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Alexa, where’s my credit?

Last year, I was honored to participate in a symposium on the subject of “moral rights” sponsored by the U.S. Copyright Office and the George Mason University School of Law’s Center for the Protection of Intellectual Property.  The symposium’s formal title was “Authors, Attribution and Integrity” and was at the request of Representative John J. Conyers, Jr., the Ranking Member of the House Judiciary Committee.

The topic of “attribution” or as it is more commonly thought of as “credit” is extraordinarily timely as it is on the minds of every music creator these days.  Why?  Digitial music services have routinely refused to display any credits beyond the most rudimentary identifiers for over a decade, and of course the pirate sites that Google drives a tsunami of traffic to are no better.

Marty Bandier raised this very issue at the NMPA Annual Meeting yesterday in New York according to Billboard:

“When I look today at the likes of Spotify, Apple Music and YouTube, I ask: where are the names of the songwriters,” said Bandier, who was presented with the organization’s Lifetime Service Award by Motown legend Smokey Robinson. “They are either not there or so hidden that you would have to be a special prosecutor, or perhaps The Washington Post – to find them. It is as if the songwriters do not exist and the only people who matter are the recording artists. However, without the songwriters coming up with the words and music in the first place, there would be nothing for the artist to record and no music to stream.”

Yet these services frequently rely on government mandated compulsory licenses (in Copyright Act Section 115), near compulsory licenses in the ASCAP and BMI consent decrees, and of course the sainted “safe harbor”, the DMCA notice and takedown being a kind of defacto license all its own particularly for independent artists and songwriters without the means to play.  They get the shakedown without the takedown.

According credit in connection with the services’ use of the Section 115 compulsory license is particularly timely as the services are filing tens of millions of NOIs under the “address unknown” loophole in the Copyright Office.  (Amazon, for example, has filed over 19 million “address unknown” NOIs alone as of January according to Christopher Sabec of Rightscorp.)

Conversely, however, since the predicate for filing an NOI under the address unknown loophole is that the copyright owner cannot be found in the public records of the Copyright Office, there must be even more millions of songs for which the services can and evidently do find a copyright registration.

So why aren’t the songwriter credits included in the service’s own metadata?  And is there no moral rights obligation in the U.S. to accord credit if the government is going to force a license?

Compulsory for thee but not for me

Moral rights are typically thought of as two separate rights: “attribution”, which is essentially the right to be credited as the author of the work, and “integrity” the author’s right to protect the work from any derogatory action “prejudicial to his honor or reputation”.  They can be found most relevantly for our purposes in the Berne Convention, the fundamental international copyright treaty to which the U.S. signed on to in 1988.  (Specifically Article 6bis.)

It is important to understand that the United States agreed to be subject to the international treaties protecting moral rights and that these rights are different and separate from copyright.  Copyright is thought of as an economic right, while moral rights continue even after an author may have transferred the copyright in the work.  Even so, both the moral rights of authors (and the material rights) are recognized as a human right by Article 27 of the Universal Declaration of Human Rights.  Or as Gloria Steinem said, artist rights are human rights.

The question then came up, why should the U.S. government require songwriters to license their works through the compulsory license without also requiring proper attribution consistent with America’s treaty obligations, good sense and common decency?

Why not indeed.

It is important to note that there are certain requirements relating to the names of the authors that are required by regulations for sending a “Notice of Intention” to use a song under the compulsory license which is what starts the formal compulsory license process.  And these services send NOIs by the bushel.  The required “Content” of an NOI is stated in the regulations is:

(d) Content.

(1) A Notice of Intention shall be clearly and prominently designated, at the head of the notice, as a “Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords,” and shall include a clear statement of the following information….

(v) For each nondramatic musical work embodied or intended to be embodied in phonorecords made under the compulsory license:

(A) The title of the nondramatic musical work;

(B) The name of the author or authors, if known;

(C) A copyright owner of the work, if known…

As I suspect based on the various lawsuits against Spotify over its apparent failures in the handling of these NOIs, the “if known” modifying “the name of the author or authors” is actually translated as “don’t bother” as most of the form NOIs don’t even have a box for that information.  This is a bit odd, because if the song is registered with the Copyright Office, the names of the authors most likely are listed in the registration and thus are “known.”

The question for moral rights purposes, of course, is not whether the music user sends the names of the authors in the NOI–presumably the copyright owner already knows who wrote the song.  The question is whether the music user displays the names of the authors of a song on their service, or better yet, is required to display those names so that the public knows.

This seems a very small price to pay when balanced against the extraordinarily cheap compulsory license that songwriters are required to grant with very little recourse against the music user for noncompliance.  (Short of an unimaginably expensive federal copyright lawsuit against a rich digital music service, of course.)  As the Spotify litigation is demonstrating, these services only have about a 75% compliance rate as it is, if that much.  The decision to accord credit to songwriters so that poor Alexa can answer the question “Hey Alexa, who wrote that song?” seems like a business decision that Amazon could take faster than the Whole Foods cashiers can file for unemployment after an Amazon takeover.

Hey Google!  Where’s My Credit?

It is pretty commonplace stuff for liner notes to include all of the creative credits.  So who is behind the times?  The artist releasing a physical disc with all of these credits, or the digital music service with its infinite shelf space that doesn’t bother with 95% of them–particularly the multinational media corporation dedicated to organizing the world’s information whether the world likes it or not?  And we’re not even broaching the topic of classical music, where the metadata and credits on digital services are dreadful.

In fairness, I have to point out that iTunes has made great strides in cleaning up this problem voluntarily, at least for songwriters.  Which goes to show it can be done if the service wants it done.

Digital services should care about whether the songwriters are fairly treated as ultimately songwriters create the one product the services have built their business on–songs.  There is an increasing level of distrust between songwriters and services, so proper attribution can help to restore trust.

But the main reason to accord credit is because “everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”  (Article 27, Universal Declaration of Human Rights.)

 

Big Tech’s Latest Artist Relations Debacle: Mass Filings of NOIs to Avoid Paying Statutory Royalties (Part 2) — Music Tech Solutions

September 30, 2016 Comments off

As noted in Part 1 of this post, Google, Amazon and others are filing what are reportedly “millions” of “address unknown” NOIs with the U.S. Copyright Office to avoid paying royalties on songs like “Fragile (Live” by Sting, even if they have licensed “Fragile” the album versions.  I fully expect that Pandora will eventually do the same for its on-demand service and Spotify is likely to do the same. This type of carpet bombing of NOIs takes the treatment of songwriters by online services to a new low.

via Big Tech’s Latest Artist Relations Debacle: Mass Filings of NOIs to Avoid Paying Statutory Royalties (Part 2) — Music Tech Solutions

“Successful” Licensing Models and the Opt Out: Music Licensing Study Comments

June 14, 2014 1 comment

The U.S. Copyright Office is conducting a “Music Licensing Study” as part of the government’s overall review of the U.S. copyright law with an eye to potentially overhauling the entire copyright system.  (See “The Next Great Copyright Act” by Maria Pallante, the head of the U.S. Copyright Office and the nominal go-to person for the U.S. Congress on copyright issues.)  The Copyright Office has received written public comments on questions posed in its Notice of Inquiry and is also holding public Roundtables in Nashville, Los Angeles and New York  (in that order).

The speakers at the Roundtables are by invitation only although the roundtables themselves are open to the public.  We understand that the Roundtable participants will be invited to submit written reply comments at some point after the conclusion of the last Roundtable.  The Nashville Roundtable is over and the Los Angeles Roundtable begins on Monday.

I filed comments with the Copyright Office and this post is the second of a three part post focusing on each of the three points I made in my comments (see Songwriter Liberty and Audit Rights Under Section 115).  This post proposes allowing songwriters to “opt out” of the compulsory mechanical license required under Section 115 of the Copyright Act.  While many are advocating abandoning the compulsory license altogether, I not only don’t think that goal is politically achievable without a consensus among songwriters as well as a very clear understanding of what comes after it, I also don’t think it’s necessary to go that far.

A middle ground is the “opt out,” so that those who wish to take advantage of some or all of the provisions of the compulsory license may do so, while those who want to negotiate a direct deal can reserve those rights to themselves.

One of the questions on the Copyright Office Roundtable Agenda is a discussion of successful licensing models.  I don’t see how anyone can defend the compulsory license in Section 115 as a “successful” model (particularly compared to the very successful compulsory license for sound recordings).  First, I can’t imagine how a licensing process could be “successful” if it does not result in transparency and robust record keeping. As I discussed in the post on creating an audit right, not only does the government not require transparency, the government actually mandates opacity.  I guess the only thing worse than piracy is accuracy.

In current practice, the compulsory license in Section 115 allows users of the license to blast out a paper trail of hundreds of thousands of notices of intent to use.  The practice of of “carpet bombing” NOIs simply results in an argument to insulate users from claims for at least intentional infringement–unless a songwriter can successfully argue the the entire exercise was just a ruse.  That would require a very well-funded songwriter plaintiff.  And no right to audit is just the cherry on top.

As David Lowery noted in his comment to the Copyright Office, the government forces songwriters to continue to license to users who don’t comply with the requirements of the license, may not pay on time, and may not pay correctly, even if the songwriter sends a termination notice and even sues the user.  The government has no feedback loop to determine if users of the license deserve to be able to keep using the government mandated compulsory.  (See Credit Check: Serial Bad Actors Should Lose Access to Compulsory Licenses.)  As David said:

In  an arm’s  length  direct  license,  I  certainly  would  not  choose  to  make a  new  license  for  my  songs  with someone  who  didn’t  respect  my  rights  or  honor  the  terms  of  my  agreement  in  the  past — particularly someone  who  owed  me  money.    Why  should  a  compulsory  license  be any  different?

These problems affect the big guys and the little guys alike–this is why I think it is necessary to allow songwriters (and if songwriters assign the opt out right, their publishers) to opt out of the entire charade.  Some may object to the opt out as making it more complicated for users to operate, but as we have seen with the Amazon service in the last week, it is not necessary for even a major service like Amazon to have deals in place with all publishers, particularly when the service offers onerous and subpar terms.

Here is part 2 of my filing:

2. Opting Out of the Compulsory License Under Section 115

A Nashville hit songwriter and session musician told me long ago that he was mystified. “Why can I get double scale when I play on the hits, but I can’t get double stat when I write the hits?” An excellent question.

Nearly 10 years ago, former Register of Copyright Marybeth Peters told the Congress that abandoning the compulsory may be an idea whose time has come:

[T]oday all…countries, except for the United States and Australia, have eliminated such compulsory licenses from their copyright laws. A fundamental principle of copyright is that the author should have the exclusive right to exploit the market for his work, except where this would conflict with the public interest. A compulsory license limits an author’s bargaining power. It deprives the author of determining with whom and on what terms he wishes to do business. In fact, the Register of Copyrights’ 1961 Report on the General Revision of the U.S. Copyright Law favored elimination of this compulsory license.  I believe that the time has come to again consider whether there is really a need for such a compulsory license. Since most of the world functions without such a license, why should one be needed in the United States?

If the Congress were to abandon the compulsory license, this would potentially derail over 100 years of commerce that relies on that structure. I think that ultimately this is the direction that the Congress should steer. However, short of abandoning the compulsory license altogether there is a middle ground and potential fix that would be relatively easy (emphasis on “relatively”).

Why keep Section 115? Just as we have uniform statutes like the Uniform Partnership Act or Uniform Commercial Code, there is a value to having certain terms of a mechanical license set in the Copyright Act. The standard negotiated mechanical license is a private contract that typically starts with “this license incorporates by reference the mechanical license in the Copyright Act except as set forth herein” or words of similar import.

The problem is not that there is a uniform set of mechanical license terms that copyright licensees and licensors can easily reference. The problem is that the terms are compulsory and essentially deny songwriters the ability to bargain—as my Nashville friend bemoaned. This is especially true of the so-called “minimum” statutory rate. I respectfully suggest that in practice the “minimum” rate is essentially a maximum primarily because the songwriter lacks the ability to opt out and withhold their song from the market. Why would any licensee ever pay more than the “minimum” if they are not compelled to accept a higher rate?

This is yet another problem plaguing songwriters. One fix would be to establish a decision point that would allow songwriters either to opt in to the existing statutory license terms or to opt out of it. My view is that the better route might be to phase in an “opt out” so the newly free market could develop more gradually, and implement the “opt in” a few years after the market got used to the idea of the “opt out.”

Either way, the change would probably best be implemented prospectively–there are a host of statutory licenses in use, either stand alone or private agreements granted by artist-songwriters in record deals that rely on the statutory license. Simply eliminating these existing licenses entirely would likely be extraordinarily disruptive and maintaining an optional “uniform mechanical license” in the Copyright Act seems to make good commercial sense.

How would this “opt out” procedure work as a practical matter? A songwriter could communicate her decision to opt out of the statutory license in the document repository of the Copyright Office.

As you know, the U.S. Copyright Office has a well-developed document repository that has been in place for decades. For a modest fee, anyone can register a document and “to encourage document recordation, the law confers certain legal advantages, including priority between conflicting transfers and “constructive notice”…if certain requirements are met.”

So an “opt out” notice could easily be recorded in the Copyright Office and take advantage of the existing jurisprudence around document recording. The services that often “carpet bomb” notifications of intention to use under Section 115 could just as easily look up the songwriter or work in the Copyright Office recordation database to determine if the particular work is available for compulsory licensing and act accordingly.

The “opt out” notice could be very simple in language and structure and its format could be established by equally simple statutory language. Songwriters could assign these rights to their publishers or administrators.

While the U.S. may eventually abandon compulsory licensing altogether as Register Peters suggested a decade ago, a serviceable repair to the system may be an “opt out” structure. This would allow songwriters who were satisfied with the status quo to continue with the compulsory and those who were not could recover their bargaining rights. In the absence of a recorded “opt out” notice, a service or record company could rely on the compulsory license and rate.

If the goal of the statutory license is to approximate a market rate, an “opt out” system will provide many good data points for a rate setting proceeding.

I respectfully suggest that under this structure, there would not be a gap in rights, songwriters and publishers would be able to bargain freely and the market would produce sufficient information for licensees to know what rights were available and who to pay.

Five Things Congress Could Do for Music Creators That Wouldn’t Cost the Taxpayer a Dime Part 3: Create an Audit Right for Songwriters

September 3, 2013 3 comments

[This post originally appeared in the Huffington Post]

Once a song is distributed to the public with the permission of the owner of the copyright in the song, the U.S. Copyright Act requires songwriters to license songs for reproduction and distribution under a “compulsory license.” This license is typically called a “mechanical license” because it only covers the “mechanical reproduction” of the song and does not, for example, include the right to use the song in a YouTube video or a motion picture, create a mashup or reprint the lyrics of the song.

When the Congress first developed the compulsory mechanical license in 1909, the concern was that “the right to make mechanical reproductions of musical works might become a monopoly controlled by a single company.” This monopoly never came to pass, and given the fragmentation in music licensing in the current environment, is unlikely to ever come about.

The user of the compulsory license (or “licensee”) has to comply with the rules for these licenses — including an obligation to account and pay royalties. If the licensee fails to comply, then the songwriter can in theory terminate the license, although making that termination stick usually requires an expensive copyright infringement lawsuit.

The bare compulsory license was not widely used before the advent of Internet music services — and then became something of a weapon of its own — music services bought into the “long tail” theory and tried to clear millions of songs overnight by massive mailings of notices of their intention to use the work. Given that songs are frequently co-written, this required sending huge numbers of notices. Behind each notice — supposedly — is a royalty account and statement of usage as required by law.

So if you’re following, songwriters suddenly were required to license to services they did not ask to be included in (unlike artists recording “cuts” the songwriter solicited), and only a limited paper trail to confirm the accuracy of royalty payments.

Trust, But Don’t Verify

Intuitively, you are probably thinking that songwriters would have the right to make the licensee provide evidence to demonstrate if this morass actually resulted in correct payments, right? Checking the evidence is called a “royalty compliance examination” or an “audit”. Since there is no “auditor general” of compulsory licenses appointed by the Congress, it would seem strange to believe that the intent of Congress was to codify the moral hazard of allowing the person doing the paying to examine their own books.

And yet, in the current practice, the fox is squarely among the chickens. This is because the government requires that the licensee merely “certifies” their own statements (i.e., promises the statements are true). This certification is done on a monthly basis by an officer of the licensee and annually by the licensee’s CPA. And songwriters are told “trust me.”

The Industry Standard

It’s safe to say that this certification process is drastically different than any industry-standard mechanical license. There is a long history of audits in the music business — the State of California even passed legislation in 2004 protecting the artist’s right to audit record companies. But when it comes to songwriters, the federal government forces songwriters to take the compulsory license, tells them the royalty rate they are to be paid, but does not permit songwriters to audit the licensee.

Instead, the government permits the licensee to “certify” their own statements (i.e., promises the statements are true). This certification is done on a monthly basis by an officer of the licensee and annually by the licensee’s CPA. And songwriters are told “trust me.”

The Blanche Dubois Approach to Royalty Accounting

As Blanche Dubois said in A Streetcar Named Desire, “I have always depended on the kindness of strangers” and until the Congress updates this certification business model, that’s exactly what songwriters are expected to do, too.

The compulsory license requires certification by the licensee on a monthly basis and by a CPA on an annual basis.

An officer of the licensee is to include this certification oath with the songwriter’s monthly statement:

“I certify that I have examined this Monthly Statement of Account and that all statements of fact contained herein are true, complete, and correct to the best of my knowledge, information, and belief, and are made in good faith.”

The Annual Statement of Account requires this certification by a Certified Public Accountant for the licensee:

“We have examined the attached “Annual Statement of Account Under Compulsory License For Making and Distributing Phonorecords” for the fiscal year ended (date) of (name of the compulsory licensee) applicable to phonorecords embodying (title or titles of nondramatic musical works embodied in phonorecords made under the compulsory license) made under the provisions of section 115 of title 17 of the United States Code, as amended by Pub. L. 94-553, and applicable regulations of the United States Copyright Office. Our examination was made in accordance with generally accepted auditing standards and accordingly, included tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.”

Do you think that the CPA has in fact examined millions of annual statements? Does the CPA’s risk manager or insurance carrier know that the CPA is certifying to a multitude of songwriters that the CPA has actually “examined the attached “Annual Statement of Account…” when it is highly unlikely that the CPA has done any such thing?

Congress crafted this language in a much simpler time. Remember — there are now millions of these statements every month. Do you think that the certification oath could possibly be true every time? Some of the time? How would you find out?

Certification is a One-Way Street

This certification runs only one way — the government only offers licensees and CPAs the opportunity to certify that the books are correct, not that they are incorrect. Under current practice, if a company or CPA is squishy about how accurate their books and records are, songwriters typically get no certifications at all and just an uncertified royalty statement if they are lucky.

What conclusion should be drawn from a failure to certify? Why not provide an alternative certification — that the licensee’s books and records cannot be certified. While it may be unrealistic to think that companies would ever disqualify their own books, it is not unrealistic to think that a CPA might choose this option on the annual statement of account given the CPA’s licensing responsibilities.

And it is definitely not unrealistic to think that the company’s books would be more likely to be accurate if the company knew that this disqualification option were available to the CPA. But the simplest thing Congress could do is to create an audit right for the compulsory license.

Let’s Keep it Simple

Chairman Goodlatte has said he intends to update the Copyright Act to bring it into line with the digital age. The Congress already allowed audits for the compulsory license for sound recordings and the webcasting royalty established under Section 114. This mechanism that Congress created in the recent past is working quite well.

Chairman Goodlatte could borrow heavily from the audit rights for the Section 114 compulsory license for sound recordings, and allow songwriters to conduct group audits under Section 115 to avoid a multiplicity of audits.

These changes would bring help bring song licensing into the 21st century and allow songwriters to enjoy greater confidence that they are being paid properly. Creating an audit right under Section 115 compulsory licenses would allow market forces to work to align the incentives toward better payments for songwriters.

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