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Is Michael Beckerman Wearing Your Safe Harbor?

May 29, 2018 1 comment

As MTP readers will recall, I prefer to think of Big Tech’s various safe harbors like the CDA, DMCA and now the MMA as an income transfer.  It’s not that the money isn’t getting made, it’s just not getting made by the people who created the value.

For example, when Google profits from selling ads against infringing videos, that money doesn’t disappear, it just doesn’t go to the artist.  So where does it go?

Well…according to a recent article in Modern Luxury “Men of Style,” it appears to go into Michael Beckerman’s shoes.  Michael Beckerman is the CEO of the Internet Association, Google’s main lobbying shillery in DC and long time revolving door man.  (Picture below with floral decoration courtesy of Wednesday Addams.)

Michael Beckerman

That’s right–$4,950 shoes.  But no socks.  (Or 6,689,189 YouTube streams.)  Now that’s what I call an income transfer.  Looks like DMCA safe harbor on his feet, CDA for his watch–what will he buy himself as a reward for the MMA reachback?  Maybe a little poker in Vegas with his buddies?

 

 

Goliath Never Learns: Watch Out for Music Choice Duping Artists for Music Modernization Act in Senate

May 27, 2018 Comments off

Remember when Blake Morgan called out Tim Westergren for sending emails to artists trying to get them to write their Member of Congress to support the Internet Radio Fairness Act (IRFA) and lower royalties for Pandora?  “Million-a-month” Tim really stepped in it that time because he didn’t expect the artists to figure out he was both pushing a deceptive deal on them and treating them like they were idiots. And that started the #irespectmusic campaign.

patrick stewart

So now there’s yet another email campaign targeting artists to act against their own interest.  This time it’s about preserving a subsidy for Music Choice’s cable music service.  If you still have cable, you’ll probably find Music Choice in the highest numbered channels.

Here’s how the subsidy works–which you should know because it’s paid with your money.  Music Choice (like Pandora) gets to take advantage of the statutory license created by the Congress in 1998 for the use of your recordings in “noninteractive” digital services.  This statutory license is a huge benefit for everyone who uses it as they can avoid individual negotiations, get streamlined royalty accounting to SoundExchange and never have to pay–clutching pearls–artist advances.

Because the license is statutory, the government also has to set the royalty rate you get through a process now conducted by the Copyright Royalty Judges.  The CRJs are supposed to set a market rate based on economic analysis and the services using the statutory license pay those rates.

But–some services are more equal than others.  Back in 1998, the Congress was trying to encourage investment in a new market for digital music services and so certain named services were given special treatment by the government to protect them from what’s called the “willing buyer/willing seller” standard that more closely tracks market rates.  This special treatment was to give certain services that were already up and running in 1998 a break on royalty rates–your royalty rates–through what is effectively a government subsidy that you finance.  This was because these “preexisting services” had started their businesses in reliance on the subsidized rates–and guess what, they kind of got to liking that subsidy.

Three of those preexisting services still exist today:  SiriusXM, Musak and Music Choice.  All three of these companies have enjoyed the break you gave them on your royalty rates for 20 years.  However–the reason to give them that break has long passed.

MTP readers will remember this issue came up with IRFA in 2012.  As we noted then, SiriusXM’s then-CEO Mel Karmazin told CNBC’s Jim Cramer in an interview about the merger of Sirius and XM Radio, both of which got the same subsidy as Music Choice:

Free cash flow is what enables you to buy back your stock, make acquisitions, pay down debt. And I believe free cash flow is an important metric. Our free cash flow now, is growing– it’s extraordinary. Before the merger we had negative free cash flow of $500 million. Negative free cash flow. This year we will have $700 million of free cash flow. We haven’t given guidance for next year. Analysts have us at a billion of free cash flow and continuing to grow. So it’s a great start.

The Music Modernization Act would switch these three subsidized services onto the same royalty rate as the thousands of other services that somehow seem to get by with the unsubsidized “willing buyer/willing seller” rates.  And Music Choice is leading the charge to keep that subsidy that you’re giving them, Musak and SiriusXM.  Presumably this is because Music Choice is more sympathetic than the cash-rich goliath SiriusXM.

To the point—Music Choice is evidently sending out an email to some artists (possibly through intermediaries like distributors) to lobby the Senate Judiciary Committee to preserve the Music Choice subsidy.  Why?  The Music Choice letter they want you to sign tells you:

Many of us have had our careers explode because of the exposure we got first on Music Choice which is critically important to the artist community.

Really.  That’s news to me.

And then there’s this:

Being played on just one Music Choice channel is like being played on every radio station in the country serving a particular music format.

No it’s actually nothing like that.

And here’s my personal favorite:

None of the streaming services provide anywhere near the level of promotion and support that we have received from Music Choice.

Exposure bucks, baby.  It’s so 1999–back to the future with Music Choice.  Where’s that flux capacitor when you need it?

Exposure Bucks

Preserving Music Choice’s subsidy would be a material change in the bill that might be enough to derail the coalition that backed it in the House and that was clearly influential on the Senate Judiciary Committee in the recent hearing.  Remember–the Senate version of the Music Modernization Act has to pass the Senate before it becomes law.  It also has to pass in essentially the same form as the House version which already passed the House unanimously.  Continuing the subsidy to these three services is a material change to the bill that could cause the whole bill to fail.  

Which, of course, would be just fine with Music Choice, SiriusXM and Musak because that would also preserve their subsidy.

So heads up–they’re running the old IRFA play all over again.  Don’t get duped.

But don’t let that stop you from supporting the Kickstarter campaign to buy a DeLorean DMC-12 for Music Choice so they can get back to the future in the style to which they have become accustomed.

 

Spotify Final Class Settlement

May 22, 2018 1 comment

The court approved Spotify class action settlement is here, more to come.

 

Lessig & Co Miss the Point that Bait and Switch on MMA Will Burn Down the Cornfield

May 21, 2018 Comments off

In case you’ve missed it, Lester Lawrence Lessig III is reprising his role as Copyright’s Biggest Loser with an op-ed in Wired about the mythical interpretation of the copyright term in the CLASSICS Act that has been taken apart by David Lowery and Neil Turkewitz.  Corey Doctorow (that well known pre-#metoo x-ray poster of minor redaction fame) also got it completely backwards as illustrated in David Newhoff’s excellent post.

It is the motivation that is most interesting about Lessig’s preening, the 40 members of the professoriate (that includes a liberal sprinkling of Google Academics) following each other right off the bandwagon and Doctorow’s whinging.   They all seem to believe that somehow there will still be a “Music Modernization Act” if the pre-72 fix in CLASSICS is stripped out.  Doctorow blames Senator Hatch, Lessig blames the usual suspects (the phantom Mickey Mouse, of course), and the IP professors are just proving that lawyers can’t do math–yet again.

For example, Doctorow tells us:

Back in March, the House passed the Music Modernization Act, a welcome bill made it easier for musicians to get paid reliably for digital streaming.

So that is quite a sentence–the bill actually passed the House “back” in April, April 25, 2018 to be precise.  So that’s wrong.  I gather that since he’s objecting to the only part of the bill (the former CLASSICS Act) that addresses “musicians”, he meant to say “songwriters.”  So that’s wrong, too.  And of course, the bill does a whole lot more that one would think would warm Doctorow’s heart (and hips, presumably), like get rid of statutory damages and attorneys fees to stop litigants like David Lowery, Melissa Ferrick, Bob Gaudio and Bluewater Music.

Both Lessig and Doctorow seem to make the assumption that CLASSICS can be stripped out of both the Senate version and the House version of the bill.  (It seems to have escaped Doctorow that Senator Hatch actually introduced the House version in the Senate and that the bill he likes that passed the House includes the pre-72 fix in CLASSICS.)  And without getting into who is right or wrong in their interpretation of the effect on the copyright term of pre-72 sound recordings, there is one thing that is the clear motivation for all this effort by the professoriate and the Google spin machine.

They intend to pass the safe harbors in the Music Modernization Act and get rid of the pre-72 loophole fix.  And they think the we will all go along with that.

They are, as usual, NUTS.

Stark raving mad.  The kind of people who see Mickey Mouse under the bed and post pictures of their pelvis dedicated to a woman they are in a flame war with.  (Move over Harvey Weinstein.)

Let me say it clearly–if they try to do this, if Google sends its shills up to Capitol Hill in hopes of a bait and switch in the Senate, the entire package will fail and it will be class action city.  But stripping out the pre-72 fix for the bait and switch is clearly what they are up to.

While you think about that, have a listen to a pre-72 recording of my friend John Baldry singing the Randy Newman classic “Let’s Burn Down the Cornfield” produced by Elton John.

We can listen to it burn…

 

 

 

Now this is a cover MOFOs

May 21, 2018 Comments off

@Smokey_Robinson Gives Moving Defense of Artist Rights at @SenJudiciary Hearing on MMA

May 16, 2018 Comments off

Smokey Robinson is one of the best witnesses for artist rights.  Mr. Robinson was on stage yesterday in the clinch at the Senate Judiciary Committee hearing on the Music Modernization Act, the new omnibus package that finally includes all of the pre-72 protections and closes that loophole for Big Tech.  (Read his written testimony here.)

The records of the 50’s and 60’s aren’t called “classics” because of their age. They’re called classics because of their greatness. They still resonate today. They add value to our lives and bring people together. They define America.

While Mr. Robinson’s written testimony was eloquent and inspiring, where he really showed his genius was in his ability to synthesize key issues and think on his feet in front of both the cameras and the U.S. Senate.

Watch this clip in which he corrected DiMA head Chris Harrison about a cavalier statement regarding “artists can always sue.”  This is what these people always say, and too often our Congress full of lawyers gets drawn into the “lawsuit as remedy” thinking–which most of the time is a dodge.  I’d even go so far as to say it’s laziness.

As Mr. Robinson pointed out so precisely, artists and songwriters can hardly ever sue because they can’t afford to hire a lawyer or even investigate their rights.  So if that’s the result–and a good justification for the copyright small claims court–that’s no remedy at all and results in an income transfer.  It’s called YouTube, Twitter, Facebook–the biggest income transfers of all time.

Fortunately, Texas Senator John Cornyn, a supporter of the pre-72 fix, gave Mr. Robinson a chance to hit it out of the park and he took it.  Smokey the Closer.

If there ever was a better defense of the need for statutory damages and attorneys fees (the “private attorney general” clause of the Copyright Act), I haven’t heard it.

And while no one said it at the hearing and taking nothing away from Mr. Robinson, it must be said that the only reason that this bill is where it is, the only reason that the pre-72 and mechanical licensing fixes are where they are, is because of Howard Kaylan & Mark Volman, David Lowery, Melissa Ferrick, Bob Gaudio and Bluewater Music and the lawyers like Henry Gradstein (both Turtles and Ferrick class actions), Sanford Michaelman and Richard Busch.  And that’s the fact.

Careful What You Wish For: Are TIDAL, Beyoncé and Kanye getting smeared?

May 14, 2018 Comments off

I know it’s shocking that anyone in the music business would try to juice the charts.  But sometimes there actually is a more innocent explanation for apparent conspiracy.

According to some press reports, about a year ago a Norwegian newspaper suddenly became interested in the credibility of the reported number of streams of two TIDAL exclusives, Lemonade and Life of Pablo.  (For the geographically challenged, Norway is next door to Sweden.)  Not sure why now, but this is not Spotify’s best week in the hip hop community.

If you recall, there was considerable hostility from Spotify about these two exclusives at the time, such as this contemporaneous comment on exclusives in The Verge from Jonathan Prince, the former Clintonista and current Spotify comms person:

“We’re not really in the business of paying for exclusives, because we think they’re bad for artists and they’re bad for fans,” Jonathan Prince, Spotify’s head of communications told me. “Artists want as many fans as possible to hear their music, and fans want to be able to hear whatever they’re excited about or interested in — exclusives get in the way of that for both sides. Of course, we understand that short promotional exclusives are common and we don’t have an absolute policy against them, but we definitely think the best practice for everybody is wide release.”

We are told in a pseudonymous post on Forbes.com:

Writers at Norwegian newspaper Dagens Næringsliv grew suspicious of the high streaming numbers – 250 million for The Life of Pablo in 10 days, and 306 million for Lemonade in 15 days – considering TIDAL’s claimed subscriber-base is only 3 million users.

What’s interesting about this particular growth of suspicion is that the time periods concerned either roughly or directly correspond to the Spotify-offending periods that TIDAL had the Beyoncé and Kanye tracks exclusively for its “claimed” subscriber base.  That’s right–subscriber base.  Because in addition to its evil exclusives, TIDAL also rejected Spotify’s beloved free tier in favor of a subscriber-only model.  Which was strike two.

But wait…there’s more.  Not only did the newspaper grow suspicious of this witchcraft, they were so suspicious they enlisted the help of others according to Forbes:

A year-long investigation, involving close collaborations with music research firm Midia and the Norwegian University of Science and Technology’s Center for Cyber and Information Security (CCIS), has allegedly validated the suspicions of inflated numbers.

Any editor who put reporters on a story as trivial…sorry…banal…sorry…unlikely as this one for a whole year must have had a very good reason to do so.  And the fact that the paper brought in a private consulting firm–which claims Spotify as a client–raises the question of who is paying for all this?   (Also claims Google as a client, another exclusive skeptic.)

So TIDAL stands accused of the crimes of success derived from exclusively releasing new tracks by two of the biggest artists in the world that were available–heinously–on a subscription service.  And perhaps a lesser included crime of tweaking the nose of the Saviour of the Music Business in the process.

Let’s say that TIDAL did juice the numbers a bit–does anyone really find the streaming count in the exclusive new release window to be that unusual for artists of the stature of Beyoncé and Kanye West?  I can understand why there may be a bit of regional pride for the Norwegians to come to the defense of their fellow Scandinavian, but are they sure they want to start looking too closely at streaming counts?

Here’s what Forbes tells us is irking them:

Since streaming rates correspond to royalty payments, TIDAL allegedly inflated the value of the impacted tracks “at the expense of other artists.” According to reports by TIDAL, the company paid Beyoncé’s label Sony $2.5 million for Lemonade and paid West’s label Universal €2 million for The Life of Pablo….If the accusations find enough grounding, it is possible that TIDAL executives could be sued for causes of action such as collusion and/or fraud. Illegal cooperation between parties, internal or external, to inflate streaming numbers and thus increase royalty payments for certain artists is clearly illegal and fraudulent. Although there is no precedent, if TIDAL is found to have manipulated numbers, then Sony and Universal would probably be required to pay back some funds plus a possible penalty, similar to a clawback.

In other words, TIDAL is accused of doing with real artists something similar to what Spotify was accused of doing with the “fake artist” controversy a la Epidemic Sound.

Well…”accused” might be bit strong given all the qualifications:  “If the accusations find enough grounding, it is possible that TIDAL executives could be sued for causes of action such as collusion and/or fraud. [Just sayin’…] Illegal cooperation between parties, internal or external, to inflate streaming numbers and thus increase royalty payments for certain artists is clearly illegal and fraudulent.”

One might say that could possibly maybe arguably likely be a kind of symmetrical karma of a sort, bae.  And it could kind of boomerang sort of maybe.

As Liz Pelly writes in her seminal “Secret Lives of Playlists“:

What are we looking at when we open Spotify? How did it get there, and on whose dime? Who owns visual real estate on Spotify? How do major labels control what the average Spotify listener is being fed? Who is shaping Spotify’s so-called “editorial voice”? Why is it so hard to tell which playlists are curated by humans and which are curated by algorithms? And how is the latter increasingly shaping the former?

I wonder if the Norwegians know what happens when you ask the authorities to start looking at all streaming playlists under a criminal microscope?

And now, back to sleep.

UPDATE:  Norwegian PRO has filed a police complaint against TIDAL.  I think it’s called discovery.

UPDATE 2:  According to HITS, Jonathan Prince is no longer at Spotify (fully-vested?):

…Prince no longer heads communications for the company—he now presents himself as a policy and strategy specialist there—he is said to remain close to boss Daniel Ek. In his time at Spotify, Prince is believed to have been the instigator of the Taylor Swift skirmishes, the defense of the so-called “fake artists” and the whispering campaign alleging that rights holders were colluding with Apple about diminishing the influence of Spotify’s free ad-supported tier.

HITS also notes that Prince “spearhead[ed] the New York mayoral campaign of Bill Thompson….”  Thompson endorsed the recently former New York Attorney General Eric “Raging Bulls***” Schneiderman, who just happened to open a state competition investigation into Apple Music when Apple launched its Spotify competitor and who failed to respond to David Lowery’s complaint about Spotify’s failure to pay songwriters.

 

 

 

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