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The UnitedMasters, the Latest Tone-deaf Artist Exploitation Scam from Silicon Valley

November 24, 2017 2 comments

Yes, they really did brand it the “United Masters”, and no, that’s not a subplot out of Game of Thrones and no, it’s not the MIC Coalition price fixing cartel.

You may have heard about the United Masters, the label services company that Google along with the Silicon Valley VC Andreessen-Horowitz is backing.  “United Masters” which is designed to “upend record companies,” or so the story goes.

The launch was covered extensively in TechCrunch and I confess I stopped reading after this:

UnitedMasters is ready to give musicians an alternative to exploitative record label deals. Artists pay UnitedMasters a competitive rate to distribute their music across the internet from Spotify to YouTube to SoundCloud, and they [meaning the United Masters and the artists] split the royalties while the artist retains the rights to the master recordings.

Ah yes.  The artists take all the risk and on top of that payment they split royalties with the “United Masters”.  Sounds like those notoriously fair venture capital deals, right?  They just left out the warrant coverage and 3x liquidation preference.

Tunecore pioneered shifting 100% of the distribution risk from the distributor to the artist by requiring an upfront payment from their distributed artists.  Tunecore did not have the additional brass to take an additional revenue share from the artist’s earnings on top of what the United Masters call a “competitive rate”.

The narrative was something like why should you share your future earnings with your distributor when you can pay Tunecore upfront?  And, in fairness, cap your distribution fees.  That deal works out better for artists who sell enough to drive that upfront payment below 20% or less of their earnings (usually artists who sell enough to make a tidy profit but not enough to justify an advance from a distributor).  However, for artists who don’t sell that much, it drives the distribution fee well over 20% of earnings and, I would imagine, in some cases 100% of earnings.

But even so, the fee-based distribution model didn’t ALSO take a percentage of revenue which is evidently the plan with the UnitedMasters.  Even though we don’t know exactly what the United Masters terms are yet, we can still find the deal structure nauseating.

Good news:  VC Horowitz brought in a tech team to the UnitedMasters party!  Yay!  Because, you know–it’s all about the data, right?

[W]e recruited a phenomenal technology team with members from distinguished companies such as Facebook, Dropbox, and Pandora. I think that the UnitedMasters engineering team is one of the best in the technology industry, but you can judge for yourself.

This from the VC firm that invested in Rap Genius, or as Marc Andreesson, the partner of Mr. Horowitz reportedly called Rap Genius, the “Talmud of the Internet.”  So these are people who have a very positive view of themselves and who have the answers for how to run the music business.

So naturally, such people would reach out to royalty deadbeats Facebook and Dropbox and Pandora, who most songwriters know as their alter ego–“Plaintiff”.  Pandora who screwed the legends of R&B out of performance royalties in their other alter ego–“Defendant”.

Now imagine this phone call–your band reaches out to a talent buyer in a town you’ve never been to before and you tell that buyer that they should give your band a Friday night because—the United Masters have divined from the data that you’d draw.

Right.

There’s a reason why Amazon is getting out of the ticketing business.

As usual, Google misses the point entirely.  Robert Levine observes in Billboard that the main thing that record companies do that the UnitedMasters evidently will not do is actually write a check to invest in artists:

So far, startups haven’t really replaced record labels because none of them really do what labels do. Almost two decades ago, Napster said that it would replace labels by distributing music, but labels aren’t exactly in the distribution business — truck drivers are. (No one gets invited to cool parties by disrupting long-haul trucking.) Several startups help artists market directly to fans, which is becoming an important part of the music business, but labels never really did that — they’ve always sold music to retailers. From a business perspective, labels invest in artists — which very few technology companies have shown any interest in doing. Because it’s a risky business.

And that’s what labels really do for artists — they amortize risk.

And while you think about that, have a listen to the incomparable Marc Ribot and Ceramic Dog performing his ode to the data lords, “Masters of the Internet”.  I don’t think that was quite the meaning of “masters” that the tone deaf “United Masters” and the data lords intended.

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.)

 

@RobertBLevine_: Federal ‘Transparency’ Bill Endangers Songwriters’ Leverage for Getting Paid

August 12, 2017 Comments off

On the surface, at least, the “Transparency in Music Licensing Ownership Act,” introduced in the House of Representatives on July 20 by Congressman Jim Sensenbrenner (R-WI), seems like a copyright bill that could help untangle the online music business….but the devil is in the details.

via @RobertBLevine_: Federal ‘Transparency’ Bill Endangers Songwriters’ Leverage for Getting Paid — Artist Rights Watch

Author @RobertBLevine_ at the Global Forum during Canadian Music Week

June 28, 2012 Comments off

An excellent presentation by Robert Levine (author of the important book, Free Ride) on the failure of the promise of the Internet and what is to be done.  Robert spoke at this year’s Global Forum hosted by Music Canada during Canadian Music Week.

See also: The Wrong Flow: Rightsflow wants you to fix their data

Book Review: “Free Ride: How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back” by Robert Levine

March 22, 2012 Comments off

There is something comforting about hearing the Speaker of the House of Commons crying “Order, order” and having the MPs actually heed that instruction.  It’s particularly comforting in light of the tragic wilding that has been occurring in the ancient city of London, the font of British civility and civilization.  But the rioting in London is really the stuff of the Internet made flesh, a virtual tableau come to life.  So this is as good a time as any to mention Robert Levine’s book, Free Ride, currently the subject of the Two Minutes Hate on the Internet.  Yet the book is, as Bill Keller, former executive editor of the New York Times, put it recently, “a wonderfully clear-eyed account of this colossal struggle over the future of our cultural lives.”

Let the Wilding Rumpus Start

Levine has written a book that is a must read for all policy makers and indeed all professional creators.  Free Ride is an excellent survey of the current state of play online but also examines the cultural underpinnings of the principle excuses (and in some cases, affirmative defenses) developed by the execuprofs like Lessig and the Berkman Center.  Not surprisingly, the wilding rumpus has begun online which is what happens when you poke the sacred cows.

(“Execuprofs” are those who are ostensibly employed by academic institutions, but whose work is primarily directed at benefiting the corporations who contribute money to their schools or causes.  If these academics were actually executives at the corporations who benefit from their work, they would not be able to proselytize as credibly.  As long as they keep the corporate contributions hidden in plain sight–or hidden–they can continue in this netherworld pretty successfully.  But they are neither executives (no P/L responsiblity) nor professors (conflicts).)

Review of Policy Based Academic Studies

Levine’s book takes a very even-handed look at topics that are generally spun so hard by execuprofs from big institutions like Stanford and Harvard that it’s often hard for policy makers to know what reality is.  Even the U.S. Government Accountability Office has been taken in by some shadowy “experts” who the GAO refuses to name in support of its conclusion that the U.S. government must take into account the positive effects of crime in considering intellectual property policies.  Levine reviews some of the studies the GAO refers to in the GAO’s “study of studies” as well as some of the studies the GAO should have reviewed but failed to include (possibly at the direction of their shadowy “experts”), which should be illuminating to policy makers around the world.   For example, Levine considers the study by Felix Oberholzer-Gee which concluded that policy makers need not worry about online theft because musicians would work for “free beer” and “admiration” (if you know what I mean) as well as the extensive work of economist Stan Liebowitz which, among other things, mounted a very effective criticism of the “free beer” campaign.  (The GAO included the “free beer” study, but not the Liebowitz work–probably on the advice of the secret “experts”.)

For this reason alone Free Ride is an important book for policy makers to keep close by.

Worldwide Blanket Licensing

Levine takes a look at Jim Griffin’s various unworkable ideas about blanket licensing that MTP readers will recall we have discussed in numerous fora and have criticized.  (See my lecture at Osgoode Hall in Toronto, for example and our article in the ABA journal.)  Unfortunately, Levine doesn’t take into account the use of the global database idea as a “bright and shiny object” to further delay the enforcement of property rights online and create full employment for consultants for what will inevitably prove to be a sideshow.  But this is a small criticism of the book and should not be taken as a detraction from an otherwise highly effective and well researched presentation.

The Hands of the Google

One of the truly significant themes in the book is how Levine has laid out in one place all the different ways that Google influences public policy around the world.  This is done through his discussion of the execuprofs, groups like the EFF and Google’s massive contributions to Creative Commons, as well as a history of the YouTube case.  I mean the Viacom case against Google–sorry.  (Saying “the YouTube case” alone is like saying “my brother is in the Army, maybe you know him.”)

For busy policy makers who are trying to get their arms around the Google debacle through the sea of hundreds of Google lobbyists that must cost Google hundreds of millions worldwide, as well as Google’s high levels of government influence (especially in the UK), Levine provides a handy scorecard to keep track of the players.  This is not a black helicopter exercise–Levine has put in the Herculean effort to follow the money from Google to its many front groups.

The book’s review in the Financial Times is generally positive, but has this to say about Levine’s Google analysis (full disclosure, FT is my favorite business website and I tend to overquote them):

“On Google, Levine is correct that this most powerful of digital businesses will  need careful regulation in future. Yet if the company’s “war on copyright” is as  cunning as the author claims, it remains mysterious why it has, as yet, been so  unsuccessful. True, this week Britain’s government did approve some relatively  minor tweaks  to copyright laws. But, on both sides of the Atlantic, sensible attempts to  stop copyright term extension, which often runs long after an artist has died,  have largely failed – usually in the face of fierce lobbying from the very same  media companies Levine paints as victims.”

I actually disagree with the FT’s conclusion.  If Google had just made illegal scans of millions of books without the hundreds of lobbyists and the proverbial legion of lawyers, Google executives would probably be in the federal penitentiary.  So since they are not–yet–in that sense, Google’s campaign has been highly successful.

More importantly, the last sentence may belie the FT reviewer’s sympathies for the arguments of Lessig and many other execuprofs:  Copyright terms that extend “long after an artist has died” is the key point that Google and its followers, including its followers in the press, are most interested in because they wish to cut off the benefits of copyright to the hated “heirs”.  (See also Lessig, “The Starving Artist Canard“.)

The author advances an argument based on duration of the copyright term that will sound familiar to readers of Free Ride.  Lessig wants artists to accept a 14 year copyright term and give up the current life plus 70 as the copyright term (allowing an artist’s heirs to capture the benefit of either a discovery of the deceased artist after their death, or the benefit of being provided for like the journalist’s heirs are from his own estate).  While the reviewer apparently deigns to allow an artist the right to benefit from their creation during their life, when they die, that’s it.  A 100% estate tax.

The FT, of course, makes a silly argument.  But it’s silly for two reasons.  First, artists who want to enforce their rights will be very unlikely to accept a legislated cut from life plus 70 to 14 no matter how much Lessig wants to disenfranchise their heirs.  Even if Lessig manages to pull off the U.S. constitutional convention which would allow him to literally rewrite the copyright clause and finally seek his revenge on the U.S. Supreme Court that denied him in his humiliating defeat in Eldred, it is unlikely that the rest of the world would follow.  (See the eponymous Con-Con-Con effort at Harvard–where else–later this year where there is to be a gathering of grifters of all stripes–or in the case of the Poker Prof, suits.)

Second, the reality is that we currently have a 5 minute copyright.  That’s how long it takes for most works to be digitized and placed on p2p, Bit Torrent networks or cyberlockers for which Google delivers search results and on which Google sells advertising.  Google is bitterly fighting any government effort to cut off this ad revenue by enforcing intellectual property rights through the Protect IP Act (or its predecessor COICA, that Levine discusses in Free Ride).  And as long as this is true, any success from Lessig’s Con-Con-Con job would only serve to drive a further nail in the coffin that I would argue his bizarre faux-philosphy built.

Why Regulation Won’t “Break the Internet”

Given the problems of the 5 minute copyright, Levine’s most important conclusion is the following excellent advice to policy makers who actually want to bring balance to the online environment that preserves consumer choice, protects intellectual property rights and defends the human rights of artists:

“We can do better.

No one believes that piracy could be stopped by a law like [the Combating Online Infringements and Counterfeits Act, a precursor to the Protect IP Act] or an agreement between media companies and Internet service providers [such as the Copyright Alert System]….But regulations like these, whether private or public, would allow a working market to emerge.  Creators would sell, consumers would buy, and both would benefit….Artists would have the option of working with big companies or making their own way in an online economy that allowed them to do business, not just take donations.

In a functioning market, online media would get better, not just cheaper.  And this, in turn, would fuel the growth of more technology companies.  This wouldn’t break the Internet; it would help it live up to its potential.”

Hear, hear.

______________________
Buy the book here:

In the US, Book People and Amazon

Brussels and United Kingdom 

And read Levine’s Free Ride blog.

Andrew Orlowski’s review

The Resonance of Moral Design or Looking for Small Change in a House of Cards

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