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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 Leave a comment

[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

The Slippery Slope of Censorship: @HuffPost Pulls Story Critical of @Spotify Ahead of IPO — The Trichordist

January 9, 2018 Leave a comment

Artists Rights advocate Blake Morgan (#IRespectMusic) published a story in the Huffington Post this morning critical of Spotify. The story was rapidly gaining traction when it was suddenly deleted and Morgan received this email from the Huffington Post telling him he’d been censored From: Bryan Maygers Subject: Spotify’s Fatal Flaw Exposed Date: January 8, 2018 at 11:43:41 AM EST […]

Here’s Blake’s piece in its entirety.

Spotify’s Fatal Flaw Exposed: How My Closed-Door Meeting with Execs Ended in a Shouting Match

I love streaming.

I love making playlists, I love being able to download streamed music so I can listen when I’m offline, and I love being able to bring that music with me. In short, I think it’s a great distribution method.

What I don’t love is how little musicians get paid for all that streaming. It’s not fair––not even close. What’s more, middle-class music makers are the ones who are hit hardest, whose businesses are threatened, and whose families are put at risk. So how can I be against the way streaming companies treat musicians but not be
against streaming itself?

The same way I’m against the electric chair, but not against electricity.

Read the complete post on The Trichordist:  The Slippery Slope of Censorship: @HuffPost Pulls Story Critical of @Spotify Ahead of IPO — The Trichordist

Must Read from @schneidermaria: Thoughts on “Net Neutrality” From Down Here in the Coal Mine – Guest Post Maria Schneider

December 6, 2017 Comments off

Maria Schneider is a 5-time GRAMMY-winning composer/bandleader in jazz, classical and for her work with David Bowie. An outspoken advocate for the rights of musicians, she has testified before Congress, and teaches and performs throughout the world. 

When Google really really wants something, it’s a marvel to watch how it hides its own greedy motives, while using surrogate groups, political polarization, and their own power over information networks to whip up a national outcry – all as Google feigns concern for the “public good.” Google has now orchestrated just such a public outcry over the vague phrase “net neutrality.” It’s a phrase that has most of us, including John Oliver (see John Oliver’s piece), biting hook, line, and sinker. I smell something rotten.  As musicians, we’re the canaries in the proverbial coal mine. We’ve long been taken on this ride by the world’s biggest data lord, and we’ve developed a keen nose. We’ve been coughing up blood down in this damn mine for too long to not take notice when new wafts of rotten stench make their way down here – especially when we look up the dark shaft and see rainbows spelling the word “Google” beneath radiant blue skies.

So I figured it was time to dig into this phrase “net neutrality” and see what it’s all about. And sure enough, as I’ll explain below, this appears as just another typical Google scam where they systematically create mass hysteria that the little guy is going to somehow be hosed. I’m afraid to say, the public is being duped.

Read the post on The Trichordist:  Thoughts on “Net Neutrality” From Down Here in the Coal Mine – Guest Post Maria Schneider — The Trichordist

The Information’s Expose on Google’s Hostile Work Environment is a Cry for Corporate Reform

December 1, 2017 2 comments

“All animals are equal, but some animals are more equal than others”

Animal Farm: A Fairy Story by George Orwell

The Information has conducted an extensive review of Google’s apparently hostile work environment and one thing is clear–all the stories we heard about Google’s headman, Eric “Uncle Sugar” Schmidt really have had the predictably corrosive effect.

The romantic relationships within the walls of Google made ideal fodder for gossip columns and magazine profiles.

Co-founder Larry Page dated Google lieutenant Marissa Mayer in the company’s early days, and co-founder Sergey Brin later drew attention for dating Amanda Rosenberg, a younger colleague. CEO Eric Schmidt dated publicist Marcy Simon when she did work for Google. The stories had sex, money and power against a backdrop of one of the world’s largest tech empires. It was like something out of a rebooted soap opera—Dynasty 2.0.

But an examination by The Information found that those interoffice relationships, and others featuring some of the company’s top leaders, have for years been a flashpoint of frustration and anger among Google’s employees. The relationships often violated at least the spirit of a company policy that prohibits superiors from secretly dating subordinates. But employees noted that there had been no apparent repercussions for the powerful, mostly male, leaders who had such relationships.

As a result, many Google employees expressed the opinion that the company’s culture appears to tolerate, or even endorse, such workplace relationships. In interviews with nearly 40 current and former Google employees, many said the issue had tainted the perception of women who earn promotions, created uncomfortable encounters at off-site events and had raised concerns over whether human resources would address inappropriate conduct. Some described their own experiences with sexual harassment at the company.

And it goes on from there.  While you may ask, where was the board, the Google board of directors was actually exactly where Uncle Sugar wanted them to be:  In the words of the Rolling Stones’ classic, under his thumb.

of-all-the-ceos-google-interviewed-eric-schmidt-was-the-only-one-that-had-been-to-burning-man-which-was-a-major-plus

Eric “Uncle Sugar” Schmidt at Burning Man

The Roman dictator Sulla is credited with originating the practice of decimatus from which we derive the word “decimation”.  The practice was military in origin and was a punishment meted on a Roman cohort often for the dishonor of the unit such as mutiny or abandoning the line.  The cohort (about 500 men) was divided into groups of 10 and each group drew lots to identify a single soldier to be killed by the others, usually clubbed to death.

Google practices a kind of reverse decimation as the three Google insiders Eric Schmidt, Larry Page and Sergei Brin are the only Google stockholders who are allowed to hold a class of stock that gives them 10 votes for each share.  And extending the Roman motif, holding this 10:1 voting power over other Google stockholders affords them a kind of co-emperor status–for you Roman Empire fans, think Diocletian and Maximian.  I guess you could say that Schmidt is the senior co-emperor and Page and Brin are the junior co-emperors.

But co-emperors they are indeed with a 10:1 power to decimate the lesser stockholders who dare challenge them.

The futility of stockholder votes at Google is obvious at Google stockholder meetings where ordinary stockholders are routinely decimated by the 10:1 voting power of the co-emperors.  The predictable results of the voting are often announced by David Drummond, the company’s head lawyer, who is himself implicated in The Information’s report.

So when you are reading The Information’s report on the internal workings of Google, just remember that not only were the employees captive to the Google culture, the perpetrators also had complete control of their board of directors.  In addition to the other takeaways from this sorry episode, it should be obvious that not only should Google be broken up, but the Google method of insider control needs to be thoroughly investigated.

@TaylorSwift13 Thinks Outside the Stream to Bridge the Value Gap

November 25, 2017 Comments off

There are several myths about streaming, but none so prevalent as the “savior” trope, which streaming services are doing their best to splice into the DNA of the music business.  Without streaming, we are told, then piracy: “Streaming stops piracy”.  Piracy, of course, is a constant, and is factored into sales these days as a limiting factor.  Also factored in is the cost of the faux legality of piracy on DMCA-protected services which also must be managed in order for windowing to work.

Streaming is now baked into the charts, which is the first step to becoming a self-fulfilling prophecy: “Streaming is radio”.  Artists must stream or be lost:  “Windowing punishes fans” (just like selling albums “punishes” fans).

All these myths ignore the basic proposition that windowing, exclusives and other contract based rights are simply ways to divide up our property rights–no more, no less.  And contracts take two to tango–if the deal is bad, no one will take it which undermines the myth.  And like all myths that fall apart when reality diverges from dogma, the curia fights back.

Given Spotify’s monopoly, or certainly dominant, position in their streaming market, it should not surprise that they push all of these myths, and they seem to do it like clockwork whenever Taylor Swift releases a new album.  Why?  Because Taylor Swift has four–count ’em–four albums that sold over one million copies in their first week of US release.  And–she’s the only artist ever to have done so.  And–she windowed every one of them, pre and post Spotify’s US launch.

Title Year Sales
Reputation 2017 1,290,000
1989 2014 1,287,000
Red 2012 1,208,000
Speak Now 2010 1,046,000

Let’s be clear–any distributor getting a Taylor Swift record in the fourth quarter sure makes up for a multitude of commercial sins in their year.  At least that’s true of profit-making companies whose executives actually have consequences for commercial sins.  Loss-making companies, on the other hand, are not motivated by pesky things like profits if they are on the “get big fast and exit” track.  You may say, oh, that’s so 1999, surely they have learned their lessons from the Dot Bomb debacle.

Nah.

The exit is still the thing for these venture backed tech companies.  The problem with exits is that the people who are only in it for the money move on to self-driving cars, climate default swaps, bitcoin or whatever.  People who are in it because they love it are stuck with the consequences.  The music business will be picking up the pieces from the streaming exit for decades because of a simple logic:  You cannot take away something that sold at a $10 price point and replace it with something that “sells” at a $0.005 price point and expect to have a business.  Remember–the trendline since 2008 is predominantly flat so while streaming may be a bigger piece of the pie, the pie itself is not growing much.  That’s cannibalization.  We’ll see how much that trend changes this year–and how much of that change is Taylor Swift.

Recorded Music 1973-2016

Source: RIAA

It must be said that there’s a real question of how many Taylor Swifts the business will sustain going forward if we don’t listen to the lesson she is teaching for those who care to pay attention and think outside the stream.

Remember that salted in the 1,290,000 units that reputation sold in week 1 are quite a few units that were sold as a fan package on an exclusive–there’s that word again–at a higher price point than the general release CD.  That should mean that the gross revenue to the distributor conservatively averages around $8 after discounts or something like $10 million in distributor gross for the week (in the US alone).

Producing that amount of streaming revenue would require approximately 2,000,000,000 streams in a week depending on whose average streaming royalty you buy into.  “Call It What You Want”, Taylor’s first single from reputation, entered HITS song revenue chart at #4 with 9,259,698 streams earning $66,186 (a chart with revenue metrics I have a quibble with due to averaging of free/sub streaming revenue, but that’s another subject).

Regardless of the underlying math, you can see that there is no way that streaming is going to put much of a dent in the revenue from the physical release.  If you are in a future oriented profit making business and not an exit oriented loss making business, you like those numbers.  Why?

Because it tells you that you could probably keep doing this for a while.  That’s called a career, and it’s what managers were supposed to foster.

How was this received at the dominant streaming platform?  Spotify hired the former Lady Gaga manager, Troy Carter, as its “global head of creative services” reporting to one Stefan Blom.  (Mr. Blom was formerly chairman at EMI Nordic, but songwriters will recognize Mr. Blom as the Spotify executive who can’t seem to find millions of songwriters despite Spotify’s vast technical abilities and signs Spotify’s “address unknown NOI” filings with the Copyright Office denying royalties to millions of songs.)

Mr. Carter did not take well to Taylor Swift’s decision to hold the reputation album off of Spotify (notwithstanding reports of Spotify’s recent agreement to accept windowing as a condition of closing its Universal license).  Variety reports:

Taylor Swift’s decision to keep her new album “Reputation” off streaming services like Spotify will drive people back to piracy, said Spotify’s global head of creator services Troy Carter at the Internet Association’s Virtuous Circle Summit Monday morning. [The Internet Association is antagonistic to artists as a general proposition.]  “A lot of it is going to be pirated,” he said. “It kind of sets the industry back a little bit.”

However, Carter also said that he understood Swift’s decision: “Taylor is super smart. We are not mad at her for the decision she made,” he said. Swift and Adele, who sold millions of copies of her “25” album while waiting seven months to release it to streaming services, are among the few artists who can withhold an album from such platforms without significantly impairing its exposure.  [Emphasis mine–note the “among the few” rationalization of the “streaming is inevitable” narrative.  If you shame everyone away from windowing, how will you ever know that it’s a “few”?]

Carter, who managed artists including Lady Gaga and Meghan Trainor before joining Spotify in 2016, was also critical about the music industry’s past business model. “We screwed over consumers for years,” he said, arguing that consumers were forced to buy highly priced albums for years that only included one or two songs they wanted. Carter drew a direct line from this attitude to exclusives on streaming services.

So we have Mr. Carter trotting out several myths at once here–although it must be said that Mr. Carter’s former employer from 2007-2013 is herself not without experience in the rarified air of the First Week Million Club–Lady Gaga herself has one record in that group with her 2011 release, Born This Way.  Of course, with its May 23, 2011 release, Lady Gaga did not have to address the Spotify new release windowing issue as the service had not yet launched in the US at that time.

Even though Mr. Carter was clearly wide of the mark with his advice to Taylor Swift, his messaging was a vast improvement over Daniel Ek’s mansplaining to Taylor on 1989 which was one of the more bizarre public encounters between an artist and a retailer in history.  Can you imagine Tower Records chief Ross Solomon saying any of these things in public?

I still hold the view that the windowing issue changes depending on whether the artist concerned has a fan base that wants their physical record.  If they do, then streaming services become like record clubs.  Nobody ever wanted the clubs to get their record until they’d had at least a 90 day holdback, more frequently 6 months or even a year.  So it is with streaming services, including Spotify.

The bigger questions are what effect windowing has on the ability to sell physical at all.  I’m still waiting to see the consumer research suggesting one drives the other, and based on industry revenues over time, it seems far more likely that streaming cannibalizes physical.  Another question is how much elasticity is there in the subscription price?  If we are expected to welcome low margin streaming as a replacement for higher margin physical and downloads, please don’t tell me that the answer is we’ll make it up on volume, t-shirts or touring.

For now, we have to acknowledge that for artists who anticipate large sales of physical and permanent downloads, singles-only streaming releases combined with physical sales is probably the principal way their distributor can afford to breach the value gap and send enough DMCA notices to keep the album off of YouTube.

 

 

 

The UnitedMasters, the Latest Tone-deaf Artist Exploitation Scam from Silicon Valley

November 24, 2017 2 comments

Yes, they really did brand it the “United Masters”, and no, that’s not a subplot out of Game of Thrones and no, it’s not the MIC Coalition price fixing cartel.

You may have heard about the United Masters, the label services company that Google along with the Silicon Valley VC Andreessen-Horowitz is backing.  “United Masters” which is designed to “upend record companies,” or so the story goes.

The launch was covered extensively in TechCrunch and I confess I stopped reading after this:

UnitedMasters is ready to give musicians an alternative to exploitative record label deals. Artists pay UnitedMasters a competitive rate to distribute their music across the internet from Spotify to YouTube to SoundCloud, and they [meaning the United Masters and the artists] split the royalties while the artist retains the rights to the master recordings.

Ah yes.  The artists take all the risk and on top of that payment they split royalties with the “United Masters”.  Sounds like those notoriously fair venture capital deals, right?  They just left out the warrant coverage and 3x liquidation preference.

Tunecore pioneered shifting 100% of the distribution risk from the distributor to the artist by requiring an upfront payment from their distributed artists.  Tunecore did not have the additional brass to take an additional revenue share from the artist’s earnings on top of what the United Masters call a “competitive rate”.

The narrative was something like why should you share your future earnings with your distributor when you can pay Tunecore upfront?  And, in fairness, cap your distribution fees.  That deal works out better for artists who sell enough to drive that upfront payment below 20% or less of their earnings (usually artists who sell enough to make a tidy profit but not enough to justify an advance from a distributor).  However, for artists who don’t sell that much, it drives the distribution fee well over 20% of earnings and, I would imagine, in some cases 100% of earnings.

But even so, the fee-based distribution model didn’t ALSO take a percentage of revenue which is evidently the plan with the UnitedMasters.  Even though we don’t know exactly what the United Masters terms are yet, we can still find the deal structure nauseating.

Good news:  VC Horowitz brought in a tech team to the UnitedMasters party!  Yay!  Because, you know–it’s all about the data, right?

[W]e recruited a phenomenal technology team with members from distinguished companies such as Facebook, Dropbox, and Pandora. I think that the UnitedMasters engineering team is one of the best in the technology industry, but you can judge for yourself.

This from the VC firm that invested in Rap Genius, or as Marc Andreesson, the partner of Mr. Horowitz reportedly called Rap Genius, the “Talmud of the Internet.”  So these are people who have a very positive view of themselves and who have the answers for how to run the music business.

So naturally, such people would reach out to royalty deadbeats Facebook and Dropbox and Pandora, who most songwriters know as their alter ego–“Plaintiff”.  Pandora who screwed the legends of R&B out of performance royalties in their other alter ego–“Defendant”.

Now imagine this phone call–your band reaches out to a talent buyer in a town you’ve never been to before and you tell that buyer that they should give your band a Friday night because—the United Masters have divined from the data that you’d draw.

Right.

There’s a reason why Amazon is getting out of the ticketing business.

As usual, Google misses the point entirely.  Robert Levine observes in Billboard that the main thing that record companies do that the UnitedMasters evidently will not do is actually write a check to invest in artists:

So far, startups haven’t really replaced record labels because none of them really do what labels do. Almost two decades ago, Napster said that it would replace labels by distributing music, but labels aren’t exactly in the distribution business — truck drivers are. (No one gets invited to cool parties by disrupting long-haul trucking.) Several startups help artists market directly to fans, which is becoming an important part of the music business, but labels never really did that — they’ve always sold music to retailers. From a business perspective, labels invest in artists — which very few technology companies have shown any interest in doing. Because it’s a risky business.

And that’s what labels really do for artists — they amortize risk.

And while you think about that, have a listen to the incomparable Marc Ribot and Ceramic Dog performing his ode to the data lords, “Masters of the Internet”.  I don’t think that was quite the meaning of “masters” that the tone deaf “United Masters” and the data lords intended.

@musictechpolicy: Facebook’s Music Licenses: What’s Not to Like?

November 21, 2017 Comments off

Facebook pays no royalties for the music that gives significant value to the platform. That’s often a surprising proposition for artists and songwriters, much less the general public.

Yet it is true—hitmakers and new artists, pros and amateurs alike do not get a penny from Facebook and the company doesn’t even attempt to license their work. Why should a multibillion dollar multinational corporation that anchors a large piece of the Internet economy and whose founder is planning on running for President of the United States get to pay music makers in exposure bucks?

The answer is that Facebook, like YouTube and many other user-generated content platforms hide behind the legacy DMCA “safe harbor” and its nonnegotiable, unconscionable, adhesion contract that controls the use of its platform.

Rumor has it that Facebook is evidently coming to the table and is in at least semi-active negotiations with at least some labels and publishers.

One may well ask what took so long—but if it were not for Universal Music Group’s pursuit of Facebook’s infringements through DMCA notices, it’s likely that Facebook would be blithely rolling on its monopolist juggernaut.

On the other hand, this is actually a good time to be negotiating these deals give the Congressional scrutiny of Facebook’s involvement in the 2016 Presidential election campaigns. We have the benefit of public statements by Facebook representatives under oath regarding what they can do and what they so far refuse to do which may come in handy in licensing negotiations.

These negotiations with rights owners may result in what will seem like a very big pop of up-front cash—but is it? And whatever the number, how will that money be distributed to the artists and songwriters that make it happen?

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