The problem is the music-streaming companies | The Hill – Paul Williams

Songwriters have a number of allies in the ongoing fight to update our nation’s horribly outdated music licensing laws. But after reading the recent post by CALInnovate’s Mike Montgomery (“Songwriters are fighting the wrong fight,” 10/5/15), it’s clear that he is not one of them. On what grounds can Montgomery, who represents technology industry interests, claim that he speaks on behalf of songwriters?

As a songwriter elected to represent the interests of ASCAP’s more than 550,000 music creator members, I find Montgomery’s arguments absurd and grossly misleading.


“Complaining is not a Strategy:” The MMF Tour Blames the Victims on Streaming

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“Complaining is not a strategy?” The MMF has found its inner robber baron.  By this logic those who protested against child labour or unfair pay in the last great industrial upheaval were “complaining” and lacked “a strategy.”  The cynical implication is that the blame lies with the victim.  The weak and the poor have failed to innovate or legislate their way out of this.  Instead they just “complain.”     Sad, the once great MMF/FAC is now simply a mouthpiece for the robber barons of  the 21st century.  Much the way the Hearst family owned news papers apparently the streaming industry funds these forums now (see:

Here are some of the “balanced” and “informative” comments from panelists at the NY forum:

“Spotify is the best product ever.”
“It’s so frustrating that artists don’t understand [how great Spotify is].”
“It’d be a shame if sensationalized media stories about low royalty payments stopped people from subscribing to streaming services like Spotify, which is so awesome.”

In NY at least Tommy Silverman was honest about what is really going on. Our sources reports Silverman said “The question is will artists be willing to take a short term loss for long term gain.”  That’s right.  Artists are currently subsidizing these services with below market rates on their songs and recordings.  The problem is there is no reward for our risk taken.  There is nothing for us “in the long term.”  As we have demonstrated streaming rates are actually trending lower. And unlike many managers we didn’t end up with equity in Spotify.  This is one of the reasons we can’t wait for the Spotify IPO.  We believe that the disclosure of ownership shares may cause some legal trouble for certain individuals.

Here is Blake Morgan’s report on the goings on at the NY meetings.   BTW you still have time to show up at the Austin meeting(hint hint).


Transparency Starts Upstream for Streaming Royalties | HuffPo – Chris Castle

We’ve often noted that if the economics at the top of the waterfall are near zero dollars (in microcents) then what trickles down will not get any better…

We’ve seen stories recently about various successes for artists in negotiations with major labels about “transparency” in the payment of the artist’s share of streaming royalties received by record companies. This is great news of course, but the new buzz word “transparency” should be understood in context. There is nothing the digital services would like more than to deflect the ire of artists and songwriters who are enraged about minuscule royalties away from the services and onto record companies or music publishers.

Creators need to be alert that they are not being duped into a false deflection because even in the best case, record companies can only pay on the royalties they receive from services.


Jimmy Iovine says, “YouTube is 40% of music business volume and 4% of music business revenue. That’s a problem!” ‪#‎vfsummit‬

‘Freemium’ music streaming

“This whole thing about freemium, it’s a shell game. These companies are building an audience on the back of the artist, and it really bugs me.”

On YouTube and music

“Here’s a little statistic … they are 40% of consumption of music and 4% of the revenue. That’s a problem! … They know that doesn’t work. But do they care? I have no idea.”


What is the Intention of Justice? Notice and Stay Down is the Government’s Responsibility

Trichordist Editor:

Will Buckley at FarePlay has created a petition to support “Take Down, Stay Down” at Read more about this important issue below and at Music Tech Policy.

Originally posted on MUSIC • TECHNOLOGY • POLICY:


Let’s get back to justice…what is justice?  What is the intention of justice? The intention of justice is to see that the guilty people are proven guilty and that the innocent are freed.  Simple isn’t it?  Only it’s not that simple.

From …And Justice for All, written by Valerie Curtin and Barry Levinson.

There is a new term in our lexicon:  Notice and stay down.  What does it mean?

It is a way of encapsulating a distortion of the law that large multinational corporations are using to their immense profit by middlemaning the theft of other people’s property in the weaponized Internet.

In the late 1990s, the large ISPs had a legitimate concern.  If they are providing ways for the many to connect with each other over the Internet by means of a technology that also enabled them anonymously to send digitized property by means of that technology–such as…

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MegaUpload (MegaVideo) Smoking Gun? Did the site illegally charge for Streaming Movies?

Trichordist Editor:

With Kim Dotcom getting his day in court, this is timely.

Originally posted on The Trichordist:

These screen shots appear to show that Kim Dotcom’s Megaupload was selling streaming movies that it did not have the rights to sell.

Megaupload was allegedly paid uploaders per stream from files they uploaded to Megaupload. That is why there were so many links that Google autopopulated Megavideo after you entered Star Wars in the search field.

Then Google estimated that there were 4.3 million web pages that had the words “star wars megavideo” on them.  Legitimate file locker sites like Dropbox, don’t allow any public links to copyrighted content.  In fact Dropbox just banned Boxopus, a torrent tool from using its API.

Megavideo let you play the first 45 minutes of Star Wars and thousands of other movies for free (after they had served you and profited from dozens ads) . . .

But then, to watch past 45 minutes, you had to enter your credit card and pay…

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Bloomberg Reports “The Fake Traffic Schemes That Are Rotting The Internet”

Uh oh… Is internet advertising just a house of cards?

Late that year he and a half-dozen or so colleagues gathered in a New York conference room for a presentation on the performance of the online ads. They were stunned. Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with at least 6 to 1 for TV. The most startling finding: Only 20 percent of the campaign’s “ad impressions”—ads that appear on a computer or smartphone screen—were even seen by actual people.

“The room basically stopped,” Amram recalls. The team was concerned about their jobs; someone asked, “Can they do that? Is it legal?” But mostly it was disbelief and outrage. “It was like we’d been throwing our money to the mob,” Amram says. “As an advertiser we were paying for eyeballs and thought that we were buying views. But in the digital world, you’re just paying for the ad to be served, and there’s no guarantee who will see it, or whether a human will see it at all.”


Ellie Goulding’s New YouTube Strategy Finally Puts Google in its Place

Trichordist Editor:

Nice to see artists getting smart about YouTube.

Originally posted on MUSIC • TECHNOLOGY • POLICY:

We all know that YouTube pays the lowest royalty rate and has the least transparent royalty statements of any digital service. Due to really bad advice, artists and labels have been driving traffic to YouTube essentially for free and marketers misread the direction of this traffic in forming the belief that hits need YouTube.  Actually, it’s the other way around.  YouTube needs hits.

Taylor Swift’s 1989 release led the way on putting this YouTube situation back on the right track.  Taylor’s videos were pretty much only available on the higher-royalty Vevo, and her label used a variety of tools to take down most of the other Taylor videos on YouTube proper.  (So while it is true that Taylor denied Spotify, to say that somehow the business move was ill-advised because YouTube pays less than Spotify misses the Vevo point.)

Ellie Goulding is now extending the strategy in rather a brilliant…

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DMCA: Denying Monetary Compensation Always | MuseWire

Who Benefits from the DMCA?
The ISPs (Internet Service Providers) who are facilitating all this trafficking of stolen material are completely off the hook because of the safe harbor provision. Imagine a company that helped people tap into the water system of your town. On the surface, they are simply selling plumbing and faucets. “Hey, we’re not making money from stealing water,” they might say, “we’re making money on sink fixtures; we can’t help it if the water people run through those fixtures is stolen.”

Yet that is essentially what Title II of the DMCA allows to occur, but with intellectual property instead of water. And by letting corporations profit from services that promote the stealing of copyrights, we send a powerful message to everyone: theft is acceptable if you can get a law passed that exempts you from prosecution.

So screwed up is Title II of the DMCA that even a corporate tool like Kravets owns up to the problem. He writes that the safe harbor provision “…provides ISPs, hosting companies and interactive services near blanket immunity for the intellectual property violations of their users.” In other words, pilfering from the pockets of songwriters and their children is just fine.


Can Blocking Ads Help Artists? Should Artists Encourage Fans to Block Ads?

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Rates are “all in” at source.  Calculations based on royalty statements from a catalogue of 1500 titles 2014.  Exception is Pandora which was calculated from 2nd quarter 2015 statements (higher than 2014).  

In the fight for fair pay artists are not at war with the Internet or really even the streaming services, we are at war with the online advertising industry.   As we have demonstrated time and time again, subscription (paid) music streaming services pay at least 7 times the rate that the free services pay.   When you see artists (like myself) post absurdly low royalty payments it’s usually from one of the services that is predominately ad supported. Above is a chart that illustrates this nicely.

So for artists the solution seems easy:  get rid of ad-supported free tiers.  The problem is that in order to do away with these ad-supported tiers we have to fight not just the music streaming services but we have to fight the real power behind the throne:  the online advertising industry which is dominated by Google. Indeed all three ad supported services above rely on Google to serve their ads. 

So basically we have to fight Google?

Good luck with that, right?   This is a company with so much lobbying power in Washington D.C. they can make an FTC investigation go away and  turn a federal criminal drug charge (aiding “Canadian” pharmacies) into a civil penalty.   Artists don’t have the money to fight Google largely cause Google has decimated our income streams over the years by allowing “users” to give our stuff away for free on YouTube and feeding massively infringing sites with ad dollars.


So what would happen if most consumers decided to block ads?

First of all it’s not a question of if consumers will block ads but when.  Consumers have grown increasingly suspicious of the entire ad tech industry.  It’s not just the annoying banners, pop-ups and pre-rolls that slow down our browsing experience, consumers have finally become aware of the industrial scale data mining and spying operations used by the online advertising industry. These companies are tracking virtually every web page you visit and often know your physical location to within a few meters.  (Don’t believe it? Don’t take it from me, ask your tech savvy friends who use browser plug-ins like Ghostery.)

While it’s relatively easy now to block pop-ups and banner ads it’s more difficult to block ads on Spotify and YouTube.   But it is doable (if a little clunky)  and it is only a matter of time before ad blocking technology catches up with the streaming services. Apple has announced its intention to allow ad blocking in the newest IOS.  It’s unclear if this will eventually block ads in Spotify and YouTube but most users would welcome it.

So what happens to artists if this happens?  If it becomes suddenly possible to block all ads?

In the short term artists would lose revenue.   But it is not as bad as you think.  If ALL the free streams on Spotify went away IMMEDIATELY artists would see their Spotify payments drop only 16%.  See here: USA Spotify Streaming Rates Reveal 58% of Streams Are Free, Pays Only 16% Of Revenue.   But lets not get too distracted by that because the real crime is that YouTube pays so little it’s a joke.

YouTube is the biggest digital platform of all. Yet as a songwriter I received $12.87 from YouTube last quarter.  By my calculations YouTube paid all rights holders (label/publisher/songwriter) less than $340 for access to my catalogue.  YouTube revenue is not gonna save artists and or the industry at large.   I will barely miss it.  And YouTube is clearly inhibiting the growth of subscription services that pay higher revenues.


What happens in the long term?

This is where it gets interesting and also very difficult to forecast. Admittedly I’m not an expert (and my terminology may not be perfect)  but in the long term ad-blocking forces all ad supported services to move towards other sources of revenue or cross subsidies.  Subscription? Bundle with another service or services?  Become a loss leading “add on” to a company selling other goods? Or much more lucrative advertising schemes like embedded ads or sponsorship.

All of these are more likely than not to boost revenue to artists on a per stream basis. We already know subscription boosts revenue per stream; Cable (I know, not a great example) has figured out how to get people who don’t watch sports to pay $6 a month for ESPN; and iTunes was clearly a loss leader built to sell hardware. Regardless the point is there are very common cross subsidy schemes already out there that could increase revenue to artists.

The downside is that there is a very real potential we end up with something like an Apple/Amazon/Altice  (don’t laugh) streaming tri-opoly if streaming services aren’t standalone. (Why no Google? Ad-blocking may put Google into a revenue crisis with unpredictable consequences.) But I would argue that consumers will adopt ad-blocking anyway, with or without artists encouraging it.  IMHO it is better for this to happen sooner than later because the longer these services limp along with no hope of profitability, the greater the damage to perceived value of music.


The Difference Between Free and Ad-supported

I want to make an important distinction here.  Not all free and ad-supported services are the same.  In reality there is a continuum but I’m gonna simplify into three groups from good to bad:

  1. Services that offer free trials which convert to paid subscriptions after 30-90 days.
  2. Services that offer free ad supported tiers but provide effective incentives for users to upgrade to subscription tiers.
  3. Services that offer free tiers with no intention or incentives to upgrade to subscription tiers or lack subscription tiers entirely or fake subscription tiers that never materialize. (like YouTube’s Music Key?)

We can argue all day over which services go into category 2.  Lets skip that for now or reserve it for a future post.  The question is whether ad-blocking eliminates category 2 and whether the users then move into subscription tiers or down into category 3?

Reasonable people can disagree, but I think that a degradation or elimination of ad revenue for category 2 is a net positive for artists as it forces these services to hone their incentives and move users from free tier to subscription tiers faster.  It’s also possible that if this is not managed correctly users will move backwards to category 3.  Admittedly there are risks.


What about YouTube/Google?

If consumers get really serious about blocking ads and refusing to be tracked?  There is no Google/YouTube.  Not in its current incarnation, not at its current size.  Google must invade your privacy for its cash machine to continue working.

Google could work around ad-blocking and anti-tracking software, but my bet (60%/40%) is they are not nimble enough to do so without a serious hit to their revenue.

Despite all the claims to the contrary Google is a one trick pony: advertising. More than 90% of Google’s revenue comes from advertising.  And a lot of that is the nastiest form of advertising, the tracking spying kind.  I believe Google is what Nassim Taleb would term “fragile.” An institution too brittle to adjust to unpredictable external shock.  A shock like the “viral” adoption of technology that allows consumers to NOT be tracked or subjected to their obnoxious advertising. The ad supported web is not and never was a given.  The internet doesn’t care about Google’s stock price,  currently stable business model or how many lobbyists they have in DC.  Just ask the music business.

The wildcard here is that an unintended consequences of net-neutrality.  As written net-neutrality  gives Google – oops, I mean the FCC a backdoor into consumers smartphones, tablets and PCs.  Absurd as it sounds the FCC could declare ad blocking in violation of net-neutrality, because it discriminates against certain packets and sources of traffic. Hopefully I’m wrong on this.


What about piracy?

Ha.  Piracy is completely supported by ad revenue.  Just ask Kim Dotcom. And Google has always been there to lend a hand,  with obfuscating ad exchanges, astroturf organizations, bloggers with financial ties to Google, shared law firms and  amicus briefs. Also does anyone else find it odd that that Dotcom was arrested only  after he proposed a plan to hijack the entire online ad network (link above)?

I think it is fair to say that Google has served as the deep pockets to aid many massively infringing businesses in their legal battles against rights holders.  This has the benefit of prolonging  a market failure that keeps supplier prices low for its “other” business YouTube .


What happens to the Internet?


The internet and the online advertising industry are not the same thing, although there are companies that spend a lot of money trying to make you think they are the same thing. To counter this I ask you to  read this imaginary conversation between The Verge’s Nillay Patel and The Berkman Center’s Doc Searls (author of the conversation), starting with this paragraph:

(NP) Unfortunately, the ads pay for all that content…

(DS) A lot, but not all. There are plenty of publishers and broadcasters that get along fine without advertising. HBO, Netflix, Consumer Reports and this blog, for example.

(NP) …an uneasy compromise between the real cost of media production and the prices consumers are willing to pay…

(DS) Stop. The commercial Internet is just 20 years old (dating from the end of NSFNet, the last holdout against commercial traffic within the Internet). We’ve hardly begun to experiment with all the different ways things can be funded, and ways people can signal their willingness to pay…

Actually read all five of his pieces on the online advertising industry.


To Block or Not to Block?

So should artists encourage their fans to block ads?  It’s not certain that things will get better for artists in the short term or long term.  On the other hand the professional working class musician is about to be snuffed out of existence.  Can it really get that much worse?

An options trader would see this as a great opportunity:  our losses are small and capped but the upside is potentially unlimited.

If you haven’t noticed I’m a bit of a bomb thrower. I enjoy provoking what I see as necessary conversations. I also enjoy figuring out how to break things.   Encouraging fans to ad-block is a bit of both.  It provokes a necessary conversation about the exploitative logic of the ad supported web and breaks stuff at the same time. Naturally I’m drawn to it.

But what is not so easy to see is that there is a careful calculation here.   The idea is to disrupt the disruptors. Musicians, performers, producers and songwriters have this in our DNA.  Each successive musical style or innovation disrupts the last one which was not so long ago the disruptor. Usually after the disruptor has grown soft, complacent or even arrogant.  When the disruptor begins to proclaim they are here to stay or changing the world?  In the music business everyone knows what happens next. Remember just ten short years ago we were proclaiming MySpace the future of the music business.

As a musician I’ve prospered (to varying degrees) through five dominant format shifts: Vinyl, Cassettes, CDs, MP3s and Streaming. The last two were the most challenging.  Still you think musicians will be sweating another transition as we go from ad-supported streaming to a fairer model?  No. By paying so little the ad-supported streaming services have made themselves economically irrelevant to most of us.  The way most musicians look at it: Who cares if they fail?  They need us more than we need them.

You know what to do right?