Ethical Pool: More for few or fewer for more – The Results of a Comparative Study on Pro Rata and User Centric Distribution Models from Finland — Music Tech Solutions

October 31, 2018 Comments off

The First Rule of Lawfare: Is Google’s Active Measures Campaign on Article 13 a Trial Run for Election Meddling by a US Non-State Actor?

October 28, 2018 Comments off

Well, I wake up in the morning
Fold my hands and pray for rain.
I got a head full of ideas
That are drivin’ me insane.
It’s a shame the way she makes me scrub the floor.
I ain’t gonna work on Maggie’s farm no more.

From Maggie’s Farm, written by Bob Dylan

Google on the Back Foot with the Copyright Directive

Google and Facebook recently suffered a lobbying debacle in Europe over the European Copyright Directive.  That legislation cuts back the European version of the what Americans call the DMCA safe harbor.  A triumph for artists, Google’s European loss was the worst lobbying defeat that Silicon Valley has been handed in a long time—at least since the SESTA legislation cut back another safe harbor in the U.S.  So it shouldn’t be surprising that YouTube’s CEO is trying to influence YouTubers to lobby on behalf of Big Tech—Google desperately needs some human shields, which is exactly what participating YouTubers would be.  Once again scrubbing the floor for the House of Google.

At its core, the Copyright Directive cuts back the ability of services like YouTube to profit from infringing activities on their platforms.   One would expect corporations profiting from that safe harbor to lobby against it, just like supporters lobbied for it.  But Google and Facebook went well beyond simply lobbying by attempting to sow discord and undermine democratic institutions.  

And they got caught—red handed.   They were caught conducting active measures such as spamming, bot farming and overt messaging campaigns calculated to undermine the legislative process in the European Parliament.  You can read about it in a number of leading European publications starting with investigations by both the Times of London and Frankfurter Allgemeine Zeitung.

 

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Google’s Article 13 Lobbying Campaign from Volker Rieck

 

Most importantly Google supporters like the Pirate Party promised—or more accurately “threatened”—that “constituents” would show up to protest, and very few did.  So Google’s active measures campaign lacked a human face—the key component that brought it down.

German MEP Helga Truepel explained why the plenary vote on the Copyright Directive was so lopsided against Google at a press conference :  “…[It was] due to this message spamming campaign. I talked to some of my colleagues here [and they] are totally pissed off, cause in the streets there were a maximum 500-800 people last Sunday [at Pirate Party protests]… and we were only deleting emails for weeks now.”

Plan B and the First Rule of Lawfare

Fast forward to today: Google needs a Plan B.  Desperately.

Google’s problem today is the Members of the European Parliament (and some members of the UK Parliament) are wise to their jive after the plenary vote.  My bet is that story is not yet concluded as it merits a criminal investigation.  Because when a corporate covert influence operation is discovered and attribution is certain, it’s hard to put that genie back in the bottle (just like Internet piracy).

But while Google desperately needs a Plan B to retain its safe harbor, publicly acknowledging its influence operation is politically awkward, bread crumbs or no.  Like fight club, the first rule of lawfare is that it does not exist.

Google and Facebook are struggling to find that Plan B as the EU lawmaking process continues with the “Trilogue”, the next step to the Copyright Directive becoming national law in the European Union.  Google seeks another way to overwhelm the system by finding human shields to mingle with the bots.  And that’s where YouTube CEO Susan Wojcicki comes in with her recent appeal to YouTubers to protest the Directive.

Ms. Wojcicki may want us to overlook that Google just got caught running active measures against a democratic institution to meddle in the legislative process on another continent.  But members of the European Parliament have not forgotten.  She may be able to pull the wool over YouTuber’s eyes, but it just makes her human shields look even more duped and her methods look especially more alarming—if not terrifying—in a post-Cambridge Analytica world.

Safe Harbors, Addiction and Human Shields

Don’t underestimate how important these safe harbors are to Google, Facebook and its fellow monopolists.  They were ready to be on the wrong side of child sex trafficking legislation to preserve their other safe harbor (Section 230 of the “Communications Decency Act”)—that surely strained Sheryl Sandberg’s performance as Wendy to Mark Zuckerberg’s “boy who wouldn’t grow up.”  These safe harbors are crucial to Google, Facebook and Twitter—because it protects them as they snort up the addictive content and reward (if not sell) views, likes, follows, and “engagement.”  

Remember—YouTube is not in the music business, or even in the content business at the end of the day.  Google and Facebook are in the addiction business.  

In particular the behavioral addiction business (see Irresistible by Dr. Adam Alter).  If you’re in the addiction business, safe harbors are very, very important.  Just ask the narcotraficantes.  And don’t forget—the U.S. Attorney for Rhode Island investigated Google for violations of the Controlled Substances Act that resulted in a $500,000,000 fine and a non-prosecution agreement (not to mention a shareholder lawsuit).

Straight Outta Minitrue

But I suspect it is the embarrassing lack of human shields cited by MEP Helga Truepel that drove Ms. Wojcicki to issue a meandering tl;dr blog post trying to convince “YouTube creators” to fall in with the company line on the Copyright Directive. 

Ms. Wojcicki manages to get through her entire appeal without coming clean about the point of the Copyright Directive—YouTube profits from piracy through the safe harbor that the Directive would cut back, especially Article 13.  (There’s way more to the Directive than Article 13, but that’s another story.)

She would have YouTubers sign up to the “sky is falling” claims that “the unintended consequences of Article 13 will put [the highly profitable YouTube] ecosystem at risk”.  Why?  Because “[i]t would be too risky for platforms to host content from smaller original content creators, because the platforms would now be directly liable for that content.”  

That is quite a leap—how is it that “smaller” YouTubers would be such a big problem?  After all of YouTube’s “advertiser friendly” changes that severely hurt the earning power of many YouTubers, does Ms. Wojcicki really think that YouTubers—a pretty clever bunch on the whole it must be said—are so gullible that they will miss the irony?  

And then she says this: “We are committed to working with the industry to find a better way.  This language could be finalized by the end of the year [in the Trilogue], so it’s important to speak up now.”

Given the breadth of the coalition supporting the Copyright Directive and opposing Google and Facebook, it’s not immediately clear who is “the industry.”  I can tell you that if she includes the music industry in that reference, I can save her some time.  

Nobody in “the industry” trusts Google, YouTube, Facebook or Ms. Wojcicki.  [Although the beachhead that Google scored with the MMA may make life interesting for publishers and songwriters wishing to protest against the hand that feeds the mechanical licensing collective.]  

And, frankly, I’d be surprised if many YouTubers trust her either.  Based on the vote supporting the Copyright Directive, there’s a wide swath of MEPs that have severe misgivings about all these Silicon Valley companies trying to run roughshod over Europeans.  And then there’s the two and probably soon to be three competition prosecutions against Google by the European Commission.  That’s a thing.

Ms. Wojcicki hasn’t learned (and I predict won’t ever learn) a simple truth that every record company and music publisher knows—don’t jack with the talent.  YouTube jacks with the talent frequently, so it’s unclear how the talent is going to react to this latest request that they take time out of their day to help YouTube.

It’s not a good look and it will come back to bite.  YouTube has been profiting from the safe harbor for its entire existence and wouldn’t know how to make an honest buck if their lives depended.

Is Election Meddling Next on Google’s Agenda?

Before Ms. Wojcicki tries to rally YouTubers as human shields to support Google’s billions on her bot farm, she needs to get her own house in order.

And members of the European Parliament need to get a grip on these active measures campaigns before Google goes beyond “lobbying” on an issue vote and moves on to meddling in campaign outcomes in a few months when the European Parliament stands for election.

In a post-Cambridge Analytica world, we all know it’s a short step from undermining opposition on a particular issue to undermining the election of a particular candidate.  And Google is just as capable of meddling as any state actor if not more so.

Save the Date: Music Publishing After the MMA: Valuations, Payments and Collections, Texas Entertainment Law Institute November 8-9 Austin

October 26, 2018 Comments off

I’m looking forward to linking up with my friend and veteran music publisher Richard Perna (Lone Wolf, Evergreen) to review the effect of the Music Modernization Act on publishing catalog valuations, payments and collections at the Entertainment Law Institute in Austin on November 8 & 9.  The ELI is one of the best entertainment law programs in the country, sponsored by the State Bar of Texas and the Texas Entertainment and Sports Law section.

For more information and to register go here.

Save the Date! NYC Music Business & Law Conference November 16

October 24, 2018 Comments off

I’m honored to be included in a panel at the New York State Bar Association’s annual Music Business & Law Conference on November 16 with truly awesome panelists.

11:50am-12:50 pm      Music Modernization Act (US) / International Developments

The Music Modernization Act could be the most consequential copyright legislation in a generation. This panel will describe what it does, what it doesn’t do, how it affects current business and legal practices, and its effect on domestic and international copyright holders.  Bring your questions.

Panelists:
Marc Jacobson, Esq. (Moderator)
Chris Castle, Esq. – CC Legal Firm and Music Tech Solutions Blog
Charlie Sanders, Esq. – Counsel-Songwriters Guild of America
Alexander Ross, Esq. – Wiggin LLP (UK)
Christine Pepe, Esq. (IP, Music, and Digital Law Consultant)

 

RIP Paul Allen

October 17, 2018 Comments off

Paul Allen was a co-founder of Microsoft and hence a “tech billionaire.”  But he used that wealth to make a contribution to music in smart and lasting ways through supporting music in Seattle and by doing so being an important voice for our business whether we knew it or not.  And of course he was a sailor, making great contributions on and below the surface.

In particular, Paul Allen made significant contributions to what became KEXP, one of the most important voices in independent radio and a lifeline for indie artists and labels.  Better known was his support for Experience Music project (now MoPop) which is truly one of the few and the great music museums in the world.

Through his Vulcan Ventures venture capital operation, Mr. Allen invested in many music related technologies and companies in a largely behind the scenes way, and also was a major underwriter of The Blues miniseries with PBS, which he executive produced.  Each of the seven films comprising The Blues was a stand-alone film, including The Soul of a Man directed by Wim Wenders that was honored with an out of competition screening at the Cannes Film Festival in 2003 with the series winning two Grammys.

Mr. Allen in his own way had as much of an impact on music and the music business as any executive.  He understood the ecosystem and did what he could to use technology generously in a host of ways, including for the benefit of creators.

When we criticize tech billionaires there’s a particular bite given the passion and support of Paul Allen.  There’s a special wistfulness now that he’s gone.

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$20 Million a Month Daniel Ek Shows “Million a Month” Tim Westergren How It’s Done

October 16, 2018 Comments off

Remember when we were all appalled that Pandora founder Tim Westergren was making $1,000,000 a month from selling Pandora stock while he was behind fighting songwriters in rate court for ASCAP and BMI royalties and stiffing artists with the Internet Radio Fairness Act and refusing to pay pre-72 artists?  And then there was the 13 bathroom house in Marin.  It was all a bit hard to stomach.

According to Jem Aswad in Variety, Daniel Ek is putting Westergren in the rear view mirror for sheer excess.  Based on SEC filings made available to a Swedish publication (probably SEC Form 4):

….Ek sold 336,213 shares $61.7 million worth of stock between July and September, and late last month signaled his intent to sell another $69.9 million sold in July–September for a total of $61.7 million.

So a little over $20 million a month, and it appears that when added to the shares he already sold and will sell, Ek should gross more than all the songwriter class action settlements combined.

“Daniel will sell a small share of Spotify shares in the next nine months as part of his long-term financial strategy. This sale of shares will constitute a minimal part of his holding in the company,” Spotify rep Sofie Grant told the [Swedish] paper. Ek and Lorentzon declined comment.

Of course, it remains to be seen how Spotify does with the several individual infringement lawsuits in Nashville and the Wixen Music Publishing lawsuit in Los Angeles. (Spotify recently lost a motion to dismiss against Bluewater Music represented by attorney Richard Busch, see Order Denying Motion To Dismiss For Lack Of Standing And Failure To State A Claim, Sept. 29, 2018, Bluewater Music Services Corporation, Inc. v. Spotify USA Inc.,  Case No. 3:17-cv-01051 (D.C. W.D. Tenn.) (2017), which also happens to be a great lesson in copyright law by the judge.)

So–Mr. Ek could spend his money on building an effective licensing operation, but….nah….Sounds like Mr. Ek is a man in need of yet another safe harbor, right?

Arithmetic on the Internet: The Ethical Pool Solution to Streaming Royalty Allocation — Music Tech Solutions

October 8, 2018 Comments off

“Sick of my money funding crap.” A Fan’s Tweet

Subscription services are one of the few secular trends in the current economy that is not yet reactive to trade wars or interest rates. Subscription services are found in many areas of the economy, but music drives some of the big ones like Spotify, Amazon and Apple.

But when fans find out that their money gets paid for music they never listen to performed by artists they would never listen to, it may give cord cutting a whole new meaning.  The ethical pool solution could give services a chance to get ahead of yet more negative fan reaction.

via Arithmetic on the Internet: The Ethical Pool Solution to Streaming Royalty Allocation — Music Tech Solutions

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