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@Europarl_EN Statement Explains Article 13 and Google’s Fake “Lobbying”

January 12, 2019 Comments off

This week the European Parliament issued a scathing rejection of Google and Facebook’s massive lobbying campaign against Members of the European Parliament over what’s often called “Article 13”, or the Directive on Copyright in the Digital Single Market.  Article 13 is the first meaningful attempt to reverse the European safe harbor income transfer and close the value gap.  

Europe’s Global Influence

Beyond its benefits inside the European Union, Article 13 is also a crucial step toward restoring creator rights outside Europe.  Passing this watershed legislation will be in important first step toward safe harbor reform around the world, hopefully as a positive influence on reforming the U.S. version commonly called the “DMCA” copyright infringement safe harbor. Congress may well pick up that DMCA safe harbor reform in this session.   

Another benefit to Article 13 is that it’s another step toward encouraging legislative bodies to continue closing Big Tech’s cherished loopholes in other areas of the law, such another U.S. loophole beloved by Big Tech that is commonly called “Section 230.”   Congress cut back Section 230 last session.

Section 230 not only allows Google to profit from a wide variety of non-controversial behavior, but also from human trafficking, illegal drugs and counterfeit goods.  Google’s Section 230 safe harbor was significantly rolled back with the Stop Enabling Sex Trafficking Act (“SESTA”) in the last Congress.  Google fought SESTA with by launching an “off the shelf” SOPA-style, faux apocalyptica, end-of-days campaign against the U.S. Congress to preserve their human trafficking profits and stop “SESTA”, but failed.

European Commission is Also Closing De Facto Loopholes

The European Parliament historic action on Article 13 likely was of particular concern to Google because the European Commission has been closing a de facto safe harbor that protected Google’s obscene commercial overreach.  The EC brought the first two of what may be many cases against Google for competition law violations with fines in the many billions of euros.  The most recent fine in those competition law cases came down days after the first of a series of votes on Article 13.  Personally, I feel that all these events must be read of a piece.

European Parliament Tells Us That Goliath Never Learns

Google’s response to all of them appears to me to also be of a piece—barrages of fake emails and robocalls to deceive MEPs into thinking there were actual constituents who supported safe harbors for multinational U.S. corporations that violate privacy and steal culture.  (If there were real constituent voices they were drowned out or irreparably tainted by Google’s fake lobbying.)

Of course, it must be said that Big Tech’s barrage of fakery was as much directed at artists as it was at elected officials.  The campaign against Article 13 is remarkable for how much it revealed that  Big tech is as out of step with cultural history in the countries where it does business as it is failing with honest advocacy.

The fakery has gotten so bad that the European Parliament found the need to release a “myths and facts” style question and answer document regarding Article 13.  Here’s a choice passage:

The draft directive has been the subject of intense campaigning. Indeed, some statistics inside the European Parliament show that MEPs have rarely or even never been subject to a similar degree of lobbying before (such as telephone calls, emails etc.). The companies to be most affected by the directive have multi-billion dollar yearly revenues (for example Google’s revenue for 2017 was $110 billion and Facebook’s was $40.7 billion).

Such wide-ranging campaigning generally does lead to impressive claims snowballing; there are claims that the draft directive risks “breaking the internet”, or “killing the internet”. Since the draft directive does not confer any new rights on creators, nor impose new obligations on internet platforms/news aggregators, such claims seem excessive.

There are numerous precedents of lobbying campaigns predicting catastrophic outcomes, which have never come true.

For example, telecom companies claimed phone bills would explode as a result of caps on roaming fees; the tobacco and restaurant lobbies claimed people would stop going to restaurants and bars as a result of the smoking ban in bars and restaurants; banks said they would have to stop lending to businesses and people, due to tougher laws on how they operated and the duty-free lobby even claimed that airports would close down as a result of the end of duty-free shopping in the single market. None of this happened.

The document comes down to this—the Parliament is not buying Google’s jive.  Let’s hope the U.K. Parliament and the U.S. Congress take note.

Europe Defends the Human Rights of Artists

For most of the 20th century, the world shared values that authors rights were to be respected and even cherished.  These values were passed into international laws that protected creator rights.  Authors rights are human rights and authors rights are memorialized in a host of human rights documents from the U.S. Constitution to the Universal Declaration of Human Rights and well beyond.  

Those rights were largely defended and violators of those rights were reviled.  A country’s treatment of artists from writers to poets to musicians and composers, screenwriters and directors defined that society. Crackdowns were shameful events, from the Red Scare to the gulags, from Tiananmen Square to the Arab Spring.

But when profit from violating the rights of authors becomes too tempting, the siren call of greenbacks breaks down what you learned from parents, teachers, rabbis, priests or pastors or even the very secular culture under attack.  In the 1990s and to the present day, a group of commercial actors in the Internet space demanded that they be given a special mandate in which to operate—a Neverland of legislated “safe harbors” ostensibly to protect the sainted innovation.  

Largely based in the Silicon Valley protectorate and backed by venture capitalists, these folks wanted a kind of autonomous or near-autonomous zone where the human rights of authors could be abridged and outright violated, largely with impunity.  Why?  Make no mistake, they didn’t do it for “freedom,” exploration of new frontiers, innovation or substantial non infringing uses—they did it for the money.

In fact, taking an inverted page straight out of Tom Wolfe’s Radical Chic and Mau-Mauing the Flak Catchers, violating the human rights of authors even became fashionable in the fast-buck, get big fast world of the dot bomb redshift of money, money, money.  Artists who expected their human rights would be at least tolerated by the anarcho-technocrats of the 99ers got a big surprise.  Imagine the hell-bent Kafka-esque spawn of Bill Jackson’s Youth of the Future and George Orwell’s Ministry of Truth.  The mish mash elites of Creative Commons, the Electronic Frontier Foundation and the Free Software Foundation sprang up from their Palo Alto petrie dish to mau-mau both Hollywood and Silicon Valley.  They gave us a mantra straight out of Orwell’s Minitrue:  WAR IS PEACE, FREEDOM IS SLAVERY and of course COPYRIGHT IS CENSORSHIP.

These first-generation Californian startup elites didn’t know Lawrence Ferlinghetti from Carol Doda or Sam Andrew from Neil Cassidy.  They didn’t know the Henry Miller’s Rosy Crucifixion series, but they knew all about the rights, preferences and privileges of the Series A.  They went to Silicon Valley for the same reason Willie Sutton robbed banks—because that’s where the money was.

And thus began in 1998 one of the biggest income transfers in commercial history that continues to this day.  But after 20 years, the tech bros who wouldn’t grow up may find that the world has had enough of their hysteria and heartlessness and that spring cleaning time has come for them.

The Ethical Pool Future: Will Fans Cut the Cord to Big Streaming Services if Artists Leave?

November 30, 2018 Comments off

Everybody knows that the boat is leaking
Everybody knows that the captain lied…

From Everybody Knows by Leonard Cohen

I wrote up my take on “user-centric royalties” a few weeks ago in a post titled “Arithmetic on The Internet: The Ethical Pool Solution to Streaming Royalty Allocation.”  The post has been widely read in the artist community and stimulated conversation about the current model of royalty allocation by streaming services that artists like Sharky Laguana have led the debate on.  I argue that the current model results in the hyper-efficient market share distribution of streaming revenues that effectively bypass the independent artists who fans listen to on the subscription streaming services.

Hyper-efficient marketshare distributions can have unintended pernicious effects due to the impact on the per-stream rate.  If you have a big market share, you don’t care much about per-stream rates because you get minimum guarantees and probably non-recoupable “technology fees” that help protect your downside and defray your accounting costs.  (Particularly important to independent labels whose streaming accounting costs may exceed streaming revenue.)  If you are an independent or “niche” artist, the per-stream rate is everything because you won’t be getting advances or technology payments.

Crucially, that hyper-efficient distribution almost guarantees to a mathematical certainty that per-stream rates will decline over time if service revenue fails to increase at a rate that exceeds the increase in the total number of streamed recordings.  The Trichordist has documented that the per-stream rate has declined by 16% over the 2014-16 period–which happened at the same time as we are told that streaming accounts for over 50% of industry-wide recorded music revenues.  If streaming revenue declines on a per-stream basis while expanding to a larger share of over-all recorded music revenues, the negative effects on the per-stream rate will almost inevitably hurt independent artists, as well as genres like instrumental jazz and classical.

As we found in a recent reader poll, many fans–even many MTP readers–are unaware that an overwhelming share of their streaming service subscription revenue is paid for music they didn’t listen to (and performed by artists they don’t care for in some cases).  Assuming that MTP readers may be more aware of these inequities than the average fan, many if not most consumers may be in the dark about where their money actually goes, which may have an effect their buying decisions and a ripple effect through the market.

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There’s little doubt that the status quo is unsustainable even though the transition from high to low-or-no margin goods may be irreversible.  Recently, Canadian artist and producer Danny Michel wrote a must-read op-ed for the current edition of the Vancouver Weekly that highlights the motivation behind the Ethical Pool.  Titled “The Expiration Date on Music”, Danny describes his own experience, which of course is echoed by a chorus of independent artists and songwriters around the world:

I’ve been a full-time musician for 25 years. It’s been nothing but hard work, but I love hard work. My songs bought my home, my studio, paid the bills and more. Through it all, the conversations backstage with other musicians have always been about music, family, guitars, friends, art, etc… But in 2018 that conversation changed. Everywhere I go musicians are quietly talking about one thing: how to survive. And I’ve never worried about it myself UNTIL 2018. What I can tell you is my album sales have held steady for the last decade until dropping by 95% this year due to music streaming services.

And therein lies the rub:  You cannot trade a high margin sale at a wholesale price of $5-$10 for a replacement with a wholesale price of a fraction of a fraction of a penny without an unrealistic corresponding exponential boost in activity.

The math is stacked.

Based on the Trichordist’s Streaming Price Bible, it takes roughly 1,600 streams on Spotify, 950 streams on Apple Music, or over 10,000 on YouTube to replace one physical or digital album that sells at a venue or retailer with $7 of net revenue to the artist.  (This revenue variation across services is one reason the TEA math doesn’t really work.)   Venue sales are incremental revenue–you’re already spending to market the show.  Due to streaming, venue sales have all but evaporated in the last few years at an increasing rate as Danny Michel observes.

The fan at the show is in direct contact with the artist in real time when the fan comes to a show the artist is already promoting.   If the fan leaves the show empty handed, it will probably be difficult to get that fan to remember to stream the new artist when they launch their service player.

Getting fans to stream the record usually requires additional effort if not expense–a key reason why it’s important at the show to get that fan’s email at least or some other way to get in touch with them outside of the music service.  As one astute independent label put it, “if the devil made me choose between selling 25 CDs at a show or getting 25 fans to sign up to an artist’s email list, I’d have to think about it for 5 minutes.”  The email signups are a hope for future revenue to make up a shortfall that will likely never be made up on streaming.

Absent getting that fan’s email, independent artists are largely at the mercy of playlist gatekeepers to the point that many are asking if they really want to continue to participate in the major streaming services.  As long as those services have little interest in allowing subscription rates to increase or pay royalties at a level that allow independent or niche genre artists and songwriters to sustain themselves, there’s less and less reason to participate.  And hyper-efficient market share distributions are already causing some artists to like cutting the cord with big services–the only question is how to get their core fans to follow them.

 

Google’s European Campaign Contributions on Article 13

August 24, 2018 Comments off

RITTER

They want what every first term administration wants…a second term.

From A Clear and Present Danger, written by Tom Clancy (novel), screenplay by Donald Stewart, Steven Saillian and John Milius.

MTP readers will recall that both the Times of London and Frankfurter Allgemeine Zeitung have confirmed the efforts by Google to influence the vote on copyright reform in the European Union.  We called for that investigation on MTP and were mocked for doing so by the usual suspects.

Getting mocked by the usual suspects is how you know you’re onto something big, by the way.

But we owe a big thanks to the really stellar investigative work of Volker Rieck and David Lowery that exposed how Google uses astroturf front groups to “push its views” and for which it no doubt pays well.

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There is, of course, a political dimension to this exposé that has not been examined thoroughly yet.  It’s an important dimenstion because the Members of the European Parliament must stand for election next year, less than a year away.  And the Member of the European Parliament who certainly appears to be as close to Google as 1 is to 2 is the lone Pirate Party representative.

The Pirate Party is a creature of proportional representation, an interesting practice in Europe (and other places) that allows political parties with very small constitutencies to field candidates and sometimes get elected to legislative bodies such as the European Parliament.  The Pirate Party has one European Parliament representative elected from Germany, which is interesting because Google has also dropped a pile of influence-peddling cash in Germany according to the Google Transparency Project.

First, Google’s academic influence program in Europe has gone beyond funding existing academic institutions, as it does in the United States, to helping create entirely new institutes and think-tanks in key countries like Germany, France and the United Kingdom. In those countries, executives from Google’s lobbying operation have helped conceive research groups and covered most, or all, of their budgets for years after launch.

Google policy executives have acted as liaisons to steer their research priorities and host public events with policymakers.

For example, Google has paid at least €9 million to help set up the Alexander von Humboldt Institute for Internet and Society (HIIG) at Berlin’s Humboldt University. The new group launched in 2011, after German policymakers voiced growing concerns over Google’s accumulated power.

The Institute has so far published more than 240 scholarly papers on internet policy issues, many on issues of central importance to Google’s bottom line. HIIG also runs a Google-funded journal, with which several Google-funded scholars are affiliated, to publish such research.

The Institute’s reach extends beyond Germany, or even Europe. HIIG previously managed, and still participates, in a global Network of Internet and Society Research Centers [Silicon Valley’s answer to the Confucious Institutes] to coordinate internet policy scholarship. Many are in emerging markets where Google is trying to expand its footprint, such as India and Brazil.

So it must be said that when Google was caught with its hand in the cookie jar on Article 13, that astroturf effort must be viewed as part of a larger Google policy laundering operation that may include influencing elections.  Certainly in a post-Cambridge Analytica world, one cannot simply ignore these dots and all are worthy of investigation for compliance with Europe’s campaign finance laws if nothing else.

For a minority political party representative of one in need of a message in the face of an imminent election, it simply cannot be ignored that garnering the finanical support of Google and Facebook’s astroturf operation for a campaign that directly or indirectly benefits a candidate may be welcome.

Getting Silicon Valley’s billions focused on motiviating the electorate around a particular issue of benefit to such a multinational bloc of monopolists might help motivate voters and guide them to the “right” candidate.  As one of the usual suspects noted:

When the European Commission announced its plans to modernize EU copyright law two years ago, the public barely paid attention. This changed significantly in recent months.

Which was perhaps one of the electoral objects of the astroturf exercise.

Considering that political campaigns in Europe are typically of quite limited duration compared to the US (sometimes as short as 25 days before polling day), coming up with a an issue campaign that a political candidate–especially an incumbent–can leverage to increase their profile has got to be golden–particularly if that campaign may not rise to the level of a restricted political contribution or electioneering has got to be disclosed.

If that issue campaign can draw funding and support from U.S. based multinational corporations like Google and Facebook leveraging their user networks and advertising clout, all the better for a vulnerable candidate.

Because in the end, what every incumbent wants is another term.  The Pirate Party already faces declining relevance and may lose the one seat they have in the European Parliament elections in a few months time.  Especially if the the Pirate Party already struggles to field a winner.  Faced with such an existential threat, who knows what compromises may get made and who knows what in-kind donations may surface.

Undisclosed compromises and in-kind donations.

Hey Alexa, Regift Yourself: Google Overtakes Amazon in Biometric Data Acquisition Tools — Artist Rights Watch

August 20, 2018 Comments off

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According to the Canalys research outfit, Google has taken the lead over Amazon for the first time in the acquisition of biometric identifying data–aka “smart speakers”.  It should come as no surprise that Google is vastly more interested in acquiring “phonemes” by which to identify users and track them through a variety of means.

The “smart speaker” is the latest step in government contractor Google’s long running campaign to track users and build speech-to-text and speech recognition tools.

The program goes back to at least 2007 when Marissa Meyer said of “GOOG-411”:

The speech recognition experts that we have say: If you want us to build a really robust speech model, we need a lot of phonemes, which is a syllable as spoken by a particular voice with a particular intonation. So we need a lot of people talking, saying things so that we can ultimately train off of that.

So who do you think the customers are for speech-to-text and speech recognition tools to whom government contractors like Google and Amazon might be selling your biometric data?  The biometrics harvesting tools allows Big Tech to connect your voice print and maybe your fingerprints to all the other data that they have already harvested about you from other means.  And of course when you add in facial recognition or iris recognition it’s game, set and match.

Think about that when you enable your fingerprint, iris or facial recognition authentication or talk to Alexa or your Google Home Mini.   Or you could just ask the Shoe Gazer at the Internet Association.

“Hey Alexa, re-gift yourself.”

 

Thank You Senator @MarkWarner, but Senator @RonWyden is the Perfect Leader in the Fight Against Behavioral Addiction

August 13, 2018 Comments off

Senator Mark Warner has released (or leaked) a comprehensive plan to combat fake news and foreign manipulation of the American electorate through Silicon Valley.  Unfortunately, however appealing or appalling some of Senator Warner’s proposals are, it’s likely that he may just be expanding the game of whack-a-mole that Silicon Valley loves so much.  We’ve seen the whack-a-mole movie before and we know how it ends.  They won’t help, you spend money to fight them, and if you ever look like you might be winning, they outspend you on lobbying to create a new safe harbor.

Senator Wyden Can Help Solve the Fundamental Problem With Social Media

There is a more fundamental problem with Silicon Valley that the Congress is actually well-suited to address, probably needs no new laws, and if fixed would go a long way to addressing some of Senator Warner’s issues—the problem of addiction and how Silicon Valley profits from creating that behavioral addiction to smartphones, likes, views, retweets and other fakery that turns the science of addiction on its head.

And the really good news is that there is one currently serving U.S. Senator who is the perfect person to take on this issue, one Senator who has shown his chutzpah in the past, and one Senator who above all others is well suited to deal with the problem of behavior addiction for corporate profit—Senator Ron Wyden from Oregon.

It was Senator Wyden who created that classic exchange in 1994 between the heads of the Big Tobacco companies which you’ve probably seen where Senator Wyden got each of them to say that nicotine was not addictive, only to discover that these companies used biological and behavioral research to make their product as addictive as possible (see The Insider, a film about Big Tobacco whistleblower Jeffrey Wigand portrayed by Russell Crowe).  

The tobacco class actions resulted in a $3.4 billion payment over 25 years–in 1997 dollars.  We know how much Big Tech hates real class actions they don’t control, but face it–a comparable settlement today would be chump change for the most valuable companies in commercial history.

This is why Ron Wyden is the perfect Senator to reprise his role of champion of public health by holding Silicon Valley’s feet to the fire.  And let’s face it—there’s lots of material to work with in the business of social media that is founded on fakery, well beyond Senator Warner’s recommendations.

YouTube’s Fakery on Display Again

It’s not surprising that fake YouTube views are again in the news in what is becoming a series of exposes on the fakery in social media.  The latest deep dive into the skullduggery behind fake views is by Michael H. Keller in the New York Times and is recommended reading by Artist Rights Watch.

Everyone in the record business who has been paying attention has seen a version of this story play out many, many times for many, many years.  Remember the radio promotion exec who always seems to get the same adds at that same stations for a few weeks?  And when the plays stop, the exec says “the record is not reacting”?  Fake YouTube views are essentially the same scam—with two exceptions. The scale is vastly bigger at YouTube and no DJ has the motto “don’t be evil.”

Mr. Keller’s post ends with this provocative conclusion:

View-selling sites continue to advertise with apparent impunity. A post on the YouTube Creator Blog warning users against fake views has numerous comments linking to view-selling sites.

“The only way YouTube could eliminate this is if they removed the view counter altogether,” said Mr. Vassilev, the fake-view seller. “But that would defeat the purpose of YouTube.”

That’s an interesting proposition.  Why would removing the view counter defeat the purpose of YouTube?  Aren’t we told that artists can’t reach an audience without YouTube?  So isn’t the purpose of YouTube to reach an audience rather than produce public views information?  Granted, the person making that assertion is a fake view seller and not a YouTube representative, but a YouTube representative would likely never say such a thing even if they knew it to be true.  Why not?

Behavioral Addiction Additives 

One reason might be that the view counter, friend counters, the likes, the retweets, the various measurements that demonstrate the re-enforcement of acceptance by “friends”, are an important component of what makes YouTube addictive, just like tobacco companies added ammonia and other chemicals to tobacco to increase its addictive powers.  And the evidence is starting to come in suggesting that it is that addiction that is the real purpose of YouTube and other social media sites.

One source of that evidence is from Professor Adam Alter of the NYU Stern School of Business whose book Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked describes in shocking detail just how devious sites like YouTube and Facebook are in delivering the dopamine fix to our brains, and worse yet to our children’s brains.  As Professor Alter told the New York Times:

Today, we’re checking our social media constantly, which disrupts work and everyday life. We’ve become obsessed with how many “likes” our Instagram photos are getting instead of where we are walking and whom we are talking to….

We are engineered in such a way that as long as an experience hits the right buttons, our brains will release the neurotransmitter dopamine. We’ll get a flood of dopamine that makes us feel wonderful in the short term, though in the long term you build a tolerance and want more.

And of course those buttons include YouTube subscriber and view counts, Facebook friends and likes and the various other feedback mechanisms that enforce a measurement of popularity.  So far, social media is good business as Spotify billionaire Sean Parker tells us:

“It’s a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology.” 

“God only knows what it’s doing to our children’s brains,” Parker said.

Of course, as one Silicon Valley entrepreneur who also survived the Dot Bomb Implosion once told me, there’s something really wrong about a world in which Sean Parker is a billionaire.

Do Fake Views Produce Fake News?

Here’s a couple thoughts about the fake view issue.  First, why doesn’t Google refund the sums spent on fake views?  Maybe not to the repeat user PR firms but at least to the individuals who were lured in by the promise of fake views who didn’t know any better?  Or would they prefer to put together one of their pre-packaged fake class actions that funnels money to their favorite shills in cy pres awards?

But going forward, what is so unusual about getting rid of view counters, friend counters, like counters, follower counters, and so on?  Twitter did something similar when they stopped the counter on Twitter linking buttons.  If YouTube is really such a great tool for consumer engagement, do we think fans are going to stop watching videos of the artists they love just because they don’t have a counter telling them what’s popular when there’s a better than 50/50 chance the counter is a fraud to begin with?

Let’s face it—one reason YouTube music videos are popular is because artists and labels drive traffic to YouTube.  That helps the view count as much as anything else.

Also, it’s not like there’s no ranking going on.  Google can rank YouTube videos in search with no problem.  Of course, they’re so good at ranking in the background that they are being fined for it by the European Commission. 

Senator Wyden, Where Art Thou?

While I appreciate Senator Warner’s effort, the real rock star in taking on Silicon Valley could be Senator Ron Wyden.  The addiction issue would be a perfect opportunity for his consumer protection legacy with tobacco addiction to enter the digital age.

And You Know It Makes Me Wonder What’s Going On: @theDavidCrosby’s Streaming Royalties

August 6, 2018 Comments off

David Crosby was in this band called The Byrds which covered “Mr. Tambourine Man” aka Bob Dylan’s first #1 hit as a songwriter.  Then he was in another band called Crosby Stills Nash & Young.  He’s done a lot of other things, too, but I mention those two bands because each of those bands were inducted into the Rock Hall.  That’s right–David Crosby was inducted into the Rock & Roll Hall of Fame twice.  And, one more thing–he is a pre-72 artist for many of his classic recordings and songs.

So here’s his reality.  Oh, and PS Spotify closed at $175.50.

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Guest Post: How Amazon’s Twitch.tv Cheats Music Creators

August 1, 2018 1 comment

Guest post* by Erin M. Jacobson, Esq.

[This article was first posted on Forbes.com and previously on themusicindustrylawyer.com.]

Music creators (songwriters and performing artists) and rights’ owners (music publishers and record labels) are not collecting a new and substantial source of income – and most of them are not aware they are not collecting it. Enter Twitch, the website exploiting creators and owners without paying for a single cent of music usage.

What is Twitch

Twitch, a subsidiary of Amazon, is a live-streaming video platform that has “over two million broadcasters and 15 million daily active users.” Anyone can become a Twitch “broadcaster,” meaning users set up their own channels and live-stream various content, which includes, but is not limited to, video-game play, card games, pranks, craft tutorials and more.

The broadcasts start out as live streams and are saved on the channel for re-broadcasts and on-demand watching. Watching videos and channels on Twitch is free and publicly accessible to anyone with an Internet connection. Anyone can become a Twitch broadcaster for free and earn money directly from viewers. Broadcasters that contract with Twitch to become a partner or affiliate will earn money from Twitch directly, as well as from viewers. All revenue streams are described in the next two sections.

Income Earned by Twitch and Twitch Partners/Affiliates

  1. Ad Revenue: Twitch serves ads on all video content, which includes video-on-demand and pre-rolls, and collects ad revenue from showing these ads.
  2. Subscriptions: Viewers can subscribe to a particular broadcaster’s channel at pricing tiers of $4.99, $9.99, and $24.99, with these charges recurring monthly. These subscriptions allow viewers to support broadcasters and use special emotes (chat icons like emojis) that are accessible only to subscribers of a particular broadcaster’s channel.
  3. Bits: Viewers can contribute “bits” to a broadcaster during a stream. Bits are a digital currency within Twitch bought by users for real money, and contributing these bits to a broadcaster is basically like adding money to that broadcaster’s tip jar.
  4. Amazon Prime: Because Twitch is owned by Amazon, Prime members can use “tokens” from their Prime membership to subscribe to broadcaster channels on Twitch. Tokens renew every month, so a Prime member can re-subscribe to a broadcaster’s channel on a monthly basis using Prime tokens.

Twitch and the broadcaster split all income from subscriptions, bits, and Prime tokens, usually on at least a 50/50 basis.

Income Earned Directly by Broadcasters

  1. Donations: Viewers can contribute money directly to a broadcaster through third party services like StreamLabs, Muxy or StreamElements without buying bits.
  2. Media Share: Viewers can make “media share requests” through StreamLabs  and StreamElements, meaning viewers can request a broadcaster to play a certain song, YouTube video, or other media within a live stream (hereinafter “Media Share(s)”). Prices for Media Shares are set by the broadcaster, and some broadcasters will start their pricing at $5 per request.

A Twitch Broadcaster’s Earnings

Twitch’s most popular broadcaster is 26-year old Tyler Blevins, known on Twitch as “Ninja.” Ninja reportedly earns over $500,000 per month on Twitch revenue alone, not counting his recent sponsorship deals by Red Bull and Uber. A recent Forbes article reported Ninja’s earnings calculation: “160,000 subscribers at a higher $3.50 rate per sub means he’s pulling in $560,000 a month from that revenue stream alone. Not counting Twitch bits. Not counting donations. Not counting 4 million YouTube subscribers.”

Ninja and most other broadcasters also use music in their streams. None of this music is licensed and none of this money is going to the music creators or rights’ owners.

Music Licenses Required

Platforms with user-generated audiovisual content require performance licenses for the compositions from performance rights organizations ASCAP, BMI, SESAC and GMR. Music users must obtain synchronization and master use licenses from the music publishers and record labels, respectively, along with paying negotiated fees to “synchronize” the audio with the visual elements. Also, rights’ owners may share in ad revenue in addition to or in lieu of those fees.

It should also be considered whether a broadcaster who repeatedly uses a particular song as a theme song or channel staple (like when Ninja does a victory dance at every game win to the song, “Pon Pon Pon”, performed by Kyary Pamyu Pamyu) is implying an association with or (false) endorsement by an artist, similar to when political candidates use certain songs in their campaigns.

First, there is no evidence that Twitch has valid performance licenses in place from ASCAP, BMI, SESAC, or GMR (although they may be working on it). Therefore, Twitch is not paying for the repeated performances of music to audiences of millions.

Second, it is not known that any broadcaster using music on Twitch obtains synchronization or master use licenses, or pays any fees for the use of music. Also, neither Twitch nor the broadcasters are sharing ad revenue with rights’ owners.

Third, Twitch does not have its own content ID system like YouTube to track and claim uses of music. Twitch leverages Audible Magic to track audio uses after a live stream is over and will mute infringing content in the on-demand re-broadcasts, but not all content is recognized and removed. Also, there is no system to flag these infringing uses or mute them during a live stream.

All of the money earned by Twitch and its partner/affiliate broadcasters for subscriptions, bits, and Prime membership is retained entirely by Twitch and its partners/affiliates, and money earned from donations and Media Share song requests is kept entirely by the broadcasters. None of these funds are allocated to music creators and rights’ owners whose music is being used in these broadcasts.

Current State of Affairs

On June 22, 2018, the Twitch community received a shock when a group of its most popular broadcasters were banned from Twitch for playing a leaked version of a new song by rapper Juice Wrld that was initiated via Media Share song requests. Interscope Records issued DMCA takedown notices, and per Twitch policy, each infringer was banned for 24-hours.

This incident has shed a light on the use of uncleared music by Twitch broadcasters, but many have either continued with playing uncleared content or will not include certain music in the broadcasts. Ninja has turned off music content so he can then repost videos to YouTube in order to avoid YouTube claims by rights’ owners and keep his YouTube ad revenue. Ninja has publicly stated, “I’ve already reached out about getting rights to music … you can still get screwed over for playing music that doesn’t belong to you. … It’s such a nightmare, that it’s just not worth it.”

Interscope later supposedly stated the DMCA takedowns were an accident and Juice Wrld apologized to the Twitch broadcasters, saying “I will do what I can to prevent it from happening again.”

The National Music Publisher’s Association (NMPA) is rumored to be in negotiations with Twitch for licensing, but has not confirmed or commented as to the details.

Furthermore, Twitch isn’t the only site on the market. There are other, similar sites such as Mixer (owned by Microsoft), Facebook Gaming, YouTube Gaming, and Caffeine. There are also other music-centric sites, like Smule, using music in audiovisual content purportedly without permission or payment. More of these websites, as well as phone apps, with user-generated content, continue to emerge and the rate at which more new platforms are introduced is unlikely to slow due to the prevalence of streaming.

The Real Problems

First, rights’ owners are not enforcing their rights and making sure they receive payment for uses of their content. As stated at the beginning of this article, many creators and rights’ owners do not even know about these infringements. Those rights owners’ that are aware, like Interscope, have allowed the rumors of “accidental” takedowns to be the last word on the subject instead of taking a stand to protect their rights.

Second, Juice Wrld is an example of at least one artist condoning the Twitch broadcasters’ unauthorized use of his work instead of getting paid. Artists and songwriters can and should benefit from these uses, and condoning the infringing behavior allows for more of it, as well as a further loss of income to the creators and rights’ owners.

Third, streamers are often ignorant of how to obtain permission. Noah Downs, a video game lawyer at McDonald, Sutton & DuVal in Richmond, VA observes, “Some broadcasters reach out to artists directly, thinking that if the artist tweets ‘Sure, use my music!’ then it must be okay to use. It does not matter if a broadcaster has that kind of permission from the artist – generally the decision is up to the label.”

Fourth, many streamers feel entitled to play music without permission under the belief they are actually helping artists by giving them exposure. Famous artists and songs do not need free promotion from Twitch broadcasters – they are already famous. While exposure might be helpful for new artists to gain fans, it still doesn’t need to be for free. For example, music service Pretzel Rocks and music company Monstercat have agreements with artists allowing music to be played legally on Twitch broadcasts with compensation being paid to the artists and songwriters.

In an ironic twist, Twitch viewers and broadcasters frequently use and repurpose clips of other Twitch broadcasters’ content without permission. The broadcasters complain about this practice and will submit content claims when their content is used without permission, but they fail to realize that they are doing the same thing to music creators and rights’ owners. Downs agrees, stating, “In many ways, broadcasters and musical artists are the same, and both deserve to be paid fairly.”

The bottom line is that all creators and rights’ owners need to be properly compensated for uses of their work. Rather than ignoring or condoning infringing behavior, creators and rights’ owners need to keep up with new uses of music and take a stand to protect the value of their music and their livelihoods.

It’s time creators stopped feeling entitled to steal from and deprive each other of the fruits of their labor. It’s time people realized that using music without permission or payment not only cheats the creator or performer, but also impacts everyone that works for them or with them. It’s time the culture of all creators shifts to one of respecting one’s own work enough to get paid for it and respecting the work of others enough to get the proper permissions and pay the proper compensation. It’s time that everyone gets serious about valuing music.

*This article does not constitute legal advice.

Erin M. Jacobson is a practicing attorney, experienced deal negotiator, and a seasoned advisor of intellectual property rights who protects musicians, songwriters, music publishers, and other music professionals.   Ms. Jacobson’s clients include Grammy and Emmy Award winners, legacy artists, and independent artists and companies. She handles all types of music industry agreements, with an emphasis on music publishing.

Ms. Jacobson also frequently represents legacy clients and catalogues, as her knowledge of both classic music and current industry practices places her in a unique position to protect and maximize opportunities for older catalogues.  She is a frequent author and speaker, and has been featured in Forbes and Music Connection.  Ms. Jacobson has also been named a Super Lawyers Rising Star and one of the Top Women Attorneys in Southern California.

For more information, visit www.themusicindustrylawyer.com.

 

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