Posts Tagged ‘Facebook’

Universal Leads Royalty Deadbeat Facebook Out of the Cold With Precedent Setting Licensing Deal

December 21, 2017 1 comment

This is what happens when you stick to your property rights–Bloomberg reports that Facebook, aka royalty deadbeat, has signed a multiyear licensing deal with Universal Music Group:

Facebook Inc. signed a multiyear licensing deal that lets the social network carry songs and artists from the world’s biggest record label, Universal Music Group, across its platforms.

The deal announced Thursday solves a long-running dispute, with Facebook agreeing to compensate the company and artists including Taylor Swift when users post videos that include copyrighted material. The accord includes Facebook, Instagram and Oculus virtual-reality technology, with Universal saying the company would become a “significant contributor” to the industry.

The deal sets Facebook up as a more direct competitor to Google’s YouTube, the most popular destination online for listening to music. Both technology giants are battling for a bigger share of people’s time, and music rights could help Facebook give users new ways to engage with its services.

The deal appears to cover UGC and no doubt includes both a settlement for the past (“solves a long-running dispute”) as well as a go forward license.  There may well be more settlements and licenses in the offing, but one fact is crystal clear–Universal was the only one of the rights owners that had the guts to stand up to Facebook by bearing down on sending the DMCA notices that allows Facebook to hoist their users as human shields from infringement claims.

As many have noted, Universal’s enforcement team did the thankless yeoman’s work that helped to remind Facebook that not only are there enforcable property rights online and offline, but Facebook would actually do much better for its stockholders and users by cooperating with artists, songwriters, labels and publishers.  It’s possible that Facebook is coming in from the cold and putting aside all that Lessig claptrap that is soooo 1999.   Claptrap that has only resulted in losses as far as the eye can see, not to mention endless hostility and gasoline known as Lyor Fully Leaded.

Credit where it’s due, it must be said that unlike Google or Spotify, Facebook has–so far–avoided the scorched earth litigation that is the hallmark of Silicon Valley’s relationship with artists and songwriters.  That decision had nothing to do with the negotiation team and everything to do with a corporate policy.  So we will see if Facebook is for real.

It also must be said that the Universal deal shows the importance and power of statutory damages.  The only leverage that anyone has against massive infringing by multnational technology companies is the power of statutory damages and attorneys fees provided in the U.S. Copyright Act.  Not everyone has Universal’s heft–class actions based on statutory damages is about the only route that many artists, songwriters, labels and publishers have against systematic and intentional knowing infringers like Facebook.

MusicTechPolicy Monthly Newsletter is out! Subscribe here!

November 11, 2017 Comments off

The latest email only MusicTechPolicy Monthly newsletter is out!  Sign up by subscribing to this blog.  This month we focus on Spotify board member Sean Parker’s revelations about how the social platforms like Facebook, YouTube, Twitter, Instagram are all consciously based on addiction modalities.  Parker’s revelations are confirmed by Dr. Adam Alter’s shocking book “Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked

Wyden Tobacco

Chris argues that this is national crisis worthy of a Congressional hearing like the tobacco industry’s cultivated addictive powers conducted by consumer hero Senator Ron Wyden. Senator Wyden conducted one of the most famous hearings in history when he asked the CEOs of the tobacco companies to state whether nicotine was addictive.

We also take a look at the tragic humor of Sen. Al Franken’s examination of Facebook, Twitter and Google regarding their inexplicable participation in the 2016 U.S. Presidential election.

Sheryl Sandberg is shocked, shocked that there is bad behavior on Facebook

September 24, 2017 Comments off

This has been a bad few weeks for two out of the four members of the FANG cartel–Facebook and Google.  Their problems can all be summed up in a post by former Googler and current Facebook COO Sheryl Sandberg–yes, that Sheryl Sandberg, who is a leading contender for beatification by the Congregation for the Causes of the Commercial Saints and former defendant in the Google shareholder derivative suit over Google’s violation of the Controlled Substances Act.

According to Ms. Sandberg:

Last week we temporarily disabled some of our ads tools following news reports that slurs or other offensive language could be used as targeting criteria for advertising. If someone self-identified as a ‘Jew-hater’ or said they studied ‘how to burn Jews’ in their profile, those terms showed up as potential targeting options for advertisers.

Seeing those words made me disgusted and disappointed – disgusted by these sentiments and disappointed that our systems allowed this.

Could the problem be that Facebook’s “systems” are designed to “allow this”?  Just like Google’s “systems” were designed and optimized to allow selling advertising keywords for pirated recordings derived from artist names?

Luke Sample

And as was demonstrated by the FBI and Department of Justice sting operation, Google perfected selling search terms for illegal drugs?  As Wired reported in 2013, Sheryl Sandberg is no stranger to the issue of state of the art “systems” mysteriously allowing bad acts:

At one point during a meeting with [then inmate and former online illegal drug impresario David] Whitaker and his lawyer, the Feds asked him how he had grown his online enterprise. Whitaker’s answer was immediate: He had used Google AdWords. In fact, he claimed, Google employees had actively helped him advertise his business, even though he had made no attempt to hide its illegal nature. It was reasonable to assume, Whitaker said, that Google was helping other rogue Internet pharmacies too.

If true, this would be a bombshell. This was Google, after all. Since its founding, the search giant had prided itself on being a different kind of corporation, the “don’t be evil” company. And for almost as long, its open-to-all-comers ad policy had come under scrutiny. Online pharmacies were a particular sticking point; in 2003, three separate congressional committees initiated inquiries into the matter.

On July 22, 2004, a month before Google went public [and she cashed out big time], Sheryl Sandberg—at the time Google vice president of global online sales and operations—testified before the Senate Permanent Subcommittee on Investigations. Legislators had proposed two bills that would regulate online pharmaceutical sales, but Sandberg argued that the measures would be unduly burdensome. [Kind of like stopping child sex trafficking–too much trouble for elites in the Internet Associations membership.] She said that Google employed a third-party verification service to vet online pharmacies. She also described Google’s own automated monitoring system and the creation of a team of Google employees dedicated to enforcing all of the company’s pharmaceutical ad policies. “Google has taken strong voluntarily [sic] measures—going beyond existing legal requirements—to ensure that our advertising services protect our users by providing access to safe and reliable information,” she testified. Neither bill made it out of committee. (Sandberg, now Facebook’s chief operating officer, declined to comment or be interviewed for this story.) [I bet.]

However–at the same time that Ms. Sandberg’s people were crowing about their verification service, other Googlers were selling advertising keywords to criminals selling illegal drugs into the United States.  Google subsequently negotiated a non-prosecution agreement (kind of like a plea bargain) pursuant to which Google paid a $500,000,000 fine, evidently with the approval of Eric Holder, then Attorney General of the United States.  Google was represented in that deal by one Jamie Gorelick (Amazon board member and former Deputy Attorney General in the Clinton Administration, replaced by…Eric Holder.  Ms. Gorelick is employed by Washington DC swamp powerhouse law firm Wilmer Cutler Pickering Hale (former employer of Senator Elizabeth Warren).).

As Google (referred to as “the Company”) expressly acknowledged in the non prosecution agreement (which you can read here):

Non Prosecution Excerpt

So–Sheryl Sandberg has a very great deal of experience going back well over a decade with big rich Silicon Valley companies profiting from debased behavior.  Some might argue profits that she enjoyed herself in the form of stock awards, salaries and cash bonuses.

This is no doubt one reason why she was sued as a defendant in the stockholder derivative suit against Google (read the complaint here) that arose out of the $500,000,000 payment of the stockholders money to keep Google executives like her from being prosecuted criminally and potentially going to prison for facilitating the sale of illegal drugs to kids among other people.  (See also The Ryan Haight Online Pharmacy Consumer Protection Act of 2007, legislation sponsored by Senator Diane Feinstein and then-Senator now Attorney General Jeff Sessions.)

Remember–there’s no public evidence that I can find (and I’ve looked) that any of this bad behavior ever cost her a penny of her own money.

Shareholder Suite

Whether it’s drugs, hate groups, human trafficking or the Russians, Sheryl Sandberg has made lots of money exploiting human misery if you ask me.  I don’t quite see how she couldn’t have.

Given her carefully sanitized checkered past, should we accept the wringing of hands, wailing and mourning and rending of garments by an unimaginably rich power player like Ms. Sandberg?

I think not.  But that doesn’t mean there isn’t a different law for the Silicon Valley elites than there is for the hoi polloi.  Trust me, Sheryl Sandberg will never be held to account and will be able to buy her way out of prosecution yet again probably using the stockholders’ money yet again.

The Importance of Credits

September 4, 2017 Comments off

Another outstanding podcast from Portia Sabin’s Future of What podcast, this time with the music credits services Jaxsta and Discogs on the importance of credits.  Credits are also known as the moral right of attribution, currently under review at the U.S. Copyright Office.  Yet another artist rights area where the U.S. lags behind the rest of the world.  (See also Robert Levine’s recent post on Billboard about Auddly, a different and also important approach to the credit issue and my previous post on how Facebook sell artist names as keywords without rights.)


If $500 million is “nonmaterial” then why does royalty deadbeat Facebook refuse to pay artists and songwriters?

February 8, 2017 Comments off

MTP readers may have seen that Facebook’s Oculus virtual reality division lost a copyright infringement case in a $500,000,000 jury verdict for a variety of claims.  While that seems like a lot of money to me, the verdict was far short of what was at stake. What is interesting about the case for our purposes was not the details (covered by the Hollywood Reporter and a bunch of other outlets if you want to read up on it).

What is interesting is how Facebook reacted to having to pay $500,000,000 for rights.  Particularly since Facebook currently pays zero for music.

According to the Hollywood Reporter:

Facebook COO Sheryl Sandberg on Wednesday told CNBC, “The verdict is non-material to our business.”

A $500,000,000 rights payment is “non-material to our business.”  This really is how the other half lives.  Without going down the rabbit hole on materiality (see the SEC statement on materiality in financial statements here), let us take Ms. Sandberg’s rather breathtaking statement as true, or at least truthy.

What Ms. Sandberg suggests to me is that any rights payment that Facebook might make for songwriters and artists is also likely to me “non-material” to their business, even if that payment were hundreds of millions annually on an industry-wide basis.

It also makes you wonder why a public company for whom a $500,000,000 copyright infringement verdict is “non-material” prefer to be unlicensed royalty deadbeats rather than pay their fair share?  People who have enriched themselves in the public markets that protect their property rights in securities transactions just as the law protects intellectual property–as demonstrated by the Oculus verdict.

Who are these people?

Target Facebook: Is the Social Network Joining the “DMCA License” Group

May 12, 2016 Comments off

Americans are freedom loving people and nothing says freedom like getting away with it.

From Long, Long Time by Guy Forsyth

Facebook is unlicensed.  Let’s be clear about that.  We all know that Facebook profits from music, and some of us know that Facebook not only profits in a general sense from having music on their platform, but they actually sell the artist’s name.

Here’s the evidence from a screen capture of the Facebook “Boost” interface that sells you the names of a seemingly endless number of artists through the “Edit Audience” button:

Facebook Artist Names


According to the blame deflectors at Complete Music Update, Facebook is developing its own version of YouTube’s highly porous ContentID file identification tool:

[I]f Facebook is going to rely on those safe harbours…it needs a decent takedown system that allows content creators to control their videos as third parties upload them. The social network has been developing this for a while now, and yesterday formally unveiled Rights Manager, which is basically its version of YouTube’s rights management set-up Content ID.

So there it is–Facebook is joining the “DMCA license” crowd–meaning that by relying on the hopelessly out of date “notice and shakedown” provisions of the U.S. and European copyright law, they help themselves to free “content”.  All the while selling advertising keywords of the names of artists who they don’t pay.

Because that’s the tricky bit–Facebook is 100% unlicensed.

The important bit that is currently missing, however, is the monetisation option that is core to Content ID – ie, if someone uploads your video and has a decent following that might watch it, as a rights owner you can let the video stay but take a cut of any ad revenue subsequent streams generate. Which means Facebook is basically ensuring itself safe harbour protection here – safe harbour law rewrites permitting – while not actually offering a new revenue stream to rights owners in return.

Let’s not perpetuate a myth that CMU perpetuates in this post–that taking a rev share actually means anything if it is coupled with the cost of monitoring Facebook’s billion-plus users 24/7.  Right now, Facebook can use its DMCA license coupled with its market power to depress the desire of the few rights owners who can afford it to send takedown notices in the first place.

That means anyone who doesn’t accept the shakedown is immediately losing money.  And it still doesn’t explain why Facebook should be able to sell artists names as keywords, which is misappropriation and a violation of moral rights. Neither of which are protected by the safe harbor.

Here’s another myth about ContentID–it doesn’t work very well, can be defeated by pitch bending (which is why YouTube has speed controls on their player) and is only available to the elite.  Compared to the massive volume of videos uploaded to YouTube, a very, very small percentage of copyright owners have direct access to Content ID.  According to YouTube:

YouTube only grants Content ID to copyright owners who meet specific criteria. To be approved, they must own exclusive rights to a substantial body of original material that is frequently uploaded by the YouTube user community.

So if this is how Facebook is going to roll, that will be yet another disaster.

From the songwriter perspective, if there are settlements to be done or class actions to be brought against unlicensed uses of music, Facebook has to be on the list.  It’s really just the Wild West over there, if the Wild Bill Hickok lived in a Harvard dorm room.

If we can’t get paid fairly by the so-called “legitimate” companies, then how are they different than Megavideo?

The truth is that Facebook is simply using its vast market power to get away with it.

And that’s also known as…well, something you’d normally like some affection while experiencing.

So, Mark Zuckerberg, give us a kiss then.

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