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HFA is Getting Blamed Unfairly — Music Tech Solutions

July 31, 2018 Comments off

When you’ve been around as long as the Harry Fox Agency, you’re going to make some enemies, screw some things up, over react and over reach. You’re also going to do a lot of things right, make some friends and do some good. But most of all, you’re going to be the whipping boy […]

via HFA is Getting Blamed Unfairly — Music Tech Solutions

Billions and Billions: Carl Sagan Meets the Music Modernization Act

July 24, 2018 Comments off

According to a post in Variety, there seems to be a rather large chunk of cash sitting at the digital music services.  As Artist Rights Watch posted,  Variety’s initial story read:

The DSPs are holding some $1.5 billion in unmatched mechanical royalties. If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Variety subsequently updated the post (you might call it a “correction”) to read:

The DSPs are holding some $1.5 billion in unmatched mechanical royalties [ADDED — that total is the sum of all Notice of Intent (NOI) filings currently parked at the U.S. Copyright office, and is climbing.] If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Both these statements are rather odd.  If there’s $1.5 billion in unmatched royalties at services, one must ask what is it doing there?

On the other hand, if the “correction” is correct, the $1.5 billion sum includes, I guess, royalties payable for the NOIs at the Copyright Office.  Not clear from Variety, but this reference must be to the “address unknown” mass NOIs (since Variety refers to “at the Copyright Office” and I think that’s the only NOI that would get filed “at the Copyright Office”).  (See my post on Big Tech’s mass NOI loophole from the ABA Entertainment and Sports Lawyer.)

This “correction” is also very strange to me because the mass NOIs are royalty free–that (and escape from liability) is the whole point of the loophole.  I think we have probably bored everyone with many posts on just what a joke these filings are.   Everyone from Ed Sheeran to the Neville Brothers are subject to these NOIs, and I’m told that at least Ed Sheeran is getting paid under a voluntary agreement.  Having said that, I would be very surprised if there were anywhere near 1.5 billion NOIs filed at the Copyright Office, although there may certainly be tens of millions or maybe over 100 million.  I’m willing to be educated otherwise, but that 1.5 billion number just doesn’t scan to me.  (You can look these up on SX Works’ handy NOI Lookup, the best tool for finding out if you have one filed on your song.)

The only way I can think of that both Variety’s original statement and the correction could be true would be if there were a voluntary retroactive unmatched payment by the digital services as part of the deal for the Music Modernization Act.  Even so, $1.5 billion is awfully generous, even for the biggest companies in commercial history.  But then, if it is a voluntary payment, how would you ever know if it isn’t also voluntarily disclosed?

So I’m looking forward to seeing if there’s a further correction.  It could just be confusion on the part of Variety or their source.  Time will tell.  But the entire exchange shows that the Copyright Office should never have allowed Spotify, Amazon, Google et al to get this started.  Strangely enough, Apple seems to get by just fine without using “address unknown” NOIs.

Rule Takers vs. Rule Makers: Congress Should Support Startups in the Music Modernization Act

July 24, 2018 1 comment

If you read the current version of the Music Modernization Act, you may find that it’s more about government mandates that entrench incumbents than a streamlined blanket compulsory license that helps startups climb the ladder.  Yet in the weeds of MMA we find startups dealt out of governance by rule makers and forced as a rule taker to ante up payments by their competitors in a game that the bill makes into the only game in town.

Billboard reports that Senators Cornyn and Cruz suggested a fix for this flaw—allow private market competition alongside the MMA’s government mandate.  (Vaguely reminiscent of the “Section 115 Reform Act” from the 109th Congress in 2006.)

Let’s review why this fix is necessary and how it could balance the roles of rule makers and takers.

It’s necessary because the problem doesn’t come from songwriters.  It comes from the real rule makers—Amazon, Apple, Facebook, Google and Spotify.  And startups know which side butters their bread. 

Public discussion of MMA has focused on the song collective and the compulsory blanket license for songs, but the mandated digital services collective is more troubling given the size of the players involved.  MMA calls the services’ collective the “digital licensee coordinator” or the “DLC”. Rule taker startups are governed by the rule maker DLC but have no say in the DLC’s selection.  

Like Microsoft’s anonymous amici, startups know their place.  Especially against Google, Amazon and Facebook, whose monopoly bear hug on startups includes hosting, advertising and driving traffic.

The MMA authorizes these aggressive incumbents to effectively decide the price to startups for the “modernized” blanket license.  Why?  Because the MMA requires users of the license to pay for the lion’s share of the “administrative assessment,” the licensees’ collectivized administrative cost payment that the CBO estimates will be over $222 million for 8 years.

Senators Cruz and Cornyn object to MMA’s delegation of the government’s authority to one collective for songwriters and one collective for digital services—with an antitrust exemption.  Why only one game in town? Rather than have the DLC run by the usual suspect monopolists, why not allow competition?

This is important–if startups can’t afford to buy-in to the license, it does them no good, and their biggest competitors decide the price of that license through the DLC. 

Both collectives are to be approved by the Register of Copyrights, but MMA puts the Register in the unenviable position of being constrained to appoint certain types of entities by statutory mandate.

Here’s the mirror image language from the MMA instructing the Register on selecting both the song collective and the DLC:

“[The Register must choose an entity that] is endorsed by and enjoys substantial support from [digital music providers/copyright owners of musical works] that together represent the greatest share of the [licensee/licensor] market for uses of [musical/such] works in covered activities, as measured over the preceding 3 full calendar years;”

Startups–who are potential music users most in need of the statutory blanket license–need not apply to be the DLC. 

That clause alone justifies the Cornyn/Cruz solution.  

There is another toad in the weeds:  The allocation of the “administrative assessment” to each music user of the blanket license.  In a clause fraught with moral hazard, MMA authorizes the DLC to “equitably allocate the collective[’s] total costs across digital music providers…but shall include as a component a minimum fee for all digital music providers.” Plus, the DLC also gets to set the “dues” payment for each of its “members.” Plus startups pay royalties to the song collective.

Rule makers set a lot of payments. But curiously no one can tell a startup today the hard cost of their blanket license tomorrow.

If a startup wants the MMA’s blanket license, the DLC can compel it to pay a share of the assessment at a price determined by the DLC—as well as a membership fee.  These mandatory payments are enforced by the DLC and are required for any music user to get a blanket license.  If this sounds cumbersome and bureaucratic, that’s because it is.  But absent the Cornyn/Cruz amendment, the bill gives rule makers control of the only game in town.

Crucially, there currently is no budget for even the first administrative assessment or the membership fee—for the biggest change to the Copyright Act in 100 years.  That comes later—perhaps years later after appeals.   When asked by Chairman Grassley, DiMA was unable to come up with a number and referred to the CBO’s cost estimate of all things.  The ante for a startup with 0.5% market share would be $1.11 million before royalties.  Yet—if a startup fails to pay the DLC, they can lose the blanket license even if current on royalty payments. 

Senators Cornyn and Cruz are rightly skeptical. 

“Modernization” should make licensing easier, level the playing field for startups and protect them from famously predatory  competitor incumbents—as well as copyright infringement lawsuits from the rule takers. 

These are all good reasons for the private market solution.  Competition at least gives startups a hope for the pursuit of fair treatment.

A wise member of the Texas Congressional delegation once told me Big Tech gets to climb the ladder to the American Dream like everyone else. What they don’t get to do is pull the ladder up behind them after getting to the top.

Expanding competition rather than mandating an exclusive collective could keep that ladder available to everyone. 

Factiness EU Style: A Dedicated Group of Like Minded People Carpet Bombs The European Parliament

July 17, 2018 Comments off

ALEX

Viddy well, little brother. Viddy well.

from A Clockwork Orange, written by Stanley Kubrick based on the novel by Anthony Burgess

As we noted in Fair Copyright Canada and 100,000 Voters Who Don’t Exist back in 2009, the legitimate desire by governments to use the Internet to engage with the governed is to be admired.  But there have been incredible and probably illegal uses of the Internet to overwhelm elected officials with faux communications that reek of Google-style misinformation and central planning in the hive mind of the Googleplex.

We saw this again with the Article 13 vote in Europe last week with what clearly seems to be a Google-backed attack on the European Parliament for the purpose of policy intimidation.  That’s right–an American-based multinational corporation is trying to intimidate the very same European government that is currently investigating them for anticompetitive behavior and is staring down a multi-billion dollar fine.

Vindictive much?

Advocacy against Google’s interests on artist rights and copyright issues (not to mention human trafficking, advertising illegal drugs and counterfeit goods) can no longer be just about making a good argument to policy makers.  It has to anticipate that Google will pull these DDOS-type stunts capitalizing on what seems to be the element of surprise.

Except there shouldn’t be any surprise.

There is a real problem with policy-by-DDOS governing.  For example, Cass Sunstein, then the Administrator of the Obama Office of Management and Budget, issued a memo in 2010 to the heads of executive branch departments and regulatory agencies which dealt with the use of social media and web-based interactive technologies.

Specifically, the Sunstein memo warned that “[b]ecause, in general, the results of online rankings, ratings, and tagging (e.g., number of votes or top rank) are not statistically generalizable, they should not be used as the basis for policy or planning.”  Sunstein called for exercising caution with public consultations:

To engage the public, Federal agencies are expanding their use of social media and web- based interactive technologies. For example, agencies are increasingly using web-based technologies, such as blogs, wikis, and social networks, as a means of “publishing” solicitations for public comment and for conducting virtual public meetings.

The European Parliament would do well to take a page from Sunstein’s thinking and limit the amount of anonymous contact that anyone can have with MEPs when the European Parliament is suffering a DDOS-style attack.

But the most important thing for the European Commission to take into account is that a company that is the target of multiple investigations is using the very market place monopoly that caused the competition investigations to intimidate the European government into bending to its will on Article 13.  (That, of course, is the biggest difference between the Europeans and Article 13 and the Americans and SOPA–the US government had dropped the US antitrust investigation into Google and it had unparalleled access to the White House.  So the two are really nothing alike at all.)

The European Commission needs to launch a full-blown criminal investigation into exactly what happened on Article 13, particularly since there is another vote on the same subject coming in September.  Properly authorized law enforcement acting swiftly can set sufficient digital snares to track the next attack which surely is coming while they forensically try to figure out what happened.

Advocates need to understand that Google is a deadly force and this is the endless war.  Good arguments are clearly not enough anymore, particularly as long as the government and law enforcement do nothing to protect democratic values from bully boy tactics.

All the Royalty Deadbeats: Chairman @RepGoodlatte Holds Hearing on Google, Twitter and Facebook Monopolies and Filtering Practices

July 17, 2018 Comments off

Thank you Chairman Goodlatte!

PRESS RELEASE:

Washington, D.C. – House Judiciary Committee Chairman Bob Goodlatte (R-Va.) today delivered the following statement during the House Judiciary Committee’s hearing on “Facebook, Google, and Twitter: Examining the Content Filtering Practices of Social Media Giants.”

Chairman Goodlatte: Today, we continue to examine how social media companies filter content on their platforms. At our last hearing, which we held April, this Committee heard from Members of Congress, social media personalities, legal experts, and a representative of the news media industry to better understand the concerns surrounding content filtering. Despite our invitations, Facebook, Google, and Twitter declined to send witnesses. Today, we finally have them here.

Since our last hearing, we’ve seen numerous efforts by these companies to improve transparency. Conversely, we’ve also seen numerous stories in the news of content that’s still being unfairly restricted. Just before July Fourth, for example, Facebook automatically blocked a post from a Texas newspaper that it claimed contained hate speech. Facebook then asked the paper to “review the contents of its page and remove anything that does not comply with Facebook’s policies.” The text at issue was the Declaration of Independence.

Think about that for a moment. If Thomas Jefferson had written the Declaration of Independence on Facebook, that document would have never seen the light of day. No one would be able to see his words because an algorithm automatically flagged it—or at least some portion of it—as hate speech. It was only after public outcry that Facebook noticed this issue and unblocked the post.

Facebook may be embarrassed about this example—this Committee has the opportunity today to ask—but Facebook also may be inclined to mitigate its responsibility in part because it was likely software, not a human being, that raised an objection to our founding document. Indeed, given the scale of Facebook and other social media platforms, a large portion of their content filtering is performed by algorithms without the need of human assistance.

And Facebook is largely free to moderate content on its platform as it sees fit. This is in part because, over twenty years ago, Congress exempted online platforms from liability for harms occurring over their services. In 1996, the Internet was just taking shape. Congress intended to protect it to spur its growth. It worked because the vibrant Internet of today is no doubt a result of Congress’s foresight.

But the Internet of today is almost nothing like the Internet of 1996. Today, we see that the most successful ideas have blossomed into some of the largest companies on Earth. These companies dominate their markets, and perhaps rightfully so given the quality of their products. However, this begs another question—are these companies using their market power to push the envelope on filtering decisions to favor the content the companies prefer?

Congress must evaluate our laws to ensure that they are achieving their intended purpose. The online environment is becoming more polarized—not less; and there are concerns that discourse is being squelched—not facilitated. Moreover, society as a whole is finding it difficult to define what these social media platforms are and what they do. For example, some would like to think of them as government actors, as public utilities, as advertising agencies, or as media publishers—each with its own set of legal implications and potential shortfalls.

It’s clear, however, that the platforms need to do a better job explaining how they make decisions to filter content and the rationale for why they do so.

I look forward to the witnesses’ testimony.

@helienne Lindvall on MMA Safe Harbor

July 16, 2018 Comments off

It must be said that Music Modernization Act safe harbor was released the same time as CISAC released an economic impact study of the DMCA safe harbor.  We think of DMCA as being worse because we’ve lived with it for decades–in decades how will we feel about the MMA safe harbor and is anyone feeling lucky?

@vahn16: Popular Twitch Streamers Temporarily Banned For Playing Copyrighted Music — Artist Rights Watch

July 13, 2018 Comments off

[Editor Charlie sez: It’s about time that these royalty deadbeats began understanding the meaning of “repeat infringer policy” which Twitch (owned by Amazon) does not seem to have in place at all.]

If you’ve watched any Twitch streams at all in your life ever, this might come as a surprise to you. After all, pretty much everybody on Twitch uses music. Sometimes it’s royalty-free, but it’s not uncommon to hear familiar hits during big streamers’ shows. Some streamers have playlists going in the background for the entirety of multi-hour streams. Others—Kotaku’s own channel included—put on some chill music before a stream is about to start, to let viewers know it’s time to tune in. To account for this, sometimes Twitch auto-mutes audio in portions of stream archives. Otherwise, people don’t usually get in trouble for it.

That doesn’t mean they can’t get in trouble for it, though.

via @vahn16: Popular Twitch Streamers Temporarily Banned For Playing Copyrighted Music — Artist Rights Watch

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