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YouTube Will Drive Lyor Crazy

October 2, 2016 Comments off

…there was lunch in the larger, first floor cafeteria where, in the corner, on a small stage there was a man, playing a guitar, who looked like an aging singer-songwriter Mae’s parents listened to.

“Is that….?”

“It is,” Annie said, not breaking her stride.  “There’s someone every day.   Musicians, comedians, writers….We book them a year ahead.  We have to fight them off.”

The singer-songwriter was signing passionately…but the vast majority of the cafeteria was paying little to no attention.

“I can’t imagine the budget for that, ” Mae said.

“Oh god, we don’t pay them.”

The Circle, by Dave Eggers

Lyor Cohen is going to run YouTube Music.  My prediction is that in a year, he will not have been able to accomplish much of anything.  This is not because of Lyor who is one of the best we’ve had in the music business.  It’s because of the way Google operates and who is really in control.

First, remember that YouTube has made a point of telling us how unimportant music is to their business.  I’m so sure that was part of their pitch to Lyor–you’re not going to be doing anything that’s very important to us or contributes much to our bottom line.  So forget that fifth assistant and any revenue based bonus.  Because, you know…you’re just not that big a deal to us.

Oh, to have been a fly on the wall…

But seriously, like any large organization, Google has competing bureaucracies and therefore its wholly-owned subsidiary YouTube does as well.  (Google is now the largest media company in the world.)  YouTube’s organizational independence is additionally blurred because it is the #2 producer of revenue inside Google relative to search and advertising sales.  But not the music part, let’s get that straight now.

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You’re going to need a bigger boat.

There seems to be a three-legged stool of competing interests in dealing with YouTube which we can describe with generalized labels–the “engineers”, the “policy people” (essentially Fred Von Lohmann) who are mostly lobbyists and lawyers, and the “business people” starting with Robert Kyncl and now with Lyor.  It’s unclear who has the upper hand in this triumvirate, but it’s pretty clear that the business people do not control their destiny.

That leaves jump ball for control of YouTube’s deals between the engineers and the policy people who seem to compete with coming up with the solution that is the worst for anyone with a passing acquaintance with private property rights in general, and artist rights in particular.  My hunch is that this will drive Lyor nuts in short order.

YouTube’s ineffective negotiating power with Big Google is particularly confusing because YouTube is both a search engine and an advertising publisher.  (Let’s call the larger Google “Big Google”.)

We sometimes forget that YouTube is the largest video search engine in the world–but don’t let that go to your head because we all know how unimportant music is to YouTube.

What’s obvious is that the engineers and policy people do not understand a fundamental point about dealing with the creative community.  They are every bit as much of ambassadors to the creative community–the entire creative community, not just the YouTubers who essentially are entirely dependent on YouTube for their success.

Why it is that YouTube has such little clout internally is anyone’s guess.  My bet is that if YouTube didn’t have to check with a host of bureaucrats at Big Google, it would be much, much easier to do business with YouTube.  However, if past is prologue, I seriously doubt that Fred Von Lohmann is going to take any guff from Lyor.  Although I would buy tickets to watch.

To state the obvious, unlike the YouTube lottery winners, professional artists who are not dependent on YouTube are not dependent on YouTube.  If pushed, there very well may come a day that they move on.  En masse.  Given YouTube’s recent change in monetizing only “advertising friendly” content and asking for a cut of brand integrations–Google’s version of 360 deals–even the “YouTube stars” may also move on–and how Lyor will relate to these folks is anyone’s guess.  I think he could do pretty well with managing that artist relations problem, if the YT Stars will let him.  Whether that happens remains to be seen.

But the mass artist exit may happen sooner than you might think, despite YouTube’s monopoly on video search.  YouTube is currently taking a beating from artists and songwriters.  Note that the beating is administered to YouTube–not to the engineers and the policy people at Big Google.  Or not yet, anyway.  Most professional creators don’t know these bureaucrats exist.  Those bureaucrats at Big Google are largely faceless (with the exception of Fred Von Lohmann) and take no heat when YouTube gets roasted alive by key opinion makers in the music business (such as Irving Azoff).  Lyor will have something of a honeymoon period, but regardless he can’t make the “value gap” disappear.

 

So how could Lyor repair the problems with YouTube?  I think that it’s going to be a heavy lift, but it would start with Big Google telling their engineers and policy types to back off.    Then we’d at least have an idea of whether YouTube can ever be a good partner.  I suspect we could have at least much better relations with an independent YouTube.  Whether Lyor agrees with that or could make it happen if he does remains to be seen.

Google hasn’t experienced an angry artist taking a baseball bat to their royalty department yet despite the $0.49 royalty checks.  Someone with Lyor’s experience could definitely help out with that if it ever happens.

YouTube should try to shake off the control of their internal masters at Google.  Then at least we’d know who we are dealing with.  Right now it looks like Lyor is going to get a lot of blame simply because he has the name ID.

Guest Post by @schneidermaria: Content ID is Still Just Piracy in Disguise: An Open Letter to Rightsholders and a Music Industry Ready to Renegotiate with a Monster

July 31, 2016 3 comments

By Maria Schneider

Content ID, YouTube’s digital fingerprinting technology, is under fire lately for very good reason.  Originally touted by YouTube as an effective method of blocking illegal uploads, Content ID was ostensibly the service’s way to protect copyright holders.  But Content ID quickly morphed into a self-serving massive moneymaker.  Their pitch goes something like this: “Hey, advertising is good for you.  Why not use Content ID to cash in on all the piracy by getting a share of revenue we can generate from ad placement?”  Well, they don’t call it piracy – but make no mistake, in the end, their whole scheme still depends on a culture of piracy.

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Since the media presents YouTube’s misleading talking points without challenge, it’s up to us to expose what’s really going on.  There’s a lot to sift through when one digs deep, so bear with me.  In the end, ask yourself if jumping on board, monetizing through YouTube’s Content ID, makes us all complicit in perpetuating the piracy racket that YouTube created to make billions for itself.

1.  YouTube’s 3 Billion Figure is all Smoke and Mirrors

YouTube dangles Content ID and monetization in general in front of music creators to lure us to participate.  YouTube’s line is that if we jump on the monetization bandwagon, they’ll share ad revenue with us.  Sounds like a good deal, but YouTube’s ad revenue has proven paltry when compared to the real cost of producing music.  Like an Atlantic City casino, YouTube wants us to believe that we just might hit the jackpot.  Stories of viral videos make the news and seem like the new brass ring for rights-holders, but this insightful article explains how rare “viral” is.  And of the very, very few who achieve viral, who can sustain it and make a career of it?

The real truth is that most music creators on YouTube are making nothing or next to nothing from the use of their work.  YouTube acknowledges that out of all people in the world with videos/music on its service, only 8000 “partners” qualify for Content ID.  The rest of us can put ads on the videos we ourselves post, but likely the majority of us are never paid anything, not reaching the $100 threshold YouTube requires of us to receive the first check.  And our own uploaded content is competing with pirated uploads of our music that we’re left to police.  The mountain of cash from all the music creators who haven’t yet reached $100 must be creating one hell of a “float” for YouTube.

YouTube boasts of $3 billion in total payouts, but dig slightly below that surface, and you see a shameful number.  They’ve admitted it’s really less than $1 billion per year.  And think about it:  YouTube has over a billion users each month, and over 12 billion users a year, so do the math.   The measure of fairness is not how much YouTube has paid out in total, but it’s whether those who make the music that fuels YouTube’s fortune are getting paid adequately.  Here would be important questions to ask:

1. How many rights-holders are represented on YouTube?  (That number must be astronomical, and likely impossible to calculate.)

2. How many rights-holders can actually pay for the budget of a record from revenue they receive from YouTube?

3. How many music creators never reach the $100 threshold?

4. Of all the music-rights-holders represented on YouTube, how many make even minimum wage on an ongoing basis, year after year, for their life’s work that sits, year after year, on YouTube’s massive servers?

Every musician knows that as long as music is available on YouTube for free, it won’t likely sell very well elsewhere, especially with all the available apps that can rip mp3s right from YouTube videos into your personal library.  And hey, what happened to the mechanical royalty for all of this, guys?  (I’ll be writing about that soon.)  So, if YouTube is going to corrupt all other income streams for those who invest their lives and means into the making of music, then YouTube should at very least pay a living wage, right?

We’ve had plenty of time to test the ad model, and one thing is for certain:  Ad revenue does not pay for the making of music – not even remotely close.  The music industry should quit banging its head into that same wall looking for results.  Face the facts folks – ads will never fuel the music economy.

2.  YouTube Has Us Haggling Over Popcorn Prices, While They Walk Away With All the “Main Event” Revenue

While we’re haggling over paltry ad revenue, we’re diverted from the far greater value that is being generated from our music.  Every month, our music drives billions of users to YouTube’s platform, and the data that Google then gathers from following our fans around the web is where YouTube’s true value lies.  Google and Facebook didn’t get their billion dollar valuations from ad revenue.  YouTube’s valuation largely comes from the mountains of hoarded data collected on the backs of all musicians and creators.  Therefore, part of the value of the YouTube empire should fairly belong to musicians.  Not only should musicians and creators share in the value of data gathered, but they should also have access to the data their creations generate.  Why in the world is it fair for YouTube to keep all of this data as a “trade secret” when it’s generated from our own fans, often through piracy YouTube expressly facilitates?

3. YouTube’s Dirty Secret about Content ID

Content ID is available only to those whom YouTube chooses – and YouTube runs the place like an exclusive country club.  The simple fact is that the vast majority of independent musician-rights-holders are not accepted into Content ID.  I’ve received five GRAMMY® Awards, and even testified about the DMCA next to Google’s counsel, Katherine Oyama, listening to her boast at length about the virtues of Content ID and its ability to block uploads.  But when I came home from testifying in D.C. and applied for Content ID, I was denied.  Content ID is reserved for big record companies with big catalogues, and probably selected independent artists whom YouTube believes will make YouTube a heap of money.  And who even knows to what degree artists or companies with YouTube contracts are allowed to “block” uploads, as those contracts are under NDAs.  Are we seriously to believe they’d permit independent artists to join, only to block their entire catalogue from being uploaded?

In the press, YouTube has fought back against the recent flood of criticism, saying that all rights-holders can access Content ID – that they can get it through “third-party vendors.”  These third party vendors often take between 20% to 50% of the revenue paid by YouTube—after YouTube takes its share.  That means the rights-holder is paying two overpaid gatekeepers.  So yes, it’s available, but at a completely unreasonable premium.  If big record companies are complaining about their bad revenue from YouTube, they should try being an independent musician, paying yet another middleman!

But here’s the most relevant fact that YouTube keeps hiding: BLOCKING UPLOADS THROUGH CONTENT ID IS NOT AVAILABLE THROUGH THIRD PARTIES.  The use they bragged about before Congress – that they imply is available to everyone – does not exist.  The reason is obvious – without ad revenue, there’s zero incentive for the third-party vendor or YouTube to partake.  The third-party vendors would have to charge a fee big enough to pay YouTube and itself to simply block uploads.  What a sick game that would be – paying some third-party company and YouTube to block the pirated uploads YouTube promotes.

Why can’t a rights-holder protect his/her work from illegal exposure on YouTube according to his/her Constitutional right, and then go sell it where he/she wants, for the price he/she chooses to set?  That’s reasonable, right?  Why is that such an unattainable dream for people like me and hundreds of thousands, if not millions, of my colleagues?

If an independent rights-holder wants to keep all their work off of YouTube and keep clear of YouTube’s ad-based, piracy-driven, self-serving, dirty, lawless racket, he or she is screwed.  Is there a single independent artist that YouTube has allowed access to Content ID for the sole purpose of “blocking” uploads?  Katherine Oyama should stop the bragging about Content ID until her company makes it available to “every” rights-holder for blocking.  And certainly, misleading Congress with false claims and self-aggrandizement in a Congressional hearing, and similarly misleading the American public through a calculated propaganda campaign, is in my opinion, deeply unethical.

4. Content ID Legitimizes Piracy – We Shouldn’t Be Complicit

Music creators who succumb to the false appeal of “monetizing” on Content ID, or those whose record company has made that deal for them, have been swayed by YouTube’s line of baloney that illegal uploads are good and aren’t really illegal as long as YouTube offers a pittance from the ads they generate.  Clearly, the infringement orgy YouTube has sponsored for so many years has brought independent musicians and record companies to their knees, as they accept bad deals to monetize the crumbs that are left on the floor from a devoured industry.

Our music industry’s acceptance of the “monetization” tool from Content ID only serves to “legitimize” the piracy that YouTube systematically breeds.  Monetization erases any last vestige of guilty-feeling-illegal-uploaders.  Content ID actually makes them feel good about themselves as they upload to their hearts’ content with zero inquiry.  “Look! I’m making the artists money AND giving them needed exposure, AND I’m offering the public free music at the same time!”

I’ve heard this logic again and again from young people with bloated YouTube channels.  We’ve all fallen into YouTube’s trap:  By making a deal with the devil, right-holders are basically condoning the piracy that has destroyed the music marketplace.  Content ID monetization is steamrolling our Constitutional right to control our own creative works.  We shouldn’t buy into YouTube’s piracy scheme for the few scraps it might offer.

5.  Content ID Offers a Pathetic Deal

With a straight face, YouTube tells you and the media that they give 55% of ad revenue to the rights-holder and only keep 45%.  But they calculate that percentage split after they first reimburse themselves for their own expenses, which they calculate behind their green curtain.  So the 55% figure is not of gross income.  An article by East Bay Ray explains that after YouTube pays itself about 37% for its expenses, rights-holders receive only about 35%.  That’s not a split, that’s a fleecing.

YouTube’s approach reeks of hypocrisy.  Sure, YouTube has expenses.  But has anyone discussed our expenses in making the recording?  Costs should be figured on both sides.  We all agree that when a potter sells a bowl, the price reflects the cost of clay, glaze, the kiln, firing, etc.  When a clothing designer sells a pair of pants, the wholesale price covers the cost of fabric, thread, pattern design, etc.  But YouTube, or rather, Google, the richest company in the world, wants us to accept a business model where the “price” they pay for our music has no rational relationship to the actual costs of making the music.  Who cares about how much they say they pay out.  Their site contains almost the entire world’s library of music, and it’s not even coming close to paying the cost of making that music.  We invest all we have – time, talent, training, technology, and more.  We have the right to expect a reasonable return on that investment.  YouTube is an imperialist tycoon that is finger-flicking less than third world pay at musicians and the music industry for a product that YouTube shouldn’t even have access to in the first place.

6. Who is Clearing all the Rights for Music on Content ID Anyway?

The answer is, probably no one.  When a record company puts out a record, the record company (assuming the artist hasn’t negotiated for ownership) likely owns the copyright to that recording.  And if the record company has struck a Content ID deal with YouTube, chances are they will monetize the record.  But what about the other copyright-holders?  Likely there are songwriters whose works are represented on the record, too.  Often there are several or more collaborators on any given song.  So, what about their right to block uploads?  Where are their royalties?  How are they accounted?  Are they accounted?  Who asked for permission?  Where is the transparency?  This is happening to me, and my answers are: none, nowhere, not, no, no one, and none.  YouTube is a jumbled, colossal rights violations mess that leaves independent rights-holders with the impossible task of doing DMCA takedowns, where YouTube publicly exposes our identities, leaving us open to repercussions from fans or record companies.  The intimidation leads us to do nothing but accept the loss.  There must be millions upon millions of such copyright violations on YouTube.  Maybe that’s why they don’t allow all of us to have access to the Content ID blocking mechanism, because they fear most records would have some rights-holder that won’t allow it to be monetized.  Well, if there was economic incentive, that wouldn’t be the case.  Isn’t that how a free market economy works?

7. YouTube’s Use of Content ID is Un-American

Here are the bigger and broader questions for our industry and government.  Why aren’t musicians and creators allowed to be a part of the American free market, where we set our prices based on the cost of producing our own product?  That’s how manufacturing works in any freedom-loving country.  Why can’t a music creator set the valuation of his/her work in the same way one sells visual art?  Why are the Department of Justice and government, (all of whom are tarnished by their whirling revolving doors with Google – read it!) who are setting most of our prices for us, doing so based on failed ad revenue models from usurious companies?  Why are the DOJ and our government at large intent on propping up a bogus “freemium” model?  And why are they blind to the simple fact that big data companies operate freemium ad-based models all to the greater end of gathering invaluable data to become the biggest player in the AI (artificial intelligence) race?

Why is the survival of theft-enabling, ineffective, ad-based internet businesses more valued than the future of music or livelihoods of musicians?  Why are we collectively not screaming our bloody heads off?  Our songs and music have shaped our culture and the world’s culture for centuries.  Music has brought people and cultures together, serving as the worlds’ ambassador without fail: a voice for freedom, for the oppressed, for change, for comfort, for celebration, and for transformation.

Music creators should be treated like the valuable citizens of this country that we are.  We should be allowed to set our own price at very least!  We aren’t the indentured servants of YouTube, here to make the Google empire rich and powerful.  Given a fighting chance, the market would show how much our fans value our work, as it has for nearly a century.  Taylor Swift and Adele proved exactly that with their quite recent releases that sold millions of good-old fashioned CDs at regular prices.  But when we’re forced to try and create that market in a society with a complicit government that’s allowed copyright theft to run rampant, it’s an almost impossible situation.

When YouTube serves the world mountains of pirated content on a silver platter without having to take a single step to stop the piracy, or Google is allowed to prioritize pirates in their ‘search’ algorithms (even after rights-holders send takedown notices), how could there ever be a true marketplace?

8. Without an Ability to Block Illegal Uploads with Content ID, We’re All Screwed

For the vast majority of us that are unable to protect our music against piracy, we’re stuck playing Whack-A-Mole with an outdated and anemic DMCA takedown process, fighting a tsunami of piracy from a company that does all they can to keep the flood-waters flowing.

So, let us ask ourselves as composers, songwriters, performers, producers, publishers, and record companies: are we willing to be complicit in this whole scheme, cementing piracy as an acceptable norm, all for the measly pocket lint they’re offering us?  I’d sooner fight piracy to the bitter end, and lose, than do that deal with the richest and scariest (“don’t be evil”) company on earth.

9.  YouTube Should Lose Their “Safe Harbor” for Withholding “Standard Technical Measures”

The DMCA’s safe harbor provision requires that companies like YouTube must ensure that “standard technical measures” “are available to any person on reasonable and nondiscriminatory terms” to identify and protect their copyrighted work.  (17 U.S.C. Sec. 512(i).)  YouTube is not allowed to discriminate as to who gets access to tools that have become “standard” in protecting copyright.  If YouTube does discriminate, it is supposed to lose its safe harbor.

It’s right in the DMCA.  This is a point no one has yet pressed.  Content ID has been around and used billions of times to make billions of dollars for years now.  “Audible Magic” is available at a very reasonable price to any company wanting to offer blocking of illegal uploads.  And on Audible Magic, content owners can upload their content for free.  Apple has now created “iTunes Match,” and Facebook is rolling out its own similar fingerprinting technology, so it’s obvious that fingerprinting technology has become a “standard technical measure.”  YouTube can’t deny it’s become the core of their business.  And, if they also tout that it’s widely available through third parties, as they have in numerous publications, that suggests “standard,” too.  Digital fingerprinting is a standard technology that’s now very accessible, it’s just that YouTube stiff-arms most of us who want to use it to block pirated uploads.  And most other sites that allow music uploads from their users, pretend like Audible Magic doesn’t exist, because they don’t want it to exist.  And though the DMCA safe harbor provision requires YouTube (and all internet companies that also allow public uploads), to use the available fingerprinting technology, no one is yet enforcing this application of the law.  It’s high time.

YouTube reserving its copyright protection feature for hand-picked rights-holders, blocking the masses’ ability to fully protect their Constitutional right, even though the technology is right there in YouTube’s dirty fingers, is like denying a rope to a drowning person.  Sounds like clear grounds to take away YouTube’s “safe harbor” protections to me.  It actually feels criminal by my own estimation, when you consider that the violated rights are Constitutional rights.

I wish record companies would step away from their Content ID contracts entirely, and fight a noble fight to enforce this statute in the DMCA that would protect all rights-holders equally, rather than being a complicit partner in the pathetic and dirty Content ID piracy racket.

10.  Content ID Should Be Made “Open Source” for All Internet Platforms

People are starting to wake up to the dangers of allowing a company to amass such power from data and artificial intelligence (AI).   There’s a movement to quickly develop AI technology and algorithms as ‘open source,’ in an effort to keep a few all-powerful hipster tycoons from having AI power over the entire world.  It’s called Open AI, and many seriously talented scientists are flocking to it.  Thank God there are a few people out there scared stiff by the power of those that are controlling AI.

Since Google’s empire is built on the premise that “open” and “free content” is such a grand idea for us little folk, then it’s high-time it puts its money where its mouth is, and make Content ID fingerprinting technology for blocking illegal uploads available to us little folk as “open source” too.  YouTube likes to say how much it has spent developing Content ID, but that’s exactly the point: if you won’t share YOUR works with us for free because you want to recover YOUR investment, why should you expect us to give away our works for free, without having recovered OUR investment?

And YouTube, don’t dictate how we rights-holders can use this now-standard technology.  Let rights-holders use it as they wish – to block or to monetize – no NDA’s, backroom deals, or intimidation.  Let’s make it all free and open, and see what a real marketplace looks like when we actually take measures to control infringement.

YouTube/Google wants the public to believe that certain “copyright” protection somehow harms the internet.  But when their own trillions are made on their own “copyrighted” software, through their own “copyrighted” algorithms and databases, and through their own “trade secret intellectual property,” they suddenly guard it like Fort Knox.  Somehow, YouTube’s and Google’s own copyrights are “good,” but musicians’ copyrights are “bad.”

Here’s the simple truth: protecting copyright doesn’t hurt the internet, it only hurts piracy.  And in the final analysis, Content ID is really just another sneaky way for YouTube to get rich off of piracy, and to try to appear like they’re throwing us a helping hand.  It’s underhanded and deceitful.  We as a music industry shouldn’t negotiate away the true value of our work out of desperation, giving way to the powerful grip of a racketeer (in my opinion) that just wants to keep us quiet.

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Are you a performer, songwriter, composer, producer, or fan, who wants to to help protect the future of music?  Sign on at musicanswers.org.

Read Maria Schneider’s ‘YouTube’ Installment #1, YouTube, Pushers of Piracy

What if Legacy YouTube Licenses Went Away? Will Artist and Songwriter Opposition to YouTube Make it Easier for Labels and Publishers to Step Away from Licensing?

June 8, 2016 3 comments

[This post first appeared in the MusicTechPolicy Monthly Newsletter for subscribers to MTP]

As manager Irving Azoff noted in his “Open Letter to YouTube“, the music community has never been more united against Google’s misuse and abuse of the government mandated “safe harbors”.  When mixed with Google’s dominant market position, highly litigious business practices and massive lobbying effort, negotiating with Google is not really negotiating–one of the main reasons all such activities are cloaked in nondisclosure agreements.

In response to Mr. Azoff, one of the few in the music industry who has stood up to Google, a YouTube star asked why does the music industry keep taking the money from YouTube if it’s so awful.

That’s a very, very good question and I’m so glad he brought that up.

What typically happens in the last few YouTube negotiations is that Google gradually ratchets up the advances and eventually the labels and publishers acquiesce.  What’s different this time is that the deals are being made in a highly public way–the artists and songwriters who ultimately call the shots contrary to popular myth are going to have a hard time relinquishing their public positions against Google and YouTube in return for thirty pieces of silver.

The changes that artists and songwriters require at Google go far beyond money.  What is needed is for Google to change its behavior, something that Google refuses to do because it’s business model is built on an extreme interpretation of the outmoded “notice and takedown” provisions of a 1998 statute that is a massive failure largely because of Google’s misuse of those provisions to Google’s great profit.

To the extent that lawmakers know the details of YouTube’s operations at all (and many don’t know the fundamental fact that Google owns YouTube), many lawmakers believe that Google provides the tools to block the unauthorized use of music on YouTube.  This is principally through Google’s “ContentID” and “Content Management System” applications.

These applications do not work very well, despite Google’s well cultivated reputation for solving Internet problems.  DMCA abuse is a problem that Google created due to its selection of a legacy business model.

What some lawmakers are now finding out for the first time is that Google does not make these tools available to everyone, but instead YouTube has a chicken-and-egg definition of who gets these tools that tiptoes around an essential fact–you only get ContentID if you grant a license to YouTube.  And if you don’t?

Then thanks to Google’s interpretation of the safe harbor, you have to monitor YouTube 24 hours a day, 7 days a week if you want to stop the infringing use of your work.  And don’t forget–even if a copyright owner grants the license, they have little control over how it is used in “user generated content.”  For example, Jack White’s music was used in what appears to be a sex tourist home video monetized by Google with ads from an asian “dating” site, Prudential Insurance and the band Apocalyptica:

If YouTube negotiations fall apart this time, Google will no doubt try to spin the failure away from its misuse of the DMCA safe harbor to extract the payment of shakedown money to “copyright misuse” of the major labels and publishers responding to the desires of their artists and songwriters.

The truth is there is no amount of money that Google can pay that will make up for the costs of enforcing the DMCA notice and takedown, most of which have to be borne anyway, license or no license.

Given the commitment of the artist and songwriter community to stopping DMCA abuse, particularly by Google due to its dominant market position and the legacy businesses it has built that are dependent on a compliant artist community (not to mention compliant lawmakers who look the other way), I wonder if the labels and publishers think that taking the king’s shilling is worth spending the political capital to offend their artists and songwriters who have gone all in on opposing Google’s legacy business practices.

On the other hand, if Google promotes ContentID and CMS as solutions, shouldn’t Google make these tools available to all creators?  Should Congress require Google to not only make the tools available to everyone, and even expand the application of these tools to search results to counter the massive infringement Google enables through search?

It is not quite too late for Congress to fix this mess.  The safe harbors were intended to give a little latitude to reasonable people acting reasonably.  The DMCA was never intended to be an alibi.

Guest Post by @schneidermaria: Open Letter to YouTube, “Pushers” of Piracy

May 15, 2016 15 comments

[We’re pleased to post this open letter to YouTube written by Maria Schneider, a five-time GRAMMY-winning composer and bandleader, a board member of the Council of Music Creators, and an active supporter of MusicAnswers.org.]

Open Letter to YouTube, “Pushers” of Piracy

by Maria Schneider 

Hank Green’s recent open letter in support of YouTube (that was in response to Irving Azoff’s open and scathing letter against YouTube) deserves a strong response from musicians and other creators.   I appreciate YouTube’s illegal business model might yield a few anecdotal success stories like Mr. Green’s and his videos of opening beer bottles with antlers, but for the vast majority of the artistic community, including me, and every musician I know (and I know thousands), YouTube is a resounding disaster.

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Maria Schneider in rehearsal

There’s no use in beating around the bush, so I’m going to cut to the chase – I’m of the firm opinion that YouTube should immediately lose its DMCA “safe harbor” status.   And I’m of the further opinion that YouTube is guilty of racketeering.   Let me explain:

YouTube is Not Entitled to “Safe Harbor” Status

YouTube and its parent Alphabet have obliterated the original meaning of the “safe harbor” law with their bullying and coercive schemes to get their users to disrespect and ignore copyright.

YouTube squeaked past its litigation with Viacom by settling their case after a four-year mutual war of attrition.   But what came out of that litigation was the best measuring stick for whether YouTube is still entitled to the protections of the “safe harbor.”   The most important directive from the court in those Viacom decisions goes something like this:   If YouTube is “substantially influencing their user behavior” toward infringing, then YouTube is not entitled to the safe harbor.   It’s that straightforward.

And without doubt, since 2014, YouTube has substantially influenced the behavior of hundreds of millions of its users toward infringement, fermenting a veritable pirate orgy.   YouTube goes way beyond turning a blind eye to the marauding masses; it actively seduces its users into illegal behavior, and has even managed to make its users believe pirate behavior is beneficial to creators.   Hank Green’s latest letter illustrates that perfectly, by explaining how YouTube’s Content ID scheme has been building and morphing since its inception, further contributing to making YouTube and Google a global empire, causing a seismic, cataclysmic shift in creative culture in our country and the world at large.

The vast majority of music on YouTube is uploaded by people with no legal right to do so – users whom YouTube has carefully molded and brainwashed.   And I’m meeting more and more young musicians who feel a growing resentment at being duped into being a part of cannibalistic behavior that is destroying their own financial future to the benefit of a corporate giant.

Here are a few things that the Viacom judges never got to hear – things that in my opinion should immediately kick YouTube out of the “safe harbor.”

Ways in Which YouTube “Substantially Influences User Behavior”

A. YouTube allows infringers to “monetize” illegally uploaded work, encouraging a culture of piracy.   And even after a takedown, YouTube and the infringers keep their past illegal profits for themselves.

B. YouTube has created technologies that allow lightning fast uploads of full tracks and albums, with no questions asked of the uploader, with no checkpoints of any kind.   YouTube knows full well there is almost never “fair use” for full tracks and albums.   So, to encourage this type of uploading can only be seen as blatant encouragement of out and out infringement.

C. YouTube is using Content ID to make users feel good about themselves as they upload work that they don’t own.   YouTube baits users to upload to their hearts content and feel helpful to copyright owners.   But for those of us who weren’t accepted into YouTube’s Content ID protection program, or didn’t agree to drink the purple Kool-Aid of licensing our entire catalogue to YouTube for monetization, tough luck – you’re left with an anemic takedown remedy.   YouTube should proactively direct users to a library of licensed music before they upload, rather than perpetuate the notion that one can upload anything, without inquiry and responsibility.   As it stands, YouTube emboldens users to assume it’s OK to upload indiscriminately.

D. YouTube has publicly offered to pay attorney’s fees up to a million dollars of some users who feel they’ve wrongly received takedown notices.   This publicity stunt emboldens all users to feel that YouTube has their back.   What a way to intimidate the creator and stir up the infringer.

E. YouTube consistently demonizes and intimidates musicians in the takedown process, publicly posting our names and making public apologies for our takedowns accompanied by a sad face.   And inversely, they protect the identity of the user who has infringed the creators work.   This public demonization of creators, contrasted by protection of the user, is unbalanced, and empowers the user to feel they are in the right.   The public apology should be from YouTube itself.

F. YouTube turns a blind eye to beyond-obvious-infringement, and users know that YouTube purposely looks the other way.   Go to YouTube and search “no infringement intended,” “I don’t own this, but…,” “I just want to share this music,” and millions of examples instantly appear where users openly admit to not owning the music or having the rights, but simply want to share it.   Google, the indisputable “king of data” certainly has the analytics to search this stuff and inform those that are breaking the law.

G. YouTube intentionally confuses and misleads users about the importance of copyright rights, offering utterly inane “educational videos.”  Watch Copyright Basics or Copyright School to see how YouTube completely downplays creators’ rights, and overplays the impact of fair use without clarification.   And YouTube’s legal eagle, Fred von Lohmann, even lectures creators about censoring negative commentary in Copyright Basics, so his hypocrisy at having disabled the public’s comments on these pathetic videos was not lost on me.   Any judge would be repulsed by YouTube’s hubris and arrogance displayed in these ghastly videos.  Considering that “music” is the most popular category of content on YouTube, it stands to follow that any educational video should at very least say to all users, “full tracks and albums” almost never qualify as “fair use.”

For years, YouTube has been a “pusher” of pirate activity on its unsuspecting “users.”   The sweeping influence of their scam has succeeded in dismantling copyright from the inside, like a flesh-eating virus, influencing citizens to destroy themselves.   Any company influencing behavior like this, especially for the purposes of eroding Constitutional rights, should lose their safe harbor.

Withholding Content ID from Creators is Outrageous.

There are other grounds for kicking YouTube out of the ‘safe harbor.”   To be in it, the law (section 512(i) which is written in terms even a non-lawyer like me can read) requires that YouTube make available to “any person on reasonable and nondiscriminatory terms” “standard technical measures” to identify or protect copyrighted works.   Well guess what:  YouTube has completely ignored that requirement, and struts around like a banty rooster while doing it.

Content ID is pretty standard “fingerprinting” stuff, and there are other companies that have similarly effective fingerprinting technologies like Audible Magic.   Fingerprinting has become standard, and YouTube certainly uses it very effectively when it comes to monetizing mountains of licensed works.   The DMCA makes it very clear YouTube needs to make that technology available to ANY (the word “any” is in the law) musician, not just the big powerful companies.   And certainly the technology shouldn’t be able to be used to instead coerce copyright holders into monetizing their catalogues instead of protecting them.   The scheme is clear: wear copyright owners down, and then they’ll be on their knees for any scraps at all.   I’m so sorry that so many big companies caved in to that pressure.   YouTube has brought nearly everyone in our business to our knees.

You won’t see me drinking YouTube’s purple Kool-Aid.   They refused me Content ID without any real explanation, but it doesn’t take a rocket scientist to figure out the truth.   This truth about fingerprinting is exposed in Hank Green’s own letter.   The truth even more came to light in Zoe Keating’s Billboard article.

Clearly, after training their unsuspecting users to be pirates, the next tactic is to muscle the weak copyright holders into an all-or-nothing chokehold.   They never wanted creators “protecting” their work with Content ID at all – they want them monetizing their work, for YouTube’s benefit.   (And by the way, YouTube keeps about 2/3rds of the gross ad revenue – read East Bay Ray’s helpful explanation.)   Clearly, the only companies that get some protection from the Content ID service are ones licensing huge amounts of music, and then they probably get to offset a certain amount of work to be protected from upload at all.   I’m guessing a few big artists get to use Content ID as intended –  the ones that YouTube would want to keep quiet.   It’s hard to know the whole ugly truth that YouTube hides from us behind the NDAs Keating spoke about.

The Emperor (or Data Lord) Has No Clothes

So if we take away YouTube’s “safe harbor,” what do we have left?   It’s standing there naked, exposed for what it is – a huge pirate schemer, manipulating and using a lot of vulnerable people in order to feed their own greed, while intimidating and controlling the rest of the people that don’t feed their needs –  the people that need to be kept out of YouTube’s way.   In my opinion this scheme is an old-fashioned racket.

YouTube is Guilty of Criminal Racketeering

YouTube has thoroughly twisted, contorted, and abused the original meaning of the outdated DMCA “safe harbor” to create a massive income redistribution scheme, where income is continually transferred from the pockets of musicians and creators of all types, and siphoned directly into their own pockets.   Congress seems to be too hypnotized by Alphabet lobbyists, swarming like locusts, for the lawmakers to stand up straight with a firm sense of right and wrong, and defend the Constitution and the citizens of this country.

When we analyze the bullying behavior of YouTube, in my opinion YouTube has created an illegal business through intimidation – the classic Webster’s Dictionary definition of racketeering.

Racketeer:  a person who makes money through illegal activities; one who          obtains money by an illegal enterprise, usually involving intimidation.

So let’s look at just a few examples of intimidating behavior YouTube shoves at us in the back alleys of its monstrous empire.

A. YouTube’s first intimidation is that you can’t join Content ID, unless you fit its special secret criteria, which we don’t know what it really is, but which appears to be that you must offer up your whole catalogue for monetization, in order to get the benefit of the technology.   And it must be a big catalogue, clearly bigger than mine.

B. YouTube’s second intimidation is making the musician sign on YouTube’s/Google’s terms in order to do a takedown. (See Stephen Carlisle’s article) It is abusive of the law, self-serving, and intimidating, as there are limits of liability, place of jurisdiction and various legalese that one shouldn’t have to agree to in order to do a take-down.   None of that is in the DMCA.   That’s YouTube’s own special sauce.

C. YouTube’s third intimidation is to reveal to the whole world, the identity of the person exercising their Constitutional right, while protecting the uploader’s identity.   That’s not in the DMCA.   It’s YouTube’s special spin.

D. YouTube’s fourth intimidation is to offer a permanent public apology for me and a sad face (or “frownie face” as YouTube general counsel, Katherine Oyama, corrected me at the Section 512 Hearings before Congress in 2014.   (YouTube and Google love “cute” words, “Alphabet, Google, YouTube, Frownie…” it creates an illusion of being harmless.)   Many rights-holders have told of bullying and threats that have resulted from exposure of their identity.   This demonization and intimidation makes many creators reticent to assert their Constitutional right.   That’s not in the DMCA.   That was YouTube’s grand idea.

E. YouTube’s fifth intimidation is to throw a whole lot of questions at the copyright holder, and even a threat about attorney’s fees, whereas none are posed to the user at the point of upload.   That’s not in the DMCA.   Only YouTube could be so cunning.

F. The sixth YouTube intimidation is the publicity stunt of offering a million dollars to defend a user against a wrongful takedown.   That’s scary.   What if I make a mistake?   And why aren’t they offering a million dollars to me against the endless infringements on my work on their site?   That confusing dynamic of YouTube throwing around their power to embolden their well-trained users is beyond intimidating.   It makes creators just give up, while it inversely cranks infringers up.   Sure, there are wrong takedowns, but there’s no comparison to the incalculable volume of infringement.   This scheme isn’t in the DMCA.   That must have come from YouTube’s goons.

G. The seventh intimidation is that though they have what’s now a standard finger-printing technology to keep content down, they force musicians like me into an endless whack-a-mole game that eventually wears out even the fiercest of us.   I personally know the feeling of giving up, and the resentment that builds when you feel manipulated into helplessness by corporate manipulation.

H. And just because they’re a different head of the same ugly monster, the eighth intimidation is specifically Google’s – Google and their special 46-step path to a takedown (cited by Stephen Carlisle) that again, ends in having to sign on to those nasty terms and condition just like YouTube.   What an abuse of the DMCA.

It’s almost impossible to believe that any group of human beings could have been so bold as to dream up and implement such a sick plan as all of this.   Even Google itself initially expressed that YouTube was dirty.   As we know, they eventually bought YouTube, so I guess Google finally decided that its inspired motto of “do no evil” was just too high of a bar to live by.   The following statements/admissions by Google employees were taken from the Viacom/YouTube case, and were made before Google acquired YouTube:

“A large part of their traffic is pirated content.” 

 YouTube is a “rogue enabler of content theft.”  

“YouTube’s business model is completely sustained by pirated content.” 

“It’s a video Grokster.” 

“I can’t believe you’re recommending buying YouTube . . . they’re 80% illegal pirated content.” 

“…it crosses the threshold of Don’t Be Evil to facilitate distribution of other people’s intellectual property.”   

Google thoroughly recognized this was criminal activity.   But when Google bought YouTube in 2006 for 1.65 billion, their tune suddenly changed.

Copyright Infringement + Intimidation = Racketeering

Since Google bought YouTube, the Alphabet empire folded their new piracy factory into the world’s most powerful company, the world’s richest company, and the world’s most secretive company.   Alphabet encourages, for their own gain, a “free” and “open” society, where all “content” is free and accessible, as though that is some sort of measure of a free society.   But when it comes to their own “content” in the form of its database and algorithms, they choose to guard it like Fort Knox.

The recent dustup at Facebook, with the political influence wielded behind their wizard’s green curtain, is just a small example of the sort of power data lords can have over us ordinary folks.   Alphabet’s influence, control, and domination will only grow exponentially as the value of its “trade secret” database continues to balloon to unimaginable proportions.   Thank God the EU is holding companies like Alphabet responsible, as we in this country all seem to be asleep at the switch, so long as YouTube is there to serve us up some edifying viral videos of somebody lighting their crotch on fire.

What is especially scary about this corporate power is that YouTube is now starting to inject itself into the very manner in which art is created.   Do we really want YouTube controlling the funding of music?   How terrifying – they destroy our creative culture, and now “they” want to save it by helping to create it themselves?   Oh my God!   That brings me to my final revelation:

YouTube Suffers from Munchausen’s Syndrome By Proxy

I was thinking about this whole convoluted scheme YouTube has cooked up with its Content ID program, when something popped in my mind, Munchausen Syndrome by Proxy.   That’s that disease you hear about sometimes on the local news where some sicko caregiver induces an illness to their own patients, so they can then turn around and quick save them and be the hero.

I suddenly realized, oh my God, that’s YouTube!  YouTube has Munchausen by proxy!   I see now – they’re not only evil, they’re sick.   Too bad it’s the most powerful company in the world that has the Munchausen affliction, and the entire world of music, film, and creative arts are the unsuspecting victims.   We, like the unsuspecting patient, can all feel grateful that YouTube, our savior, has come up with the life-saving solution of helping us monetize our pirated work, and they’ll further save us by letting some of us be “the chosen” YouTube artists they’ll produce.

Common Sense Solutions

I asked YouTube nicely to reform its ways when I testified before Congress, offering several key ways to even the playing field and stop destroying musicians and other creators.   But they’ve not only ignored me (and many others like me), they’ve since turned up the heat and made an even greater mockery of the “safe harbor” rules.

Recently I had the opportunity to participate in four of the seven roundtables held by the U.S. Copyright Office on the DMCA’s Section 512.   I offered the following common-sense solutions:

A. Takedown should mean stay-down.

B. There should be mandatory checkpoints and education on the upload, with language created by the U.S. Office of Copyright, as well as a required signed perjury statement on the upload.   Parity between upload and takedown is only logical and only fair.

C. All sites with uploaded content should have to use the latest fingerprinting technology where creators can enter their work for the purpose of protecting it, not for the purpose of being muscled into monetizing it to the benefit of the hosting company.

D. Stop the public display of the copyright holder’s identity when they do a takedown.

For starters, YouTube, would you please consider these four steps as a first, good-faith step in the right direction?

Perspective is Everything

I appreciate that YouTube might work for a select few folks including Mr. Hank Green, but it is not in any way representative of the breadth of the arts in America – musicians, authors, filmmakers, photographers, poets, artists and more.   Alphabet is systematically leeching away our diverse and rich culture in order to become the most powerful and wealthy corporate empire the world has ever known.   And it’s just getting started.

The Internet has brought the world together in many wonderful ways.   I appreciate that as much as anyone, having been the first Internet-only, fan-funded GRAMMY-winner.   But the arts have connected people far more, and for far longer, than the Internet.  The arts have connected us in times of war, brought healing through times of suppression, brought inspiration in times of need, and expression when weak voices needed to be heard.

The Internet and the arts could be powerful if they worked to help one another, but as it stands, the Internet is being used by corporate giants to gut the arts for their own gain – and they are destroying our culture.

I heard an extremely powerful quote yesterday from the great American author, T.J. Stiles, (where he paraphrased Professor Jane Ginsburg from Columbia University) saying: “the worst form of censorship is poverty.”  YouTube/Google, and other data lord companies are absolutely “silencing” and thereby “censoring” the arts – just ask the 80% of Nashville songwriters who have had to leave the profession in the last decade.

Jaron Lanier, who wrote Who Owns the Future, describes musicians as the canary in the coal mine.   While YouTube has the canary’s feathers sticking out of its mouth, we’re not dead yet.   Temporarily dazed by YouTube’s cunning bite, and drowning in its greedy drool, we are slowly coming to our senses.   Musicians and artists of all types, as well as record companies, publishers and agents (who only exist because of music creators), need to unite and stand up for our Constitutional right to own our copyrights, and to force data lords like YouTube out of the lucrative “safe harbor” that it has used to exploit us.

[Download a pdf of this post here.]

An Interview with Andrew Shaw of PRS for Music on Negotiating with Google, a guest post by Jonathan David Neal

January 15, 2016 Comments off

[Editor Charlie sez: In honor of the new PRS-YouTube license in the UK, we’re reposting this harrowing first hand account of the first YouTube/PRS negotiation.  For PRS members, there’s a good chance that this post has more information about your deal than you’ll ever get anywhere else because your rates are–you know–confidential and stuff.

This post is by Jonathan David Neal and originally appeared in The Score, the membership publication of the Society of Composers and Lyricists.  You can read his blog at Composer’s POV. PRS for Music is the principal music licensing body for performances of music in the United Kingdom and is roughly the equivalent of ASCAP, BMI and SESAC for UK residents.  Although this interview is from 2009, it gives you some insight into Google’s over the top negotiation tactics and how they use the withholding of content as a negotiation tactic in the press–enforcing your property rights is “censorship” don’t you know.  This is a long read, but worth every minute and is information you won’t get anywhere else.]

An interview by composer Jonathan David Neal with Andrew Shaw, Managing Director of Broadcast and Online of PRS for Music.

Background:

In the summer of 2007 PRS For Music, the UK PRO, licensed You Tube, owned by Google, for music use on a per download basis. That contract ended at the end of December 2008, at which time Google and PRS entered negotiations to renew the contract. In March 2009 while continuing negotiations Google, without warning blocked premium content access to users in the UK and few weeks later did the same thing in Germany. I interviewed Andrew Shaw (who is one of the PRS negotiators) in London on May 15, 2009. This story has strong implications for composers, songwriters and lyricists all over the world, since we are in a continuing struggle to maintain our rights as creators and copyright owners.

Neal: Please give us a short back-story to the [PRS’s] struggle with Google & You Tube

Shaw: Well, I think that to understand what is happening now you need to understand the history of where it all came from. You Tube as you know was started in December 2005 and was bought by Google in early to mid 2006 and that’s the time it really started getting some traction in the market place. The service had evolved from very humble beginnings as a way for private individuals to share their home videos. But over a period of time, the content that was being uploaded was copyright content rather than people having dinner parties and they were for a long time relying on their DMCA (Digital Millennium Copyright Act) protections and equivalent protections in Europe to say they had no liability for the content.

Neal: For the readers please explain DMCA.

Shaw: Digital Millennium Copyright Act, that is essentially the US law that says if you are a mere conduit you don’t have any  responsibility for what’s transmitted over your pipe provided that if someone notifies you that you are hosting illegal content, you take reasonable steps to take it down as soon as possible [Ed. Charlie: And without knowledge of infringment and if you terminate repeat infringers]. Google was saying, “Look we are just a big electronic notice board that some people around the  world decide to post things onto and other people around the world decide to come and have a look at these notices and we’ve actually got no idea what’s going on.”

Part of the business logic was that there is a huge community of users out here and “if we take the Google experience and knowledge of digital advertising sales and sprinkle some of that pixie dust onto You Tube, you’ve got excellent digital advertising sales married with a huge user base and massive traffic scale.” I think one of the reasons it hasn’t worked in that way is you’ve got millions of individual pieces of content that are all being viewed, the majority of which are being viewed a relatively small number of times.

The whole principle of Google’s advertising is it’s contextual advertising but they couldn’t actually identify what the content is, so if you tag a video as, for example, “Madonna,” You Tube or a computer has no idea whether that is a pop video or something about the Catholic church.

Advertisers were finding that adverts were appearing next to content that they weren’t quite aware of what that content was. They wanted their brand to be associated in certain places and not with others types of content. [Ed. Charlie sez: like an implied endorsement.] So the whole business model of advertising and targeted advertising required a much greater level of precision of knowledge of what was in the video.

Now as soon as you get into a level of knowledge about what’s in the video, by default you know what that video is and therefore, you start to lose your potential defenses that you are just a mere conduit and you don’t know what’s going on.

So there is a sort of process whereby, I suppose you call it “dancing around the handbags,” where they came to us and said, “We would like to have a license, but, of course, we don’t need one.” We said, “We’d like to give you a license, but we need to know what you’re doing.” They said, “Well we can’t tell you because we don’t know, because if we knew…” and there was a sort of Kafkaesque situation.

But we took what I think was a pragmatic view at the time and said look, at the end of the day we’ve actually  got two choices. We can either license You Tube and try and get what we believe is a fair and equitable remuneration for the works being used and pass that back to our members or we can go down the litigious route and sue them like Viacom had done or we can do nothing. We felt that doing nothing was sort of tacit approval that this was all acceptable.

We took the pragmatic view that licensing was preferable to litigation, for a number of reasons. First of all, getting into litigation was always going to be extremely expensive, extremely time consuming and take a long time to get resolution. The Viacom case proves that point. At the end of the day the outcome was very uncertain. An uncertain outcome might have been great, it might have been not so good and in a worst case, it could have been not so good with a knock on impact on all sorts of other areas of our business. We took the view that licensing was the best approach, so we licensed them.

We were the first society in the world to license You Tube, which was a major coup for us. But, I think that it was also, a major turning point for You Tube because it was the first time, that they had, actually, by default, recognized that they required a license, where if they didn’t require a license and they were so sure of that they certainly wouldn’t take one out. So, we licensed them in the summer of 2007. The license expired at the end of last year, 2008.

During the two years of You Tube’s license they were a model licensee. They did absolutely everything they said they were going to do, they went above and often beyond the call of duty in terms of trying to work with us to develop standardized reporting mechanisms, reporting tools, and we enjoyed a very good working relationship with them.

So, we’re now in a position at the end of 2008 where our license comes up to expire, we’ve got 18 months worth of data about what is actually being used on the service.

We’ve also seen a big transition in the content that’s been on the service over that 18 month period. They had realized that a very large number of videos being watched over a relatively small period of time, with no knowledge of what’s going on, was not going to generate big advertising revenue. Where the advertising money was going to be was in sponsorships and professional content. And so they started actively acquiring what they called seeded content, so they went to the BBC and did a deal to get clips of programs and previews. They’ve now expanded this to all sorts of different content owners, whether it be Hollywood studios, music labels, the White House, Downing Street, whatever.

[Ed. Charlie sez: The evidence against YouTube in the ongoing Viacom case and class action suggests that YouTube knowingly and purposely seeded their website with illegally obtained and distributed premium content for the purpose of profiting from the users attracted to the seeded content.]

A large proportion of the value of what is being generated by YouTube is actually around seeded content [Ed. Charlie: that is the revenue to YouTube], notwithstanding the fact that it accounts for a relatively small proportion of the usage. So you’ve got a sort of asynchronous pattern there. And, clearly music has been a very big area for them; they’ve done deals with all the labels except Warner Bros. and the labels have actively created channels for their artists on YouTube, where artist videos can be shown/promoted.

Now as far as we’re concerned, when you use a generated content, it’s pretty hard to value as far as the music, for instance, from the copyright point of view because you don’t know whether the music is in the foreground, the background, whether it’s incidental, whether it’s 30 seconds, 5 seconds or is it the whole point of the piece or is it just incidental to it. Then if you sort of move up the hierarchy of value, as far as music is concerned, you get into the professional seeded content where clearly there is some economic benefit being derived either by YouTube or the content user or both as a result of making that content available.

But still, music is a supporting ingredient to the finished created work. And then the “top end” of value from our perspective, is something like a pop video where music is actually the whole essence of it. If you then relate that to our regulatory framework, we have something called a “joint-online” license, which is our licensing scheme for digital music, and it was the subject of a  copyright tribunal decision back in 2007.

The copyright tribunal (UK Copyright Tribunal-similar to the US CRB) set a rate which was sort of equivalent to the American CRB, and the rate that they set for digital exploitation of music, pure music, like a pop video, was the greater of 8% of revenue or 0.22 pence per work streamed. So, every time a video was shown, we should have been paid at the greater of 8% or 0.22 pence.

The rates that they (the UK Copyright Tribunal) published in the summer of 2007, would only be applicable for a 2-year period, and it would expire in July 2009; they didn’t say what would happen after that. So, it is obviously incumbent upon us to do extensive market analysis and then come to a decision as to whether anything material had changed between then and now that would justify amending those rates or the structure of those rates, and if so to put that into place. So, we’ve been going through this process, and we are close to publishing what our new rates will be in the next few weeks. But YouTube, and Google has, and again, this is not confidential because they’ve said it publicly, said their position is a per-stream minimum for a service like You Tube doesn’t work, the only thing that works is a percentage of revenue. On a superficial level, their argument sounds very plausible. They say, “We’re trying to create this brand new business model, we’re giving exposure to all of these artists and these musical works, all we want to do is share in the revenues that we’re able to generate with the creators of those works. We absolutely believe the creators should be paid, but they should be paid a percentage of what we can make.”

Our view is that music has a value, irrespective of whether or not someone else is able to generate revenue out of it. If [music] didn’t have a value, then, [Google] wouldn’t be using it.

And it is very important for a number of reasons, including that the rights of creators are respected and they are remunerated a small amount of money every single time the music is played. There are a number of reasons why it’s important, one is, as I’ve said, it has a value.

The second is that specifically with respect to YouTube, any person who is uploading content has 3 choices when they upload that content. It gets fingerprinted and they can choose to monetize it, they can choose to not monetize it, or they can choose to block it. But, we don’t believe that if a third party makes a decision not to monetize content that it can be fair to the creator of that content not to get any sort of remuneration; a decision over which they (the creators) have no control.

The third reason is that with respect again to YouTube, there is a huge amount of crosssubsidization going on. Before the internet came along, there were lots of areas of commerce where as product or services become commoditized, what their provider does is bundle them with other products and services. So whether it’s handsets and minutes for mobile phone tariffs, whether it’s cable television and telephone and broadband connection from a cable TV provider, or whether it’s Google, whose business actually is all about the monetization of data.

To a large extent they don’t care whether the data they have about you comes from your email usage, your calendar, your search patterns or what you’re watching on You Tube. All of that has a value to them that is far greater than the sum of the parts. And therefore, simply looking at how much advertising is sold against one particular page of showing a video on YouTube is not an accurate and reflective economic analysis on which to base an appropriate remuneration for creators. That fundamentally, is a difference of opinion between the two of us.

We believe creators should be paid a small amount of money every time their music is used.

They [Google] believe that creators should be paid a percentage of what they can make in terms of advertising.

So, what happened after that is that we had been having our negotiations and had a meeting scheduled for, a series of meetings scheduled and a plan to try and come to some resolution, when on a Monday afternoon, I received a phone call from Google saying “We have made a decision that we are going to block all premium music content with effect from 6pm tonight.”

Neal: No notice? [Ed. Charlie sez: Welcome to the Googleplex.]

Shaw: No, this call came at 2:30 in the afternoon. This was clearly a very calculated and premeditated tactic on their part, because first of all, we had actually had a meeting with them the previous Friday where we had been consulting with them on what their views were for our new joint online license. The next negotiation meeting had actually been penciled in for the following day, a Tuesday, so it was rather strange that 2:30 in the afternoon, I get this phone call, and within 5 minutes of me putting the phone down, I started getting calls from our press office, who were receiving calls from every single media outlet in the UK, saying “We’ve heard that Google is about to block all music videos in the UK tonight-what have you got to say about it?”

Chris Smith: Big Day . . .

Shaw: Now, what they actually did was very highly targeted, and designed to create a much bigger story than the actual impact on the user experience. If you go on to YouTube even today in the UK, you may not be able to find every single version of a particular pop video, but I would pretty much bet that whatever video you wanted to find, you could find a version of it somewhere. So, they have not blocked all music videos in the UK. What they have purported to do, is to block what they call Premium Music Content. Premium Music Content by their definition is content that is either being uploaded by record labels or claimed by record labels, either some label uploaded or it seems someone else has uploaded it, they’ve owned it and they’ve said we own the copyright in this and therefore it’s part of our pot.

I think there are 3 reasons why they honed in on these two. Number one, it was the only part of the content set that actually disrupted other people’s revenue funds. So, if Joe Blog gets their video blocked, they get pissed off, but, so what? If Universal Music gets their video blocked, they stop receiving revenue every time that video is played.

So, the tactic, one has to assume, was to put pressure on other people who were being affected, to put pressure on us, to concede our position. So, one was it was disrupting other people’s revenue flows.

The second was that it was highly targeted, as I said, on the Premium Music Content, which actually accounted for a relatively small portion of all usage on YouTube. So, the videos concerned, and we don’t know exactly how many there are, because it seems to change on a daily basis, but it accounts for probably single digit percentage of total views or streams viewed on YouTube.

The third reason was that they will still at some point claim that as far as user generated content is concerned, (as opposed to) user uploaded content, because they are two quite different things, they would still want to fall back on some sort of “We’ve got no responsibility for this.” As soon as you start blocking something because it fits into a certain category then you have to know what it is in order to block it.

So, by leaving all of the user uploaded content alone they preserve their position with respect to DMCA protections and a lack of obligation to take responsibility for that content.

So they have blocked some of these videos, a few weeks later they did the same thing in Germany. They publicly said that the reason they did it was because they were unable to reach an agreement with us, although, we were still in the middle of a negotiation and we certainly did not ask them to take this action, and take content down.

They also said they felt uncomfortable being in a position where they were not licensed. Now, I find that quite ironic, given that the other 200 or so countries in the world don’t seem to pose such a moral dilemma for them and their content is still available there. Since the date of the take-down, or the blockage, I think March, about 2 months ago now, so early March, we have continued to talk to them and we do continue to talk to them, but there is still a fundamental difference of opinion over what they are responsible for and what is the appropriate mechanism to judge that.

Neal: At this point, you don’t really know what kind of effect it’s had? Have you heard from publishing members or record labels complaining that they’re losing money on this?

Shaw: No. I have to say we’ve been extremely pleased by the support that we’ve got from a wide variety of constituents and  stakeholders in the industry, and actually, not just in our industry, but across all creative industries.

This is not an issue between Google and PRS Music: this is a battle that we happen to have stuck our head above the parapet, being in a large territory that’s important to them, perhaps having been the first to license them, but, we are being made an example of in a battle that applies equally to record labels, it applies to journalists, it applies to book publishers and photography.

Any type of content that is being exploited over the internet, where there is a very fine line between a company providing an ability for consumers to find what they’re looking for, that other people have put there, and a company that is actually providing that content as a service provider. There is a fine line between data and/or information and content. If you go on to Google’s corporate website and look at their strategy file, their mission statement, one of their strat lines is “Don’t be evil” but another is there that is the corporate mission, (I can’t remember it verbatim) but it’s something like “to make all the world’s information available to anybody who wants to find it,” something like that. And that word, “information”, was probably put in there when that’s exactly what they did, but the line between information and content has become very, very blurred.

And if you look at what’s going on in the US with the book settlement, you look at what’s going on all over the world with newspapers and the Google news aggregation service and Google books as well, there are lots of areas where that line is becoming very blurred and probably being overstepped.

___________________

Conclusion by Jonathan David Neal

This is just one example, in one part of the world of how some corporate giants are trying to devalue the work and content of creators, and ultimately respect of composers, and songwriters. It’s happening all over the world. Their mantra has been, “you need us.” However, they need our content, which is just as important. A second observation is, “if they devalue our intellectual property, they undermine the value of their own intellectual property, their services and everyone loses.”

It’s very short sighted. We as composers, songwriters and lyricists need to take an active stand against those who would devalue our work and demand respect for our craft and ourselves.

Note: On September 3, 2009 PRS for Music announced a new licensing agreement that covers music contained in videos streamed via the online video platform.  Premium music videos have now been reinstated to YouTube in the United Kingdom.

Thanks to Dan Foliart and UK Composer Chris Smith, for helping me make this interview possible. Chris sits on the board of PRS-MCPS and arranged the interview, which took place at PRS For Music’s London office in May of 2009.

Google’s Uncertain Trumpet: Why is YouTube still hidden in the search alphabet?

August 13, 2015 2 comments

You’ve no doubt heard that Google has rearranged the deck chairs to reorganize the company.  The general idea is that Google is establishing a holding company titled “Alphabet”–please resist the urge to point out that Google now owns the alphabet.  What underlies the restructuring is that Google has essentially succeeded in its initial business play to organize the world’s information whether the world likes it or not.  Now Google is setting about commoditizing all of it.  Not just music, books, movies, television programming.

All of it.

With the European Commission breathing down their necks in what appears to be a vigorous antitrust indictment, one can’t help noticing that breaking up Google will be that much simpler after the Alphabet reorganization than before.  So while the spin that Google is putting on the reorganization is that of confidently going a new direction into the future, there may actually be greater uncertainty about the future at Google than ever before.

It’s an odd coincidence that Google is announcing the Alphabet reorganization at the same time as they are seeking a delay in responding to the EC’s antitrust indictment.  Jamie Gorelick can’t help them with this one apparently.

As Re/Code’s insightful journalist Kara Swisher said on Charlie Rose’s show:

You will hear Google saying — the most powerful and sometimes frightening company on the planet — saying oh, we`re just a startup. And so it`s kind of perplexing at the same time… they want to be young and so this maybe gives them a little youth and innovation….I think that it`s just another way to state what they were already doing and it makes for great headlines and then we can all make Alphabet jokes and things like that. But in general, it`s just a statement of what they were doing before.

What Google is essentially accomplishing is moving its riskier business lines under separate managers under the new Alphabet holding company but is leaving search, Android and YouTube in Google.  (It remains to be seen exactly how this will all work as a matter of corporate formality, not to mention that pesky shareholder voting business.  Since the Google insiders have 10 times the voting power of folks like you and me–to the extent ordinary shareholders get a vote at all–we can be pretty confident that when the dust settles, the insiders will still be in control.  If not more so.)

One also can’t help noticing that the European Commission is currently prosecuting Google for antitrust violations in search, is investigating Android for potential antitrust violations and also has a complaint against YouTube pending from IMPALA (the European indie label association).  Pure coincidence, I’m sure.

While we can speculate on these high level machinations, we have much more mundane aspirations.  I’m watching Google reorganize our money and thinking about what all this means for YouTube.

What About YouTube?

So why is YouTube still combined with search?  We don’t know the exact reason because no one is talking (yet).  This is Google after all.  One way to think about this is that YouTube is simply a format based version of search that extends Google’s monopoly power over the video vertical subsidized by Google’s monopoly rents from search.  As we have learned from various investigations and experience, Google clearly favors its own products in search, so it’s not surprising to see YouTube results at the top.

As Matthew Ingram observed in a thoughtful article in Fortune:

Since both YouTube and Google are involved in search (if you see YouTube primarily as a vertical search engine devoted to video) and both depend on advertising for the bulk of their revenues, it arguably makes sense to have them part of the same company, where they can share resources. The flaw in this theory is that YouTube wants to be much more than just a search engine, and real investment in video and the creative economy requires very different skills….A couple of ex-Googlers speculated that YouTube may not have been broken out as a separate unit because Google’s revenues and growth rate are flattening, and therefore it needs to keep all of that YouTube cash and growth inside the search company until it can figure out how to grow faster through mobile and other means. Once that transition has been made successfully, then YouTube can be spun out.

What this may mean for Margrethe Vestager the European Commission’s antitrust regulator is that any prosecution of Google for search must necessarily include YouTube.  We’ll see what the future may hold on that score.

But what this means today for artists and songwriters is that we need to be much tougher on YouTube in royalty negotiations.  Music is a huge part of YouTube’s success and revenues.  Morgan Stanley produced this chart after some green eyeshade working over of Google’s publicly disclosed revenues in an effort to break out YouTube’s contribution to revenue (which neither Google nor YouTube provide directly).  Morgan Stanley thinks YouTube’s revenue is growing 38% year over year.  You know–that revenue we’re supposedly sharing in.  I’m sure your YouTube royalties are growing at the same rate.

In fairness, these numbers are estimates of YouTube gross revenues and does not take into account YouTube’s operating costs.  However–when a “startup” is booking $6 billion, we are well past the point that we should feel we need to cut them a break on royalties.  As Kara Swisher noted, Google’s “we’re just a startup” smokescreen is a bit hard to take.

The Alphabet reorganization is further confirmation that YouTube is a mature business and should be treated as such.

I’m Ready as Anybody Can Be

Here’s the reality:  This business of taking a mysteriously calculated revenue share is bullshit.  The idea that a $6 billion company is paying a royalty that requires a scientific calculator to determine is madness.  The whole YouTube royalty structure has to go.  Do we say to CBS, well pay us a part of what you get and if you decide to sell low that’s OK.  If you decide that some uses of our music aren’t going to be “monetized” (a vile concept), hey, that’s up to you.

No we don’t do that.  We say here’s the price, pay it or don’t use the music.

If YouTube wants to get a license for the premium music videos then guess what?  Drop the sham positioning on DMCA safe harbor.  Why on earth should they get both?  If they want to be in business with artists and songwriters, then act like it.  And if you consider that video search is just branded search under a different name, then why should Google get to hide behind the sham safe harbor at all, particularly now that they’ve told the world that YouTube and search go together.

It’s also nearly impossible to determine whether we’re being paid correctly as upstream royalty compliance is essentially blocked by Google and wrapped in NDAs.  This is a petrie dish for fraud on a massive scale that would make Morris Levy blush and someone needs to investigate it–like Mississippi Attorney General Jim Hood is trying to do while being sued by Google at the same time.

It’s time to stand up and be counted on these issues.

You’ve Got to Stand for Something or You’ll Fall For Anything

This is not going to be easy.  Somehow we have gotten into business with the most litigious company on the planet that is running an Enron-level laundry inside the darkest of all black boxes.  YouTube has somehow gotten our marketing folk believing that somehow they need YouTube to market artists.

This assumption needs to be tested.  Taylor Swift has already done a great job of showing us all that YouTube needs hits and hits don’t need YouTube.  The Man 2.0 behind the curtain did not dig that at all. My bet is that it’s about to start happening a lot more frequently.  It’s really very simple–we just need to get it in our job descriptions that hits still need to happen and if we can’t use YouTube to our advantage we will not allow YouTube to use us to theirs.

The Alphabet reorganization should be plenty of proof that YouTube is not a music video service–it’s a search vertical and a data honey pot that is skinned to look like a music operation.  And it books a fortune.

It’s time to get serious.  Google has shown that they are very serious and we should be, too.

Wouldn’t you like your royalties to be growing 38% year over year?

Will the European Union Break Up Google and Should They Include YouTube?

November 22, 2014 Comments off

When Kim Dot Com was arrested, a reporter asked me if I was surprised.  This reaction completely went against the mood of the moment about the fellow.  You’re not? (Incredulous)  Why not? (Scandalized).

Because if you get down on your knees and beg to be punished, don’t be surprised if you are.

I have the same reaction to news that the European Parliament is considering a resolution that Google should be treated as a monopoly in Europe and be “broken up” or required to divest itself of its search business.  According to Reuters:

The European Parliament is preparing a non-binding resolution that proposes splitting Google Inc’s search engine operations in Europe from the rest of its business as one possible option to rein in the Internet company’s dominance in the search market.

European politicians have grown increasingly concerned about Google’s and other American companies’ command of the Internet industry, and have sought ways to curb their power. A public call for a break-up would be the most far-reaching action proposed and a significant threat to Google’s business.

The draft motion does not mention Google or any specific search engine, though Google is by far the dominant provider of such services in Europe with an estimated 90 percent market share.

So how did this come to pass?  It’s simple:  Once again, Google overplayed their hand.  Supposedly the master of public relations and behind the scenes play, Google–and in particular Eric Schmidt (call sign “Uncle Sugar”)–dragged out the European Commission’s antitrust investigation for four years.  But oopsie–that also coincided with the term of the antitrust official of the EC with whom Schmidt had become BFFs.  Uncle Sugar left out the closing part.  When you spend four years working on a deal with a guy, you want to be thinking in terms of that closing bit.  Especially when you know going in that the guy you’re schmoozing is LEAVING ON A DATE CERTAIN.

What Google was truing to avoid was/is something called a “Statement of Objections” that is an administrative proceeding in EC law that allows the imposition of a fine for violating the EC competition law.  That should be a huge amount of money–in Google’s case some estimates are $10 Billion–and it comes with service after the sale, meaning regulatory oversight.

What has become apparent in the not one, not two, not three but an unprecedented four settlement negotiations with the OUTGOING competition commissioner, is that Google has in fact violated the laws that they are avoiding prosecution under.  And even if Google is prosecuted now, they’ve still had an extra four years of operating profits, an extra four years of expanding their control over European governments and an extra four years of extending what Public Citizen called Google’s “soft power”.

However, what has also happened in the intervening four years is hockey stick increase in the public distrust of Google and extreme dissatisfaction with the way the EC was handling the Google investigation.  All the supposed “settlement” proposals that Google made were that special kind of “we think you’re an idiot” approach that anyone who has dealt with Google will immediately recognize.  A fish rots from Uncle Sugar down, don’t you know.

What has happened instead is that there is a full throated movement now among Members of the European Parliament to do what’s worse for Google than paying almost any fine:  Divestiture.

It is possible for governments to require extremely large (check), arrogant (check) and unrepentant (check) violators of antitrust law to divest themselves of certain assets.  This is a relatively normal process with mergers (we’ve even seen record companies required to do this as a condition of approving the merger), and that’s a different breed of cat altogether as it’s part of an overall negotiation.

But to cause divestiture with a company that has violated the antitrust laws is far less common.  We saw this with the break up of the Bell system in the US (United States v. AT&T, 552 F.Supp. 131 (D.D.C. 1982) for those reading along).  The reason for the AT&T case was that the FCC accused the company of using monopoly profits from its Western Electric subsidiary to subsidize the costs of its network.  Sound familiar? I’ll come back to this.

It’s important to note that the way that this break up would be accomplished is not through the European Parliament as Deutche Welle reports:

While the European Parliament lacks the authority to break up corporations and has no power to initiate legislation, such a resolution would increase the pressure on the European Commission to take action against Google.

“It’s a strong expression of the fact that things are going to change,” Gary Reback, a United States attorney who has filed complaints against Google on behalf of companies said, adding “The parliament doesn’t bind the commission for sure, but they have to listen.”

According to Reuters, the resolution was co-sponsored by German center-right Christian Democrat lawmaker Andreas Schwab and Spanish centrist Ramon Tremosa earlier this week. Schwab told Reuters it was “very likely” to be adopted by his own parliamentary group and it was also supported by the main center-left group.

The new anti-trust chief for Europe, European Competition Commissioner Margrethe Vestager, said she would take some time to decide on the next step in a long-running investigation into Google, after her predecessor, Joaquin Almunia, had rejected a proposed settlement with Google which would have ended the matter.

Regardless of whether the European Parliament has the authority to break up Google, it is not a good thing on many levels for even a nonbinding resolution to be adopted in favor of that result.  It’s like the Parliament is telling the public we don’t like Google, we’re keeping an eye on Google and we really don’t trust Google.  And the signal it sends to the new European Competition Commissioner is–go for it.

But that’s not really the end of it.  What about YouTube?  Extremely large (check), arrogant (check) and unrepentant (check) violators of antitrust law.

If Google dominates search in Europe, YouTube is just another search vertical–video search.  And we know that Google used its monopoly profits from search advertising to subsidize YouTube for years.  We’ve seen in the indie label case filed against YouTube with the same European Competition Commission that YouTube certainly behaves like a monopolist–because YouTube is a monopoly.  So Google used its monopoly profits to create a new search monopoly with YouTube and then used its monopoly control to try to bully independent labels.

It also appears that YouTube was unable to use the brass knuckle negotiation tactics it’s so famous for to bully the indie labels into dropping their complaint in Brussels as a condition of closing the Music Key license.  But the case stands out as a prime example of what should be done if the divestment train gets rolling.  Google search and YouTube are just two sides of the same coin.

And of course what it all comes down to is that Google uses its monopoly position to dominate smaller players, all the while harvesting data to profile Google’s search users and music fans on YouTube.  And we all are contributing to Google’s ultimate monopoly–data.

Google shares data across all its platforms which itself a kind of monopoly subsidy across all it’s platforms.  So you can’t really accomplish the goal if all you do is divest the search platform.  YouTube itself must also be spun off with separate management and transparency in data sharing.

As Garth Brooks said, “I’m telling you, [YouTube is] the devil.”  Who never would have survived without subsidies from Google’s monopoly profits.

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