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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

@songpreneurs: Why Is Tom Petty Suing Spotify and How Does This Relate to the Music Modernization Act? — Artist Rights Watch

[Editor Charlie sez:  Another songwriter group against the controversial Music Modernization Act! See the Songwriter’s Guild opposition letter here  and read the legislation here.]

The end of 2017 and beginning of 2018 has seen a flurry of activity as headlines reveal another $1.6 Billion Dollar Lawsuit against the tech streaming online distribution company, this time by Wixen Music Publishing, who represent compositions by Neil Young, Tom Petty, Rage Against the Machine and others.

This latest lawsuit joins nearly half a dozen other class action / lawsuits against Spotify by independent music creators and rights administrators filed in the past two years.

“The Trichordist” blog collaborator, Cracker and Camper Van Beethoven front man, David Lowery of Athens, Georgia and songwriter Melissa Ferrick successfully sued Spotify and settled with a $43.4 Million Fund for unpaid songwriter and publisher royalties last year.

Around the same time the NMPA (National Music Publishers Association) also stepped in and made their own $30 Million settlement with Spotify as reported by Robert Levine in Billboard in May of 2017.

Nashville / Texas based Bluewater Music Services Corp filed a lawsuit against Spotify in 2017, led by champion of the underdog attorney Richard S. Busch, the same lawyer who represented the victorious Marvin Gaye estate in their “Blurred Lines” infringement case, and helped Eminem successfully stand up to EMI when his rights were being squashed in the name of commerce.

The Bluewater suit and yet another Spotify lawsuit by an independent music publisher, Rob Gaudino are both detailed in this Variety article “Spotify Faces Two New Lawsuits From Music Publishers” by Janko Roettgers in July 2017.

 These lawsuits highlight Spotify’s ongoing battle to do business with its suppliers, the songwriters and music publishers who are forced through federal regulation to make their material available to Spotify and other streaming companies against their will through a practice known as Compulsory Licensing, whereby the rights owners are not permitted to deny usage of their intellectual property.

What kind of negotiation can actually happen if one party cannot walk away?  Not much, we are proving.

Read the post on Songpreneurs

 

@eriqgardner: Spotify Hit With $1.6 Billion Copyright Lawsuit Over Tom Petty, Weezer, Neil Young Songs [Music Modernization Act Fallout]

January 2, 2018 Leave a comment

In a curious twist, Eriq Gardner reports that the controversial Music Modernization Act has already prompted the inevitible litigation from a publisher seeking to beat the bill’s new safe harbor deadline applicable to lawsuits filed after January 1, 2018.  Wixen Pubilshing filed the new lawsuit on December 29, 2017, two years to the day after David Lowery filed the first class action against Spotify, but before the  Music Modernization Act legislation is even available on thomas.gov.

 

DSj2qcAWAAcqyqT.jpg-large

The new safe harbor on p. 82 of the Music Modernization Act

 

As the new year begins, the music industry could be set for an epochal moment. Hopes are running high for the first significant reform of music licensing rules in decades. The coming year may also see Spotify go public. But before any of this happens, the Stockholm, Sweden-based streaming giant must now contend with a massive new copyright lawsuit from Wixen Music Publishing, which administers song compositions by Tom Petty, Zach De La Rocha and Tom Morello of Rage Against the Machine, The Black Keys’ Dan Auerbach, Steely Dan’s Donald Fagen, Weezer’s Rivers Cuomo, David Cassidy, Neil Young, Sonic Youth’s Kim Gordon, Stevie Nicks and many others.

On Friday, Wixen Music Publishing filed a lawsuit in California federal court that alleges that Spotify is using Petty’s “Free Fallin’,” the Doors’ “Light My Fire” and tens of thousands of other songs without a license and compensation. The plaintiff is seeking a damages award worth at least $1.6 billion plus injunctive relief.

Wixen’s lawsuit is being revealed here for the first time, but the move will come as hardly a surprise to those who have been paying attention to Spotify’s growing copyright problem….

[T]he Music Modernization Act would impact copyright holders suing over mechanical reproduction after Jan. 1, 2018, which helps explain the New Year’s Eve filing.

“We are very disappointed that these services will retroactively get a free pass for actions that were previously illegal unless we actually file suit before Jan. 1, 2018,” said Wixen president Randall Wixen in a statement to The Hollywood Reporter. “Neither we nor our clients are interested in becoming litigants, but we have been faced with a choice of forfeiting rights and damages, or taking action at this time. We regret that this otherwise admirable proposed bill has had this effect, and we hope that Spotify nonetheless comes to the table with a fair and reasonable approach to reaching a resolution with us. We are fully prepared to go as far forward in the courts as required to protect our clients’ rights.”

Read the post on The Hollywood Reporter

Read the Wixen complaint here

Read the Music Modernization Act here

@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.

 

 

 

Guest Post: Making Fake Art: “1984”, The New Rembrandt, and The “Fake Artist”

August 4, 2017 Comments off

By Laura Kobylecky

“It was only an ‘opeless fancy.
It passed like an Ipril dye,
But a look an’ a word an’ the dreams they stirred!
They ‘ave
stolen my ‘eart awye!

 The tune had been haunting London for weeks past. It was one of countless similar songs published for the benefit of the proles by a sub-section of the Music Department.”

From 1984 by George Orwell

In the dystopian world of George Orwell’s 1984, there is a machine called a “versificator.” The versificator makes what might be called “fake” music—songs that are “composed without any human intervention whatever.” In April of 2016, “A New Rembrandt” was revealed (1). The painting, like the songs of a versificator, was made by machines. In August of 2016, Music Business Worldwide (2) accused Spotify of “creating fake artists.” What is a fake artist? Can music be fake?

The world of 1984 is a grim place. Members of the “Party” have access to resources based on their rank. The rest of society are called “Proles.” The term is short for the “proletarian” and refers to the working class. The Proles make up the majority of society, and so the Party provides them with various sources of entertainment to keep them from getting too restless.

The versificator is one of the entertaining distractions made by the Party. A versificator generates songs that are “composed without any human intervention whatever.” The results range from insipid love songs like “Hopeless Fancy,” to the “savage, barking rhythm” of the “Hate Song”—designed to stir rage against political enemies.   The novel’s protagonist describes one of these songs as “dreadful rubbish.”

But the Proles like it fine. The song “Hopeless Fancy,” takes hold among them and “haunts” London for weeks. In this case, the art of the machine seems adequate for consumption.

The versificator is an element of fiction. However, “The Next Rembrandt” is real. (3) Microsoft, a participant of this project, describes it as “blurring the boundaries between art and technology” and states that the “project is intended to fuel the conversation about the relationship between art and algorithms, between data and human design.” The project used technology to make a painting that supposedly recreates Rembrandt’s style.

The portrait is a man. He has a black hat, tilted slightly. A goatee graces his face as a white ruffled collar draws the eye. His lips are slightly parted in the gesture of a half-spoken word and his eyes are inquisitive and bright. He has never lived. He is purely the manifestation of technological innovation and he exists as “a result of analysing data from Rembrandt’s body of work.”

The portrait took over 18 months. The project was based on access and study of primary data. All 346 of Rembrandt’s paintings were collected in “high resolution 3D scans and digital files.” With the art digitized, it could be studied. An algorithm searched for data points. From the data, various facial points were determined. The result was brought into the world with a 3D printer that recreated the layers and textures of paint on paper. The final product is a pleasant “painting.” It’s nice to look at, but it won’t fool the experts—yet. In the future who knows. Is it fake art? That depends on perspective.

What makes a “fake artist”? In August, 2016, Music Business Worldwide (2) accused Spotify of creating “fake artists.” However, this isn’t quite what it sounds like. Unlike “The Next Rembrandt,” these tracks are not being made by a machine—according to the post. The article states that Spotify has been “paying producers to create tracks within specific musical guidelines.” These producers get a flat fee.

So why does this bother anyone? It’s partially because of playlists. Spotify’s playlists are big money for some musicians. A “chill vibes” piano play list can be a great way to get plays for a composer. However, if Spotify chooses to drop “their records in the playlists in favor of its own masters,” that seriously shifts the balance of power and profit. Those same composers might have a reduced chance of profit and success on this platform.

There is another problem with the, hypothetical, “fake artist.” In a second article, (4) Music Business Worldwide addresses the issue of how these “fake artists” could be driving down the “per-stream income for everyone, while lowering the negotiating power of the labels/publishers/collecting societies.” The following chart illustrates that issue:

Royalty Allocation Ratio

The problem depends on the “allocation ratio,” or how people are getting paid. The bigger the “total plays” the smaller the “per play rate”. If the total pool of monthly revenue available for royalty payments is divided equally over the total number of plays, that determines the “per play” rate for that month. Each artist or songwriter would get paid for each of their plays based on that rate. (There may be complexities like minimum payments and country variations depending on negotiation power, but the basic math is pretty consistent.)

However, it doesn’t quite set right if somebody is watering down the “total plays” by including the “flat fee” folks. Flat fee artists already got their money and they aren’t getting more from the royalty pool no matter how many plays they got. Including their plays in the pool would serve no function other than to reduce the rate that the royalty artist gets per play.

It’s kind of like if you work at a restaurant and tips are your main income. You might have agreed to take a tip share. Everybody’s tips are added up and divided equally. So you make a salary, say, $2.13 an hour and expect to work for the rest in tips. But what if a co-worker has decided they’d rather not gamble on the tips. They agreed to take a flat hourly rate of maybe $11.25. Well if at the end of the day there are 6 waiters getting hourly plus tips and 4 hourlies, but the tip share is divided over ten people, things are strange. The six waiters are only getting a tenth of the total tips, but the extra money being held back from the tip share won’t be given to the hourlies. The extra money just goes to somebody else’s pockets.

Spotify has disagreed with this assertion. The Guardian quotes Spotify:

“[It’s] categorically untrue, full stop. We pay royalties – sound and publishing – for all tracks on Spotify, and for everything we playlist. We do not own rights, we’re not a label, all our music is licensed from rightsholders and we pay them – we don’t pay ourselves. We do not own this content – we license it and pay royalties just like we do on every other track….”

However, the Guardian indicates that even if the royalties are paid they might still be “much more favourable to the company than its standard deals with record labels.” A small change of fraction of a percent of Spotify’s reported $2.8 billion total royalty payout could add up to a great deal of saved money over time. Some of the same math of the above chart could still apply.

But in the end, these are still genuine human artists making the tracks, according to reports. The “fake artists” might be people with different names, but they are people nonetheless. Nobody has invented a versificator re-creating the “Next Rembrandt” of music. But could it happen?

The Next Rembrandt was based on a collection and study of data. Algorithms were used to apply the data points. So if the Rembrandt recreation took high res scans of all the Rembrandt works, then the versificator also would require a massive collection of data to work with, as well as the tools to use that data.

Spotify has made many recent acquisitions of companies that interact with data. Forbes addresses ( 5 ) some of these recent acquisitions. One of these startups that study data is Preact. The company is described “Learning everything possible about what makes subscribers happy, what they don’t like, what they’re talking about online.” Another acquisition is “Soundwave,” a startup that tracks “what songs people played on their phones and where.”

Another major purchase on the data front is The Echo Nest (6). This company “uses data analysis and machine listening to power song recommendation, audio fingerprinting and audio analysis.” Fast Company goes into further detail about The Echo Nest ( 7 ) . They describe the way that it:

“…devours data about the music, on both the “acoustic side”–tempo, key, etc. (Echo Nest’s system crunches that sort of data in about 10 seconds for a song)–and the “cultural side”–what reviewers are saying about the music for instance.”

So it seems like the Echo Nest has some capacity to study a song, the content of it, and also to study how those particular content elements affected people (the cultural side). This data is valuable. What could be done with it?

The New Rembrandt was a study of finding data in the work of Rembrandt, followed by an analysis of that data, and completed with an application of that data. It took massive amounts of data, and tools to study that data to make a genuine “fake” machine-made painting. If someone wanted to make a versificator, capable of producing genuine “fake artist,” how would they do it? Well, it might take access to a massive pool of music, tools capable of studying that data, some motivation and the financial backing to make it all come together.

This is where the science fiction side comes back.  What would motivate someone to make a versificator, one that could produce Prole-pleasing content? First, it must be examined how such a machine would affect the industry. What would a versificator do? If a machine could simulate the art of humans, with any degree of success, it would certainly shift some power in the music and tech industry. The mechanization could reduce individual bargaining power. Even the production of “filler music” could leverage negotiating power enough that major shifts occur. Who would be motivated to make this happen?

In the end, does it really matter? It’s still art maybe, just made by a machine. Does human-content have less value simply because humans didn’t make?

In 1984, the narrator watches a “Prole” prole hanging her laundry on a line. She hums “Hopeless Fancy,” a versificator song, but “the woman sang so tunefully as to turn the dreadful rubbish into an almost pleasant sound.” The song is appreciated, and it connects to this human enough for them to sing along. Is that connection enough, to elevate the product to art?

Would you listen to songs from the versificator?

 

 

REFERENCES

  1. https://www.theguardian.com/artanddesign/2016/apr/05/new-rembrandt-to-be-unveiled-in-amsterdam
  2. https://www.musicbusinessworldwide.com/spotify-is-creating-its-own-recordings-and-putting-them-on-playlists/
  3. https://news.microsoft.com/europe/features/next-rembrandt/
  4. https://www.musicbusinessworldwide.com/why-spotifys-fake-artists-issue-like-so-much-in-streaming-comes-back-to-transparency/
  5. https://www.forbes.com/sites/hughmcintyre/2016/11/15/spotify-is-ramping-up-its-acquisitions/#501eedcd40d5
  6. http://variety.com/2014/music/news/spotify-acquires-the-echo-nest-1201126850/
  7. https://www.fastcompany.com/1734773/echo-nest-makes-pandora-look-transistor-radio

 

© 2017 Laura Kobylecky, All Rights Reserved

 

@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

Why Spotify Needs A Magistrate

July 19, 2017 Comments off

Spotify was served in federal court in Nashville with two new lawsuits for massive copyright infringement by parties represented by Richard Busch (who has a strong track record in the area).  Based on the allegations in the complaint and reports about what appear to be breaches of Spotify’s recently concluded settlement with NMPA, it seems abundantly clear that when it comes to mechanical royalties, the company is simply not getting it done.

It must be asked, where is the board? Who is minding the store at Spotify? One conclusion that the latest litigation suggests is that Spotify’s future will be a lot like Napster–endless litigation from songwriters and publishers who are either not part of the settlements because they opted out or whose works were infringed recently and are not picked up by any settlement.  This should give any board of directors pause–not to mention a gut check with their D&O insurance company.

But what about the songwriters who don’t want to go through the litigation maze and just want to be paid fairly when Spotify plays their songs?  As long as Spotify takes a cavalier attitude–even in the face of massive litigation–no one can trust the company to do the right thing.

As Matt Pincus told the New York Times in a different, but relevant, context: “The more controversies [Spotify] have that have a moral underpinning to them, the more of a problem they will have in the bigger fight.”

Not only does Spotify have the “black hat” problem with songs and songwriters, they also make people wonder about their reporting and licensing on sound recordings and artists.  If Spotify’s accounting on songs is so sloppy and the company is either so slow or so unwilling to fix themselves, how can they possibly be doing it perfectly on sound recordings?

There is a solution to this that one would think both sides would welcome–a court appointed federal magistrate to oversee an independent third party rendering Spotify’s royalty statements and handling its licensing.  There is an apocryphal story that Goldman Sachs partners are under continual audit by the IRS by means of an IRS office inside Goldman.  While that may seem oppressive if true, at least a Goldman partner would know that they were already clean with the IRS.

If a court ordered a federal magistrate to review Spotify’s royalty reporting for say the next 10 years, songwriters might actually get paid and the Spotify board and their insurance company could breathe easier.  Not to mention the implicated employees.

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