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Pandora’s Answer in Wixen v. Pandora (Lyricfind): Can you ever find what you don’t look for?

August 31, 2019 Comments off

Remember Wixen Music Publishing sued Pandora over Lyricfind’s purported license for song lyrics.  The case is being heard in Los Angeles before District Judge Stephen V. Wilson.   (If that name rings a bell, he was the trial judge in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster.)

Specifically, Wixen makes this allegation in paragraph 5 of the complaint (my emphasis):

Pandora may claim that it had obtained licenses to display the lyrics to the Musical Compositions from one or more sources, including an entity called LyricFind, the self-proclaimed “largest lyric licensing service” in the world, which  claims that it “has licensing from over 4,000 music publishers, including all majors.” However, as Pandora knows, and has known, LyricFind did not have the authority to grant licenses to Pandora for the display of any of the lyrics to the Musical Compositions on its service.

Pandora has now answered Wixen’s complaint, which is pretty much the typical “we deny everything those guys said” type approach with one exception that caught my eye.  It could be nothing, but it is an odd phrasing to me.

In response to paragraph 5 of Wixen’s complaint, Pandora responds to Wixen’s allegations (also in paragraph 5 of the Answer, my emphasis):

The allegations of Paragraph 5 [of the Complaint] contain speculation and conclusions of law to which no responsive pleading is required. To the extent a response is required, Pandora: (i) lacks information and belief as to the allegation that LyricFind is “the self-proclaimed ‘largest lyric licensing service’ in the world, which claims that it ‘haslicensing from over 4,000 music publishers, including all majors,’” and on that basis denies such allegation, (ii) lacks information and belief as to whether LyricFind had the “authority to grant licenses to Pandora for the display of any of the lyrics to the Musical Compositions on [Pandora’s] service”, and on that basis denies such allegation, and (iii) denies the remainder of the allegations of Paragraph 5.

Maybe this is a nothing issue and maybe I am over-thinking it.  God knows this would not be the first time that happened.  However, I do find it an odd phrasing.

Wixen’s allegation was that Pandora knew that LyricFind did not have authority to grant Pandora the rights to Wixen-represented songs.  How might Wixen think Pandora “knows and has known” LyricFind did not have the rights?  A simple explanation might be because Wixen told them so, and probably told them so more than once.  In fact, I would not be surprised if Wixen told them so repeatedly while Pandora disregarded Wixen and continued to exploit the song lyrics at issue.  (And this is the primary reason these companies get sued in my experience.)

Note that there is no qualifier on this allegation by Wixen such as “on information and belief” which usually means that the speaker is not speaking from first hand knowledge, but rather something they have been told and that they believe at the moment of utterance.  This is kind of like saying “our client informs us that….”

Pandora’s response is not “we have a contract with LyricFind in which they represent they have the rights” or better yet, “LyricFind has provided Pandora with the underlying license from Wixen demonstrating that they have the rights.”  Remember, this is arguably a core issue in the Wixen case, if not the core issue:  Did Pandora reasonably rely on their license with LyricFind that represented that LyricFind had the rights to Wixen’s catalog?  Or, did Pandora have actual knowledge that LyricFind did not have the rights to Wixen’s songs?

At this point, it is hard to know the answer to either of these questions definitively.  But–it does seem that if LyricFind did have the rights, and assuming LyricFind’s license to Pandora was otherwise solid, isn’t it kind of game over at that point?  Wouldn’t you think Pandora would be screaming it from the rooftops?

Instead, Pandora seems to be saying it lacks first hand knowledge of what authority LyricFind had to grant rights to Pandora, and on the basis of their lack of knowledge denies Wixen’s allegation (the apparent antecedent of “that basis” in the Answer).  Which I guess means that they haven’t asked LyricFind, and that’s kind of the dog that didn’t bark.  Wouldn’t you think they’d make it their business to find out?  Perhaps even long ago?  But to put a bit finer edge on it, perhaps a bit uncharitably, can you ever find what you don’t look for?

Wixen, of course, can very likely discover through a subpoena or deposition what communications exist between Pandora and LyricFind on this issue, so if they did talk about it, it’s only a matter of time until it comes out, unless they can somehow keep those communications from discovery which I doubt.

Not taking anything away from Wixen Music Publishing, but this case is quite interesting because it could have wider ranging ramifications–if LyricFind did not have the rights to license Wixen repertoire to a client the size of Pandora but did so anyway, how many others are caught up in that mess?  That’s a pickle of a whole different water, to mix a metaphor.

Status conference with Judge Wilson on September 9, stay tuned.

@musictechpolicy Podcast: Eight Mile Style Sues Spotify Under Music Modernization Act

August 30, 2019 Comments off

Chris Castle discussion of Eight Mile Style lawsuit against Spotify under Music Modernization Act (driving with dogs series)

Eight Mile Style v. Spotify Complaint

Meet the New Boss:  Tech Giants Rely on Loopholes to Avoid Paying Statutory Royalties with Mass Filings of NOIs at the Copyright Office

The Time to Hesitate is Through: Amazon’s Thievery Requires Decisive Action

August 28, 2019 1 comment

Emmanuel Legrand reports in his excellent newsletter that:

Music industry trade group the Recording Industry Association of America(RIAA) has asked the US government for tougher measures against infringers, in particular in the online marketplace. The proposal was part of a submission to the US Department of Commerce, as part of its request for comments on the state of the state of counterfeit and pirated goods.

You can read the RIAA’s submission here.  Note that everyone who participates in a recording is screwed by counterfeits including artists, producers, songwriters, musicians and vocalists.

Counterfeiting and pirating of physical music products facilitated by online platforms continues to cause harm to our members. In 2019, we conducted two studies to identify the amount of counterfeit offerings of music CDs on popular online platforms, including a study on the prevalence of high quality counterfeit box sets on certain platforms and a study on the prevalence of high quality counterfeits for a broad sample of current and evergreen album titles released by the major U.S. record labels. As further discussed below, each of these studies showed significant counterfeit activity on the noted online platforms, including findings that:

  • A recent sample purchase program found 100% of new high quality box sets offered for sale through eBay or AliExpress in the U.S. were counterfeit; and
  • A recent sample purchase program found 11% of new CDs offered for sale on Amazon were counterfeit, and 16% of new CDs sold on eBay were counterfeit.For the study on box sets of music, we identified and made test buys on eBay and AliExpress’s U.S. platforms of 10 well known artist box set titles released by major U.S record labels. Each purchase was made after a search for “brand new” box sets of the titles selected, and a purchase of the 4 lowest priced box sets on each platform, without regard to seller location. We then examined the products that were shipped to us. On both eBay and AliExpress, 100% of the test buys of the box sets were counterfeit. This is of particular concern as box sets are premium physical music products designed for the superfan that often contain the most significant sound recordings in an artist’s repertoire.

The conclusion is:

Trafficking of counterfeit and pirated goods, whether in the form of physical CDs, box sets or artist merchandise, as well as online infringement of music and music videos in digital form, continues to significantly impact the music industry. We believe more can be done, including implementation of voluntary measures as well as governmental action, to deter and reduce such activity, and create a healthier online ecosystem where all can thrive.

Amazon apparently was the only one of the bootleggers who responded, and did so with the usual non answer and deflection:

Our customers expect that when they make a purchase through Amazon’s store—either directly from Amazon or from one of its millions of third-party sellers—they will receive authentic products. Amazon strictly prohibits the sale of counterfeit products and we invest heavily in both funds and company energy to ensure our policy is followed. We work with and empower brands through programs like Brand Registry, Transparency, and Project Zero to ensure only authentic products are sold in our stores. We investigate any claim of counterfeit thoroughly,including removing the item, permanently removing the bad actor, pursuing legal action or working with law enforcement as appropriate.

Sound familiar?  Kind of like how YouTube responds to the community flagging?  Investigating after the illegal goods are being sold is not the point.  Getting caught is not the point.  The point is stopping the illegal goods from getting onto the platform in the first place.

The reason this drivel from Amazon sounds like tired crap is because it is tired crap.  And crystalizes that they think the problem is getting caught and that what they really want is to keep getting away with it.

And this is where I disagree a bit with RIAA–the time for voluntary measures has passed.  Someone needs to go to jail–someone high up who almost invariably knew what was going on (for example, grand jury documents told the U.S. Attorney for Rhode Island “Larry Page knew what was going on“).

Then we can talk again about voluntary measures to keep their butts out of the slammer–not their pathetic little “Project Zero.”  I got your project zero right here.

Remember the great continuum that has driven homo sapiens for millennia:

FEAR <———> GREED

We need Jeff Bezos closer to the FEAR end than the GREED end.

Remember that data is the new exposure, streaming is the new physical and that both these tropes have something in common–artists are being driven to substitute away from low to no margin streaming and away from sustainable margins on physical like CDs with no revenue replacement.  (Unless you’re in the 5% of tracks that account for 90% of streaming revenue in the hyper efficient market share distribution of streaming revenue.)

Against that background, we find that the online platforms like eBay, Alibaba and Amazon are going even further toward evil and doing little or nothing in their rush to drive physical retail out of business to stop the sale of counterfeit CDs delivered to your door by Amazon Prime or Ali-express.  And most honest business folk would probably think they are pretty shameless about it and ask how could they get away with sucking up the revenue from counterfeits into their maelstrom of cash?

But before you go down that rabbit hole, you need to understand an important fact about the mind set of Silicon Valley–and it’s the same mindset that gave us both Google and Theranos.  It’s not that they made a choice to do evil.  It’s that they don’t understand there is a choice about doing evil.  It’s how these little soulless people sit in front of Congress and lie and feel good about themselves.  The Internet is their Ring of Gyges and they are unconcerned about justice because their thing is getting away with it, not getting caught and getting richer than Croesus.

Somewhere in their development they lacked the normative guide–or “sherpa” in their case–that should have developed a self-governing code to map their behavior.  Parents, pastors, priests, rabbis, teachers, all failed to make a dent.  These are the kind of people who don’t stop when the European Commission fines them billions.  They don’t care how they treat their employees as long as they’re the richest man in the world.  They don’t care about ripping off artists.  Their reaction to getting caught is not fixing the problem, their reaction is to buy the shillery and try to make us look greedy for expecting them to behave.

If a $5 billion fine didn’t work, how about $50 billion?  Let’s try that.  But even in the Silicon Valley dual class stock system, the corporate royalty might start thinking about offering up an executive to save the company rather than pay truly appropriate fines.

This is why the solution probably isn’t voluntary.  It probably has a lot more zeros on it than any normal person  would think reasonable, or is a court order for very specific behavior, or simply prison.

Artist Glossary of Industry Terms: Re-Recording Restrictions

August 24, 2019 Comments off

If you’ve been following the Taylor Swift situation with her former label, you’ve probably seen the unsurprising news that Taylor plans to re-record some or all of her prior catalog.  This raises the issue of the customary “re-recording restriction” and “re-producing restriction” found in artist and producer agreements respectively.

Re-recording restrictions are designed to give the label that invested in the recordings a reasonable time period to exploit their exclusive rights.  (This may also give Label 1 a chance to benefit if an artist they dropped enjoys new success on Label 2 sparking commercial interest in that artist’s back catalog.)

Here’s what these look like.  First a more negotiated one:

After the Term, Artist shall not, prior to the later of the following dates, perform for any person, firm, or corporation other than us, for the purpose of making Phonograph Records or Master Recordings, any Song which was recorded hereunder or under any other agreement between you or your affiliates and us or our affiliates for which we or our affiliates paid an advance against royalties hereunder or under such other agreement (whether or not in respect to Recording Costs) or which is released by us for commercial sale to the general public no later than six (6) months after the expiration of the Term; provided that if any such Song was recorded in a Master hereunder and we are otherwise entitled to release such Master in Phonograph Record form, prior to performing such Song for any third party for the purpose of making Phonograph Records, you shall notify us of our failure to have so released such Master and we shall have six (6) months after the date of such notice to so release such Master, upon which release the Song embodied in that Master shall be subject to the provisions of this subparagraph, and; further provided that if we fail to so release such Master within that six (6) month period, you shall have the right to perform that Song for any such third party irrespective of the provisions of this subparagraph:  (i) the date five (5) years subsequent to the last date on which a Master Recording embodying that Song was delivered to us hereunder (but a Master or arrangement thereof included on a “Greatest Hits” or “Best of” LP shall be deemed to have been last recorded when such Master was originally recorded; or (ii) the date two (2) years subsequent to the date on which the Term hereof ended.

And then a more plain vanilla one that is not negotiated (“you” refers to the artist’s loan out personal services corporation):

You warrant and represent that you have the sole and exclusive right to the services of Artist as required herein. You warrant and represent that Artist will not perform for any Person other than Label (and neither you nor Artist will license or consent to or permit the use by any Person other than Label of Artist’s name or likeness) for or in connection with the recording or exploitation of any Record embodying a Composition recorded or delivered by Artist under this agreement prior to the later of (i) the date five (5) years after the date of Delivery hereunder to Label of the last Master embodying that Composition, or (ii) the date two (2) years after the expiration or termination of the term of this agreement or any subsequent agreement between Label and you or Artist or any other Person furnishing Artist’s recording services. Your agreement with the individual producer of each Master hereunder will restrict said producer from producing a Composition produced by such individual hereunder on another Master for any Person other than Label for at least two (2) years from the date of Delivery to Label of such Master.

Note that this language includes a flow down requirement for the producer agreement–one that is typically negotiated by the artist engaging the producer (not the label).  So if the artist plans to use their original producer, you want to be sure that the producer’s re-recording restriction is not more restrictive than the artist’s.

There is a long history (particularly in Nashville) of artists re-recording their hits and it is a standard–albeit not that common–practice that could easily be anticipated.

Sometimes this happens significantly after the artist is dropped.  Quick story–in one situation, we were releasing a “best of” compilation with the cooperation and participation of an artist who had been off the label for a good ten years.  It turned out that they had one track we didn’t own that was a big hit.  It would have been nice for the fans to include it on our record.  I asked the releasing label for a license and offered very reasonable terms, including a generous advance that was likely well more than the label would have earned in royalties even under the very fair royalty rate we offered.  The band was ready to go back into the studio and reunite for this recording.

I don’t think the other label believed this when I told them, but we had to impose a deadline on our offer as otherwise we weren’t going to be able to pull all of it off on schedule.  The deadline passed, our offer expired, so the band went in the studio and recorded a great version of the original track–and they did it for costs only because that’s what the artist wanted to do.

The punchline is that you need to listen to your artist, even if they are not on the label.  I always felt that if an artist was someone we thought highly enough of that we got into business with them in the first place, we would always treat them (and their heirs) with that same level of respect, on or off the label, recouped or unrecouped.  For example, I would almost always seek artist consent for either current roster or back catalog master licenses even if we were not contractually obligated to do so, a practice for which I caught hell from PolyGram.  Too bad.

Another answer to the re-recording restriction is that the artist values the label relationship enough that they prefer to come back to the home label and ask to have their back catalog released or licensed back.  It doesn’t always work out that way, but that’s better than having them re-record for someone else.

@musictechsolve: Vote for Creator and Startup Licensing Education at SXSW

August 23, 2019 Comments off

Deadline for SXSW Panel Picker is today! Please vote for my creator and startup licensing panel at SXSW.EDU. If the latest Spotify litigation shows anything it’s the importance of licensing education.

I have a workshop in the SXSW.edu track titled “TEACHING ARTIST ROYALTIES TO CREATORS AND STARTUPS.”  It follows my philosophy that we need smart artists and smart startups to work together if we all are to succeed.

The workshop has three purposes:

–A building block approach to teaching artists and songwriters about the principal royalty streams that sustain them.  This is targeted financial literacy which is as critical to artists and songwriters as balancing your checkbook.

–A licensing roadmap overlay for entrepreneurship studies.  It’s far too frequent that entrepreneurs spend more time developing their product roadmap and critical path than they do developing their licensing roadmap side by side with the product.  That way when a startup gets to launch there is less likelihood they will go into the terminal holding pattern or worse–launch without licenses.

–the importance of clean and stable metadata to both artists and startups (and mature companies) and how to accomplish this goal starting with the digital audio workstation.

The class description:

Royalty rates, royalty reporting and earnings are some of the least understood–yet most important–parts of a creator’s career or a startups nightmare. Understanding royalties is as important as understanding how to balance your checkbook. Starting with metadata and simple revenue streams, leading to complex calculations and government run compulsory licenses and sometimes impenetrable royalty statements, the workshop gives educators tools and building blocks to teach the subject.

I’d really appreciate your vote for the class in the SXSW Panel Picker here. To vote, you just need to sign in to PanelPicker or create a free SXSW account with your email only.

 

Hombres Good and Bad: Why Did SEC Allow Cloudflare to IPO?

August 20, 2019 Comments off

Cloudflare describes itself in its IPO documents (Form S-1):

We have built a global cloud platform that delivers a broad range of network services to businesses of all sizes and in all geographies…

What Cloudflare doesn’t tell you is that it is also the Internet provider of choice for a host (no pun intended) of unsavory and in some cases likely entirely illegal businesses that use its platform for bad stuff.  How to they get away with it?  Well…that depends on what the meaning of “it” is.

Cloudflare, you see, means well.  And that’s what counts in the Internet economy.  There must be a TED Talk about doing bad with good intentions.  For example, its mission statement:

Cloudflare’s mission is to help build a better Internet.

Like don’t be evil, dude.

The problem is that it’s not just that Cloudflare fell in with bad company–Cloudflare seems to have been the platform of choice for really bad company.  My bet is that wasn’t an accident.

But here’s the curious thing–the Security and Exchange Commission doesn’t seem to have looked too hard at what Cloudflare is up to.  Even when the SEC is put on notice of really nasty stuff that you would expect to see in a different government document–namely an indictment.

Cloudflare evidently was the global cloud platform for both the Daily Stormer and 8Chan.  Both are dealt with in a single “risk factor” in Cloudflare’s S-1 addressing “negative publicity”:

Activities of our paying and free customers or the content of their websites or other Internet properties, as well as our response to those activities, could cause us to experience significant adverse political, business, and reputational consequences with customers, employees, suppliers, government entities, and others.

Activities of our paying and free customers or the content of their websites and other Internet properties could cause us to experience significant adverse political, business, and reputational consequences with customers, employees, suppliers, government entities, and other third parties. Even if we comply with legal obligations to remove or disable customer content, we may maintain relationships with customers that others find hostile, offensive, or inappropriate. For example, we experienced significant negative publicity in connection with the use of our network by The Daily Stormer, a neo-Nazi, white supremacist website, around the time of the 2017 protests in Charlottesville, Virginia. We also received negative publicity in connection with the use of our network by 8chan, a forum website that served as inspiration for the recent attacks in El Paso, Texas and Christchurch, New Zealand. We are aware of some potential customers that have indicated their decision to not subscribe to our products was impacted, at least in part, by the actions of certain of our paying and free customers. We may also experience other adverse political, business and reputational consequences with prospective and current customers, employees, suppliers, and others related to the activities of our paying and free customers, especially if such hostile, offensive, or inappropriate use is high profile.

Conversely, actions we take in response to the activities of our paying and free customers, up to and including banning them from using our products, may harm our brand and reputation. Following the events in Charlottesville, Virginia, we terminated the account of The Daily Stormer. Similarly, following the events in El Paso, Texas, we terminated the account of 8chan. We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this.

Ah, negative publicity is the issue, you see, because that affects profitability.  Because they take money and are willing too debase themselves for an internet subscriber account.  So it’s not that these sites did anything intrinsically bad, it’s that Cloudflare got caught doing business with them and they got “negative publicity.”

I’m really surprised that the SEC Examiner who processed this S-1 allowed all this stuff to just sail right through as they opened the door to the public markets for these soulless technocrats.  They used to give you the microbial scrub at the SEC before they let you feed at the public trough, but I guess those days are gone.

And you have to wonder who wasn’t minding the store when Cloudflare’s lawyers passed through the Internet trope of “censorship”.  A private company terminating an account of sickos is not censorship.  I don’t know how much “judgement” it takes to figure out that maybe you don’t want to be in business with the Daily Stormer or 8Chan.  That’s all.  There’s no grandiose mystery to it, there’s no “judgement” and there’s definitely no “censorship” (which is what the government does).  There’s just making a decision about who you are and who you want to associate yourself with.

This was not lost on Rep. Ted Deutch who recently asked why the Library of Congress was hosted by Cloudflare.  Good question.  You know, they take money from hombres good and bad.

Texas Bar Section Announces Nominations are Open for the Cindi Lazzari Artist Advocate Award — Artist Rights Watch

August 16, 2019 Comments off

We’re pleased to help get out the word that nominations are open for the Cindi Lazzari Artist Advocate Award for “heroes and heroines” involved with artist advocacy in all Texas communities.  For Texas readers, there’s info below about how to nominate.  If you’re not in Texas you may want to look into whether your community has a similar award.  If not, you might consider starting one.

If you would like to nominate someone for the award, you may use this form.

PRESS RELEASE:

The State Bar of Texas Entertainment and Sports Law Section (TESLAW) announced that nominations for the Cindi Lazzari Artist Advocate Award are open now until 11:59 pm Central Time on October 1, 2019.  The award is named for the late Cindi Lazzari, a leading Texas attorney who went far beyond the call of duty in her efforts to protect the rights of artists in the music industry.

In these challenging times for Texas musicians, TESLAW wants to hear about the exciting heroes and heroines who carry on the tradition of Cindi’s good works in all the music communities across Texas.  Nominees need not be attorneys.

Previous recipients of the Lazzari Award include Juan Tejeda (musician, arts administrator and activist), Robin Shivers (artist manager and founder of the Health Alliance for Austin Musicians), Texas Accountants and Lawyers for the Arts, SIMS Foundation, Nikki Rowling (co-founder of Austin Music Foundation and author of the Austin Music Census), Casey Monahan (the first head of the Governor’s Music Office) and Margaret Moser (the journalist and long-time music editor for the Austin Chronicle).

Nominations for the 2019 Lazzari Award will be accepted through October 1, 2019 and should be sent by e-mail only to law@amyemitchell.com. The nomination email should include (1) the nominee’s name and contact information; (2) a one-page statement as to why the nominating individual believes the nominee should receive the award; and (3) a biography of the nominee.

TESLAW will present the Cindi Lazzari Artist Advocate Award at the annual Entertainment Law Institute, to be held in Austin November 20-22, 2019.

For further information, please see TESLAW’s web page at http://teslaw.org/awards/cindi-lazzari-artist-advocate-award/

via Texas Bar Section Announces Nominations are Open for the Cindi Lazzari Artist Advocate Award — Artist Rights Watch

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