Archive

Archive for the ‘artist rights’ Category

@MykiAngeline: @The_WIMN: Front And Center: @SoundExchange Senior Director Of Industry And Artist Relations, @LindaBlossBaum — Artist Rights Watch

August 14, 2017 Comments off

[Editor Charlie sez: A must read interview with a true artist rights advocate, Linda Bloss-Baum.]

Music has come a long way since the age of vinyl records and cassette tapes. It wasn’t that long ago when the only way to listen to music was either attending a live performance, tune in to your favorite radio station, or purchase hard copies from your local music store. Now with the ability to stream music from the internet, listening to our favorite artist is readily at our finger tips. Anyone with a laptop or smart phone can access almost any artist and song.

It also became increasingly harder for music artists to get paid for their creations.

This is where companies like SoundExchange come into play, working at the center of digital music to develop business solutions that benefit the entire music industry. As the Senior Director of Industry and Artist Relations, Linda Bloss-Buam ensure that artists and rights owners are aware of all the services that SoundExchange has to offer.

Below, Linda shares with us how she applies her experience and training in music policies and practices, and what she is doing to increase awareness of women in the music industry.

Read the interview on the Women’s International Music Network

@RobertBLevine_: Federal ‘Transparency’ Bill Endangers Songwriters’ Leverage for Getting Paid

August 12, 2017 Comments off

On the surface, at least, the “Transparency in Music Licensing Ownership Act,” introduced in the House of Representatives on July 20 by Congressman Jim Sensenbrenner (R-WI), seems like a copyright bill that could help untangle the online music business….but the devil is in the details.

via @RobertBLevine_: Federal ‘Transparency’ Bill Endangers Songwriters’ Leverage for Getting Paid — Artist Rights Watch

An Interview with Andrew Shaw of PRS for Music on Negotiating with Google, a guest post by Jonathan David Neal

January 15, 2016 Comments off

[Editor Charlie sez: In honor of the new PRS-YouTube license in the UK, we’re reposting this harrowing first hand account of the first YouTube/PRS negotiation.  For PRS members, there’s a good chance that this post has more information about your deal than you’ll ever get anywhere else because your rates are–you know–confidential and stuff.

This post is by Jonathan David Neal and originally appeared in The Score, the membership publication of the Society of Composers and Lyricists.  You can read his blog at Composer’s POV. PRS for Music is the principal music licensing body for performances of music in the United Kingdom and is roughly the equivalent of ASCAP, BMI and SESAC for UK residents.  Although this interview is from 2009, it gives you some insight into Google’s over the top negotiation tactics and how they use the withholding of content as a negotiation tactic in the press–enforcing your property rights is “censorship” don’t you know.  This is a long read, but worth every minute and is information you won’t get anywhere else.]

An interview by composer Jonathan David Neal with Andrew Shaw, Managing Director of Broadcast and Online of PRS for Music.

Background:

In the summer of 2007 PRS For Music, the UK PRO, licensed You Tube, owned by Google, for music use on a per download basis. That contract ended at the end of December 2008, at which time Google and PRS entered negotiations to renew the contract. In March 2009 while continuing negotiations Google, without warning blocked premium content access to users in the UK and few weeks later did the same thing in Germany. I interviewed Andrew Shaw (who is one of the PRS negotiators) in London on May 15, 2009. This story has strong implications for composers, songwriters and lyricists all over the world, since we are in a continuing struggle to maintain our rights as creators and copyright owners.

Neal: Please give us a short back-story to the [PRS’s] struggle with Google & You Tube

Shaw: Well, I think that to understand what is happening now you need to understand the history of where it all came from. You Tube as you know was started in December 2005 and was bought by Google in early to mid 2006 and that’s the time it really started getting some traction in the market place. The service had evolved from very humble beginnings as a way for private individuals to share their home videos. But over a period of time, the content that was being uploaded was copyright content rather than people having dinner parties and they were for a long time relying on their DMCA (Digital Millennium Copyright Act) protections and equivalent protections in Europe to say they had no liability for the content.

Neal: For the readers please explain DMCA.

Shaw: Digital Millennium Copyright Act, that is essentially the US law that says if you are a mere conduit you don’t have any  responsibility for what’s transmitted over your pipe provided that if someone notifies you that you are hosting illegal content, you take reasonable steps to take it down as soon as possible [Ed. Charlie: And without knowledge of infringment and if you terminate repeat infringers]. Google was saying, “Look we are just a big electronic notice board that some people around the  world decide to post things onto and other people around the world decide to come and have a look at these notices and we’ve actually got no idea what’s going on.”

Part of the business logic was that there is a huge community of users out here and “if we take the Google experience and knowledge of digital advertising sales and sprinkle some of that pixie dust onto You Tube, you’ve got excellent digital advertising sales married with a huge user base and massive traffic scale.” I think one of the reasons it hasn’t worked in that way is you’ve got millions of individual pieces of content that are all being viewed, the majority of which are being viewed a relatively small number of times.

The whole principle of Google’s advertising is it’s contextual advertising but they couldn’t actually identify what the content is, so if you tag a video as, for example, “Madonna,” You Tube or a computer has no idea whether that is a pop video or something about the Catholic church.

Advertisers were finding that adverts were appearing next to content that they weren’t quite aware of what that content was. They wanted their brand to be associated in certain places and not with others types of content. [Ed. Charlie sez: like an implied endorsement.] So the whole business model of advertising and targeted advertising required a much greater level of precision of knowledge of what was in the video.

Now as soon as you get into a level of knowledge about what’s in the video, by default you know what that video is and therefore, you start to lose your potential defenses that you are just a mere conduit and you don’t know what’s going on.

So there is a sort of process whereby, I suppose you call it “dancing around the handbags,” where they came to us and said, “We would like to have a license, but, of course, we don’t need one.” We said, “We’d like to give you a license, but we need to know what you’re doing.” They said, “Well we can’t tell you because we don’t know, because if we knew…” and there was a sort of Kafkaesque situation.

But we took what I think was a pragmatic view at the time and said look, at the end of the day we’ve actually  got two choices. We can either license You Tube and try and get what we believe is a fair and equitable remuneration for the works being used and pass that back to our members or we can go down the litigious route and sue them like Viacom had done or we can do nothing. We felt that doing nothing was sort of tacit approval that this was all acceptable.

We took the pragmatic view that licensing was preferable to litigation, for a number of reasons. First of all, getting into litigation was always going to be extremely expensive, extremely time consuming and take a long time to get resolution. The Viacom case proves that point. At the end of the day the outcome was very uncertain. An uncertain outcome might have been great, it might have been not so good and in a worst case, it could have been not so good with a knock on impact on all sorts of other areas of our business. We took the view that licensing was the best approach, so we licensed them.

We were the first society in the world to license You Tube, which was a major coup for us. But, I think that it was also, a major turning point for You Tube because it was the first time, that they had, actually, by default, recognized that they required a license, where if they didn’t require a license and they were so sure of that they certainly wouldn’t take one out. So, we licensed them in the summer of 2007. The license expired at the end of last year, 2008.

During the two years of You Tube’s license they were a model licensee. They did absolutely everything they said they were going to do, they went above and often beyond the call of duty in terms of trying to work with us to develop standardized reporting mechanisms, reporting tools, and we enjoyed a very good working relationship with them.

So, we’re now in a position at the end of 2008 where our license comes up to expire, we’ve got 18 months worth of data about what is actually being used on the service.

We’ve also seen a big transition in the content that’s been on the service over that 18 month period. They had realized that a very large number of videos being watched over a relatively small period of time, with no knowledge of what’s going on, was not going to generate big advertising revenue. Where the advertising money was going to be was in sponsorships and professional content. And so they started actively acquiring what they called seeded content, so they went to the BBC and did a deal to get clips of programs and previews. They’ve now expanded this to all sorts of different content owners, whether it be Hollywood studios, music labels, the White House, Downing Street, whatever.

[Ed. Charlie sez: The evidence against YouTube in the ongoing Viacom case and class action suggests that YouTube knowingly and purposely seeded their website with illegally obtained and distributed premium content for the purpose of profiting from the users attracted to the seeded content.]

A large proportion of the value of what is being generated by YouTube is actually around seeded content [Ed. Charlie: that is the revenue to YouTube], notwithstanding the fact that it accounts for a relatively small proportion of the usage. So you’ve got a sort of asynchronous pattern there. And, clearly music has been a very big area for them; they’ve done deals with all the labels except Warner Bros. and the labels have actively created channels for their artists on YouTube, where artist videos can be shown/promoted.

Now as far as we’re concerned, when you use a generated content, it’s pretty hard to value as far as the music, for instance, from the copyright point of view because you don’t know whether the music is in the foreground, the background, whether it’s incidental, whether it’s 30 seconds, 5 seconds or is it the whole point of the piece or is it just incidental to it. Then if you sort of move up the hierarchy of value, as far as music is concerned, you get into the professional seeded content where clearly there is some economic benefit being derived either by YouTube or the content user or both as a result of making that content available.

But still, music is a supporting ingredient to the finished created work. And then the “top end” of value from our perspective, is something like a pop video where music is actually the whole essence of it. If you then relate that to our regulatory framework, we have something called a “joint-online” license, which is our licensing scheme for digital music, and it was the subject of a  copyright tribunal decision back in 2007.

The copyright tribunal (UK Copyright Tribunal-similar to the US CRB) set a rate which was sort of equivalent to the American CRB, and the rate that they set for digital exploitation of music, pure music, like a pop video, was the greater of 8% of revenue or 0.22 pence per work streamed. So, every time a video was shown, we should have been paid at the greater of 8% or 0.22 pence.

The rates that they (the UK Copyright Tribunal) published in the summer of 2007, would only be applicable for a 2-year period, and it would expire in July 2009; they didn’t say what would happen after that. So, it is obviously incumbent upon us to do extensive market analysis and then come to a decision as to whether anything material had changed between then and now that would justify amending those rates or the structure of those rates, and if so to put that into place. So, we’ve been going through this process, and we are close to publishing what our new rates will be in the next few weeks. But YouTube, and Google has, and again, this is not confidential because they’ve said it publicly, said their position is a per-stream minimum for a service like You Tube doesn’t work, the only thing that works is a percentage of revenue. On a superficial level, their argument sounds very plausible. They say, “We’re trying to create this brand new business model, we’re giving exposure to all of these artists and these musical works, all we want to do is share in the revenues that we’re able to generate with the creators of those works. We absolutely believe the creators should be paid, but they should be paid a percentage of what we can make.”

Our view is that music has a value, irrespective of whether or not someone else is able to generate revenue out of it. If [music] didn’t have a value, then, [Google] wouldn’t be using it.

And it is very important for a number of reasons, including that the rights of creators are respected and they are remunerated a small amount of money every single time the music is played. There are a number of reasons why it’s important, one is, as I’ve said, it has a value.

The second is that specifically with respect to YouTube, any person who is uploading content has 3 choices when they upload that content. It gets fingerprinted and they can choose to monetize it, they can choose to not monetize it, or they can choose to block it. But, we don’t believe that if a third party makes a decision not to monetize content that it can be fair to the creator of that content not to get any sort of remuneration; a decision over which they (the creators) have no control.

The third reason is that with respect again to YouTube, there is a huge amount of crosssubsidization going on. Before the internet came along, there were lots of areas of commerce where as product or services become commoditized, what their provider does is bundle them with other products and services. So whether it’s handsets and minutes for mobile phone tariffs, whether it’s cable television and telephone and broadband connection from a cable TV provider, or whether it’s Google, whose business actually is all about the monetization of data.

To a large extent they don’t care whether the data they have about you comes from your email usage, your calendar, your search patterns or what you’re watching on You Tube. All of that has a value to them that is far greater than the sum of the parts. And therefore, simply looking at how much advertising is sold against one particular page of showing a video on YouTube is not an accurate and reflective economic analysis on which to base an appropriate remuneration for creators. That fundamentally, is a difference of opinion between the two of us.

We believe creators should be paid a small amount of money every time their music is used.

They [Google] believe that creators should be paid a percentage of what they can make in terms of advertising.

So, what happened after that is that we had been having our negotiations and had a meeting scheduled for, a series of meetings scheduled and a plan to try and come to some resolution, when on a Monday afternoon, I received a phone call from Google saying “We have made a decision that we are going to block all premium music content with effect from 6pm tonight.”

Neal: No notice? [Ed. Charlie sez: Welcome to the Googleplex.]

Shaw: No, this call came at 2:30 in the afternoon. This was clearly a very calculated and premeditated tactic on their part, because first of all, we had actually had a meeting with them the previous Friday where we had been consulting with them on what their views were for our new joint online license. The next negotiation meeting had actually been penciled in for the following day, a Tuesday, so it was rather strange that 2:30 in the afternoon, I get this phone call, and within 5 minutes of me putting the phone down, I started getting calls from our press office, who were receiving calls from every single media outlet in the UK, saying “We’ve heard that Google is about to block all music videos in the UK tonight-what have you got to say about it?”

Chris Smith: Big Day . . .

Shaw: Now, what they actually did was very highly targeted, and designed to create a much bigger story than the actual impact on the user experience. If you go on to YouTube even today in the UK, you may not be able to find every single version of a particular pop video, but I would pretty much bet that whatever video you wanted to find, you could find a version of it somewhere. So, they have not blocked all music videos in the UK. What they have purported to do, is to block what they call Premium Music Content. Premium Music Content by their definition is content that is either being uploaded by record labels or claimed by record labels, either some label uploaded or it seems someone else has uploaded it, they’ve owned it and they’ve said we own the copyright in this and therefore it’s part of our pot.

I think there are 3 reasons why they honed in on these two. Number one, it was the only part of the content set that actually disrupted other people’s revenue funds. So, if Joe Blog gets their video blocked, they get pissed off, but, so what? If Universal Music gets their video blocked, they stop receiving revenue every time that video is played.

So, the tactic, one has to assume, was to put pressure on other people who were being affected, to put pressure on us, to concede our position. So, one was it was disrupting other people’s revenue flows.

The second was that it was highly targeted, as I said, on the Premium Music Content, which actually accounted for a relatively small portion of all usage on YouTube. So, the videos concerned, and we don’t know exactly how many there are, because it seems to change on a daily basis, but it accounts for probably single digit percentage of total views or streams viewed on YouTube.

The third reason was that they will still at some point claim that as far as user generated content is concerned, (as opposed to) user uploaded content, because they are two quite different things, they would still want to fall back on some sort of “We’ve got no responsibility for this.” As soon as you start blocking something because it fits into a certain category then you have to know what it is in order to block it.

So, by leaving all of the user uploaded content alone they preserve their position with respect to DMCA protections and a lack of obligation to take responsibility for that content.

So they have blocked some of these videos, a few weeks later they did the same thing in Germany. They publicly said that the reason they did it was because they were unable to reach an agreement with us, although, we were still in the middle of a negotiation and we certainly did not ask them to take this action, and take content down.

They also said they felt uncomfortable being in a position where they were not licensed. Now, I find that quite ironic, given that the other 200 or so countries in the world don’t seem to pose such a moral dilemma for them and their content is still available there. Since the date of the take-down, or the blockage, I think March, about 2 months ago now, so early March, we have continued to talk to them and we do continue to talk to them, but there is still a fundamental difference of opinion over what they are responsible for and what is the appropriate mechanism to judge that.

Neal: At this point, you don’t really know what kind of effect it’s had? Have you heard from publishing members or record labels complaining that they’re losing money on this?

Shaw: No. I have to say we’ve been extremely pleased by the support that we’ve got from a wide variety of constituents and  stakeholders in the industry, and actually, not just in our industry, but across all creative industries.

This is not an issue between Google and PRS Music: this is a battle that we happen to have stuck our head above the parapet, being in a large territory that’s important to them, perhaps having been the first to license them, but, we are being made an example of in a battle that applies equally to record labels, it applies to journalists, it applies to book publishers and photography.

Any type of content that is being exploited over the internet, where there is a very fine line between a company providing an ability for consumers to find what they’re looking for, that other people have put there, and a company that is actually providing that content as a service provider. There is a fine line between data and/or information and content. If you go on to Google’s corporate website and look at their strategy file, their mission statement, one of their strat lines is “Don’t be evil” but another is there that is the corporate mission, (I can’t remember it verbatim) but it’s something like “to make all the world’s information available to anybody who wants to find it,” something like that. And that word, “information”, was probably put in there when that’s exactly what they did, but the line between information and content has become very, very blurred.

And if you look at what’s going on in the US with the book settlement, you look at what’s going on all over the world with newspapers and the Google news aggregation service and Google books as well, there are lots of areas where that line is becoming very blurred and probably being overstepped.

___________________

Conclusion by Jonathan David Neal

This is just one example, in one part of the world of how some corporate giants are trying to devalue the work and content of creators, and ultimately respect of composers, and songwriters. It’s happening all over the world. Their mantra has been, “you need us.” However, they need our content, which is just as important. A second observation is, “if they devalue our intellectual property, they undermine the value of their own intellectual property, their services and everyone loses.”

It’s very short sighted. We as composers, songwriters and lyricists need to take an active stand against those who would devalue our work and demand respect for our craft and ourselves.

Note: On September 3, 2009 PRS for Music announced a new licensing agreement that covers music contained in videos streamed via the online video platform.  Premium music videos have now been reinstated to YouTube in the United Kingdom.

Thanks to Dan Foliart and UK Composer Chris Smith, for helping me make this interview possible. Chris sits on the board of PRS-MCPS and arranged the interview, which took place at PRS For Music’s London office in May of 2009.

The Marginal Value of Infringement in the Wrong Tail

January 11, 2016 Comments off

It looks like Spotify has got hold of the wrong tail.  Spotify is doing back flips to blame others for its manifest failures to lawfully obtain mechanical licenses.  Spotify’s transgressions are currently the subject of two different class actions brought by songwriters.  According to press reports, 10% to 25% of the songs on Spotify “are not properly licensed and/or not distributing royalty payments.”  Spotify also claims to have licensed approximately 30 million recordings (of 30 million songs, give or take for covers).

Based on these assumptions, that means there are three million to 12 million songs that “are not properly licensed and/or not distributing royalty payments”.  This is not a few new releases, a 1/16th of a song for a sample, the odd songwriter who cannot be found or who is non responsive.

Millions of unlicensed songs isn’t an acceptable accident, it’s an unacceptable policy.  In fact, it’s exactly what the compulsory mechanical license was designed to prevent.

At the end of the day, the policy, i.e., the choice, to go forward without licenses, rests solely with Spotify.  The company could have complied with the compulsory license–enacted by the U.S. Congress for this exact situation–but Spotify chose not to.  Whoever Spotify hired to undertake the mechanical process of mechanical licensing, someone at Spotify decided to go forward without complying with the law and they did so on a grand scale.  It appears that the thinking was that the upside value of having “all the world’s music” was greater than the downside risk of getting caught.  The marginal value of another few million songs was greater than actually complying with the law and paying songwriters.

This decision is what is called “business risk.”  Incredible as it may seem, this decision–this willful decision–to accept the business risk of using millions of unlicensed songs was apparently driven by a belief that in order to have an effective consumer offering, Spotify had to have tens of millions of tracks available to consumers.  This policy of using millions of unlicensed songs may well have been informed by the “long tail” theory and thought experiment posited by one Chris Anderson (in case you forgot him).  You can read all about it in Anderson’s counterintuitive utopian book The Long Tail: Why the Future of Business is Selling Less of More which was based on a 2004 article in Wired.

I’d be very interested to know exactly where this consumer research is that shows the marginal value of an additional 12 million songs is so meaningful to a music service that it trumps the infringement exposure.  I frankly have never seen it–aside from Spotify’s reliance on Anderson’s version of the long tail.

Anderson goes down the wrong rabbit hole by relying on anecdotal observations of “Ben” an anonymized (or perhaps fictional) character who is a teenager from an affluent family in Silicon Valley who gets most of his music from “friends” and “Bit Torrent” (recall that Spotify’s CEO was a developer of uTorrent, a key piece of the piracy picture acquired by Bit Torrent in 2006).  So Anderson starts by analyzing a legal market with comparisons to the black market.  That obviously wasn’t going anywhere logical.  Neither is any market of what the New York Times called “pixel-size niches“.

Anderson’s long-tail thought experiment has been criticized by a number of people such as Harvard Business School Professor Anita Elberse in the Harvard Business Review and most famously in the music business by Will Page, the former economist for PRS, the UK performing rights organization.

Any record company production manager could have chimed in–and perhaps would have if it wasn’t so obvious that it did not really bear much discussion.  The corresponding transaction costs of a variety of functions including rendering royalty statements for minuscule unit sales were not worth keeping the title in the catalog.  You know, kind of like sending a royalty statement for three streams.  Preparing the statement may well cost more than the royalty even if the statement is itself digitally delivered.  Not to mention taking the phone call from the angry songwriter who got a statement for $0.19.

Record companies are no strangers to the long tail–that’s often called classical and instrumental jazz.  It is worth noting that record companies have for decades deleted titles that didn’t sell enough to justify keeping the title in the company catalog.  This is consistent with Professor Elberse’s research demonstrating that “the tail increasingly consists of titles that rarely sell and that are produced by smaller-scale players.”  Professor Elberse assumed that there were no infringement costs associated with those “titles that rarely sell” thus exponentially increasing the cost of the tail, or as this particular tail is known in some circles, the wrong tail.

Then-PRS economist Will Page reached a similar conclusion after analyzing PRS royalty payments in 2008.  Those who have had about enough sanctimony from Spotify about how it is God’s gift to fighting piracy will find this nugget of interest when wondering how much the marginal value of the last 12 million tracks that don’t sell really is worth if they are all unlicensed:

Will Page, the former economist for PRS, found in a 2008 study of PRS revenues that famously debunked Chris Anderson’s absurd “long tail” theory, the “long tail” is pretty meaningless for music services:

[PRS] found that only 20% of tracks in our sample were ‘active’, that is to say they sold at least one copy, and hence, 80% of the tracks sold nothing at all. Moreover, approximately 80% of sales revenue came from around 3% of the active tracks. Factor in the dormant tail and you’re looking at a 80/0.38% rule for all the inventory on the digital shelf.

Mr. Page now works for Spotify.  They could have just asked him before taking the business risk of failing to get compulsory licenses.

Was the marginal value of the long tail worth it for Spotify when compared to statutory damages?  Commentators often mock statutory damages, especially for willful infringement, as being over the top.  In the case of the compulsory mechanical license, you can look at this another way.

Congress did backflips to make the compulsory license easy to get.  If a well funded company like Spotify (last valuation $8 billion) chooses to ignore Congress’s efforts, then Congress wants to make sure that the marginal value of ignoring the compulsory license is always less than the statutory damages for choosing to do so.

Useless Streaming Artist Data: You Know Where to Put the Thumb

December 14, 2015 1 comment

Pandora and Spotify (among others) have made a big deal out of providing “data” and “analytics” about streaming uses to artists–and particularly managers–about how the artist is performing on their respective services.  The “artist data” meme is also offered up as a value add to counter complaints of low royalties.  There is a real question of how useful this “artist data” is and a recent CNBC article calls into question just how accurate it really is in the first place.

Of course the most valuable piece of “artist data” that services could at least help the artist acquire–the fan’s email address–they won’t touch.  Obviously, I’m not suggesting that the service hand over the fan’s email address to the artist without the fan’s consent, so let’s not go down that rabbit hole, a favorite of the services trying to avoid this issue.

What I am suggesting is that the service provide the fan with an opportunity to sign up for the artist’s own email list.  This could be as simple as a link that would take the fan outside of the service momentarily to the artist’s email list sign up page.  That way I don’t believe there are any privacy law issues for the service as there would be if the service just handed over the email address.

I have raised this with senior executives at Apple and Spotify and it went nowhere.  The Spotify person rejected the idea outright because it would take the Spotify user (aka the artist’s fan) outside of Spotify.  Strange, because the fan would be offered a choice.  You know–the fan of the artist who most likely was driven to the service by the artist they are streaming.  (This would produce another interesting metric based on the number of email list sign ups by service, but I digress.)

Aside from whether the type of information being provided is even useful to artists, there’s another question of whether the “artist data” is even accurate in the first place.  And how would you even know.

CNBC did a little fact checking on streaming data provided by iHeart Radio analyzing the recent Grammy nominees.  This isn’t exactly the same as the “artist data” being hawked by streaming services, but it is perhaps a good proxy (since it’s hard for artists to see each others artist data results).

iHeartRadio (owned by Clear Channel) gave CNBC the “artist data” for the most popular tracks on Clear Channel’s massive streaming operations.  But CNBC discovered by using simple logic–aka sequential thought–that Clear Channel’s “artist data” was wrong.  Because CNBC concerned itself only with massive hits, data checking was relatively simple (which of course makes the Clear Channel screw ups look even more idiotic).

Keep in mind as you read this that if you’re an artist using the “artist data” for its recommended purpose–discovering nuances about the service’s listening audience–it will almost certainly be more difficult if you’re not Ed Sheeran or Taylor Swift.

 

In a blog post based on the original (aka wrong) data, iHeartRadio said Ed Sheeran took home the honor of “most-thumbed up” track of 2015 with “Thinking Out Loud.” Taylor Swift’s three big songs relegated her to second, third, and eighth place. (Update: the original iHeartRadio blog post was taken down. The link above is a cached version.)

More impressive in the original data was that Drake’s “Hotline Bling” was the most-thumbed up track in 26 states in 2015. That would be amazing because the song only came out in July and didn’t really catch on until the colorful video was released in October. Here is exactly what the blog post said about Drake:

Although the track didn’t premiere until mid-2015, with the unforgettable music video coming out just weeks ago, the last-minute addition of Drake’s “Hotline Bling” surprised and delighted the ears of listeners across the country, leading it to become the No. 1 most thumbed song of 2015 across more than 20 states!

But this didn’t make sense to us. Sure Drake’s song was popular, but how could it be the top song in half of all states even though it was only hot at the very end of the year?

More weirdly: how could Drake’s song be No. 1 in half of the states but not appear anywhere in the top 10 songs nationally.

CNBC pointed this out to Clear Channel, who admitted their mistake and “corrected” their bad data.  Yet that “corrected” data was FUBAR also according to CNBC:

The new data included the actual number of “thumbs up” and “thumbs down” by state. Of note is that Ed Sheeran’s “Thinking Out Loud” is the “most thumbed up” track in only one state — Hawaii. We find it is extremely unlikely that his track was actually the top track in the nation overall. IHeartRadio has not yet responded with further clarifications about the rest of its data set. We can’t check that against its original report, but we’re hoping to find out soon.

Of course, the new data set only included raw “thumbed” numbers for the top track in each state, so it’s possible that “Thinking Out Loud” had enough second-ranked “thumbs” to overcome Taylor Swift’s “Style,” but that seems unlikely.

So the thumbs didn’t have it after all?  Clear Channel miscounted?  Hard to say because we are entirely dependent on Clear Channel to provide the data backing up their work product.  But we know there was some kind of screw up because CNBC had to provide a link to a cached copy of the original Clear Channel blog post with the bad data.  If there’s no agenda here, why would Clear Channel try to hide their mistake from artists?

But good work by CNBC–except for one thing.  They continued the streaming service meme that somehow talent buyers and concert promoters care about how many thumbs you get when deciding to book a gig.

[C]oncert planners and promoters depend on data like this to create touring routes.

No, no, a thousand times no.  Clearly CNBC have never met a talent buyer. This is just simply not true.

Nonetheless, this CNBC post is a great example of how unreliable this “artist data” can be and just how hard it is to verify.  So hard that it may well be simply misleading to ask artists to take a lower royalty rate for what is most likely some species of snake oil.

They can keep their thumbs.  I’ll just settle for asking the fan to sign up on the artist’s site, thank you very much.

 

Google’s Uncertain Trumpet: Why is YouTube still hidden in the search alphabet?

August 13, 2015 2 comments

You’ve no doubt heard that Google has rearranged the deck chairs to reorganize the company.  The general idea is that Google is establishing a holding company titled “Alphabet”–please resist the urge to point out that Google now owns the alphabet.  What underlies the restructuring is that Google has essentially succeeded in its initial business play to organize the world’s information whether the world likes it or not.  Now Google is setting about commoditizing all of it.  Not just music, books, movies, television programming.

All of it.

With the European Commission breathing down their necks in what appears to be a vigorous antitrust indictment, one can’t help noticing that breaking up Google will be that much simpler after the Alphabet reorganization than before.  So while the spin that Google is putting on the reorganization is that of confidently going a new direction into the future, there may actually be greater uncertainty about the future at Google than ever before.

It’s an odd coincidence that Google is announcing the Alphabet reorganization at the same time as they are seeking a delay in responding to the EC’s antitrust indictment.  Jamie Gorelick can’t help them with this one apparently.

As Re/Code’s insightful journalist Kara Swisher said on Charlie Rose’s show:

You will hear Google saying — the most powerful and sometimes frightening company on the planet — saying oh, we`re just a startup. And so it`s kind of perplexing at the same time… they want to be young and so this maybe gives them a little youth and innovation….I think that it`s just another way to state what they were already doing and it makes for great headlines and then we can all make Alphabet jokes and things like that. But in general, it`s just a statement of what they were doing before.

What Google is essentially accomplishing is moving its riskier business lines under separate managers under the new Alphabet holding company but is leaving search, Android and YouTube in Google.  (It remains to be seen exactly how this will all work as a matter of corporate formality, not to mention that pesky shareholder voting business.  Since the Google insiders have 10 times the voting power of folks like you and me–to the extent ordinary shareholders get a vote at all–we can be pretty confident that when the dust settles, the insiders will still be in control.  If not more so.)

One also can’t help noticing that the European Commission is currently prosecuting Google for antitrust violations in search, is investigating Android for potential antitrust violations and also has a complaint against YouTube pending from IMPALA (the European indie label association).  Pure coincidence, I’m sure.

While we can speculate on these high level machinations, we have much more mundane aspirations.  I’m watching Google reorganize our money and thinking about what all this means for YouTube.

What About YouTube?

So why is YouTube still combined with search?  We don’t know the exact reason because no one is talking (yet).  This is Google after all.  One way to think about this is that YouTube is simply a format based version of search that extends Google’s monopoly power over the video vertical subsidized by Google’s monopoly rents from search.  As we have learned from various investigations and experience, Google clearly favors its own products in search, so it’s not surprising to see YouTube results at the top.

As Matthew Ingram observed in a thoughtful article in Fortune:

Since both YouTube and Google are involved in search (if you see YouTube primarily as a vertical search engine devoted to video) and both depend on advertising for the bulk of their revenues, it arguably makes sense to have them part of the same company, where they can share resources. The flaw in this theory is that YouTube wants to be much more than just a search engine, and real investment in video and the creative economy requires very different skills….A couple of ex-Googlers speculated that YouTube may not have been broken out as a separate unit because Google’s revenues and growth rate are flattening, and therefore it needs to keep all of that YouTube cash and growth inside the search company until it can figure out how to grow faster through mobile and other means. Once that transition has been made successfully, then YouTube can be spun out.

What this may mean for Margrethe Vestager the European Commission’s antitrust regulator is that any prosecution of Google for search must necessarily include YouTube.  We’ll see what the future may hold on that score.

But what this means today for artists and songwriters is that we need to be much tougher on YouTube in royalty negotiations.  Music is a huge part of YouTube’s success and revenues.  Morgan Stanley produced this chart after some green eyeshade working over of Google’s publicly disclosed revenues in an effort to break out YouTube’s contribution to revenue (which neither Google nor YouTube provide directly).  Morgan Stanley thinks YouTube’s revenue is growing 38% year over year.  You know–that revenue we’re supposedly sharing in.  I’m sure your YouTube royalties are growing at the same rate.

In fairness, these numbers are estimates of YouTube gross revenues and does not take into account YouTube’s operating costs.  However–when a “startup” is booking $6 billion, we are well past the point that we should feel we need to cut them a break on royalties.  As Kara Swisher noted, Google’s “we’re just a startup” smokescreen is a bit hard to take.

The Alphabet reorganization is further confirmation that YouTube is a mature business and should be treated as such.

I’m Ready as Anybody Can Be

Here’s the reality:  This business of taking a mysteriously calculated revenue share is bullshit.  The idea that a $6 billion company is paying a royalty that requires a scientific calculator to determine is madness.  The whole YouTube royalty structure has to go.  Do we say to CBS, well pay us a part of what you get and if you decide to sell low that’s OK.  If you decide that some uses of our music aren’t going to be “monetized” (a vile concept), hey, that’s up to you.

No we don’t do that.  We say here’s the price, pay it or don’t use the music.

If YouTube wants to get a license for the premium music videos then guess what?  Drop the sham positioning on DMCA safe harbor.  Why on earth should they get both?  If they want to be in business with artists and songwriters, then act like it.  And if you consider that video search is just branded search under a different name, then why should Google get to hide behind the sham safe harbor at all, particularly now that they’ve told the world that YouTube and search go together.

It’s also nearly impossible to determine whether we’re being paid correctly as upstream royalty compliance is essentially blocked by Google and wrapped in NDAs.  This is a petrie dish for fraud on a massive scale that would make Morris Levy blush and someone needs to investigate it–like Mississippi Attorney General Jim Hood is trying to do while being sued by Google at the same time.

It’s time to stand up and be counted on these issues.

You’ve Got to Stand for Something or You’ll Fall For Anything

This is not going to be easy.  Somehow we have gotten into business with the most litigious company on the planet that is running an Enron-level laundry inside the darkest of all black boxes.  YouTube has somehow gotten our marketing folk believing that somehow they need YouTube to market artists.

This assumption needs to be tested.  Taylor Swift has already done a great job of showing us all that YouTube needs hits and hits don’t need YouTube.  The Man 2.0 behind the curtain did not dig that at all. My bet is that it’s about to start happening a lot more frequently.  It’s really very simple–we just need to get it in our job descriptions that hits still need to happen and if we can’t use YouTube to our advantage we will not allow YouTube to use us to theirs.

The Alphabet reorganization should be plenty of proof that YouTube is not a music video service–it’s a search vertical and a data honey pot that is skinned to look like a music operation.  And it books a fortune.

It’s time to get serious.  Google has shown that they are very serious and we should be, too.

Wouldn’t you like your royalties to be growing 38% year over year?

Power Transition, Lawfare and the Spotify/Google Interlocking Directorate

July 30, 2015 1 comment

Though this be madness, yet there is method in it.

Hamlet, by William Shakespeare

Power Transition in Business

When a relatively unequal competitor is about to overtake a dominant competitor, lawfare is most likely to break out when the less dominant competitor perceives their opportunity to replace that hegemon.  At this point in the power relationship, the less dominant competitor may seek interlocking relationships with other less dominant competitors in the relevant market in order to attack the hegemon by reducing competition with each other and coordinating lawfare operations against the hegemon.

These interlocking boards or corporate relationships may work well when there is something in it for the allied less dominant competitors that helps each of them in ways that do not harm each of them.  For example, in an alliance of two less dominant competitors G and S against hegemon A, this will be particularly true if company G has discrete  goals with hegemon A that only tangentially affect company S.  If lawfare against hegemon A would greatly benefit company G and would not harm company S, S may find an alliance with G for lawfare against A to be beneficial.

This may be particularly true if A is competing directly with S in a related market and (with apologies to Professor Kugler) at a moment when A is temporarily weaker than S, but S perceives A as about to overtake S.  In other words, lawfare is not most likely to break out when A in fact overtakes S, but rather at the moment when S perceives A as about to overtake S.  It is at that moment that an interlocking alliance with G may be most desirable to S so that the two companies can bring their collective power to bear on A by making lawfare on A.  (This is a version of the “power transition” theory of international relations.)

In the world of corporate realpolitik, such alliances may form well in advance of an anticipated move by A that threatens both S and G.

Spotify’s Dominant Market Position

On May 12, 2014, Spotify’s director of economics Will Page gave a presentation at the Music Biz Conference in Nashville (hosted by the Google-dominated Music Business Association, formerly known as NARM in a soon to be forgotten day).  As reported by Billboard, Will Page gave the audience a good deal of evidence of Spotify’s domination of the online music market:

Spotify claims to have represented one out of every ten dollars record labels earned in the first quarter….Page’s claim shows the speed at which subscription services are gaining share of the U.S. market. According to IFPI data, all subscription services accounted for 10.2 percent of U.S. recorded music revenue in 2014. If Spotify had a 10-percent share in the first quarter, it’s safe to say the overall subscription share is well above the 10.2 percent registered last year.

These numbers suggest that while Spotify may have a significant share of overall U.S. recorded music revenue, Spotify is clearly dominant in the global subscription market with its now 20 million subscribers and probably is dominant in the U.S. music subscription market.

Yet it is Spotify’s failure to convert users of the Spotify ad supported service (with ads served by Google) to the Spotify subscription service that is at the heart of objections to continuing to license the ad supported service.  Not to mention the bait and switch aspect.

The Return of the Interlocking Board

While Spotify may have enjoyed global domination in music subscriptions, it did so with an eye over the shoulder at the much anticipated and inevitable launch of the a subscription service by Apple, which also happens to be Google’s main competition in the smartphone market.  Not surprisingly, we saw this July 21, 2014 story in Re/Code by the highly credible tech journalist Kara Swisher a few weeks after Page’s presentation:

Omid Kordestani, who has just temporarily replaced Nikesh Arora as chief business officer of Google, is joining the board of Spotify, according to people with knowledge of the situation.

In addition, sources said, one of the search giant’s former execs, Shishir Mehrotra, will become a special adviser to CEO Daniel Ek and the company’s management.

The move is a fascinating one, especially since sources inside Google said that new YouTube head Susan Wojcicki has expressed interest in acquiring the popular online music service if it were for sale. It is not currently and there are no such discussions going on between the pair about such a transaction.

Thus, the new appointments appear unrelated. And, to be clear, Google’s top execs often join boards of companies, both with corporate ties to them and not.

In any case, Google is still planning on launching a long-delayed YouTube subscription music service this year that would compete with Spotify. If it actually does get going, it will be the second such offering from the company.

That YouTube subscription service is now even longer delayed.  In fact, I’m beginning to wonder if it will launch at all.

Ms. Swisher revisited that July 21 story on July 22 to clarify the reference to Google’s potential purchase of Spotify–only.   She wrote:

…Spotify co-founder and CEO Daniel Ek has indeed met with Google execs about various and substantive commercial deals at YouTube, Google Play and Android.

“There has not been a single conversation about Google’s interest between the two,” said one source, reflecting many others. “There was never a price, never a negotiation, never anything.”

Ms. Swisher followed up that July 21 story with a post on September 11, 2014:

As Re/code previously reported it would do, Spotify has officially added Google’s business head, Omid Kordenstani, to its board.

And thus the interlocking alliance was formed.

Google’s Shady History With Apple

Recall for a moment that the Federal Trade Commission pressured Google Executive Chairman (and then-CEO) Eric Schmidt to resign from the Apple board of directors.  This after Google launched a series of products that directly compete with Apple and is so coincidental as to call into question whether Schmidt violated his fiduciary duty as an Apple director (Droid, Google Tablet, AdMob, Google TV, and what was then called Google Music).

So what about that resignation?  According to Engadget, Steve Jobs said:

“Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.”

According to Reuters, on July 9, 2009 the Federal Trade Commission announced that it would continue investigating Schmidt:

The U.S. Federal Trade Commission said it will continue to investigate the relationship between the boards of Apple Inc and Google Inc, after Google’s chief quit Apple’s board on Monday.

Richard Feinstein, director of the FTC’s bureau of competition, commended both companies for recognizing that sharing directors raises competitive issues, in light of the resignation of Google Chief Executive Eric Schmidt from Apple’s board.

Feinstein said regulators have been investigating the Google-Apple tie for “some time,” even as the two companies increasingly compete with each other in markets such as smartphones and operating systems.

“We will continue to investigate remaining interlocking directorates between the companies [for violations of the Clayton Act],” Feinstein said.

Well, that 2009 investigation seems to have trailed off and gone nowhere.  2009, 2009, what else happened in 2009?

It can safely be said that Google’s war on Apple is long standing and there is no love lost there.  It should not come as a surprise that Spotify would view Google as a valuable ally in its own competition with Apple.  Not only was Spotify’s dominant position in the music subscription market directly threatened by the launch of Apple Music, but Apple’s gifted executive Eddie Cue delivered further humiliation to Daniel Ek involving Ek’s bête noire, Taylor Swift.

Artist relations problems need to be solved quickly and generously (and frankly if an issue get to become an artist relations problem, it’s your own damn fault).  Mr. Cue quickly solved an artist relations problem around Apple’s proposed 90 day royalty free launch by his deft handling of criticism from Taylor. Mr. Cue’s successful handling of Taylor’s criticism solved his company’s artist relations problem.  Whether Mr. Ek knows it or not, this was a further humiliation to him after Spotify’s brand damage from his widely-reported collision with the Taylor juggernaut.

The Washington Hackathon Continues Apace

In September 2014, Spotify announced a hire that was largely overlooked at the time.  Taking “hackathon” to a whole new level, Spotify announced that it had hired Washington lobbyist and Clintonista Jonathan M. Prince as its corporate communications revolving doorman.

Jonathan M. Prince Revolving Door Profile from OpenSecrets.org

Now why do you suppose this person was brought on?

Compounding the urge to merge was the announced policy change at Sony and Universal demonstrating an increasingly skeptical view of the ad supported services like Spotify and YouTube, also broken by Re/Code in a March 8, 2015 interview by the outstanding journalist Dawn Chmielewski (who has written extensively on the music business for many years) with Universal’s Lucian Grainge.  This was followed shortly by a statement from Sony’s Doug Morris indicating dissatisfaction with the free content model that is at the heart of Spotify and Google’s business (“In general, free is death.”)

I seriously doubt that these relatively simultaneous statements by Lucian and Doug came as a total surprise to either Spotify or Google, but the public nature of the statements combined with personnel changes probably put a fine edge on reality for Spotify and Google.  Lawfare was now in order.

Not only did Spotify and Google have interlocking interests in preserving the ad supported model, but each brought complimentary skill sets to the lawfare ready room.  Spotify is able to play the role of plucky startup victimized by the big bad Apple and the smaller but badder major labels that are conspiring to take free music away from consumers.  Google is able to hang out in the shadows and bring its investment in Washington, DC agency capture and vast experience being on the wrong end of antitrust investigations around the world.  And in particular, Google’s stunning influence over the U.S. government through the Obama Administration including the Federal Trade Commission.

Just a quick reminder of Google’s dominance of the U.S. government:

President’s Council of Advisors on Science and Technology and Obama Campaign Volunteer: Eric Schmidt (call sign “Uncle Sugar”)

Google Lobbyist: Katherine Oyama (former Associate Counsel to Vice President Joseph Biden)

Counselor to the Chairman, Federal Communications Commission: Gigi Sohn, formerly CEO of Google Shill Lister Public Knowledge.

Special Assistant to Chairman, Federal Communications Commission: Sagar Doshi (Google Product Specialist)

Chief Digital Officer, Office of Management and Budget and Featured Revolver at OpenSecrets.org‘s Revolving Door Site: Jason Goldman, formerly Product Manager at Google.

Director of Google Ideas (and co-author with Uncle Sugar of The New Digital Age): Jared Cohen (formerly a member of the Secretary of State’s Policy Planning Staff and as an advisor to Condoleezza Rice and later Hillary Clinton).

Director of United States Patent and Trademark Office: Michelle Lee (formerly Google’s Head of Patents and Patent Strategy)

U.S. Chief Technology Officer: Megan Smith (formerly at Google[x])

Deputy U.S. Chief Technology Officer: Alexander Macgillivray (formerly Google’s point man on orphan works)

Director of Google Advanced Technology and Projects Group: Regina Dugan (former director of DARPA)

Director of U.S. Digital Service aka savior of Healthcare.gov (in case you couldn’t tell): Mikey Dickerson (former Site Reliability Manager at Google)

YouTube Global Communications and Public Affairs Manager:  Chelsea Maugham (former U.S. State Dept. Chief of Staff)

Google Head of Global Development Initiatives: Sonal Shah (Advisory Board Member, Obama-Biden Transition Project)

Deputy U.S. Chief Technology Officer (White House): Nicole Wong (former Google Vice President & Deputy General Counsel)

And then there are dozens if not hundreds of former Hill staffers now working for Google’s DC shillery.

Not to mention FTC Commissioners Joshua Wright and Edith Ramirez, Julie Brill and Maureen K. Ohlhausen.

Timing is Everything

In yet another case of curious timing involving a Google relationship, the day that Apple Music launched the New York Attorney General announced an investigation into whether Universal–remember, the same Universal that had announced it was going to take a relook at its ad supported deals of the kind it had with Spotify and YouTube–and Apple Music had somehow colluded to undermine Spotify and YouTube.  As NPR’s Laura Sydell reported:

The investigation centers on whether Apple may have urged [Sony and Universal] to drop support for free, ad-supported streaming services such as Spotify and Google’s YouTube. Such a move could be seen as anti-competitive.

That investigation was later dropped by the New York AG (who also signed the amicus brief supporting Mississippi Attorney General Jim Hood against Google).  Why was it dropped?  Well, possibly because there are solid commercial reasons for deciding that the experiment with ad supported music was a disaster?  Possibly because it became apparent that Spotify’s story about converting free users to subscribers was not borne out by the…you know…results?

How do you suppose that this investigation got started?  Just a coincidence?

I think not.

Guess what also happened right around the same time?

Spotify Lobbying According to OpenSecrets.org

Spotify Lobbying According to OpenSecrets.org

Yes, those Washington lobbyists don’t have to use a scientific calculator to add up what Spotify pays them!

The NY complaint was a skirmish before the main attack.  And here’s where the real lawfare gets interesting.  Remember, Google has been fighting Apple for years and Eric Schmidt left the Apple board under a cloud (no pun intended).  Independently of Spotify, I think it’s pretty safe to say that if Google could find a way to jack with Apple they would jump on it.

Also remember that Google has been bashing apps for quite a while and it takes no great genius to suspect that the reason is because they can’t stalk you inside of apps very easily.  So if Google could find a way to attack Apple’s apps, don’t you think they’d jump on it?

And what better way for Google to attack Apple than to go after Apple’s pricing model in the App Store?  (Apple takes 30% of “digital consumables” sold by developers through the App Store, including most subscriptions.)

Of course if Google itself went after Apple’s App Store pricing that might be a little transparent, so that won’t do.  What to do, oh what to do?

Things That Go Bump in the Night

According to the Radio and Internet Newsletter’s July 9, 2015 reporting:

Spotify has sent an email to Apple iOS subscribers, suggesting they cancel their Spotify Premium accounts, if those subscriptions were purchased through the Spotify app, and re-subscribe on Spotify’s website.

The reason for this surprisingly suggested workaround is to save money. A Spotify Premium plan costs $13 when purchased through iTunes, and $10 when bought directly from Spotify. “The normal Premium price is only $9.99, but Apple charges 30 percent on all payments made through iTunes,” Spotify said in the subscriber email acquired by Engadget.

Here’s part of the email:

Spotify Attachment-1.0

As RAIN confirmed, Apple has nothing to do with setting the price for in-app purchases.  That decision lies with the developer exclusively.  The developer–Spotify in this case–knows going in what the cost will be.  Spotify knew that when it first put the Spotify app in the App Store years ago.

But RAIN notes the curious timing of Spotify’s misleading advertising campaign:

The timing of Spotify’s communication, soon after Apple’s launch of a competing on-demand music service, cannot be ignored. It must be particularly galling to Spotify that Apple is potentially luring users to its own service, and taking a portion of Spotify subscription payments. The risk of Spotify’s communication strategy is that subscribers will cancel their Spotify/iTunes subscriptions, as Spotify recommends, and sign up for Apple Music’s three-month trial. The advice here, for what it’s worth, is for Spotify to drop the in-app subscription price to $10, eat the loss, hand the saving to subscribers, and retain its users. Complaining isn’t aggressive business. Pricing is.

There is, of course, a long way from “galling” to “illegal.”  And that’s what lawfare is all about.  So it should come as no surprise that the Federal Trade Commission is now investigating Apple for deceptive trade practices.

The Washington Post reporting on the investigation contains a helpful quote from an employee of Google shill-lister Public Knowledge (so you know it must be important to Google):

What is so tough for regulators here — other than that they are using relatively arcane laws that probably never anticipated the innovation now going on in the tech sector — is that the streaming companies really do have a lot of ways to reach consumers. They can sell it over the Internet. And they all offer apps on Google’s store, which actually serves more customers around the world than Apple does.

So is Apple’s behavior truly anti-competitive?

“The fundamental question is if it is big enough to wield enough market power that can harm the competitive process,” said Gene Kimmelman, president of media public interest group Public Knowledge. “Music distributors would need to show that they truly need to be in the iTunes ecosystem to demonstrate a legitimate competitive concern.”

Actually–the fundamental question is whether Google is manipulating the Federal Trade Commission to conduct lawfare against Apple to preserve the shite artist royalties from ad supported services like YouTube and its interlocking relationship partner Spotify.  This is not just a Nixonian fantasy.

You Won’t Have Johanna Shelton to Kick Around Anymore

After the Wall Street Journal’s release of internal FTC staff memoranda recommending that Google be prosecuted for antitrust violations (a prosecution that was squashed by political appointee FTC commissioners) Google lobbyists were caught instructing FTC commissioners to be be publicly supportive of Google according to Buzzfeed:

Johanna Shelton, a senior lobbyist at Google, emailed an official at the Federal Trade Commission with a pointed request: release a public statement that would help the search giant deal with a negative story. Two days later, the agency did just that….Google was “deeply troubled” and “puzzled” by the agency’s silence on the matter, Shelton said in the email, which emerged in response to a public records request and was obtained by BuzzFeed News. She said the inadvertently released document was being used by Google’s rivals to “sow confusion and undermine the FTC’s conclusions, especially in Europe.”

“We believe it is critical for the FTC to defend its reputation, showing that it followed a thorough process and fully took into account the Bureau of Competition staff memo, among other internal agency opinions including the Bureau of Economics,” Shelton said in the email. “A public statement standing by the FTC’s ability to make a final decision after assessing differing internal views would go far in the international space to restore the reputation of the FTC, especially on due process.”

Two days after the email was sent, and after the Wall Street Journal published another article about Google’s relationship with Washington, the FTC released a statement that provided the context Shelton had sought.

In other words, Google lobbyists said jump and the FTC’s political appointees merely asked how high.

Is Google pulling rank to get the FTC to investigate Apple on a pricing policy that has been in place for years?  Is Google using its interlocking board seat with Spotify to use Spotify’s competition with Apple in the music subscription market to get the FTC to attack Apple in a way that also benefits Google in the smartphone market?

Of course now that Spotify has Jonathan Prince on board, the company may be able to use Prince’s easy access to senior White House staff to sick the FTC on Apple all by themselves.  But either way, the motives are oddly aligned.

However–Digital Music News tells us that Apple Music to date has had no effect on Apple App Store downloads of the Spotify, Pandora or YouTube iOS apps.  I wonder what the FTC thinks of that stat?

Let’s remember that Spotify is a music service.  It’s not in as many business lines as Google.  The only reason why Spotify is able to spend hundreds of thousands on lobbying (probably soon to be millions at this run rate) is because they get cheap deals on music.  Those deals have an end point.

The most meaningful statistic of all, though, is the number of subscribers to Apple Music.  Apple reached 10 million subscribers in about 45 days.  Spotify reached 20 million subscribers in seven years.  If Apple Music continues on anything like this run rate, it is going to be very difficult for company S to overtake hegemon A.  Apple Music provides market confirmation that free music is not necessary to get users to subscribe to a music service.

And that is not good for company G or company S.  Not to mention that lawfare can backfire.  What they have to worry about is that in their effort to stop Apple by manipulating the FTC, Google and Spotify will have demonstrated that something is really rotten in Washington, DC.  And Mountain View.  Not to mention Sweden.

%d bloggers like this: