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You Say Registrar I Say Register: Truth in the Land of Plenty

April 24, 2015 3 comments

A quick update on the Canadian copyright extension for sound recordings:  The magisterium of the professoriate in Canada is equivocating yet again on the difference between artists who write songs and artists who don’t and misleading the public in the process.

I know that’s a shocker.  While you recover, a quick detour on the difference between a songwriter and an recording artist.  Yes, at a certain level of generality, both are called “artists”.  But in these discussions, the two are treated quite differently.

In Canada, songwriters get a term of copyright measured by their life plus an additional 50 years.  If you consider an average life expectancy of 80 years, that’s 130 year copyright term.  For all you Statute of Ann fans out there, I realize that’s a good long time and that you would prefer a copyright term of the life expectancy of the average indoor tabby.  Newsflash: That ship has sailed.

Sound recordings in Canada, on the other hand, have a fixed term essentially measured from release date for conversational purposes.  That term was 50 years and soon will be 70.  Not 130.  Roughly half.

Songwriters typically retain at least 50% of their songs’ income as the writer’s share and often get more if they have a co-publishing agreement and even more if they have only an administration agreement.

Artists, on the other hand, get a royalty of something between 1/8 to 1/4 of a number that you can think of as the wholesale price.  There are a bunch of lawsuits right now about digital–those lawsuits seek 50% for digital and are being settled.

Unbelievably, I’m reading a bunch of attacks on Canadian artists like Leonard Cohen and Randy Bachman, even Buffy St. Marie (seriously).  As more and more artists come out in support of the 70 year copyright term, the Canadian professoriate have an increasing number of targets to sling mud at.

But here’s the difference–in case they haven’t noticed, the professoriate needs to check their calendars.  It’s not 1999 anymore.  Artists are sick and tired of being told how stupid and greedy they are by academics who get a paycheck every week and who have the brass to tell them that they should be happy with their songwriter royalty–even the ones who aren’t songwriters.

These are the same kind of people who mock songwriters and want them to sell more t-shirts and who have very little daylight between them and Big Tech.  The consistent part is that when it profits them to do so, they bash the artists on the sound recording issues and then bash the songwriters on the musical composition issues.  And in between they want the government to regulate every breath we take.

The first time I met Gordon Lightfoot and Leonard Cohen was with the late Jesse Winchester at Montreux many years ago.  Many years after that, I worked with David Anderle to release “Tower of Song” on A&M, which is still one of the great albums.  I realize that these artists could care less what Michael Geist thinks of them, but it pains me to see them get bashed gratuitously by the self-appointed professoriate in their own country to further an agenda that is as close to Google’s as one is to two.

The comfort though is that it’s not 1999 anymore and as dozens of Canada’s great artists speak out, they give us all a lesson in courage.  I’m sure that their truth will prevail.

Like the man said, may the lights in the land of plenty shine on the truth some day.

PS to bloggers:  See what I did there with the link to buy “Tower of Song”?  I linked it to Waterloo Records, my local indie record store.  I bet you have an indie record store, too.  And if you don’t, use Waterloo.  Texas wants you anyway.  But you don’t have to give into the inclination to link everything to Amazon.  Your indie record store offering online sales is perfectly capable of drop shipping CDs to you, and they will appreciate the business.  An added plus:  They answer the phone and they know WTF they are doing.

World Watch:  Canadian Government Closes Big Tech’s Back Door Loophole

April 22, 2015 5 comments

Canadian Prime Minister Stephen Harper’s government has announced that Canada will expand the current 50 year copyright term for sound recordings in Canada to 70 years. This brings Canada into the 21st Century and in line with its global trading partners. Expect handwringing from Big Tech and the magisterium of the professoriate, some of which has already begun, complete with at least some manufactured evidence worthy of Pandora.

Harper Government Acts to Protect Canadians from the Copyright Term Shell Game

The way you play the copyright term game internationally is to sell knockoff CDs or vinyl versions of classic recordings at super-budget prices in the country with the shortest term as those records flow into the public domain. Fans are confused by these records being sold side by side with value added versions (such as digitally remastered, 5.1 mixes, etc.).  For example, two titles by The Beatles recently appeared at Canadian Walmart stores according to The Examiner:

Whether they are Canadian public domain Beatles releases is not known. Walmart customers who have purchased them have commented that the CDs were dubbed from recordings and are terrible quality. “Audio is horrible! Wouldn’t want it even it was free!,” one said about “Love Me Do.” “Subpar quality. Save your $5 and put it towards REAL Beatles recordings,” said another.

There’s also a good chance that the same game can be played digitally at least with recordings ripped from old analog copies (but probably not with later digital versions that enjoy renewed copyright term).

An announcement yesterday by Prime Minister Stephen Harper’s government on Canada’s new copyright term is a great move for all featured and non-featured artists, their record label partners–both majors and indies–and independent artists who own their recordings.  As the announcement says:

The mid-1960s were an exciting time in Canadian music, producing many iconic Canadian performers and recordings. While songwriters enjoy the benefits flowing from their copyright throughout their lives, some performers are starting to lose copyright protection for their early recordings and performances because copyright protection for song recordings and performances following the first release of the sound recording is currently provided for only 50 years. [According to a Canadian IP expert, the change should go into effect before the summer.]

Canada has long had a shorter copyright term for sound recordings than most major economies. The U.S. is 95 years, the EU is largely 70 years but Canada’s has been 50 years.  This means that recordings made before 1965 currently are in the public domain in Canada and more will become available for resale by fast buck operators with each passing year.  Looming victims: Recordings of “These Eyes,” and “American Woman”, the massive hits by Winnipeg’s Guess Who. Followed by  Bachman Turner Overdrive’s iconic hits “Taking Care of Business” and “Roll On Down the Highway”. Then Bryan Adams’ records will start, and so on.

“Thank you for recognizing all that the performers and producers put into creating music and their continued need to be recognized for that effort 70 years later. The government’s Budget 2015 amending the term of copyright is very much appreciated in the music community.”
– Alex Lifeson (Rush)

As we’ve seen with Pandora and SiriusXM in the U.S., these streamers refuse to pay pre-72 artists because the records are not afforded federal copyright protection. We can only assume that Big Tech digital services operating in Canada will also refuse to pay artists for any works that would have fallen into the public domain if it were not for this latest protective move by the Canadian government. Fortunately, extending the copyright term to 70 years will forestall these classic records from falling into the hands of fast buck operators. But you can expect the full court press by Big Tech lobbyists and their allies to start a drum beat to oppose the extension.

The Yank is Silent

Michael Geist of the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic at the University of Ottawa, aka the Lessig of Canada, has already started the handwringing and jingoism about Harper’s desire to bring Canada into the 21st Century. I would say he does a brilliant job of making the losing argument (yet again) but this time he really doesn’t even do that. In a curious tweet that seems to have been deleted, Geist initially seemed to misread the Government’s position as being extending the Canadian copyright term to life plus 70 rather than the straight 70 year term:

I guess he’s gotten squared away on what the language in the Government’s policy actually says. In a blog post, one of Geist’s major arguments against the Harper Government is that when Europe passed their copyright term extension, some countries voted against it. Now there’s a shocker–no unanimity?  Say it ain’t so! But it is exceptionally odd how he finds support for his argument that good is actually bad:

With many more studies and reports reaching the…conclusion [that extending the copyright term is always bad] (see here, here, here, and here) – some [studies and reports] estimating that the costs to the public would exceed one billion euros with 72 percent of the benefits record labels – the issue unsurprisingly proved very controversial in Europe. The European Union ultimately passed an extension from 50 to 70 years in 2011, but not without significant opposition from member states. Eight countries – Belgium, Czech Republic, Luxembourg, Netherlands, Romania, Slovakia, Slovenia and Sweden all voted against, while Austria and Estonia abstained.

We’ll come back to these “studies and reports” momentarily.   I guess that what Geist is saying is that a majority of European countries rejected his point of view? Not sure…. Another of Geist’s arguments against the Harper government is a lack of “studies” (and we know how the academics like their studies, especially when they get paid to produce them by their cronies in the bureaucracy).

So let’s look at the “studies and reports” that Geist cites in his usual cascading series of unquoted links marshaled to support his own conclusion, the “here, here, here and here” I quote above. Here #1: An academic paper presented at the Fordham IP conference. Not a study and not a report.  It becomes “analysis from EU experts” on Twitter…so which is it?

Here #2: A letter to the editor from Open Knowledge (funded by 2 of the same funders as Creative Commons). Not a study and not a report.

Here #3: A joint academic statement. Not a study and not a report.

Here #4: A law firm blog post that was reposted in The Register quoting one of the academics in Here #3 and a lawyer at the law firm that writes the blog. Not a study or a report, but seems like classic astroturfing to me.  I haven’t seen any reposts from Out Law on The Register lately.

Geist’s quote about the billions and billions seems to come from the law firm blog post that was reposted in The Register, especially the following part of the law firm blog post:

Martin Kretschmer, director of Bournemouth University’s Centre for Intellectual Property Policy & Management said that record companies will garner far greater benefits from the change than small-time artists and called the decision to approve the changes “a dreadful day for musicians and consumers”. “It is not surprising that many performers’ organisations and collecting societies support the Directive,” Kretschmer said in a statement [link in the original which is not to any statement, but to an advert for a roundtable with Kretschmer built around another professor flogging a book against copyright]. “They do not have to carry the costs – which will exceed €1bn to the general public,” he said. “Seventy-two per cent of the financial benefits from term extension will accrue to record labels. Of the 28 per cent that will go to artists, most of the money will go to superstar acts, with only 4 per cent benefiting those musicians mentioned in the [Council of Ministers] press release as facing an ‘income gap at the end of their life times’. Many performers also do not appear to understand that the proposal would lead to a redistribution of income from living to dead artists,” Kretschmer said.

Say what? Of course, in a trick worthy of David Blaine, somehow Professor Kretschmer, an academic in Bournemouth, knows the terms of all the legacy record deals in the world to come up with his 72%/28% split—but leave that to one side. This becomes a “UK study” in Geist’s twitter account:

The point is that Geist The Sea Lawyer cites to “studies and reports” but doesn’t cite one study or one report, unless he is imagining in his mind a study that is very different than anything he’s ever been paid to produce. Or maybe not….

A Lesson in Astroturfing (Updated 4/24/15)

Geist’s CIPPIC acolytes are out talking to the press, apparently.  In a piece quoting one of the acolytes published in the National Post, Ishmael N. Daro perpetuated the quote from the Pinsent Masons’ blog “Out-Law” linked in Geist’s post–remember that one from Here #4 and alternatively identified by Geist as one of the “studies and reports” and as a “UK study” on Twitter?

“It is not surprising that many performers’ organisations and collecting societies support the Directive,” Kretschmer said in a statement [link in original]. “They do not have to carry the costs – which will exceed €1bn to the general public,” he said.

So the implication in the Out-Law from the mega international firm Pinsent Masons and certainly from the description of it by Michael Geist is that extending copyright term in Europe would cost the public over €1bn and that Kretschmer’s number is backed up by a “UK study.”  This number then gets reported thusly in the National Post:

Studies on copyright extension suggest only a small portion of the revenue will flow to the artists, while also costing the public billions of dollars in the long term.

The link in the National Post is to Geist’s blog post in which he quotes the Pinsent Masons post that was reposted on The Register years ago and states that it supports Geist’s proposition that extending the copyright term in Canada for sound recordings by 20 years will cost “the public billions of dollars in the long term” as now is reported in the National Post.

So it must be true, right?

“I’ve been making music since the early 1970s. Term extension is a huge relief – in just a few short years I thought I would start to see copies of my work and no revenue. Not anymore, thank you PM Harper.”
– Myles Goodwyn [wegotchur back Myles]

Not so fast…if you work backwards, Pinsent Masons links to a “statement” that supports their quote.  That statement is a link to an advert for a panel at Bournemouth in which Kretchmer participates but has no statement from him.  So where did it come from?  Surely the fact checkers at the National Post know, eh?

You really can’t tell from the Pinsent Masons post that was reposted in The Register.  Is this odd?  Not really.  When you look at the Pinsent Masons website, Out-Law is described thusly by the Pinsent Masons’ website, followed by the smiling faces of two “journalists”, one “editor” and an “Out-Law Consultant”:

Our Out-Law Team

Key people – at your disposal

These are our key people.  They are all at your disposal, individually and collectively.  Between us, we will put together the team bespoke to your needs, in terms of our expertise and your geography.

Yes, Pinsent Masons’ “key people–at your disposal.”  Whatever you desire.  That’s a bit different editorial policy than say…oh, say the National Post.

So then…give Geist the benefit of the doubt and let’s look behind door Here #3.  This is the joint academic statement of which Kretchmer is a participant that Geist calls a “study and report”.  In that statement, there is a footnoted reference to “M. Kretschmer and P. Hardwick, Authors’ Earnings from Copyright and Non-Copyright Sources: A survey of 25,000 British and German writers (2007)” (footnote 8 for those reading along).  Maybe this is the source of the billions and billions quote?

Unfortunately, no joy.  This was actually a survey that was commissioned by the Authors Licensing and Collecting Society in the UK and that has since been updated.  Also–whatever conclusions it reached had nothing to do with the music business at all, and certainly not sound recordings.  However, Professor Kretchmer may be forgiven or at least given the benefit of the doubt for how he was quoted by Out-Law as he may well have been speaking of the collecting society for authors–as in book authors.  As he did not participate in the updated study commissioned in 2013 by ALCS, he might not have been up to speed.  And there is no evidence that he has any idea that his old statement from the Out-Law blog is currently being used in what appears to be a completely unrelated context.

“We’re glad to see Canada extend our length of copyright protection to terms consistent with other artists in other countries.”
– The Sheepdogs

But who cannot be forgiven in my mind is Geist or the National Post.  This “billions” is clearly a plug number and if it is backed up by anything at all, it certainly isn’t the evidence presented which was originally given in a completely different context.  Or, in the case of the National Post, relied on.

And, of course, in turn the National Post article has already shown up in copyleft newsletters and of course the EFF website as authoritative (that’s the Google Shill List member EFF).  The “millions and millions” quote was repeated by another copyleft type that even showed up in a post on Billboard–who we expect to get it right, being the Bible of the Music Business and all.  Repeat–because a recording is in the public domain does not mean that the seller has to charge any particular price point–so it doesn’t necessarily mean the “public” pays less.  It definitely doesn’t mean that those selling the original recording now in the PD can stop paying artist royalties required by artist contracts for the records they do sell.  You think EMI stops paying royalties to The Beatles when the recording fall into the PD?

Of course, as the Beatles Examiner observed, the sound quality on knockoffs is probably going to be awful.  Why?  Because the reseller does not have access to the original master tapes–the physical object still owned by the copyright owner, at least in a capitalist system.  These knockoff titles will always be several generations away from the original and will have questionable packaging as well.  Some might say that ripping a CD to a digital file creates a “perfect copy.”  Trust me, it may sound perfect to some people, but it ain’t.

But this is the thing about astroturf–if it sounds like something they want to hear, some journalists just keep regurgitating it without checking the fact.  So we have the National Post, the EFF and Billboard drinking the Kool Aid.  Can the ORG be far behind?

Classic, classic astroturfing.

A Short Detour into Royalty Accounting

Here’s a hot tip for Geist and Kretechmer that they would know if either had ever sold a record or talked to anyone who had:  When consumers pay the retail price for a public domain recording, they don’t pay “royalties”: they pay…the retail price.  There’s nothing that requires a public domain recording to be sold at any particular price. It is the retailer, including the digital retailer, who should be paying the artist royalties in the form of the wholesale price. When public domain records are sold, no royalties flow to the recording artists. All the money flows to the retailer and the operator distributing the PD work.  That’s the point. That’s why the Big Tech companies are so infatuated with the public domain—it’s another way to get rid of payments to those pesky artists and make all the money themselves. So in typical Geist style, there’s just enough truth in his statement that he can’t be called a liar, but he leaves out some critical steps that would undermine his sanctimony.  Because dogma only works as long as you can’t see who’s behind the curtain.

And since Geist has brought up these Beatles knockoffs with the justification that Lennon and McCartney will still get their mechanical royalty as songwriters, why don’t we just check with CMRRA on that little fact.

“As artists, ownership of our music is almost like a retirement plan. It is great to see that by extending Canada’s copyright term, the government is protecting that investment”
– Triumph

Beware, the TPP Is Nigh: Astroturf and the Public Domain

Geist has a serious issue with the Trans Pacific Partnership—so do I, frankly, although for different reasons. But he’s kind of obsessed with the idea that the United States government is using the TPP to bully Canada into “caving” on the copyright term issue. I fail to see the basis for this jingo.  If Canada were extending the term from 50 to 95—matching the term in the U.S.–I’d say he has a point. But that’s just not happening.

What is odd about Geist working up the jingo over the Harper Government (apparently witless and cowering according to Geist) is that there are many overlapping American influencers from the Google Shill List on the external advisory board of Geist’s NGO base of operations, the Samuelson-Glushko CIPPIC.

The very name is oddly American—Samuelson is Professor Pamela Samuelson, the U.C. Berkeley academic, and Glushko is her technocrat husband Robert Glushko, the Silicon Valley tycoon and also a U.C. Berkeley professor. Evidently they bought the naming rights to CIPPIC. That’s right–the Canadian Internet Policy and Public Interest Clinic is now named after two Americans.  You would have a hard time finding a list of all the different Samuelson-Glusko clinics, but I believe that S-GCIPPIC is the only one outside the U.S.  The others I know of are at Fordham, University of Colorado, Boulder, American University and, of course, U.C. Berkeley that received $200,000 in the discredited Google Buzz class action settlement.  (See David Lowery’s critique of Professor Samuelson’s “Copyright Principles Project” in Politico.)

Not to mention that it seems to me that Samuelson and Glushko are each as close to Google as one is to two. So before Geist starts looking for Yanks Under The Bed, he should look in his own house first. That’s CIPPIC—the “yank” is silent.

Google started getting into the public domain in a big way around the Copyright Term Extension Act, the U.S. statute that established the 95 year protection term at issue.  Recall that Google’s boy Lessig (on the cozy external advisory board of CIPPIC) was handed the then-biggest defeat of his career before the U.S. Supreme Court in the Eldred case on this very issue.

In a fit of pique that is quintessentially Lessigonian, Lessig stamped his little foot and Google came running with a gigantic check right alongside the Omdiyar Network Fund (of Ebay founder Pierre Omdiyar) and other Big Tech luminaries to fund Creative Commons and other initiatives to undermine copyright and expand the class of works that could be exploited without compensation to artists. Creative Commons 2008 Schedule B Lessig provided the unifying ideology and presto—the “public domain” chant became part of the catechism of anti-artist doctrine presented as dogma by the magisterium of the professoriate through the synchronicity of Big Tech money and academic “freedom to barter”—Saint Larry of the Googleplex and his Canadian cousin Saint Michael Geist of CIPPIC.  (For a detailed explanation of how Google works–to coin a phrase–with academics, see Public Citizen’s excellent report “Mission Creepy” that exposes Google’s influence spending in the U.S.–would that Public Citizen did the same for Canada and the EU.)

So nobody should be surprised that Geist is raising his hand to oppose Canadians extending Canada’s copyright term in Canada.

That’s Jingo: The Yank is Silent

Of course, Geist wants to try to work up a frenzy over the Trans Pacific Partnership.  Somehow in Geist’s mind bringing Canada’s copyright term in line with the rest of the developed world is “caving in” to the Americans. Why isn’t it also caving into the Europeans?

Why isn’t caving into the Brits the explanation that Canada wants to come into the 21st Century? Remember, the new 70 year term in Canada is not the same as the 95 year term in the US, but it is the same as the 70 year term in the EU. If Canada extended to 95 years, I could understand the jingo, but given that Canada matches the Europeans, I really don’t get it—except for one thing.

Running the jingo against the Brits, for example, must not play as well for Mr. Jingo as trying to stir up anti-Americanism. And of course, this is not the first time we’ve seen Geist dance the jingo.  This is in fact typical Geist jingoism, transmogrifying stopping loophole-seeking behavior into “caving to U.S. demands”.

What I don’t understand is why Geist is so unwilling to acknowledge that maybe, just maybe, his countrymen had an original thought when it comes to copyright.  Why on this subject is Canada always being pushed around and why does the Harper Government never act in the best interests of Canadians–at least in The Michael Show?

So, sorry Mikey—before you start the whinge, get your facts straight and at least do us all the courtesy of attacking the right straw man. And by the way—please don’t attack artists like Randy Bachman. It’s not a good look for you.

“Thanks for term extension PM Harper, you really are taking care of business.”
– Randy Bachman

World Watch: The Safe Harbor Loophole and the Internet of Other People’s Things

April 18, 2015 1 comment

“Americans are freedom loving people and nothing says ‘freedom’ like getting away with it.”

From Long, Long Time by Guy Forsyth.

How many times have you heard the expression, “DMCA license”?  The expression is completely baseless, yet it has come to be used to describe an online company that uses music, movies, television, books and images that are intentionally used without rights and commercially until the company receives a take down notice.  The examples given of companies using the “DMCA license”?  Most frequently YouTube, Grooveshark and whatever Michael Robertson is doing at the moment.

If you tell these people that there’s no such thing as a “DMCA license” and that the very expression is internally contradictory, the comeback usually is “Why does YouTube get away with it?”  And of course the answer is the same answer to why does YouTube claim to be struggling to break even–Google is willing to bankroll any litigation using the monopoly rents they derive from their search business to extend their control including fighting any suggestion that they are not entitled to the safe harbors under the U.S. Copyright Act.  If it’s any comfort, the Europeans have the same problem.

The problem with this, of course, is the sheer volume of notices that Google receives for their search business as well as for YouTube.  Google received over 350 million take down notices for search alone.  Google doesn’t disclose the number of takedown notices it receives for YouTube, but a “Google representative” (whoever that is) said that YouTube took down 180,000,000 infringing videos in 2014 according to PC World:

Google argues that new laws aren’t needed to protect copyright holders.

“We’ll continue working to protect people using our services,” Google’s lawyer said Monday. Last year alone, he said, it removed 500 million “bad ads” and over 180 million YouTube videos for policy violations.

Unclear if all those videos were for copyright violations, but the context of the quotation was about copyright infringement.

There is, of course, a threshold question of whether YouTube is even within the definition of a “service provider” under the safe harbors in the first, place, but here’s what the “DMCA” actually says–you’ll note the “knowledge predicate” that is the threshold requirement for the service provider qualifying for the relief:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider – (A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

Would you say that receiving 350 million take down notices would constitute “actual knowledge” or “facts or circumstances from which infringing activity is apparent”?  Or would you say that Google views the massive number of notices as a feature set that tells them their business model is working to plan?

As Beggars Group Chairman Martin Mills told an audience at Canadian Music Week in 2014:

The American government is increasingly looking at reforming copyright laws. As long as that reform creates a balance between strengthening copyright and allowing investment in the creative world, and adapting it to a world never envisaged, I support that intention. But I believe part of that change must be to remove the safe harbour loophole.

We are at the point at which notice and take down must become notice and stay down.

To conclude, whilst thanking you all again, I would like to quote from one company’s evidence to Australia’s Communication Ministry a few months ago.

“ We believe there is significant, credible evidence emerging that online piracy is primarily an availability and pricing problem “

Whereas that might have been true ten years ago, today, in an era with myriad licensed services (and Australia has more than most ), and with streaming services with free tiers, I think that’s, frankly, rubbish.

Who was it from? Google, the parent of YouTube, one of the companies that have made billions on the back of a statutory provision intended to protect ordinary people acting innocently.

The purpose of the DMCA safe harbors was to provide a little latitude to reasonable people acting reasonably, not to provide a rationale for the “DMCA license” and not to impose one of the biggest income transfers of all time.  I’m still looking for the conga line of Congressmen who think that Congress intended to strike that balance.

The Europeans have the same problem with the EU Copyright Directive.  Given Google’s massive lobbying and cronyism in the United States, it is likely that we will need to look to Europe to fix the “notice and shakedown” loophole just like we have to look to Europe to reign in Google’s many other abuses of its monopoly powers.  As Music Week reported last week:

The IFPI is taking action against what it sees as an abuse of safe harbour rules by platforms like YouTube and Dailymotion, which is resulting in the music industry losing out on billions of potential income every year.  [Hence, the income transfer.]

Legislation that allows passive intermediary digital platforms to host content without getting “caught up in copyright liability” needs to be clarified, said IFPI chief executive Frances Moore during a press conference….

Moore highlighted YouTube and Dailymotion as websites that define themselves as intermediary hosts and use safe harbours to avoid getting full licenses and paying creators the same rates as the likes of Spotify and Deezer [that do not rely on the safe harbor fiction]….

“Spotify and Deezer have something like 141 million paid and unpaid subscribers who generate something like $1.6 billion for the industry. On the other hand, YouTube or Dailymotion, who have over 1bn users, generate something like $641m for the industry.”

This year, the IFPI will be working to try and get governments to clarify the “legislative flaw” through campaigning for change within European law via the courts, but any change could take “one or two” years to go through.

Google will, of course, fight tooth and nail to keep the income transfer under the “DMCA license”.  The other dynamic that isn’t often discussed is that there are two forces at work here:  one is the income transfer that causes label revenues to decline across the board and due in no small part to infringing activity of which Google is well aware across all its platforms.  The other is the effect of the advances that YouTube does pay for the videos and songs it does license.  As revenues decline, those advances, breakage, “technology fees” and the like that YouTube pays out become more and more important to survival.

This allows Google to use YouTube for the opportunity to turn the screws if the industry gets too uppity.  And, oh, by the way–don’t forget that Google has a seat on Spotify’s board of directors.

So watch this space–things may get interesting.

World Watch: The Google Antitrust Case in Europe

April 16, 2015 Comments off

You can’t have been in the music business for very long without getting the idea that it’s a round world.  We have been an international business almost from the time there was a concept of international trade and cultural exchange.  It’s a two way street–there is a well-trodden path from the US abroad and from there and back, especially Canada, the UK, Europe, Japan, South Korea, Australia and New Zealand, even Texas.

The U.S. government supports American innovators in the artist community through a variety of international treaties and enforcement mechanisms, the U.S. Copyright Office and of course the U.S. Patent and Trademark Office (despite some rather unknowledgeable and gratuitous swipes at USPTO senior staff that verged on unintelligible by a member of the music bar who unfortunately was left in the same room as a megaphone.  That person should have been thanking the staff and not mistaking the fact that the USPTO has long had significant and important input into copyright policy in the U.S.).

From time to time, I will be posting about international issues of importance to U.S. artists that come up.  The first is the prosecution of Google by the European Commission for abuse of monopoly power.  This case is important to U.S. artists for a couple of reasons.

1.  It is the first time Google has had a serious confrontation with a government that it has not been able to control through vast sums spent on lobbying both directly and of the astroturf variety–see “Mission Creepy“, Public Citizen’s indispensable and exhaustive guide through Google’s labyrinthine network of academics (starting with the Poker Prof himself, Lester Lawrence Lessig III), NGOs (EFF and Public Knowledge), front groups and outright lobbyists.

2.  IMPALA has filed a complaint against YouTube (owned by Google) with the European Commission.  IMPALA is the trade group representing independent labels in Europe and has a significant degree of experience in fighting anticompetitive moves by a variety of corporations.

3.  IMPALA has to a degree adopted the cause of Zoë Keating as an example of the treatment of independent artists by YouTube–and when you read the EC complaint, you will no doubt immediately see the parallels between the complainants in the EC case and the case against YouTube that is yet to be brought.

4.  Senator Mike Lee is investigating corruption charges against the Federal Trade Commission that inexplicably failed to prosecute Google in the U.S. despite the recommendation by senior FTC staff that a prosecution be brought.  Given the proximity to Google’s many fixers of Washington insider Beth Wilkinson, the outside lawyer who was mysteriously brought in to oversee the FTC’s investigation of Google rather than have that role fulfilled by FTC staff, Senator Lee no doubt has many things to investigate.

Here is the press release from the EC on the prosecution:

Commission sends Statement of Objections to Google on comparison shopping service; opens separate formal investigation on Android

Brussels, 15 April 2015

The European Commission has sent a Statement of Objections to Google alleging the company has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages. The Commission’s preliminary view is that such conduct infringes EU antitrust rules because it stifles competition and harms consumers. Sending a Statement of Objections does not prejudge the outcome of the investigation.

The Commission has also formally opened a separate antitrust investigation into Google’s conduct as regards the mobile operating system Android. The investigation will focus on whether Google has entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices.

EU Commissioner in charge of competition policy Margrethe Vestager said: “The Commission’s objective is to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not artificially deny European consumers as wide a choice as possible or stifle innovation”.

“In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules. Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe.”

“I have also launched a formal antitrust investigation of Google’s conduct concerning mobile operating systems, apps and services. Smartphones, tablets and similar devices play an increasing role in many people’s daily lives and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company.”

Comparison shopping

Comparison shopping products allow consumers to search for products on online shopping websites and compare prices between different vendors. The preliminary conclusion of the Commission’s investigation opened in November 2010 is that Google gives systematic favourable treatment to its comparison shopping product (currently called ‘Google Shopping’) in its general search results pages, e.g. by showing Google Shopping more prominently on the screen. It may therefore artificially divert traffic from rival comparison shopping services and hinder their ability to compete on the market. The Commission is concerned that users do not necessarily see the most relevant results in response to queries – this is to the detriment of consumers, and stifles innovation. The Commission’s preliminary view is that to remedy such conduct, Google should treat its own comparison shopping service and those of rivals in the same way. Google now has the opportunity to respond to the Commission’s allegations within ten weeks and to then seek a formal hearing. The Commission considers that overall, previous commitment proposals from Google were insufficient to address its competition concerns.

Further details of the Commission’s Statement of Objections on comparison shopping can be found here.

Android

Since 2005, Google has led development of the Android mobile operating system. Android is an open-source system, meaning that it can be freely used and developed by anyone. The majority of smartphone and tablet manufacturers use the Android operating system in combination with a range of Google’s proprietary applications and services. These manufacturers enter into agreements with Google to obtain the right to install Google’s applications on their Android devices. The Commission’s in-depth investigation will focus on whether Google has breached EU antitrust rules by hindering the development and market access of rival mobile operating systems, applications and services to the detriment of consumers and developers of innovative services and products.

Further details of the Commission’s formal investigation of Google in relation to the Android mobile operating system can be found here.

Background

The Commission continues its ongoing formal investigation under EU antitrust rules of other aspects of Google’s behaviour in the EEA, including the favourable treatment by Google in its general search results of other specialised search services, and concerns with regard to copying of rivals’ web content (known as ‘scraping’), advertising exclusivity and undue restrictions on advertisers.

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So you can see that this is actually two different antitrust actions–one is a “Statement of Objections” which is an actual prosecution of Google and the other is an announcement that the Commission has launched a new “formal antitrust investigation of Google’s conduct concerning mobile operating systems, apps and services.”

The timing of this prosecution and new investigation suggests that the Commission has an appetite for getting to the bottom of Google’s anticompetitive behavior in a serious way.  This is particularly important since the U.S. clearly has no appetite for the same, and Senator Lee will hopefully find out why that is.

What it should say to artists is that the Commission has yet to take up IMPALA’s case.  My hunch is that the Commission will look at the IMPALA complaint through a different lens now that the Commission is taking a serious look at Google.

It’s also important to realize that the head of the Commission’s competition authority changed at the end of last year.  Google spent years slow walking the investigation through Mr. Almunia, the last competition chief.  Mr. Almunia allowed Google to present an unprecedented three settlement proposals in what was apparently an attempt to run out the clock on Mr. Almunia’s term.

Unfortunately for Google, none of those proposals were acceptable to Mr. Almunia and he waived goodbye to his new friend Eric Schmidt with no points on the board for Google.

Here’s a tip that any high school football coach can tell you:  If you’re going to run out the clock, be damn sure you win the game.

As we now know through the disclosures by the Wall Street Journal under Freedom of Information Act requests, both Ebay and Amazon had secretly complained to the Federal Trade Commission about Google, which makes the issues involved far more expansive than originally thought.

What happens now from an artist perspective?

–Many more big actors like Ebay and Amazon may come into the EC action as complainants.

–Other countries may decide to come forward now that the EC has shown the way and disclosed the seriousness of Google’s misbehavior.

–States in the United States may take a closer look at whether they have actions they can bring under state competition or unfair trade practices laws.

–IMPALA may receive a very fair hearing.

–Someone may join the EC case as a complainer based on Google abusing its monopoly power in favor of YouTube.  Ever seen a video on an artist site listed in Google search results that wasn’t on YouTube?

Remember, the U.S. Senate Antitrust Subcommittee that Senator Lee now chairs previously investigated Google for almost the exact same reasons as Google is now being prosecuted by the Europeans.  In fact, Senator Lee himself led a vigorous cross examination of Eric Schmidt on this very subject.

I have to believe Senator Lee feels entirely vindicated by the EC’s action.  In fact, he may feel so vindicated that he holds a public hearing on the corruption questions swirling around Google and the FTC.

And that will be a good thing for artists.  We’re a long way from YouTube treating artists with the respect that they deserve and we’re a long way from the government no longer being enamored by the crony capitalists like Google and their special interest lobby.

But it’s a step in the right direction and it shows why it’s a good idea for artists to keep an eye on what happens in other countries.

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