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Archive for February, 2019

Guest Post by @Volker_Rieck: CLOUDFLARE: THE BAD, THE WORSE AND THE UGLY?

February 27, 2019 Comments off

You may have never heard of Cloudflare and you may be wondering what the company has to do with music, technology or policy.  Cloudflare plays a vital role in the worldwide criminal enterprise of piracy and competes with Google, Facebook and Amazon for the moniker of the Genco Olive Oil company of the Internet.  Here’s how the company describes itself:

Cloudflare, Inc. is a U.S. company that provides content delivery network services, DDoS mitigation, Internet security and distributed domain name server services. Cloudflare’s services sit between the visitor and the Cloudflare user’s hosting provider, acting as a reverse proxy for websites. Cloudflare’s headquarters are in San Francisco, California, with additional offices in London, Singapore, Champaign, Austin, Boston and Washington, D.C.

But Torrentfreak tells us:

As a CDN provider, Cloudflare relays traffic of millions of websites through its network, including many pirate sites.

Or said another way, Cloudflare is a lynchpin in the biggest income transfer in commercial history.  So what do you do when you’re Cloudflare?  How do you get some liquidity with that big income transfer?  How else–you find some sleaze bags to underwrite an IPO so they can shovel some money their way, too.

Cloudflare, a U.S. startup whose software makes websites load faster and with greater security, is preparing for an initial public offering (IPO) that could value it at more than $3.5 billion, people familiar with the matter said.

The company is looking to go public in the first half of next year, the sources said this week, joining a string of software and internet firms seeking to tap the stock market and capitalize on strong investor appetite and rich valuations.

The IPO will be led by investment bank Goldman Sachs, said the sources, who asked not to be named because the matter is confidential. Exact timing of the IPO has not been finalized, the sources added.

The astute researcher in Germany Volker Rieck has some insights into Cloudflare that the Securities and Exchange Commission would do well to review before they let Cloudflare make Mr. & Mrs. Main Street their partner in crime.

Read the post on Webschauder

In the US, a large technology company is about to go public. Cloudflare, a San Francisco-based company, wants to collect nearly $3.5 billion on the stock exchange in the first half of the year with the support of the investment bank Goldman Sachs. But there are dark shadows over Cloudflare. The spectrum of its customers ranges from credit card fraudsters and spammers, to sites that engage in copyright infringement as a business model, to terrorist sites. Even US embargos are undermined.

What is Cloudflare?
Cloudflare offers a content delivery network. In simple terms, it provides a kind of turbo drive for web pages, allowing them to be delivered world-wide quickly and securely. Cloudflare places itself between, on one hand, the web page and/or servers of its customers and, on the other, the site visitor and/or user of the service. By enabling it to selectively control and distribute site traffic, it can offer increased speed and protection against network overload attacks (DDoS).

However, Cloudflare also offers another feature: anonymizing its customers.
By placing a virtual screen over the original web page and/or their server, Cloudflare makes the operator practically untraceable. Upon inquiry, Cloudflare will only provide its own data, hiding client information such as hosting service and IP address, making it impossible to take legal action against illicit sites and services.
Civil law inquiries are futile, because Cloudflare only provides the naming of the hosting services, which is worthless without the respective IP address. This is roughly equivalent to seeking info on an unmarked apartment with just the address of a high-rise building housing thousands of residents.

The Cloudflare problem is well known
This anonymizing feature from Cloudflare attracts a number of unsavory customers including, again and again, copyright infringers. But it doesn’t stop there.

Since December 2018, the EU Commission has included Cloudflare on a watch list for counterfeiting and piracy.

Most recently, the service received the dubious prize as the worst enemy of the creative community from the US blog TheTrichordist.

The listing of infringing market participants has a long history in the US. The music association RIAA submits an annual list of the worst offenders to the US Trade Representative. In 2017, 9 out of 20 violators could not be identified by the RIAA because Cloudflare effectively camouflaged them. The US film association MPAA is also aware of the problems with Cloudflare obfuscation and names the company in its annual list of interferers.

In the relatively new piracy segment IPTV – the streaming of non-licensed TV signals – the company is also on the move. A study from Fall 2018 shows the role of Cloudflare both in camouflaging the sites that sell IPTV subscriptions and in concealing the origin of the streams.

In a survey of data centers comprising file and streaming hosts in 2016, 40% of the Top 10 and 47% of the Top 30 used Cloudflare.

The ECO, a German association, which obviously doesn’t care about anything
Cloudflare is a member of the German industry association ECO. The purpose of this membership is probably to get a discount for traffic at the Frankfurt (DE-CIX) internet node, which ECO operates through a subsidiary.

ECO has never seemed to care that providers who are very heavily involved in piracy, including Cloudflare, are members of the association. In any case, there was no reaction to corresponding reports that ECO members, including Cloudflare, are responsible for over 50% of piracy traffic in the film sector in 2014, with 45.2% of this activity accounted for by Cloudflare and around 6% by a further five members.

Screenshot: Extract from the ECO member list, February 2018, http://www.eco.de/ueber-eco/mitglieder/#C

 

Cloudflare in court
The reports of legal proceedings against Cloudflare are long and concern more than just virtual goods. For example, two manufacturers of bridal fashions filed suit for trademark and copyright infringements by plagiarizers who were made anonymous by Cloudflare. And, while a claim brought by adult entertainment provider ALS-Scan ultimately ended in settlement, the judge found that Cloudflare’s activities could significantly support copyright infringement by hosting cached copies of files (though the settlement precluded a final judgment on Cloudflare’s actions and liability).

Supporting Illegal Activity: Calculated or Coincidence?
In Fall 2018, Cloudflare made news by ending its business relationship with pirate hosts like Rapidvideo due to violating its terms of use. After all, before this, Cloudflare had only voluntarily terminated its business relationship with US Nazi site the Daily Stormer in 2017.

Screenshot Youtube Video with Cloudflare CEO Matthew Prince on Fox Business Network


Big Data brings it to light

The current Google Transparency Report offers a look at the actual extent of Cloudflare’s involvement in piracy.

In the report, Google lists all requests from rights holders for deletions from the Google search index that concern rights violations. Meanwhile these are more than 2.9 billion messages. The top 5,000 of still existing domains already account for 79% of all reported URLs.

In order to understand the significance of Cloudflare for this market, the 1,355 domains that are parked with companies such as Team Internet, Sedo or GoDaddy have to be subtracted from the 5,000 domains, since it makes no sense to protect parked sites with Cloudflare.
This leaves 3,645 domains. Of these 3,645 right-infringing sites, 41.9 % run via Cloudflare. For their part, they are responsible for 44.7 % of the copyright infringements reported to Google.

If one were to extrapolate this proportion to the total number of domains listed in the Google Report for copyright infringements, one would come up with almost 670,000 domains protected by Cloudflare – a significant portion of the 2.2 million domains with requests for delisting from Google’s search engine.

Among Cloudflare’s customers are: Torrentz.eu, Gosong.net, Share-online.biz, Catshare.net, Bitsnoop.com, Deepwarez.org, Turbobit.net, Myfreemp3.eu, and Nitroflare.com.
Each of these websites received at least 3 million deletion requests from the Google search index.

Not only pirates love Cloudflare – also credit card fraudsters, phishing sites, extortionists, and terrorists

The Watchwebsite Crimeflare is a real treasure trove of information about Cloudflare, listing 650 credit card fraud sides alone, to which Cloudflare offered shelter.

Cloudflare also proudly deals in SSL certificates, providing sites like Phishingseiten the manufactured consumer security and confidence-building necessary to be successful. According to the German magazine Heise, hundreds of such certificates for cheats were issued by Cloudflare.

Of course, as Spamhaus reports, the spreading of Malware often takes place over Cloudflare.

With Cloudflare, extortion is also par for the course, which conveniently generates additional services. By providing anonymity and untraceability to sites threatening, for example, to bring a web page to a standstill through DDoS, Cloudflare can then sell the attacked site its protection services. A truly special form of customer acquisition.

Cloudflare has also found good business in terror. As far back as 2012, the news agency Reuters confronted Cloudflare with the fact that it maintained the websites of Hamas and Al-Quds, designated by the US as terrorist groups.
And in 2018, terrorist organizations were still being supported, with Dutch security researcher Bert Hubert identifying at least 7 different terrorist organization websites that use Cloudflare.

The Huffingtonpost had these findings evaluated by Benjamin Wittes, Senior Fellow of the Brookings Institution:

„This is not a content-based issue. Cloudflare] can be as pure-free-speech people as they want – they have an arguable position that it’s not their job to decide what speech is worthy and what speech is not – but there is a law, a criminal statute, that says that you are not allowed to give services to designated foreign terrorist organizations. Full stop.“

As icing on the cake, the company even has customers who are on the official embargo list of the US (SDN-List). For example, CENTRAL REPUBLIC BANK from the Donetsk region uses Cloudflare’s services.

Screenshot: Collage of information from the US Treasury’s Office of Foreign Assets Control
https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx
Screenshot: Whois record of crb.dnr.ru at February 18th 2019

 

Do investors actually know what they are investing in?
Against the background of all these facts, two things are worth considering:
1) How has Cloudflare been able to obtain financing rounds from various investment companies in the past, including Google’s parent Alphabet?
2) Does Goldman Sachs actually know anything about the extent of its involvement in rights violations and its support of dubious „ventures,“ even to the point of undermining US embargoes?

Risk management is one of the central parameters of investment banks when evaluating investments. Risks must be known and assessable in advance. Cloudflare’s considerable participation in dubious transactions is rare in an IPO and a huge risk. Particularly if, as in the ALS-Scan case, the company is faced with its own liability, or if criminal law is violated through the service’s business with terrorist organizations.
Goldman Sachs and current investors either lack moral standards, are naïve, or consider the risk of failure to be very low, which only shows how urgently we need government regulation of intermediaries on the Internet.

Volker Rieck, Jörg Weinrich

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It’s Time to Tell Them #IRespectMusic: Big Radio Starts the Anti-Artist Drumbeat with the Fake Local Radio Freedom Act Take 2

February 22, 2019 Comments off

Remember the Local Radio Freedom Act from last year?  Well, they’re back with a new LRFA (pronounced “screw you”).  This Congress can’t agree about much, but they can agree they want to keep screwing artists.

Here’s the deal.  LRFA is the Alinsky-style straw man–demonize your opponent as something you want people to believe your opponent to be (a “tax” for example), then perpetuate that mischaracterization no matter what.  (In the current parlance, something pretty close to gaslighting fake news.)

This LRFA legacy “nonbinding resolution” has become an evergreen in the arsenal of the NAB’s gaslighting efforts to perpetuate exploitation of recording artists for one reason and one reason only–because they can.  The NAB gets a bunch of Members to sign up, doesn’t tell them the truth about what they signed, and hope that nobody tells them otherwise until it’s too late.

Here’s a list of signatories at the end of this post in case you want to tell them #irespectmusic, why don’t you?  Sign the petition at I Respect Music.org

More on this to come, but the headline is that Big Radio is back with a new LRFA, H.Con.Res. 20 in the House and S.Con.Res.5.

CONCURRENT RESOLUTION

Supporting the Local Radio Freedom Act.

Whereas the United States enjoys broadcasting and sound recording industries that are the envy of the world, due to the symbiotic relationship that has existed among these industries for many decades;

Whereas for nearly a century, Congress has rejected repeated calls by the recording industry to impose a performance fee on local radio stations for simply playing music on the radio and upsetting the mutually beneficial relationship between local radio and the recording industry;

Whereas local radio stations provide free publicity and promotion to the recording industry and performers of music in the form of radio air play, interviews with performers, introduction of new performers, concert promotions, and publicity that promotes the sale of music, concert tickets, ring tones, music videos and associated merchandise;

Whereas Congress found that “the sale of many sound recordings and the careers of many performers benefited considerably from airplay and other promotional activities provided by both noncommercial and advertiser-supported, free over-the-air broadcasting”;

Whereas local radio broadcasters provide tens of thousands of hours of essential local news and weather information during times of national emergencies and natural disasters, as well as public affairs programming, sports, and hundreds of millions of dollars of time for public service announcements and local fund raising efforts for worthy charitable causes, all of which are jeopardized if local radio stations are forced to divert revenues to pay for a new performance fee;

Whereas there are many thousands of local radio stations that will suffer severe economic hardship if any new performance fee is imposed, as will many other small businesses that play music including bars, restaurants, retail establishments, sports and other entertainment venues, shopping centers and transportation facilities; and

Whereas the hardship that would result from a new performance fee would hurt American businesses, and ultimately the American consumers who rely on local radio for news, weather, and entertainment; and such a performance fee is not justified when the current system has produced the most prolific and innovative broadcasting, music, and sound recording industries in the world: Now, therefore, be it

Resolved by the House of Representatives (the Senate concurring), That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.

Here’s the list of Members of Congress who want to keep screwing artists:

Ms. Castor of Florida (for herself, Mr. Conaway, Mr. Butterfield, Mr. Johnson of Ohio, Mr. Gianforte, Mr. McEachin, Mr. LaMalfa, Mr. Rogers of Kentucky, Mr. Gosar, Mr. Weber of Texas, Mr. Graves of Georgia, Mrs. Dingell, Mr. Moulton, Mr. Babin, Mr. Young, Mr. Comer, Mr. Jordan, Mr. Bost, Mr. Kelly of Pennsylvania, Mr. Cole, Mr. Keating, Mr. Flores, Mr. Hagedorn, Mr. Crawford, Mr. Palazzo, Mr. O’Halleran, Ms. McCollum, Mr. Ryan, Mr. Kinzinger, Mr. Collins of New York, Ms. Stefanik, Mr. Turner, Mr. Olson, Mr. Allen, Mr. Chabot, Mr. Massie, Mr. Hill of Arkansas, Mr. Westerman, Mr. Upton, Mr. Duncan, Mr. Walker, Mr. Rodney Davis of Illinois, Mr. Rush, Mr. Kilmer, Mr. Walberg, Mr. Gonzalez of Texas, Mr. Kind, Mr. Lynch, Mr. LaHood, Mr. Grothman, Mr. Wilson of South Carolina, Mr. Latta, Mr. Williams, Mr. Budd, Ms. Kuster of New Hampshire, Mr. Long, Mr. Bilirakis, Mr. Arrington, Mr. Hice of Georgia, Mr. Shimkus, Mr. Zeldin, Mr. Meadows, Mr. Mullin, Mr. Emmer, Mr. Lawson of Florida, Mr. Pallone, Mr. Clay, Mr. Posey, Mr. Newhouse, Mr. Womack, Mr. Walden, Mr. Hastings, Mr. David Scott of Georgia, Mr. Harris, Mr. McKinley, Mr. Rouzer, Mr. Nunes, Mr. Lamborn, Mr. Calvert, Mr. Rogers of Alabama, Mr. McHenry, Mr. Marshall, Mr. Buchanan, Mr. Davidson of Ohio, Mr. DeFazio, Mr. Mooney of West Virginia, Mr. Loebsack, Mr. Carter of Georgia, Mr. Cuellar, Mr. Duffy, Mrs. Brooks of Indiana, Ms. Foxx of North Carolina, Mrs. Kirkpatrick, Mr. Brown of Maryland, Mr. Gibbs, Mr. Wenstrup, Mr. Brendan F. Boyle of Pennsylvania, Mrs. Rodgers of Washington, Mr. Simpson, Mr. Dunn, Mr. Cook, Mr. Mitchell, Mr. Stivers, Miss González-Colón of Puerto Rico, Mrs. Beatty, Mr. Evans, Mr. Brooks of Alabama, Mr. Fortenberry, Mr. Payne, Mr. Luetkemeyer, Mr. Yarmuth, Mr. Courtney, Mrs. Radewagen, Mrs. Bustos, Mr. Banks, Mr. Gallagher, Mr. Smith of Nebraska, Mr. Kelly of Mississippi, and Mrs. Wagner)

And here’s the list of Senators:

Mr. Barrasso (for himself, Mr. Heinrich, Mr. Boozman, Ms. Collins, and Mr. Udall).

 

Guest Post by Iain Baker of @jesusjonesband on the PledgeMusic Situation

February 18, 2019 Comments off

[Used by permission of the artist.  This post is from a series of tweets by Iain Baker of Jesus Jones regarding both their experience being cut off by PledgeMusic and also the implications for the larger music business.]

The music business is fond of winning battles, and losing wars. The best example I can think of is squashing Napster – that victory was anything but – it didn’t hold back the tide of downloads, it merely hastened the rise of streaming.

Above all, it entrenched a generational shift in attitude towards the ownership and transference of digital content. So when the Pledge disaster began to unfold, my first thought was the battle in front of me. How could I get back the thousands of pounds I was owed?

How could Pledge survive, so that I could release more music, in the future, and replicate the successful campaigns we’d created thus far? But, as time passed, my emphasis shifted to the bigger picture, and the war, not the battle.

This was driven by one realisation: what if it happened again? If the site is saved, what’s to stop Pledge just doing it again? What’s to stop them getting another load of money in, and just losing it again? What could stop that? And the answer, sadly – not that much.

I wanted Pledge to be saved – but the chances aren’t high. They’ve apparently got unsustainable debts, huge liabilities, and a board of directors who are – at best – incompetent, and at worst – could possibly be open to allegations of dishonestly and fraudulent mismanagement of funds.

Companies like Pledge are held hostage by VC cash from investors. These investors don’t seem to care whether a struggling songwriter gets a chance to put out a great new record – they just want their investment back, with a profit on top. And I get that – that’s how business works.

But VC cash is flung around in the hope of finding the next big thing – and that need for success comes with a greater need to gamble, and a corresponding disregard for consequences. People poured a lot of money into Pledge, so that Pledge could go out and get more money.

The artistic endeavours that were at the core of Pledge became secondary to the pure profit that could be leveraged. I’m think this hope that investors would see returns is what was driving Pledge’s doomed efforts to grow, exponentially.

I can’t help but think that investing in something like a charity would have been regulated more tightly, ensuring that funds raised were managed effectively, that plans would be in place to ensure realistic growth, whilst still allowing benefactors to be rewarded.

This wouldn’t be an issue, if Pledge were selling biscuits, for example. Trying to sell a great new biscuit, and become the biggest and best biscuit retailer in the world…….

But Pledge was operating in the same way as a Bank, or a building society [or credit union]. They were the custodians of people’s hopes and dreams. In the same way that a bank would take the shoebox of money from under your bed, and say “don’t worry, when you need this, we’ll be there for you.”

But Pledge weren’t there, for anyone. People trusted Pledge, and Pledge didn’t show any of that trust, in return.

The Banking system is held together by trust, and by confidence. But since the financial crisis, it’s been vitally important to underpin that confidence with safeguards, and structures which ensure that banks are protected from contagion and shock to ensure that poor choices cannot threaten people’s trust and security. And this is what needs to happen if we’re going to save Pledge. We need to think about saving the idea of it, and not necessarily the site itself.

For marginalised, struggling artists – or for those who just need to have hope, when traditional lines of business seem closed – a site that offers a way to promote themselves effectively is a godsend.

But the trust which should have kept this system afloat was torpedoed by the very people who were charged with protecting it. We simply can’t let that happen again. We need the business model, but we don’t need the people who ran that business into the ground.

We need a new structure where top-down investment is replaced by community, trust and transparency, growing from the ground, upwards. We need financial safeguards, and guidelines to make sure everyone in the supply chain is protected.

The old model was quick, and easy – some of that simplicity may be lost. Consumer law, and contractual obligations may hamper initial progress, and make the path longer to travel.

But if we’re to try and maintain the vital business model we’ve all come to rely on, then we owe it to ourselves to try and make it work.

When it comes to actually defining this new plan – well, I don’t have the answers. I wish I did. All I know is that if we stick together, and share our communal knowledge, passion, and commitment, we’ll get there.

So – I don’t really know what’s next. If anyone can suggest a way forward, or a way to start putting this into action, I’d love to talk further. You know where I am.

Article 13: Let the Investigations Begin

February 14, 2019 Comments off

 

 

It remains to be seen how the legislative process on Article 13 will play out but it’s very clear what the European Parliament’s next step is–investigate how American multinational corporations attacked a duly elected government.  The European Commission is foreshadowing this crucial next step in its official, undeniable and detailed condemnation of Google’s lobbying tactics.  (See The Copyright Directive: how the mob was told to save the dragon and slay the knight on the EC’s official blog.)

Bear in mind that these techniques have been used by Big Tech for many years as I have documented.  But it must be said that Google and Facebook have hit a new low with Article 13 and the Parliament should not let it go back to business as usual.  What is unusual about the Article 13 campaign was that it simply was repeated versions of Plan A–carpet bomb the MEPs with automated emails (aka spam) and pretend that these fakes were the voice of the people.

Bots 14-2-19 Edited

Many of these Twitter accounts behaved in a manner that is similar to the Russian bots that all these social media companies have told the U.S. Congress and the UK Parliament that they are taking steps to control.  If that’s true, it should be clear that when Jack Dorsey bats his stock options at the Congress about how seriously they take the problem, they don’t seem to take it very seriously when it is Big Tech’s interests on the line.

Twitter should have caught all this behavior given their supposed interest in stopping the Russian bot farms.  It’s hard to know exactly what the game was with these accounts the way that Twitter could tell the MEPs in, say, an investigation.  Under oath.  But we can guess based on the old Twitter ratioing techniques.

Bot 8 2-12-19 Edited

There are hundreds if not thousands of accounts that all have some common traits–very high numbers of likes, very low numbers of followers and all making a clear effort at riding an emotional contagion that social media is designed to exploit.

There is a real problem with governing-by-contagion and public officials are investigating this very thing with the Russian bots that bear a striking resemblance to Google’s Article 13 campaign.

But this problem isn’t news–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 recognized the attraction to social media for policy making:

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.

 

But Sunstein called for exercising caution with public consultations.  He 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.”

The European Parliament would do well to take a page from Sunstein’s thinking.

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 begin with.

And Google is doing it to intimidate the European government into bending to its will on Article 13.  I’ll say it again–the European Commission needs to launch a full-blown criminal investigation into exactly what happened on Article 13.

 

 

 

 

You Furnish Alexa, and He’ll Furnish the War

February 10, 2019 Comments off

When Hearst Artist Frederic Remington, cabled from Cuba in 1897 that “there will be no war,” William Randolph Hearst cabled back: “You furnish the pictures and I’ll furnish the war.”

Time Magazine

Many artists I speak to have a serious moral problem driving their fans to YouTube knowing that the artists are simply feeding Google’s data bombing with collateral damage in the form of their music and their fans.  Yet Google’s beachhead in the data apocalypse is nothing compared to Amazon–as far as I know, which I hesitate to say too categorically given that it’s Google.

But Amazon’s super groovy Alexa comes with many Intelligence Community connections that on balance are more destructive to society than the carbon footprint of Amazon trucks creating the inverse of the efficiency of the shopping center, brutalizing employees or destroying small retailers.

Amazon Retail.png

What does Amazon do with your fan’s Alexa data (or your data for that matter)?  Belle Lin reports in the Intercept:

At the beginning of October [2018], Amazon was quietly issued a patent that would allow its virtual assistant Alexa to decipher a user’s physical characteristics and emotional state based on their voice. Characteristics, or “voice features,” like language accent, ethnic origin, emotion, gender, age, and background noise would be immediately extracted and tagged to the user’s data file to help deliver more targeted advertising.

The algorithm would also consider a customer’s physical location — based on their IP address, primary shipping address, and browser settings — to help determine their accent. Should Amazon’s patent become a reality, or if accent detection is already possible, it would introduce questions of surveillance and privacy violations, as well as possible discriminatory advertising, experts said.

The civil rights issues raised by the patent are similar to those around facial recognition, another technology Amazon has used as an anchor of its artificial intelligence strategy, and one that it controversially marketed to law enforcement. Like facial recognition, voice analysis underlines how existing laws and privacy safeguards simply aren’t capable of protecting users from new categories of data collection — or government spying, for that matter. Unlike facial recognition, voice analysis relies not on cameras in public spaces, but microphones inside smart speakers in our homes. [Emphasis mine]

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What’s the connection to the Intelligence Community?  It’s all in the cloud, baby–according to Frank Konkel writing in The Atlantic:

The intelligence community is about to get the equivalent of an adrenaline shot to the chest. This summer, a $600 million computing cloud developed by Amazon Web Services for the Central Intelligence Agency over the past year will begin servicing all 17 agencies that make up the intelligence community.

And of course the next step after the old IC is the largest employer in Crystal City.  According to many sources, Amazon is competing to win a $10 billion–that’s with a  B–contract from the Department of Defense to provide cloud services to the entire U.S. military, called the Joint Enterprise Defense Initiative or “JEDI”.  (Oh, please.)  The Pentagon, by the way, is essentially next door to Amazon’s HQ2 site in Crystal City/Alexandria.  There are many interesting twists to this particular Amazon grab at the taxpayer’s money, but one story that caught my eye is Reuters’ reporting that Google dropped out of the competition–why you may ask?

Alphabet Inc’s Google said on Monday it was no longer vying for a $10 billion cloud computing contract with the U.S. Defense Department, in part because the company’s new ethical guidelines do not align with the project, without elaborating.

Google said in a statement “we couldn’t be assured that [the JEDI deal] would align with our AI Principles and second, we determined that there were portions of the contract that were out of scope with our current government certifications.”

Yes, that’s right.  Too corrupt even for Google.  (And CNN reports that Amazon is being investigated by the Pentagon for illegal government contracting practices.)  That’s right–Jeff Bezos, JEDI master, wants those big bucks from John Q. Public.

Amazon is looking more and more like Halliburton, and Jeff Bezos is looking more and more like the Charles Foster Kane of the data apocalypse.  YouTube looks tame by comparison, which tells you how bad it really is.

And then there’s this braying about Amazon’s “Rekognition” AI-driven facial recognition application:

Amazon Rekognition today announces three new features: detection and recognition of text in images, real-time face recognition across tens of millions of faces, and detection of up to 100 faces in challenging crowded photos. Customers who are already using Amazon Rekognition for face verification and identification will experience up to a 10% accuracy improvement in most cases.

And who among us will find it useful to use this tool for “detection of up to 100 faces in challenging crowded photos”.  Well…depends on who you mean by “us” as Ava Kofman reports in The Intercept:

Police in Lancashire, a county in northwest England, have rolled out a program to broadcast crime updates, photos of wanted and missing people, and safety notifications to Amazon Echo owners. Since February, the free app has been available to those using Alexa, a cloud-based voice assistant hooked up to the Echo smart speaker. The first of its kind in the U.K., the program was developed by the police force’s innovations manager in a partnership with Amazon developers.

The program marks the latest example of third parties aiding, automating, and in some cases, replacing, the functions of law enforcement agencies — and raises privacy questions about Amazon’s role as an intermediary. Lancashire County will store citizens’ crime reports on Amazon’s servers, rather than those operated by the police.

And once Amazon uses Alexa to collect this biometric and other data, who do you think has access to it, hmmm?  And then there’s Ring, but what happens when Ring meets Alexa is a story for another day, or perhaps an Amazon Prime original series.

So are you still sure you want to promote Alexa penetration?  Just ask “her”–“Alexa, deliver my file” and see what happens.

 

 

The MTP Podcast: Revenue? What Revenue? Don’t be fooled on royalty audits vs. financial audits

February 8, 2019 Comments off

 

BLANCHE
Whoever you are…I have always depended on the kindness of strangers.
From A Streetcar Named Desire, by Tennessee Williams

From Highlights of Managing Change under the Music Modernization Act’s Mechanical Licensing Collective (footnotes omitted.  A version of this article appears as How Will the Music Modernization Act’s Mechanical Licensing Collective Work? in 34 Entertainment Law & Finance 1 (No. 9, Dec. 2018.)

Audits: Only the MLC may audit the blanket licensees.  Only copyright owners may audit the MLC. However, audits must be conducted by certified public accountants and those auditors are obligated to look for overpayments—which probably violates a CPA’s duty of loyalty. As Warner Music Group’s Ron Wilcox testified to the CRJs, “Because royalty audits require exten- sive technical and industry-specific expertise, in WMG’s experience a CPA certification is not generally a requirement for con- ducting such audits. To my knowledge, some of the most experienced and knowledgeable royalty auditors in the music industry are not CPAs.”

It is also important to note that the collective may only audit once a year for the prior three years. Given that there will be bil- lions of transactions subject to audit (and eventually trillions in a three year period), it is unlikely that CPAs will be conducting census level audits. Projections and lump sum payments are likely, and lump sum payments tend to be distributed in the old- school method of market share distributions.

Is Self Auditing Hazardous to Your Health? musictechpolicy.com/2014/06/01/is-s…to-your-health/

Songwriter Liberty and Audit Rights Under Section 115: Music Licensing Study Filing musictechpolicy.com/2014/06/10/song…g-study-filing/

Attestation Agreements AICPA

Generally Accepted Auditing Standards AICPA

Generally Accepted Accounting Principles

How to Fix The Music Modernization Act’s Flawed “Audit” Clause musictech.solutions/2018/03/12/how-…d-audit-clause/

Five Things Congress Could Do for Music Creators That Wouldn’t Cost the Taxpayer a Dime Part 3: Create an Audit Right for Songwriters artistrightswatch.com/2018/12/29/pos…r-songwriters/

Guest Post by Keith Bernstein: Holy GAAP! Publishers Not Getting the Upside musictechpolicy.com/2016/02/22/gues…ing-the-upside/

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February 6, 2019 Comments off
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