universal treasury folk are very smart people, so I’m sure they will manage the sale of their stock with an eye to avoiding tanking the stock and maximizing profit, so their interests are aligned with their artists (and presumably songwriters, too).

The next problem that we will all have to deal with is the meme that Spotify is already promoting–the reason Spotify loses money is that royalties are too damn high.  I guess that means the royalties they’re not paying?  Followed closely behind (A) the reason they can’t pay songwriters is because songwriters hide from them (true story, read the F-1 at p. 20); (B) Spotify wants to eliminate the “middleman” (i.e., record companies) and good luck with that; and (C) if the music industry had just built a global rights database then, then everything would be fine so Spotify’s failure to pay royalties is really our fault.

And especially those pesky songwriters who hide from them.

Even if it may take a while to liquidate Universal’s position in Spotify, it is comforting that they’re committed to doing the right thing.

Guest Post by @sarahickman: Streaming Royalties Are Ending Opportunities for Working Musicians — Artist Rights Watch

March 10, 2018 Leave a comment

Sara Hickman on how the economics of streaming is hollowing out the “middle class musician” and devouring the music business from the ground up.

via Guest Post by @sarahickman: Streaming Royalties Are Ending Opportunities for Working Musicians — Artist Rights Watch

You Can’t Find What You Don’t Look For: @theDavidCrosby Gets Screwed Twice by Big Tech

From Spotify’s F-1:  “Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans.”

Now bend over for that truly seemless access.

David Crosby is one of the most influential musicians, songwriters, vocalists and performers of his generation.  From The Byrds to Crosby, Stills, Nash & Young, to his duo with Graham Nash and his solo work, David Crosby is truly one of the most gifted artists you will ever encounter.  If you don’t know his work, he’s not hard to find–start with the move Woodstock and go from there.  And, of course, his music is readily available on any streaming service or the decade-themed channels on SiriusXM.

But David Crosby has a problem–he recorded much of his seminal work in the wrong year for the digerati and for the warm hearted folk like Jim Meyer at SiriusXM, Tim Westergren while at Pandora, the Digital Media Association and the MIC Coalition who oppose treating pre-72 recordings like all others for digtial sound recording performance royalties.

So David gets screwed on the sound recordings.  Not being content with one sleazeball move, Spotify, Google, Amazon and iHeart also screw him on his songs by filing “address unknown” notices with the Copyright Office.  (And, it must be said, the Copyright Office gets their licks in, too, by allowing this to happen.)

Here’s a run on David Crosby’s recordings for which these monopolists have filed at least 156 “address unknown” NOIs:

David Crosby

In a recent interview with Rolling Stone, David Crosby said:

Spotify’s plan to go public, filed last week, could generate $23 billion and make the world’s biggest record labels hundreds of millions of dollars richer — but the Swedish streaming giant has yet to soothe grumbling and litigious artists and songwriters who say its royalty payments are unfairly low. “They rigged it so they don’t pay the artist,” David Crosby tells Rolling Stone. “I’ve lost half of my income because of these clever fellas. I used to make money off my records, but now I don’t make any.”

This gives doubling down a whole new meaning.

But Daniel Ek is about to make serious bank while he has many outstanding bills to songwriters and artists, including David Crosby.  And the one thing we know for sure when Spotify files an NOI is that they can’t say “but we paid the labels” or “we paid the publishers”.  They are not paying at all because they use a loophole to get out of any royalty obligation–while getting all the liability insulation of the compulsory license.

Thanks, Copyright Office.

Here’s another thing that’s about to happen to Daniel Ek.  Remember old “million a month” Tim Westergren who sold Pandora stock every month netting him over $1 million a month?  Want to bet that Daniel Ek does the same and that he’s going to make way more than $1 million a month?

We will be happy to bring you that news that you won’t read in the mainstream media as soon as Ek’s filings start to go through the SEC.  Then he can explain to David Crosby how it feels to be a billionaire off the backs of the songwriters and artists he stiffs.

%d bloggers like this: