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Victory in Europe: The Two Years War over the Copyright Directive has Begun

May 30, 2019 Comments off

[This post originally appeared in the MusicTechPolicy Monthly Newsletter.]

If you’ve heard about the new copyright law in Europe, you’ve probably heard that the new rules with either break the Internet or bring Big Tech to heel.  I’d suggest neither proposition is true but not for the reasons you might think.  The reason is that Big Tech has absolutely no intention of complying with the law unless they are made to do so and few-if any- governments have the stomach to make them.

Cynical much, you may think?  Not really.  Hardly a day goes by that some new horror story doesn’t break about some awful business practice at Google, Facebook, Amazon or Twitter.  Lawmakers wring their hands, maybe fine the company concerned and everyone goes back to sleep until the next eruption.  Those fines are in the billions, but the bad behavior continues.

There’s a simple explanation for why.  It should be obvious by now that relying on good corporate citizenship is no more likely to produce a good outcome with Big Tech than it has  been with Big Anything Else.  You can dress them up in hoodies, they can tell you to lean in and that they won’t be evil, but “trust me” has not worked out very well so far.

Not only has “trust me” not worked out in terms of outcomes, it also hasn’t resulted in compliance with the law.  And this is the real reason why the bad behavior continues.  It’s not that these horror stories are “glitches”–no, the platforms that produce the inhuman results are working exactly as they are designed to do.  Do you really think that companies like Google, Facebook and Amazon aren’t able to control their platforms, algorithms and applications?

No, these companies make things that work very, very well.  For them.  They wrap them in extraordinary spin and mythology and deceive their users into increasingly addictive behaviors.  At their core, all these platforms are in two business lines–surveillance capitalism and addiction.  They use access to music and movies and journalism as a honeypot to draw in users whose data they can scrape and resell in an unvirtuous circle.

Face it–the Amazon shopping jones is not that different that a Home Shopping Network addiction, and none of the engineered behavior addictions from Silicon Valley are that different that Brown & Williamson Tobacco chemically engineering their product to be physically addictive to smokers with the messaging to match.

Nowhere is the unvirtuous circle more obvious than in Europe during the run up to and final passage of the new European Copyright Directive.  It cannot be overlooked that the European Commission fined Google billions of dollars twice during the period that overlapped with the ultimate passing of the Directive, for a total of $6.8 billion.  Those fines seem large, but were barely discussed compared to the braying from YouTube over the Copyright Directive.

According to leading European newspapers, Google and Facebook in particular fought the Directive with tactics that are reminiscent of Russia’s Internet Research Agency that we have all become too familiar with.  Bots, spam, interference lobbying and outright threats to Members of the European Parliament, the lot.  YouTube used its platform to spread misinformation about the directive through “YouTube creators” and reportedly targeted the children of MEPs who supported the Directive.

In the end, Google and Facebook were able to turn certain parts of the Directive their way but understand this–the Directive is simply that.  A directive at the “federal” level of the European Union.  That directive now has to be put into national laws by each legislature in the 28 countries that are members of the EU before it has any legal effect.  This can take up to two years  Therein lies the rub.

If past is prologue, Google, Facebook and their Big Tech fellow travelers have absolutely no intention of ever complying with the Directive.  They will lobby away as much of the Directive as possible at the member state level–that effort was already under way before the dust had settled much less the just concluded voting for Members of the European Parliament.

They then will sit back and wait to be sued.  The courtroom is where Big Tech most excels in tying the wishes of voters into knots.  By the time there is a final non appealable judgement from the highest court of competent jurisdiction in each member state including forms of appeal that no one has even thought of yet, Google will have probably backed new legislation and collected political IOUs that Google plans to use to reverse all ground gained in the Directive.

And in the meantime, the greatest income transfer of all time will continue as Google and Facebook suck the life out of creators for their fast buck profits and stock market largesse.

The only thing that will get their attention is action that affects their behavior-breaking up these companies in particular.  But understand that any government that takes them on is essentially going to war with a corporate country that is probably better funded and nastier than any government.

Getting justice from Silicon Valley will be an apocalyptic story worthy of Skynet.  But don’t think you can affect their behavior with your so-called laws that they have no intention of obeying.  Kyle Reese is not coming.

Don’t get me wrong–I’d rather have the Directive than not.  Just don’t deceive yourself into thinking the fight is over.

The fight is just beginning.

An Insult to the Heart: Lobbyists Organize Big Tech Rallies in Europe

March 24, 2019 Comments off

The ghost of Edward Bernays walks the streets of the ancient capitols of Europe.  As the man who wrote the book on propaganda (literally) Bernays made a chilling observation:

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of.

In a post-Cambridge Analytica world, the battle for humanity will be fought over the equivocation of “freedom”—the basic human freedom of expression will be coopted by the corporate freedom from regulation to profit from surveillance by machines.  It is the ad-man’s old challenge–make you think something that will kill you is actually good for you.

joecamel

Descendant of Bernays’ “Torches of Freedom” Campaign

In turning the machines loose on the humans who are their product, corporations will use tools that Bernays foreshadowed–but these “men we have never heard of” will be playing with the very foundations of democratic institutions of the nation state.  Who wins this battle is up for grabs right now and nowhere are we seeing this struggle for humanity more clearly rendered than in Europe in the battle over Article 13.

In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.

Bernays described Google some 70 years before its time.

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The offspring of Joe Camel proudly displayed at the Googleplex

We should understand that the “value gap” that sparked this extraordinary lobbying effort by American multinational corporations to bring Europe to heel was symptomatic of a more fundamental sickness.  That commercial symptom could, and perhaps should, be more readily understood as a “values gap”–the perverse voyeurism of the surveillance capitalists to commoditize all that touched their networks and use artists to lure the humans whose data could be scraped, whose behavior could be monitored and eventually manipulated for even greater profit.

helga google interfere

I’d suggest that is why this struggle in Europe resonates so deeply with artists around the world.  It’s not just the commercial insult.  It’s not the metaphorical Room 101 app where the winning answer is 2+2=5.

It is an insult to humanity.  It is an insult to the heart.

The First Rule of Lawfare: Is Google’s Active Measures Campaign on Article 13 a Trial Run for Election Meddling by a US Non-State Actor?

October 28, 2018 Comments off

Well, I wake up in the morning
Fold my hands and pray for rain.
I got a head full of ideas
That are drivin’ me insane.
It’s a shame the way she makes me scrub the floor.
I ain’t gonna work on Maggie’s farm no more.

From Maggie’s Farm, written by Bob Dylan

Google on the Back Foot with the Copyright Directive

Google and Facebook recently suffered a lobbying debacle in Europe over the European Copyright Directive.  That legislation cuts back the European version of the what Americans call the DMCA safe harbor.  A triumph for artists, Google’s European loss was the worst lobbying defeat that Silicon Valley has been handed in a long time—at least since the SESTA legislation cut back another safe harbor in the U.S.  So it shouldn’t be surprising that YouTube’s CEO is trying to influence YouTubers to lobby on behalf of Big Tech—Google desperately needs some human shields, which is exactly what participating YouTubers would be.  Once again scrubbing the floor for the House of Google.

At its core, the Copyright Directive cuts back the ability of services like YouTube to profit from infringing activities on their platforms.   One would expect corporations profiting from that safe harbor to lobby against it, just like supporters lobbied for it.  But Google and Facebook went well beyond simply lobbying by attempting to sow discord and undermine democratic institutions.  

And they got caught—red handed.   They were caught conducting active measures such as spamming, bot farming and overt messaging campaigns calculated to undermine the legislative process in the European Parliament.  You can read about it in a number of leading European publications starting with investigations by both the Times of London and Frankfurter Allgemeine Zeitung.

 

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Google’s Article 13 Lobbying Campaign from Volker Rieck

 

Most importantly Google supporters like the Pirate Party promised—or more accurately “threatened”—that “constituents” would show up to protest, and very few did.  So Google’s active measures campaign lacked a human face—the key component that brought it down.

German MEP Helga Truepel explained why the plenary vote on the Copyright Directive was so lopsided against Google at a press conference :  “…[It was] due to this message spamming campaign. I talked to some of my colleagues here [and they] are totally pissed off, cause in the streets there were a maximum 500-800 people last Sunday [at Pirate Party protests]… and we were only deleting emails for weeks now.”

Plan B and the First Rule of Lawfare

Fast forward to today: Google needs a Plan B.  Desperately.

Google’s problem today is the Members of the European Parliament (and some members of the UK Parliament) are wise to their jive after the plenary vote.  My bet is that story is not yet concluded as it merits a criminal investigation.  Because when a corporate covert influence operation is discovered and attribution is certain, it’s hard to put that genie back in the bottle (just like Internet piracy).

But while Google desperately needs a Plan B to retain its safe harbor, publicly acknowledging its influence operation is politically awkward, bread crumbs or no.  Like fight club, the first rule of lawfare is that it does not exist.

Google and Facebook are struggling to find that Plan B as the EU lawmaking process continues with the “Trilogue”, the next step to the Copyright Directive becoming national law in the European Union.  Google seeks another way to overwhelm the system by finding human shields to mingle with the bots.  And that’s where YouTube CEO Susan Wojcicki comes in with her recent appeal to YouTubers to protest the Directive.

Ms. Wojcicki may want us to overlook that Google just got caught running active measures against a democratic institution to meddle in the legislative process on another continent.  But members of the European Parliament have not forgotten.  She may be able to pull the wool over YouTuber’s eyes, but it just makes her human shields look even more duped and her methods look especially more alarming—if not terrifying—in a post-Cambridge Analytica world.

Safe Harbors, Addiction and Human Shields

Don’t underestimate how important these safe harbors are to Google, Facebook and its fellow monopolists.  They were ready to be on the wrong side of child sex trafficking legislation to preserve their other safe harbor (Section 230 of the “Communications Decency Act”)—that surely strained Sheryl Sandberg’s performance as Wendy to Mark Zuckerberg’s “boy who wouldn’t grow up.”  These safe harbors are crucial to Google, Facebook and Twitter—because it protects them as they snort up the addictive content and reward (if not sell) views, likes, follows, and “engagement.”  

Remember—YouTube is not in the music business, or even in the content business at the end of the day.  Google and Facebook are in the addiction business.  

In particular the behavioral addiction business (see Irresistible by Dr. Adam Alter).  If you’re in the addiction business, safe harbors are very, very important.  Just ask the narcotraficantes.  And don’t forget—the U.S. Attorney for Rhode Island investigated Google for violations of the Controlled Substances Act that resulted in a $500,000,000 fine and a non-prosecution agreement (not to mention a shareholder lawsuit).

Straight Outta Minitrue

But I suspect it is the embarrassing lack of human shields cited by MEP Helga Truepel that drove Ms. Wojcicki to issue a meandering tl;dr blog post trying to convince “YouTube creators” to fall in with the company line on the Copyright Directive. 

Ms. Wojcicki manages to get through her entire appeal without coming clean about the point of the Copyright Directive—YouTube profits from piracy through the safe harbor that the Directive would cut back, especially Article 13.  (There’s way more to the Directive than Article 13, but that’s another story.)

She would have YouTubers sign up to the “sky is falling” claims that “the unintended consequences of Article 13 will put [the highly profitable YouTube] ecosystem at risk”.  Why?  Because “[i]t would be too risky for platforms to host content from smaller original content creators, because the platforms would now be directly liable for that content.”  

That is quite a leap—how is it that “smaller” YouTubers would be such a big problem?  After all of YouTube’s “advertiser friendly” changes that severely hurt the earning power of many YouTubers, does Ms. Wojcicki really think that YouTubers—a pretty clever bunch on the whole it must be said—are so gullible that they will miss the irony?  

And then she says this: “We are committed to working with the industry to find a better way.  This language could be finalized by the end of the year [in the Trilogue], so it’s important to speak up now.”

Given the breadth of the coalition supporting the Copyright Directive and opposing Google and Facebook, it’s not immediately clear who is “the industry.”  I can tell you that if she includes the music industry in that reference, I can save her some time.  

Nobody in “the industry” trusts Google, YouTube, Facebook or Ms. Wojcicki.  [Although the beachhead that Google scored with the MMA may make life interesting for publishers and songwriters wishing to protest against the hand that feeds the mechanical licensing collective.]  

And, frankly, I’d be surprised if many YouTubers trust her either.  Based on the vote supporting the Copyright Directive, there’s a wide swath of MEPs that have severe misgivings about all these Silicon Valley companies trying to run roughshod over Europeans.  And then there’s the two and probably soon to be three competition prosecutions against Google by the European Commission.  That’s a thing.

Ms. Wojcicki hasn’t learned (and I predict won’t ever learn) a simple truth that every record company and music publisher knows—don’t jack with the talent.  YouTube jacks with the talent frequently, so it’s unclear how the talent is going to react to this latest request that they take time out of their day to help YouTube.

It’s not a good look and it will come back to bite.  YouTube has been profiting from the safe harbor for its entire existence and wouldn’t know how to make an honest buck if their lives depended.

Is Election Meddling Next on Google’s Agenda?

Before Ms. Wojcicki tries to rally YouTubers as human shields to support Google’s billions on her bot farm, she needs to get her own house in order.

And members of the European Parliament need to get a grip on these active measures campaigns before Google goes beyond “lobbying” on an issue vote and moves on to meddling in campaign outcomes in a few months when the European Parliament stands for election.

In a post-Cambridge Analytica world, we all know it’s a short step from undermining opposition on a particular issue to undermining the election of a particular candidate.  And Google is just as capable of meddling as any state actor if not more so.

Truth Will Out! @digitalmusicnws: Surprise! The ‘Music Modernization Act’ Prohibits Litigation Against Streaming Services [With New Even Safer Harbor Power Play] — Artist Rights Watch

January 15, 2018 Comments off

[Editor Charlie sez: You’ve all probably gotten mass emails full of glittering generalities about the controversial Music Modernization Act that don’t tell you what the bill actually says or the power play that’s actually going on. Well…you’ve been Sneekyfy-ed! More News from the Goolag on the latest government taking by the lobbyists to follow!]

via Truth Will Out! @digitalmusicnws: Surprise! The ‘Music Modernization Act’ Prohibits Litigation Against Streaming Services [With New Even Safer Harbor] — Artist Rights Watch

Read the post by Paul Resnikoff on Digital Music News

Read the Music Modernization Act here

Will Congress Bring Songwriters a Lump of Coal or Justice?

October 17, 2017 3 comments

It is axiomatic that as government expands, liberty contracts. Songwriters are among the most highly regulated workers in America, so on the continuum of liberty, guess where songwriters score? Most people are surprised by that unadulterated, and rather bleak, fact. After all, songwriters don’t make anything toxic or build in places they shouldn’t or dump chemicals in a waterway. Songwriters don’t have monopoly power. Songwriters don’t even get to set their own prices—the government largely does that in a very expensive and Kafka-esque process. They just write songs.

Not only are songwriters highly regulated workers and are forced by the government (or to use a term from political theory, “the Sovereign”) to bend a knee, the Sovereign has abdicated the enforcement of the laws protecting songwriters to the songwriters themselves except in rare criminal cases. Not only has the Sovereign failed to afford songwriters the same level of protection as the desert tortoise, the Sovereign actually requires songwriters to enforce the laws themselves. Sounds like a reality show.

So rather than getting even more government, songwriters are due for either getting the Sovereign out of their commercial lives, or if justice fails them yet again, at least getting the Sovereign to actually enforce the law.

Why is this important now? Because the Congress has conducted a “review” of the laws affecting songwriters and it’s possible that the Congress now is about to actually do something in the waning days of the current session of Congress. For songwriters, the holiday season is a good time to remember the most terrifying words in the English language: I’m from Washington and I’m here to help.

The Royalty that Time Forgot

The Sovereign compels songwriters to license their songs in two principal ways: The compulsory license for “mechanical” copies (Section 115 of the Copyright Act) and the rate courts (under a 1941 consent decree for ASCAP, the longest running consent decree in history, and a comparable one for BMI dating from 1964). The government set the mechanical royalty rate for the compulsory license at two cents per song per copy in 1909 and then forgot to raise it until 1976 when in its largesse, the Sovereign raised the rate to 2.75 cents per copy—inflation alone would have put the mechanical at 12 cents in 1976. That shadow of that injustice has dogged songwriters ever since and to this day.

Imagine for a moment if the Sovereign had set any other wage in 1909 and then forgotten to raise it for 67 years.

Today that same rate is 9.1 cents where it was set and forgotten in 2006—eleven years ago. So songwriters live in the shadow of that “minimum” statutory rate for which they never got relief from the Sovereign.

The Current Landscape

The main threats to songwriters from Washington come from one bill and the failed administration of two agencies: The Copyright Office and the Department of Justice. All these threats emanate from what is likely the largest lobbying cartel in history, the “MIC Coalition” an organization created for one purpose in my view: to crush songwriters once and for all. The MIC Coalition seems devoted to fixing prices for songwriters at zero or as close to zero as they can get them as far as I can tell.

The bill in Congress is the proposed Transparency in Music Licensing and Ownership Act (HR 3350) which is fully backed by the biggest of big businesses (MIC Coalition) to the detriment of the smallest of small businesses (songwriters). This legislation would impose yet another formality on songwriters by creating a massive database that would supersede the current copyright registration system for one purpose—denying songwriters the right to sue for statutory damages and attorneys fees in cases of copyright infringement. According to this legislation, if your song is not on the government’s list, then you can’t use the one big stick to drive compliance with the Sovereign’s own rules governing compulsory mechanical licenses.

Why is that? Because you are most likely to be suing a member of the MIC Coalition, or more precisely suing a member of one of the several trade association members of the MIC Coaltion—the DIgital Media Association (or “DiMA” in the logo above). The Digital Media Association is comprised of Amazon, YouTube, Apple and Spotify among others and has long been a stake in the side of the creative community. That’s right—one trade association member of the MIC Coalition represents three of the biggest corporations in the commercial history of the United States.

One alternative to statutory damages would be for the Department of Justice to assume a greater role in the enforcement of the copyright law. But the MIC Coalition has no intention of allowing that. No, no, no. The plan is to create a Gargantuan “gotcha” in order to take away statutory damages and attorneys fees as a right of any copyright owner to sue and replace it with….nothing.

Agency Failures

It is well to remember that the U.S. Copyright Office is a pre-New Deal legislative branch agency that has none of the civil or criminal enforcement powers we have come to associate with post-New Deal regulatory executive branch agencies. While the Copyright Office issues regulations, the Sovereign predominately leaves the enforcement of these rules to creators, publishers and labels to enforce at great expense. This is the one place that the Sovereign seems to want the market to work—the part where the Sovereign abdicates its primary purpose, that of protecting the people. Like I said, the desert tortoise fares better than the songwriter.

The Copyright Office does have power to affect the market by refusing or failing to act, however. For the last two years or so, the Copyright Office has permitted over 50 million and counting “address unknown” notices to be filed on compulsory song licenses using a backwater loophole of the Copyright Act. The loophole deems a song owner to be “unknown” if the owner’s contact information and song ownership is not available in the public records of the Copyright Office. This means that unless you have gone through the expensive and lengthy formality of registering with the Copyright Office for all your songs, you are “unknown”. If a cover recording of your song appears on a digital music service, then rather than track you down before using the song, the service can simply file—at great expense—an “address unknown” notice with the Copyright Office. This has resulted in approximately $5 million in filing fees to the Copyright Office to date according to an estimate from Paperchain.

And who is filing these notices and paying these fees? Google, Spotify, Amazon, iHeart, Pandora—all members of the MIC Coalition price fixing cartel. Think that’s a coincidence? Using this loophole, these corporate giants pay a zero royalty for their compulsory licenses. Hence, the cartel attempts to fix the price for songs at zero or as close to it as they can.

The Copyright Office permits these filings to occur and to my knowledge has raised no objection to it. They are unmovable on this point while they watch songwriters burn down. (I have a longer article on this “address unknown” issue here.)

The Department of Justice is currently engaged in a massive charade called “100% licensing”. This new and abrupt change in the way the DOJ interprets the ASCAP and BMI consent decrees was brought about under the auspices of a former outside lawyer for Google who was installed as a senior official in the antitrust division of the DOJ. What this interpretation means is that on co-written songs, the longstanding practice of each songwriter on a co-write administering their share of the song is thrown out the window. Instead, each songwriter is required to license 100% of the song, including their co-writer’s share. (Recall that Irving Azoff challenged Google by forming Global Music Rights and requiring a separate license for his writers who withdrew from the government-regulated PROs.)

The BMI rate court judge ruled against the DOJ—but the Sovereign is now appealing that ruling. The DOJ’s handling of the situation was so bad that songwriters actually sued the DOJ.

What is to be Done?

First—the DOJ should drop the appeal of the BMI rate court ruling against 100% licensing.  It’s a waste of time and creates substantial hostility among songwriters.

Second—the Copyright Office should stop accepting address unknown filings and refer the matter to the Congress to close the loophole. Digital services could also refuse to post recordings for which they have no publisher information, which is action most likely to produce unknown information from the market.

Most importantly—the Congress should not introduce yet another distortion in the market with some unicorn database that will never work.

As we approach the season of hope, it is well to echo what songwriters and publishers have told Congress for years: Songwriters need more liberty, not less.

The MTP Podcast: Michelle Lewis and Kay Hanley of SONA and David Lowery on DOJ’s “Union Busting” Gambit Against Songwriters

August 17, 2016 1 comment

In an explosive conversation, Michelle Lewis and Kay Hanley talk with David Lowery and Chris Castle about Songwriters of North America, their experiences with lawyers from the Department of Justice Antitrust Division in the lead-up to the DOJ’s decision on “100% licensing,” and disingenuous behavior by the government’s lawyers that crossed the line into “union busting.”

Michelle and Kay

Michelle Lewis and Kay Hanley

—in an ex parte communication, Antitrust Division Section Chief David C. Kully advised a witness in an ongoing Justice Department inquiry to withdraw from ASCAP as a solution to 100% licensing, knowing she was represented by counsel.

—Justice Department lawyers chose to conduct meetings and telephonic communications with songwriters in which DOJ lawyers read aloud from proposed text of their 100% licensing statement in an effort to build a false consensus among songwriters and refused to provide a written draft of the statement for public comment.

hesse

—At the direction of former Google lawyer and DOJ official Renata B. Hesse, the lawyers also told SONA members that no transcripts existed of these telephonic communications.  If true, it is highly unusual for the Justice Department to engage in such contacts with interested parties without preserving a record of such meetings to be made available to the public and preserved as customary federal record keeping.  The lawyers’ statement is more likely another lie or obfuscation.

 

 

Show notes:

Links to documents we discuss on the MTP Podcast with Michelle Lewis, Kay Haneley, David Lowery on the DOJ’s new policy on 100% licensing.

Songwriters of North America Website

@wearesonala

The Trichordist

cranky

Podcast theme from “March of the Billionaires” written by Davey Faragher, Johnny Hickman, David Lowery & Michael Urbano, performed by Cracker from their 2014 album, Berkeley to Bakersfield used courtesy of Cracker.

Doc McStuffins

Department of Justice Statement on 100% Licensing

MIC Coalition Letter to DOJ Lawyer Renata Hesse

BMI’s Premotion Letter to Judge Stanton re Obama Justice Department Ruling on 100% Licensing

The Obama Administration Is Lame Ducking An Unworkable Burden on Songwriters: 4 Reasons Why It’s Bad Law by Chris Castle (Huffington Post)

Guest Post by Stephen Carlisle: ASCAP and the Terrible, Horrible, No Good, Very Bad DOJ Decision That’s Going to Create Chaos in the Music Industry

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@GTP_Updates: White House Kept Close Tabs on FTC Google Antitrust Probe — Artist Rights Watch

August 17, 2016 Comments off
david_edelman_final

White House Internet Advisor R. David Edelman

Newly-uncovered emails show the White House was closely tracking the outcome of the Federal Trade Commission’s antitrust probe of Google, with an official contacting Google’s lobbyist shortly before the agency’s decision to settle the case.

via @GTP_Updates: White House Kept Close Tabs on FTC Google Antitrust Probe — Artist Rights Watch

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