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Good News: Big Machine TV

January 19, 2017 Leave a comment

MTP readers know I take a dim view of the music business (and the larger entertainment industry) falling over themselves to drive traffic to YouTube.  Big Machine is taking a major step in the right direction to protect their artists’ brands from being used to hand Google negotiation leverage on a silver platter.  This trend won’t reverse itself overnight, but Big Machine is to be applauded for having the foresight (per usual, frankly) to set the right strategy for the industry.

Here’s the press release:

Big Machine Label Group will soon launch a proprietary digital video platform that gives fans direct access to content featuring the label’s superstar roster of talent.  Big Machine TV (www.BigMachineTV.com) will offer music videos and behind-the-scenes content when it goes live in February, later hosting exclusive interviews, announcements, contests and more. All of the label’s artists, including superstars Taylor Swift, Tim McGraw, Reba, Florida Georgia Line, Rascal Flatts and Thomas Rhett, will have individual channels on the platform that allow viewers to seamlessly search for desired content for an immersive online fan experience.

The development of Big Machine TV comes just as Nielsen Music’s recent 2016 U.S. Year-End Report shows that music video streaming is up 8% year over year, reaching nearly 180 billion streams last year. Video viewership on the new BMLG platform will count towards Nielsen’s consumption charts.

“Big Machine has always pushed the envelope, and we found ourselves asking, ‘is there a better way’ when it comes to syndicating our online content, pushing it onto social media, protecting it and ultimately monetizing it at the highest rate possible to benefit our artists,” said BMLG President and CEO Scott Borchetta. “And the answer was ‘yes’. The Big Machine TV platform is an incredible tool to better serve our artists and their fans by delivering content when and how we want, all the while making sure the creators are compensated fairly.”

Big Machine Label Group has repeatedly been known for making groundbreaking moves among the music industry and in 2016 was named by Fast Company magazine as one of the “Most Innovative Companies” in America. In 2012, in an unprecedented deal, BMLG made history by working with Clear Channel, the largest owner of U.S. radio stations, to secure sound-recording performance royalties to the label and its artists. This became the first time in history that artists would get paid of their recordings on terrestrial radio stations.

@thetrichordist: Updated! Streaming Price Bible w/ 2016 Rates : Spotify, Apple Music, YouTube, Tidal, Amazon, Pandora, Etc. — Artist Rights Watch

January 18, 2017 Leave a comment

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The problem with a pro-rata share of advertising revenue is that the fraction may well always trend downward and is dependent on the growth rate of the service involved. If that sounds like a ponzi scheme, it is pretty similar.

[your plays/all plays] * [ad revenue]

If the fraction is always your plays divided by all plays, your plays may spike a bit but will always be more constant than the all plays number which continually grows at least on a relative basis as more recordings are released industry wide. The “your plays” number will likely never grow at a rate that is greater than the growth in the “all plays” number.  The denominator will probably always grow faster than the numerator, which means the fraction is continually getting smaller.

This may be offset somewhat by growth in the ad revenue, but in order for royalties to grow for any particular artist, the percentage increase in the ad revenue would have to exceed the percentage decrease in “your plays” and your percentage piece of the pie.  Based on the Trichordist findings, it looks like the percentage decline in the plays ratio is greater than the increase in ad revenue.

The same will probably be true of subscriber revenue as the “new money” starts to level off or even decline.

That’s why it’s like a ponzi scheme.

The last time we did this was back in 2014, so we thought it was time for an update. Not a lot of surprises but as we predicted when streaming numbers grow, the per stream rate will drop. This data set is isolated to the calendar year 2016 and represents an indie label with an […] […]

via @thetrichordist: Updated! Streaming Price Bible w/ 2016 Rates : Spotify, Apple Music, YouTube, Tidal, Amazon, Pandora, Etc. — Artist Rights Watch

Class Action by Artists Against Distributor For Accountings Under Direct Deal With SiriusXM

January 18, 2017 Leave a comment

The string trio Time for Three and S’More Entertainment filed a class action yesterday (Jan 17) in New York federal district court against “Defendants Entertainment One GP LLC and Entertainment One U.S. LP, doing business as E1 Entertainment and/or Koch Entertainment LP” for a variety of claims relating to the defendant’s direct deal with SiriusXM.

The class action complaint describes the suit:

4. In violation of the Class Member Contracts, Defendants entered into secret negotiations and agreements with satellite radio provider Sirius XM Radio (“Sirius XM”), for the exploitation of Plaintiffs’ and the Class Members’ intellectual property. Defendants have systematically failed to account for any revenue, or pay any portion of the revenue generated from the exploitation of the Class Members’ Musical Works on Sirius XM under this agreement.

5. Plaintiffs bring this nationwide class action on behalf of themselves and similarly situated Class Members arising from Defendants’ failure to properly account for and pay revenues generated for the distribution of the Class Members’ Musical Works on Sirius XM and other digital satellite radio providers. Plaintiffs bring claims including for breach of contract, breach of the implied covenant of good faith and fair dealing, an accounting, and declaratory relief. Plaintiffs seek monetary damages, injunctive, and/or declaratory relief on behalf of themselves and others similarly situated against Defendants’ for their willful violation of the Agreements….

B. Defendants’ Secretly Withheld Revenues From Sirius XM in Violation of the Contracts Resulting in Substantial Damages to the Class Members

24. Pursuant to the 1995 Digital Performance Right in Sound Recordings Act, and the 1998 Digital Millennium Copyright Act, artists, songwriters, and masters holders are legally entitled to receive royalties for digital performances of Musical Works on DEMD, including on Sirius XM. In the absence of a direct contractual agreement between the digital transmission entities (e.g. Sirius XM) and a record company, these DEMD royalties are determined based on federally-approved statutory license rates. By law DEMD royalties generated pursuant to a statutory license—absent an agreement between the parties—are collected on behalf of and distributed to rights holders by the independent non-profit organization, SoundExchange, Inc. (“SoundExchange”).

25. When digital transmission providers contract directly with record companies for DEMD rights, such royalties are paid at contractually negotiated rates, and the obligation to collect, account for and pay such revenues to artists and musicians falls on the record company, instead of SoundExchange.

26. In this case, Defendants secretly negotiated and entered into an agreement for Sirius XM to distribute the Musical Works of Plaintiffs and the Class Members. Defendants had a legal obligation under the Agreements with Plaintiffs and other Class Members to properly and accurately account for and pay the revenue received by Defendants to Plaintiffs and Class Members. On information and belief, rather than fulfilling their contractual obligations, Defendants have systematically, knowingly, and intentionally withheld and failed to account for and pay for revenue generated from Sirius XM Plaintiffs and other Class Members.

27.  As a result of Defendants’ conduct, the revenue that Defendants have collected from Sirius XM is never reported, and is never subject to potential remittance to Plaintiffs and the Class Members. Instead, these revenues have been wrongfully retained by Defendants outright.

28. Defendants have engaged in this conduct even though they have no contractual or legal right to do so. It is currently unknown whether there are entities other than Sirius XM from whom Defendants are collecting DEMD revenue, without reporting and paying such revenues to Plaintiffs and the Class Members.

29. Defendants are wrongfully retaining monies that are owed to Plaintiffs and the Class Members. On information and belief, Defendants could easily account for and pay the money owed to Plaintiffs and the Class Members, as required by the Agreements.

Read the class action filing here.

This will be one to keep an eye on.  The lawyers filing the complaint on behalf of the potential class include some familiar names and are:

REESE LLP

Michael R. Reese
George V. Granade
100 West 93rd Street, 16th Floor
New York, New York 10025
Telephone: (212) 643-0500
Facsimile: (212) 253-4272
Email: mreese@reesellp.com
ggranade@reesellp.com

JOHNSON & JOHNSON LLP

Neville L. Johnson
Douglas L. Johnson
Jordanna G. Thigpen
439 N. Canon Dr. Suite 200
Beverly Hills, California 90210 T: (310) 975-1080
F: (310) 975-1095
Email: njohnson@jjllplaw.com
djohnson@jjllplaw.com
jthigpen@jjllplaw.com

PEARSON, SIMON & WARSHAW, LLP

Clifford H. Pearson
Daniel L. Warshaw
Bobby Pouya
15165 Ventura Boulevard, Suite 400
Sherman Oaks, California 91403
Telephone: (818) 788-8300
Facsimile: (818) 788-8104
Email: cpearson@pswlaw.com
dwarshaw@pswlaw.com
bpouya@pswlaw.com

@njmacphee: Musician @MaximCormier wonders how songs ended up for sale online without his OK–Artist Rights Watch

January 15, 2017 Leave a comment

One of the only stories on piracy where the artist called the cops.  More of that, please!

A guitarist from Cape Breton was shocked this week to discover his music was being sold online without his knowledge or consent. Maxim Cormier of Chéticamp said a local radio station was offering track-by-track digital downloads of his songs for a fee. “I had never given permission to them to do that,” said Cormier. “And I had certainly never received any payments for any of the sales.” When Cormier found out, he called the police.

via @njmacphee: Musician @maximcormier wonders how songs ended up for sale online without his OK — Artist Rights Watch

Is Google about to Launch the Largest Torrent Search Engine Ever Seen?–Artist Rights Watch

January 15, 2017 Leave a comment

After years of catering to copyright holders and their increasing demands, is Google about to go rogue in sheer frustration? According to a report by TorrentFreak, 2017 could well be the year Google throws its toys out of the pram, raises the Jolly Roger and takes to the digital seas in anger by launching its very own mega torrent search engine.

via @Aditya Bhat: Is Google about to launch the largest torrent search engine ever seen? — Artist Rights Watch

@shiraovide: Pandora’s Eyes Are Bigger Than Its Wallet

January 13, 2017 Leave a comment

Remember the rending of garments by Pandora’s overpaid executive team about how they just couldn’t turn a profit because of the royalties they paid under their statutory licenses?   Statutory licenses allow Pandora to operate without paying minimum guarantees like they will need to do for their much ballyhooed on demand service that is yet to launch.   And remember the standing offer we made to pick any MBA lurking in any business school corridor anywhere in the world to help a company with government mandated price controls on the expense side and over $1 billion in annual revenue turn a profit?

Looks like their secret is out–as Bloomberg’s Shira Ovide writes, Pandora is feeling the burn.  This right before (we suppose) that Pandora launches its on demand music service for which they are serving millions of “address unknown” NOIs on the Copyright Office to stiff songwriters on statutory royalties.  The story from Ms. Ovide is thought provoking, but let’s provoke this thought:  What happens if Pandora can’t pay its statutory royalties at all?

At its current rate of cash burn, then, [Pandora] will exhaust its reserves of ready cash in about 10 months.

What happens to the statutory royalties if Pandora goes bankrupt?  Remember–in bankruptcy, artists and songwriters are known as “unsecured creditors” standing way, way behind Pandora’s creditors such as bond holder Texas Pacific Group.  Of course, it’s probably more likely that Pandora’s exit will be a sale–hopefully before it misses a royalty payment and hopefully for more than the $450 million of cold cash it spent on the misguided acqusition of Ticketfly.

Pandora said on Thursday that it was being savvy about how it lures new subscribers without overspending on marketing and that it was finding more ways to automate advertising sales. The company also said its “commitment to cost discipline” — i.e., its willingness to fire people and pinch pennies in nonessential areas — would allow it to devote funds to new products. Using a customized measure of earnings, Pandora said it expects to do better than the losses forecast by Wall Street analysts. The company still doesn’t expect to be profitable under conventional accounting standards.

The best hope to cure Pandora’s ills is a sale. And that’s why Pandora’s stock moves up mostly at any hints a sale might be coming.

Read the post on Bloomberg

 

 

Facebook’s Misappropriation Problem Selling Artist Names as Keywords

January 6, 2017 Leave a comment

“Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

Article 27(2), Universal Declaration of Human Rights

What do Prince, The Beatles, The Chainsmokers, Celine Dione, Maroon 5, Jimi Hendrix and Rev. Martin Luther King, Jr. all have in common?  Each of their names are for sale as advertising keywords on Facebook.  (Although we’ll just look at Facebook today, it’s highly likely that the same is true of Google and other advertising networks that profit from the sale of keywords.)

Why should we care?  Because under the law of many states and of the United States, public figures (and some would say every person) has the right to protect the use of their name and likeness (including images) and often their voice.  This protection is typically called the “right of publicity”.  (Approximately 22 states recognize the right of publicity in some form including Alabama, Arizona, California, Florida, Hawaii, Illinois, Indiana, Kentucky, Massachusetts, Nebraska, Nevada, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.)

It’s best to view the right of publicity as an intellectual property right drawing on but distinct from other intellectual property rights.  The right of publicity is distinct from copyright and is more like unfair competition and misappropriation that are most directly analogous to protections in trademark law.  (A good place to start for further reading is “The Right of Publicity” by Professor Nimmer (19 Law &  Contemporary Problems 203 (1954)) and Professor McCarthy’s treatise “The Rights of Publicity and Privacy” and of course the seminal right of publicity case, Haelan Laboratories v. Topps Chewing Gum, 202 F2d 866 (2d Cir. 1953).)

There is a long line of cases involving misappropriation of the right of publicity in the advertising setting, particularly cases where the infringer knew that the artist did not want to perform in a commercial.  In two well known cases, the advertiser approached the artist to perform on a commercial, the artist declined, and the advertiser got a sound alike singer to invoke the artist’s voice anyway.  (Midler v. Ford Motor Co. 849 F.2d 460 (9th Cir. 1989) (misappropriation of Bette Midler’s voice) and Waits v. Frito-Lay, Inc. 978 F.2d 1093 (9th Cir. 1992) (misappropriation of Tom Waits’ voice.)   The advertisers lost.

Rev. Martin Luther King, Jr.’s image was misappropriated in a similar situation where a company sought permission to manufacture a plastic bust of Rev. King and was denied by the King estate, but did it anyway.  (See Martin Luther King, Jr. Center for Social Change, Inc. et al v. American Heritage Products, Inc. et al 296 S.E.2d 697 (Ga. 1982) and 694 F.2nd 674 (11th Cir. 1983).  The 11th Circuit held for the King estate based on the Georgia Supreme Court’s interpretation of Georgia’s right of publicity including the ability of heirs to assert the rights of a deceased person.

Another case along these lines that involved the misappropriation of a celebrity’s persona was brought by the Wheel of Fortune personality Vanna White (White v. Samsung Electronics America, Inc., 971 F.2d 1395 (9th Cir. 1992)).  The defendant in that case produced an ad that featured a robot that invoked a caricatured version of the persona of Vanna White.  (Query whether “Wheel of Fortune” should have sued as well, but leave that to one side.)

So what does this mean for Facebook?  Well, Bette Midler, Tom Waits, Rev. King and Vanna White should all feel included in the discussion as all of their names are available as keywords for sale on Facebook.  Facebook clearly has significant misappropriation risk from infringing the right of publicity of a host of artists and celebrities, or, one might say a “class” of artists and celebrities (including estates).  How do we know that?

One way we know is because Facebook says it does.  In Facebook’s 2015 annual report Facebook tells stockholders in the Risk Factors (at p. 6):

We are subject to a number of U.S. federal and state and foreign laws and regulations that affect companies conducting business on the Internet. Many of these laws and regulations are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy and data protection, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, personal information, electronic contracts and other communications, competition, protection of minors, consumer protection, telecommunications, product liability, taxation, economic or other trade prohibitions or sanctions, securities law compliance, and online payment services. In particular, we are subject to federal, state, and foreign laws regarding privacy and protection of people’s data. Foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.

Misappropriation of the right of publicity as practiced by Facebook is not “constantly evolving”–it’s well settled law.  They are not going to be able to take advantage of the “Because Internet” defense.  Like so many other offline transactions that are replicated online, the essential elements don’t change.  If anything, it’s not even a close case in my view.

They take the artist’s name and sell it without permission and they acknowledge that they have the risk (because their senior management and lawyers know that Facebook is doing it).  And essentially the same language appears in the Facebook annual reports for 2014 (at p. 7), 2013 (at p. 10) and 2012 (at p. 13) which is the first year that Facebook filed a public annual report after its IPO.  I would bet that the Facebook pre-IPO investor reporting to its private company investors probably had the same or similar language.

So they know what they are doing.  And we haven’t even mentioned the moral rights of artists yet.

For a company that is entirely unlicensed on its uses of music, Facebook is starting to look like a blatant infringer of a host of artist rights.  Mark Zuckerberg recently announced he was planning on traveling to the 50 states to see how the 99.999% live.  Before he packs a sandwich for the trip, he should look into his company’s advertising practices–starting with one he acknowledges to his investors.

 

 

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