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Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters

December 19, 2017 Comments off

Great news today that the appeals court upheld BMI’s ruling by the BMI rate court judge that there is no such thing as 100% licensing under the consent decrees.  Although it’s like winning an appeal that the Sun really does rise in the East (attention Berkeley students), it’s good to put that issue to one side and to poke a stick in Google’s eye.

hesserenata

More on this to come, but who can forget the Kafka-esque insanity of Renata Hesse and David Kully, two former Google-era Justice Department antitrust officials who saddled thier colleagues with one of the most bizarre cases in the history of the music business:  100% licensing under the out of date, anticompetitive and frankly destructive PRO consent decrees.

Hesse and Kully’s behavior was so bad that songwriters actually had to sue the DOJ for, among other things, a brilliantly argued claim for unconstitutional taking of property without just compensation as a result of  what clearly appears to be Google-inspired overreach (see MTP’s timeline on Renata Hesse’s assault on songwriters and Scott Cleland’s timeline on how Hesse always seemed to be there at just the right time and just the right place to protect Google’s interest from the government oversight that Google loved to focus on other people–like those pesky songwriters.)

A little tea leaf reading suggests that there may be some appetite at the DOJ for at least cutting back the consent decrees if not sunseting them altogether, particularly since we have GMR and others trying to get into the PRO market in the US.  (A fact that is probably not lost on the MIC Coalition price fixing cartel which no doubt would like to see any new MRO take over PRO licensing for the true one-stop shop.)

More to say on this once I get a chance to read the opinion.

We all owe a big thanks to BMI for taking the fight to the government despite the odds against prevailing over the MIC Coalition cartel.  Truth may be stranger than fiction, but truth has a way of prevailing if you ride toward the guns.

Now maybe the DOJ could reopen an investigation of the real antitrust violators–Google and the MIC Coalition.

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.

@philouza: New Bill Calling For Transparency In Music Is Surprisingly Opaque — Artist Rights Watch

August 2, 2017 Comments off

NPR’s Andrew Flanagan on the controversial Transparency in Music Licensing and Ownership Act (TIMLAOA).

via @philouza: New Bill Calling For Transparency In Music Is Surprisingly Opaque — Artist Rights Watch

Don’t Believe the Astroturf: Yet More Regulations Won’t Help Songwriters or Small Business — Music Tech Solutions

July 31, 2017 Comments off

By Chris Castle

“[Government] interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding.” James Madison, The Federalist Papers No. 44

There is a bill in Congress backed by the mega lobbying juggernaut called the MIC Coalition that would force songwriters and artists to “register” with the government in order to protect their rights from the biggest corporations in the world. Failing to do so would take away the stick of statutory damages and an award of attorneys fees to songwriters or artists who are victorious in copyright infringement litigation. Statutory damages and attorneys’ fees are the only real protection that the government gives these creators–the smallest of small businesses.

via Don’t Believe the Astroturf: Yet More Regulations Won’t Help Songwriters or Small Business — Music Tech Solutions

The Transparency in Music Licensing and Ownership Act: The Domesday Book Meets A Unicorn — Music Tech Solutions

July 27, 2017 Comments off

Americans are freedom loving people and nothing says freedom like getting away with it.

Long Long Time, written by Guy Forsyth

Longtime PRO opponent Rep. Sensenbrenner introduced a bill entitled “The Transparency in Music Licensing and Ownership Act“, a piece of work that is Dickensian in its cruelty, bringing a whole new meaning to either “newspeak” or “draconian,” take your pick.  It’s rare that the Congress can accomplish the hat trick of an interference with private contracts, an unconstitutional taking and an international trade treaty violation all in one bill.  But I guess practice makes perfect.  And since the MIC Coalition gave the bill a rousing cheer followed by a heaping serving of astroturf, we should not be surprised.  (Read the bill here.)

While this legislation currently applies only to songs and sound recordings, other creators should not feel that they’ve dodged a bullet.  I hear that the House Judiciary Committee staff is planning on closing the loop and making all copyright categories subject to the same “register or lose it” approach favored by Lessig, Samuelson and their fellow travelers.  If you thought that we are in an era of the triumph of property rights, that must be a different Congress you’re thinking of.

The bill perpetuates the myth of the “global rights database” that no one who understands the complexities believes will ever be created.  It sounds logical, right?  We have county recorders for real estate, the DMV for cars, why not a database for music?

That is an 11th century idea being welded onto a 21st century problem, the Domesday Book meets a unicorn.  The problem isn’t knowing who owns a particular work which evidently is either what they believe or want you to believe.

The problem is that the users don’t want to seek permission or beg forgiveness, either.  They want to get away with it.  This bill demonstrates that unassailable fact in colors bold as the Google logo.

Think about it–by the time you finish reading this post, 1000 songs will be written and 500 songs will be recorded somewhere out there in the world.  Or more.  (Not to mention photographs taken,  paintings painted, chapters written and so on.)

Do you think that songwriters around the world are thinking, now I know what lets do, let’s rush to go register that new song in the U.S. Copyright Office–in the database, the registration section, the recordation section?  Otherwise, I’ll never be able to afford the lawyer to sue Spotify if they don’t pay me.  I don’t think they’re thinking that at all and are about to fall into the MIC Association’s trap for the unwary.  Why the MIC Coalition?  We’ll come back to them.

mic-coalition-no-npr

MIC Coalition Members

In a nutshell, the bill requires the extraordinarily heavy burden of requiring all songwriters and recording artists (or their publishers or labels)–all, as in the entire world seeking to sue in the U.S., not just the US writers–to register numerous fields of data in a yet to be created database if they plan on suing for statutory damages:

[I]n an action brought under this title for infringement of the exclusive right to perform publicly, reproduce, or distribute a nondramatic musical work or sound recording, the remedies available to a copyright owner [ANY copyright owner] that has failed to provide or maintain the information [required] shall be limited to…(A) an order requiring the infringer to pay to the copyright owner actual damages for the public performance, reproduction, or distribution of the infringed work; and…(B) injunctive relief to prevent or restrain any infringement alleged in the civil action.

That means if you haven’t undertaken the formality of registering in this new database, then the user has no exposure to statutory damages and will not have to pay the victorious songwriter or artists attorneys’ fees.  And this new safe harbor applies apparently even if that songwriter or artist has filed a copyright registration under existing law.

There is nothing in the bill that actually requires the protected class to actually look up anything in this new database, or actually be in compliance with existing statutory licenses (such as the webcasting or simulcasting licenses).

So who is in the new protected class entitled to the Nanny State’s protection from those collusive and pesky songwriters and artists?  Let’s look at the victimology of the “ENTITLEMENT” paragraph.

Well, actually, there’s no “ENTITLEMENT” paragraph for the entitled, it’s actually called “APPLICABILITY” (see “newspeak”, WAR IS PEACE, etc.).  The connected class includes five different categories of cronies.

First, the defined term “An establishment” gets the new even safer harbor.  “Establishment” is a defined term in the Copyright Act (in Sec. 101 for those reading along at home):

An “establishment” is a store, shop, or any similar place of business open to the general public for the primary purpose of selling goods or services in which the majority of the gross square feet of space that is nonresidential is used for that purpose, and in which nondramatic musical works are performed publicly.

Like the members of this organization, the National Retail Federation:

mic-coaltion-8-15 Retailers

Then another defined term “A food service or drinking establishment”.  Kind of like these people:

mic-coaltion-8-15 Booze

That is, the National Restaurant Association, the American Hotel and Lodging Association  (aka those who put their kids through college thanks to SXSW) and their suppliers, the American Beer, Wine and Spirits Retailers.

Next, “A terrestrial broadcast station licensed as such by the Federal Communications Commission”.  I guess that would include the National Association of Broadcasters, iHeart, Salem and Cox (which of course raises the question of whether this entitlement also applies to Cox’s Internet group), kind of like these people:

mic-coaltion-8-15 radio

Don’t forget “An entity operating under one of the statutory licenses described in section 112, 114 [webcasting and simulcasting], or 115 [mechanical licenses].”  Note–not that the statutory license applies to the particular song or sound recording in the way it is used that is the subject of the lawsuit, just that the entity is operating some part of its business under one of those licenses regardless of whether the service that is the subject of the lawsuit operates under one of these licenses or not.  (Pandora’s on-demand service compared to webcasting, for example, could be out of compliance with its sound recording licenses but claim the safe harbor because it is “operating under” one or more of the statutory webcasting license in the radio service or the statutory mechanical licenses for songs.)

It appears that would include these people:

mic-coaltion-DiMA Members

and don’t forget these people who are DiMA members and need the government’s protection from songwriters and artists:

Amazon logo

white apple logo

Microsoft Logo

Spotify_logo

And then I guess you could throw the Consumer Technology Association and CCIA in there, too.

So I think that’s everyone, right?

Last but not least there’s this group as “belt and suspenders”:

An entity performing publicly, reproducing, or distributing musical works or sound  recordings in good faith as demonstrated by evidence such as [i.e., but not limited to] a license agreement in good standing with a performing rights society or other entity authorized to license the use of musical works or sound recordings.

Note:  The license need not be for the musical works or sound recordings for which the “entity” is being sued, just any license for any musical works or sound recordings.

There are loopholes in the bill that you could drive a fleet of Street View cars through, so you have to assume that the loopholes will be hacked given who is involved.  Don’t let anyone tell you “oh that’s just legislative language, we can fix that.”  The whole thing has to be voted down.

Let’s call this bill what it is:  Crony capitalism, the triumph of the connected class.  The Domesday Book writ large.

It’s some of the biggest companies in the world deciding that they don’t want to hear from songwriters or artists anymore.

So shut up and sing.

[This post originally appeared on Music Tech Solutions]

 

 

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