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Will Congress Bring Songwriters a Lump of Coal or Justice?

October 17, 2017 3 comments

It is axiomatic that as government expands, liberty contracts. Songwriters are among the most highly regulated workers in America, so on the continuum of liberty, guess where songwriters score? Most people are surprised by that unadulterated, and rather bleak, fact. After all, songwriters don’t make anything toxic or build in places they shouldn’t or dump chemicals in a waterway. Songwriters don’t have monopoly power. Songwriters don’t even get to set their own prices—the government largely does that in a very expensive and Kafka-esque process. They just write songs.

Not only are songwriters highly regulated workers and are forced by the government (or to use a term from political theory, “the Sovereign”) to bend a knee, the Sovereign has abdicated the enforcement of the laws protecting songwriters to the songwriters themselves except in rare criminal cases. Not only has the Sovereign failed to afford songwriters the same level of protection as the desert tortoise, the Sovereign actually requires songwriters to enforce the laws themselves. Sounds like a reality show.

So rather than getting even more government, songwriters are due for either getting the Sovereign out of their commercial lives, or if justice fails them yet again, at least getting the Sovereign to actually enforce the law.

Why is this important now? Because the Congress has conducted a “review” of the laws affecting songwriters and it’s possible that the Congress now is about to actually do something in the waning days of the current session of Congress. For songwriters, the holiday season is a good time to remember the most terrifying words in the English language: I’m from Washington and I’m here to help.

The Royalty that Time Forgot

The Sovereign compels songwriters to license their songs in two principal ways: The compulsory license for “mechanical” copies (Section 115 of the Copyright Act) and the rate courts (under a 1941 consent decree for ASCAP, the longest running consent decree in history, and a comparable one for BMI dating from 1964). The government set the mechanical royalty rate for the compulsory license at two cents per song per copy in 1909 and then forgot to raise it until 1976 when in its largesse, the Sovereign raised the rate to 2.75 cents per copy—inflation alone would have put the mechanical at 12 cents in 1976. That shadow of that injustice has dogged songwriters ever since and to this day.

Imagine for a moment if the Sovereign had set any other wage in 1909 and then forgotten to raise it for 67 years.

Today that same rate is 9.1 cents where it was set and forgotten in 2006—eleven years ago. So songwriters live in the shadow of that “minimum” statutory rate for which they never got relief from the Sovereign.

The Current Landscape

The main threats to songwriters from Washington come from one bill and the failed administration of two agencies: The Copyright Office and the Department of Justice. All these threats emanate from what is likely the largest lobbying cartel in history, the “MIC Coalition” an organization created for one purpose in my view: to crush songwriters once and for all. The MIC Coalition seems devoted to fixing prices for songwriters at zero or as close to zero as they can get them as far as I can tell.

The bill in Congress is the proposed Transparency in Music Licensing and Ownership Act (HR 3350) which is fully backed by the biggest of big businesses (MIC Coalition) to the detriment of the smallest of small businesses (songwriters). This legislation would impose yet another formality on songwriters by creating a massive database that would supersede the current copyright registration system for one purpose—denying songwriters the right to sue for statutory damages and attorneys fees in cases of copyright infringement. According to this legislation, if your song is not on the government’s list, then you can’t use the one big stick to drive compliance with the Sovereign’s own rules governing compulsory mechanical licenses.

Why is that? Because you are most likely to be suing a member of the MIC Coalition, or more precisely suing a member of one of the several trade association members of the MIC Coaltion—the DIgital Media Association (or “DiMA” in the logo above). The Digital Media Association is comprised of Amazon, YouTube, Apple and Spotify among others and has long been a stake in the side of the creative community. That’s right—one trade association member of the MIC Coalition represents three of the biggest corporations in the commercial history of the United States.

One alternative to statutory damages would be for the Department of Justice to assume a greater role in the enforcement of the copyright law. But the MIC Coalition has no intention of allowing that. No, no, no. The plan is to create a Gargantuan “gotcha” in order to take away statutory damages and attorneys fees as a right of any copyright owner to sue and replace it with….nothing.

Agency Failures

It is well to remember that the U.S. Copyright Office is a pre-New Deal legislative branch agency that has none of the civil or criminal enforcement powers we have come to associate with post-New Deal regulatory executive branch agencies. While the Copyright Office issues regulations, the Sovereign predominately leaves the enforcement of these rules to creators, publishers and labels to enforce at great expense. This is the one place that the Sovereign seems to want the market to work—the part where the Sovereign abdicates its primary purpose, that of protecting the people. Like I said, the desert tortoise fares better than the songwriter.

The Copyright Office does have power to affect the market by refusing or failing to act, however. For the last two years or so, the Copyright Office has permitted over 50 million and counting “address unknown” notices to be filed on compulsory song licenses using a backwater loophole of the Copyright Act. The loophole deems a song owner to be “unknown” if the owner’s contact information and song ownership is not available in the public records of the Copyright Office. This means that unless you have gone through the expensive and lengthy formality of registering with the Copyright Office for all your songs, you are “unknown”. If a cover recording of your song appears on a digital music service, then rather than track you down before using the song, the service can simply file—at great expense—an “address unknown” notice with the Copyright Office. This has resulted in approximately $5 million in filing fees to the Copyright Office to date according to an estimate from Paperchain.

And who is filing these notices and paying these fees? Google, Spotify, Amazon, iHeart, Pandora—all members of the MIC Coalition price fixing cartel. Think that’s a coincidence? Using this loophole, these corporate giants pay a zero royalty for their compulsory licenses. Hence, the cartel attempts to fix the price for songs at zero or as close to it as they can.

The Copyright Office permits these filings to occur and to my knowledge has raised no objection to it. They are unmovable on this point while they watch songwriters burn down. (I have a longer article on this “address unknown” issue here.)

The Department of Justice is currently engaged in a massive charade called “100% licensing”. This new and abrupt change in the way the DOJ interprets the ASCAP and BMI consent decrees was brought about under the auspices of a former outside lawyer for Google who was installed as a senior official in the antitrust division of the DOJ. What this interpretation means is that on co-written songs, the longstanding practice of each songwriter on a co-write administering their share of the song is thrown out the window. Instead, each songwriter is required to license 100% of the song, including their co-writer’s share. (Recall that Irving Azoff challenged Google by forming Global Music Rights and requiring a separate license for his writers who withdrew from the government-regulated PROs.)

The BMI rate court judge ruled against the DOJ—but the Sovereign is now appealing that ruling. The DOJ’s handling of the situation was so bad that songwriters actually sued the DOJ.

What is to be Done?

First—the DOJ should drop the appeal of the BMI rate court ruling against 100% licensing.  It’s a waste of time and creates substantial hostility among songwriters.

Second—the Copyright Office should stop accepting address unknown filings and refer the matter to the Congress to close the loophole. Digital services could also refuse to post recordings for which they have no publisher information, which is action most likely to produce unknown information from the market.

Most importantly—the Congress should not introduce yet another distortion in the market with some unicorn database that will never work.

As we approach the season of hope, it is well to echo what songwriters and publishers have told Congress for years: Songwriters need more liberty, not less.

MTP Podcast: Pallante Firing, DOJ Appeal of BMI 100% Licensing Ruling, and Artist Advocacy

November 18, 2016 Comments off

The Harder They Fall: Kafka 1 DOJ 0

September 16, 2016 Comments off

Details to follow, but the BMI rate court judge ruled against the Department of Justice on 100% licensing.  Here’s the important part of the ruling:

Nothing in the Consent Decree gives support to the Division’s views.

That’s what I call the ontological definition of losing.  You know…gloating is so unbecoming but sometimes it’s really hard not to.

Here’s the BMI press release:

BMI PREVAILS OVER DOJ IN CONSENT DECREE DISPUTE
NEW YORK – September 16, 2016 — Today, federal Judge Louis Stanton issued an order rejecting the US Department of Justice’s (DOJ) recent interpretation of the BMI consent decree, and concluded that BMI is free to engage in the fractional licensing of musical works.  This decision immediately followed oral arguments heard today from both parties. Judge Stanton’s ruling is now the controlling interpretation of the BMI consent decree, and a copy can be found HERE.
Below is a statement from BMI President & CEO Mike O’Neill on today’s decision:
“As we have said from the very beginning, we believed our consent decree allowed for the decades-long practice of fractional licensing and today we are gratified that Judge Stanton confirmed that belief.  Our mission has always been to protect the interests of our songwriters, composers and publishers, and we feel we have done just that.  Today’s decision is a victory for the entire music community.”
ASCAP CEO Beth Matthews said:
“This is terrific news for all of us in the songwriting community as we continue to work on modernizing the consent decrees to reflect the real world.”
And Mr. Kafka said, no shit.

A Guide to the Department of Justice Ruling on “100% Licensing”

September 12, 2016 Comments off

By Steve Winogradsky and Chris Castle, all rights reserved.

The recent ruling by the U.S. Department of Justice in United States v. Broadcast Music, Inc. and United States v. American Society of Composers, Authors and Publishers has left many songwriters, publishers, motion picture and television producers and, yes, even lawyers scratching their heads to understand the import of the ruling.  Not to mention Texas Governor Greg Abbott who has written to Attorney General Loretta Lynch asking her to reconsider the DOJ ruling.

The authors have summarized the ruling in the chart that follows.  The thing speaks for itself.

As you will see, the left hand column lists the various roles of a music creator (starting with “Songwriter”) or music user.  The rows describe some of the potential combinations of co-writers who will run afoul of the DOJ’s ruling.  The chart is followed by a list of descriptions of what rule will apply to your situation.

If you find yourself in the left hand column, scan across the rows to see if you fit in any of the co-writer positions.  Then look for which note applies to you in the list of notes below the chart.

For example, if you are an ASCAP songwriter who has co-written with a BMI songwriter (1st box in column and 6th row across), Note E applies to you.

This chart is based on the authors’ interpretations of the DOJ’s statement and is not dispositive or based on a court ruling as there has been none as of this writing.  Obviously, this is not meant as legal advice and you should not rely on it.  This is a complex area that has gotten even more complex, and you should consult with your own lawyers.

For further background, listen to the MTP podcast with Steve Winogradsky, David Lowery and Chris Castle and read Steve’s book Music Publishing–the Complete Guide.  And essential reading on the issue is that evergreen resource for legal research on takings and other government behavior in the digital age, The Trial, by Franz Kafka.

By popular demand, download a copy of this post with the chart here.

 

100% ASCAP or 100% BMI (single writer or all co-writers belong to the same PRO) 100% SESAC and/or GMR

(single writer or all co-writers belong to one of these PROs)

100% Foreign PRO/ASCAP Collects in US 100% Foreign PRO/BMI Collects in US Co-write

ASCAP & BMI

Co-write ASCAP or BMI with Other U.S. PRO Co-write foreign writers, where 1 is represented in the U.S. by either ASCAP or BMI and the 2nd is represented by a different PRO
Songwriter Note A, below Note B, below Note A, below Note A, below Note E, below Note E, below Note E, below
Publisher Note A, below Note B, below Note A, below Note A, below Note F, below Note F, below Note F, below
TV Producer Note C, below Note B, below. Note C, below Note C, below Note G, below Note G, below Note G, below
Film Producer Note C, below Note D, below Note C, below Note C, below Note G, below Note G, below Note G, below
Webcaster Note A, below Note B, below Note A, below Note A, below Note G, below Note G, below Note G, below
TV Broadcaster Note A, below Note B, below Note A, below Note A, below Note H, below Note H, below Note H, below
Radio broadcaster (terrestrial or satellite) Note A, below Note B, below Note A, below Note A, below Note I, below Note I, below Note I, below
Interactive Streaming (Subpart B&C) Note A, below Note B, below Note A, below Note A, below Note J, below Note J, below Note J, below

Notes

A. All songs may be licensed under either ASCAP or BMI’s blanket licenses

B. All songs may be licensed under both SESAC and GMR’s blanket licenses

C. Obtain synchronization licenses from each party for their respective shares, as is current custom and practice. All songs may be licensed under either ASCAP or BMI’s blanket licenses

D. Obtain synchronization licenses from each party for their respective shares, as is current custom and practice. All songs may be licensed under both SESAC and GMR’s blanket licenses

E. Songs may not be licensed under a blanket license from ASCAP or BMI unless the co-writers agree to have only one PRO administer a particular song, which may require restructuring their co-writer agreement and PROs setting up a structure for paying non-member writers. Depending on their songwriter/publisher agreements, writers could issue direct licenses to users upon request and collect performance royalties directly

F. Songs may not be licensed under a blanket license unless the co-publishers agree to have only one PRO administer a particular song, which may require restructuring their co-publishing agreement and PROs setting up a structure for paying non-member writers & publishers. Publishers could issue direct licenses to users upon request (which might include the writer’s share) and collect performance royalties directly

G. Obtain synchronization licenses from each party, as is current custom and practice. Songs may not be licensed under a blanket license unless the co-publishers agree to have only one PRO administer a particular song, which may require restructuring their co-publishing agreement. TV, film or webcaster producer could request directly performance licenses and pay parties directly. If no direct licenses are available and songs are not covered under the blanket license, producer may not include songs in their productions.

H. Songs may not be licensed under a blanket license unless the co-publishers agree to have only one PRO administer a particular song, which may require restructuring their co-publishing agreement. Broadcaster can either require TV & film producers to obtain direct licenses or broadcaster can obtain them directly from publishers (which would include the writer’s share of royalties. If no direct licenses are available and songs are not covered under the blanket license, producer may not include songs in their productions.

I. Songs may not be licensed under a blanket license unless the co-publishers agree to have only one PRO administer a particular song, which may require restructuring their co-publishing agreement. Broadcaster can obtain direct licenses from publishers (which would include the writer’s share of royalties). If no direct licenses are available and songs are not covered under the blanket license, broadcaster may not include these songs in their broadcasts.

J. Songs may not be licensed under a blanket license unless the co-publishers agree to have only one PRO administer a particular song, which may require restructuring their co-publishing agreement. Streaming service can obtain direct licenses from publishers (which would include the writer’s share of royalties). If no direct licenses are available and songs are not covered under the blanket license, broadcaster may not include these songs in their streaming service.

 

 

The MTP Podcast: Michelle Lewis and Kay Hanley of SONA and David Lowery on DOJ’s “Union Busting” Gambit Against Songwriters

August 17, 2016 1 comment

In an explosive conversation, Michelle Lewis and Kay Hanley talk with David Lowery and Chris Castle about Songwriters of North America, their experiences with lawyers from the Department of Justice Antitrust Division in the lead-up to the DOJ’s decision on “100% licensing,” and disingenuous behavior by the government’s lawyers that crossed the line into “union busting.”

Michelle and Kay

Michelle Lewis and Kay Hanley

—in an ex parte communication, Antitrust Division Section Chief David C. Kully advised a witness in an ongoing Justice Department inquiry to withdraw from ASCAP as a solution to 100% licensing, knowing she was represented by counsel.

—Justice Department lawyers chose to conduct meetings and telephonic communications with songwriters in which DOJ lawyers read aloud from proposed text of their 100% licensing statement in an effort to build a false consensus among songwriters and refused to provide a written draft of the statement for public comment.

hesse

—At the direction of former Google lawyer and DOJ official Renata B. Hesse, the lawyers also told SONA members that no transcripts existed of these telephonic communications.  If true, it is highly unusual for the Justice Department to engage in such contacts with interested parties without preserving a record of such meetings to be made available to the public and preserved as customary federal record keeping.  The lawyers’ statement is more likely another lie or obfuscation.

 

 

Show notes:

Links to documents we discuss on the MTP Podcast with Michelle Lewis, Kay Haneley, David Lowery on the DOJ’s new policy on 100% licensing.

Songwriters of North America Website

@wearesonala

The Trichordist

cranky

Podcast theme from “March of the Billionaires” written by Davey Faragher, Johnny Hickman, David Lowery & Michael Urbano, performed by Cracker from their 2014 album, Berkeley to Bakersfield used courtesy of Cracker.

Doc McStuffins

Department of Justice Statement on 100% Licensing

MIC Coalition Letter to DOJ Lawyer Renata Hesse

BMI’s Premotion Letter to Judge Stanton re Obama Justice Department Ruling on 100% Licensing

The Obama Administration Is Lame Ducking An Unworkable Burden on Songwriters: 4 Reasons Why It’s Bad Law by Chris Castle (Huffington Post)

Guest Post by Stephen Carlisle: ASCAP and the Terrible, Horrible, No Good, Very Bad DOJ Decision That’s Going to Create Chaos in the Music Industry

MusicTechPolicy Podcasts on SoundCloud

Subscribe to MusicTechPolicy Podcast on iTunes

Watch this Space: MTP Podcast on 100% Licensing with Michelle Lewis and Kay Hanley of Songwriters of North America, David Lowery, Chris Castle coming soon

August 12, 2016 Comments off

Next week we will continue discussion of the Department of Justice [sic] ruling on 100% licensing and partial withdrawals from the songwriter’s point of view.

Participants will be songwriters Michelle Lewis and Kay Hanley of Songwriters of North America, David Lowery and Chris Castle.

Watch this space for links to the podcast when it is completed, probably August 17/18.

In the meantime, you can subscribe to the MTP Podcast on iTunes or on Stitcher.  More recent podcasts can also be found on SoundCloud.

For background, check out the MTP podcast with Steve Winogradsky, David Lowery and Chris Castle on the technical aspects of the DOJ’s decision.

The MTP Podcast: The Consequences of DOJ’s New Rule on 100% Licensing with David Lowery, Steve Winogradsky and Chris Castle

August 10, 2016 1 comment

David Lowery, Steve Winogradsky and Chris Castle discuss the implications of the new rule by the U.S. Department of Justice re-interpreting the ASCAP and BMI consent decrees to require 100% licensing and prohibiting partial withdrawal.

David Lowery is the founder of Cracker and Camper van Beethoven, leading artist rights advocate and writer of The Trichordist blog, and teaches at the Terry School of Business at the University of Georgia at Athens.

Steve Winogradsky is a senior music lawyer and co-proprietor of the music services company Winogradsky/Sobel in Los Angeles.  Steve teaches at UCLA and Cal State Northridge and is the author of a leading legal handbook Music Publishing: The Complete Guide.

Chris Castle is founder of Christian L. Castle, Attorneys in Austin, Texas and edits the MusicTechPolicy blog.  He is formerly an adjunct professor at the University of Texas School of Law, and lectures at law schools, music schools and business schools in the U.S. and Canada.

“Where’d You Get the Music” performed by Guy Forsyth.

Subscribe to the MTP Podcasts on iTunes.

Topics Covered:

–The DOJ’s new rule in the ASCAP and BMI consent decrees.  Background link to DOJ statement and link to BMI’s “pre-motion” letter to BMI rate court judge outlining BMI’s objections to new DOJ rule.

–Will songwriters have to indemnify PROs for antitrust violations of failing to renegotiate licenses?

–Who bears the administrative costs?

–How DOJ’s new rule is actually anticompetitive and anticompetitive aspects of direct licensing.

–Is DOJ rule Google’s payback to Pharrell Williams refusing to license for YouTube?

–Devastating impact on music in television programs and motion pictures, “WKRP revisited”

–Google’s influence on the new rule through Renata B. Hesse, the new head of the Antitrust Division.  Background link: How Google Took Over the Justice Department Antitrust Division: Renata Hesse’s Timeline

–What is the plain English version of the new rule?

–How U.S. Copyright Office rejected DOJ’s position.  Background link to Copyright Office report rejecting DOJ’s position.

–DOJ requirement that songwriters renegotiate split agreements on every song registered with ASCAP and BMI

–Genre-based impact on hip hop and country music.

 

Next up:  Michelle Lewis and Kay Hanley of Songwriters of North America and David Lowery discuss DOJ ruling from songwriter’s perspective with Chris Castle.

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