Congressional Research Service Memo on Constitutionality of IRFA Section 5

Senator Ron Wyden and his staff director Jayme White were kind enough to ask the Congressional Research Service to conduct a legal analysis of the concerns regarding Section 5 of the so-called “Internet Radio Fairness Act” that we have raised on Trichordist and that David Lowery raised directly with Senator Wyden at the Future of Music Coalition Policy Summit in Washington on November 13.

You can read the entire memo here, but the part that interests us the most is this section:

David Lowery, writing for the Thetrichordist.com, has argued that “Section 5 of IRFA is perhaps the most pernicious part of the bill, for it would make it illegal for anyone to criticize digital sound recording licensees. If IRFA becomes law, artists and artist organizations will need to watch what they say in public in opposition to [certain licensees’]direct licensing efforts.”  It seems that Lowery takes issue with the use of the words”any action” that would”prohibit, interfere with, or impede”negotiations.

He argues that these terms are too broad and could apply even to those who would criticize licensees for attempting to negotiate direct licenses with copyright owners. Another concern cited by Lowery in opposition toSection 5 is the ambiguity inherent in the language “any copyright owners acting jointly.”

This language does not necessarily seem to be limited to large member-based royalty collection organizations like SoundExchange. It may be broad enough to encompass, for example,the members of an individual band, who might be considered to be individual copyright owners, acting jointly. Under this broadreading of the language, an argument could be made that a band, posting its criticisms of direct licensing negotiations between a licenseeand a copyright owner, would betaking an action that would interfere with a direct licensing negotiation, therebyviolating Section 5.

Though this hypothetical presents a broad interpretation of the language of Section 5, it is not an implausible one. It is possible that the language may be broad enough to cover a blog post by a band expressing their opinion regarding contract negotiations between a licensee and a copyright owner. Nonetheless, it seems unlikely that, in practice, Section 5 would impinge upon First Amendment rights….

But it’s not “implausible.”

Other Than That Mr Westergren, How Was The Play? IRFA Gets An Ass Whupping

Yesterday the Internet Radio Fairness Act got a hearing before congress and promptly got it’s ass kicked.  I mean there is really no polite way of saying it.  Democrats and Republicans alike were scornful and clearly not interested in hearing Pandora’s ginned up unfairness crap. Not only did they seem to disagree with Pandora’s argument for lower royalties the committee went completely off the reservation and began to question why terrestrial radio doesn’t pay royalties to performers.  At one point Rep John Conyers asks:

“I’m still trying to figure out why artists and performers who play 24-7 on terrestrial radio don’t get a dime.”

Oops.

My favorite  part was Virginia Republican Bob Goodlatte’s scornful reproach to Pandora’s CEO Joe Kennedy

“Here we are again,  Mr Kennedy, when is a deal a deal?”

The Congressman was referring to the fact that just 3 years ago Pandora was crowing about the deal they had made with record labels, publishers and artists for royalties.  Now instead of trying to increase their paid subscribers, or increase advertising revenue, they are back asking congress for a handout.

And doesn’t congress have better things to do?  A fiscal cliff or something?

Or Pandora Could Add Another Minute Of Advertising And Raise Their Revenue 50%

Silicon Valley tech gurus  love to tell musicians that they “need new business models.”  This is kind of funny when you consider that most of these folks work for companies that have never shown a profit. Never!  Whereas my web-enabled businesses Cracker and Camper Van Beethoven  (like many bands) have been profitable for decades.  So can someone please tell mewhy we’re supposed to  listen to these serial failures with their snake oil schemes?

I think it’s high time that artists turn the tables.  We should tell these folks how to run their businesses for a change.  Quit whining and bootstrap it! Just like we had to when we were starting our bands.  Sell T-shirts or something!

For instance here’s how Pandora can increase their revenue 50%:

1. Pandora plays one minute of commercials per hour.  Satellite radio plays about thirteen minutes an hour. Pandora could easily double the number of ads and still have a very pleasant consumer experience.

2. Pandora made approximately $86 million from advertising on total revenues of $101 million last quarter.  Let’s say they double the amount of advertising and they only generate another 65 million from doubling ads.  This gives them a minimum of $151 million in revenue. And that is an increase of 50%.

But seriously folks, have investors considered that the so-called Internet Radio Fairness act could take years to pass?  And then once it passes it requires the President to appoint new judges that would have to be approved by the Senate.  Does that sound like a quick fix to you folks?  But that’s not all . These new judges would then have to convene new hearings on the royalty rates under the new below fair market value standards.    This would take years.

On the other hand Pandora could start increasing revenue tomorrow by simply airing more ads.  This is what most main street businesses do.  They need more revenue?  They generate more revenue.  They don’t run to the federal government to force their suppliers to lower their prices!  Adapt or die Pandora!

Of course we know the IRFA is about more than royalty rates.  This is about agency capture.  It’s about replacing current judges with judges that are more friendly to the the Tech and Broadcast industry’s agenda.  It’s about not allowing artists and their representatives to speak out when mega-broadcasters propose direct licensing deals that benefit labels at the expense of artists.   We artists could be prosecuted under The Sherman Act if this bill passes!

Let’s just hope that congress sees this for what it is: Crony Capitalism.

The Most Important Fact Academics and The Copyleft Neglect to Mention: Copyright is Optional.

This started as a quick response to a piece that Paul Resnikoff ran on his excellent Digital Music News blog.   I realized later that I really had a more general point to address.  There is a large contingent of people in the Copyleft (especially academics) that don’t seem to realize that eliminating copyright actually reduces choices and empowers rich and powerful corporations. 

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A few years ago I had the pleasure of seeing comedian Patton Oswalt at my wife’s venerable DIY/indie music venue The 40 Watt club.

Patton opened with an apology to the largely liberal academic and college students in audience.

“I want to sincerely apologize for my opposition to gay marriage, I realize I may have offended many of you. But no one told me  gay marriage wasn’t mandatory”.

This is what is so incredibly stupid about the copyright debate. The tech lobby has created an army of ignorant academics, tech public policy apparatchiks and paid bloggers that seem to not understand that copyright is not mandatory.  Anyone is free to enter into a creative commons like licensing agreement or even just give away their music by fiat if they chose.  The hybrid/sharing economy is here and it’s thriving.

In fact that is what I do with some of my repertoire.  Cracker and Camper Van Beethoven have had a Grateful Dead inspired taping/sharing policy since our inception in the the early 1980’s.  We have thousands of live tracks on the internet music archives I unequivocally support an artist’s right to monetize his/her songs however they see fit. Or not to monetize those songs.

Eliminating Copyright protections does not increase choice by artists but limits them.  It does the opposite. We would no longer be able to choose how we monetize songs.  We could not chose with whom we do business. Eliminating copyright is mandatory collectivization, it’s closer to something that totalitarian regimes impose than the kind of free choice we provide in our democratic societies.

If this had been the public policy in the 1950’s and 1960’s the mafia connected Morris Levy wouldn’t have even had to buy those R&B singers the occasional Cadillac. He could have paid them nothing.  Most of the digital shysters arguing that they they want to “help” artists by “promoting” their music and paying them nothing are making the exact same arguments that Morris Levy made to artists in the 1950s and 1960’s when artists came to him asking for money.

Those calling for the abolition of copyright protections would simply be allowing multinational corporations like Universal Music, Google, Apple and BitTorrent  to exploit artists without little or no compensation.   It would make the most exploitative practices of the old music business look like childs play.

While it may seem revolutionary to many academics and bloggers to sit behind a computer and post invectives against copyright and the major record labels it’s not. It’s actually a regressive pro-corporate activity.  The truth is the rights of millions of individual artists (not record labels) would be destroyed in the process.  While mostly large multinational corporations would benefit.

The ideals of western civilization are ultimately designed to protect the rights of the weak, poor and powerless against the strong rich and powerful.  It may seem stupid in this age of cynicism and greed to measure policies against the fundamental principles of western civilization.  But it is not.  Especially if you believe in leaving behind a better and fairer world. If academics and intellectuals have time and energy for “fair trade” coffee isn’t it hypocritical that they don’t want to ensure that artists (the vast majority of which are in the developing world) are also fairly compensated and not exploited?

In an age when we are obsessed with advancing the rights of formerly persecuted minorities  and generally making the world a kinder place.  It is startling to see so many people arguing to make the world less fair and less civilized place for the milions of individual artists on the planet.  I can’t help but wondering if these generally progressive academics and intellectuals have really thought through their opposition to copyright.

Zoë Keating’s Request for Internet Transparency met w/ usual Hypocrisy

We’ve been following Zoë Keating’s blog for a while. Zoë represents (figuratively, not literally) a new generation of musicians whose careers have only really existed in the post-internet, pro-piracy environment. As such, the perspective of these artists who have little experience in the world prior to optional payment and virtually no artist control over the distribution of their work is somewhat different from those who have inhabited both environments.

We celebrate the Zoë Keatings of the world for their undying tenacity in their efforts to navigate the current music industry without having had the benefit of the pre-piracy era. Zoë’s made a few excellent observations and suggestions. One recent post has been to ponder the creation of a new artists rights coalition to represent the needs of contemporary indie and DIY artists. Another post has been soul searching on what might be the fair way to set appropriate royalty rates across the various terrestrial, satellite and internet streaming radio platforms.

But it is one of Zoë’s most recent posts which has really caught our attention, as Zoë has been “slashdotted” just for asking for transparency and data sharing from the internet companies profiting from the artists work.

In the case of a service like Pandora, when someone has taken the time to create a station around my music or given my songs a “thumbs up”… I’d rather know where in the world those particular listeners are than be paid the $0.0011 per play that is currently required by law. That was my point.

Now, we don’t think this should have to be a choice, and we think Zoë has an excellent point, especially given that the Declaration Of Internet Freedom specifically states transparency as one if it’s principles.

Declaration of Internet Freedom

We stand for a free and open Internet.

We support transparent and participatory processes for making Internet policy and the establishment of five basic principles:

Expression: Don’t censor the Internet.

Access: Promote universal access to fast and affordable networks.

Openness: Keep the Internet an open network where everyone is free to connect, communicate, write, read, watch, speak, listen, learn, create and innovate.

Innovation: Protect the freedom to innovate and create without permission. Don’t block new technologies, and don’t punish innovators for their users’ actions.

Privacy: Protect privacy and defend everyone’s ability to control how their data and devices are used.

As with many things we’ve seen from the tech sector, there always seems to be selective reasoning when it comes to them actually adhering to their own principles. This from the same people who want permissionless innovation, up and until, you are not asking them for permission as Google is illustrating with Doogle.

Of course the double standard and irrationality of the freehadist hive mind doesn’t stop there. Among the comments posted, this one is indicative of the faulty logic and thinking expressed by so many of the anti-artist maximalists.

“She got money, I got music. There was no agreement to get my data. 0% is hers.”

The point that should be emphasized is that there was no agreement period. Pandora gets a compulsory license. It gets the benefit of a “one-stop shop” for all sound recordings so long as it pays the rates, no questions asked. Congress took away from Zoe Keating the choice to make that agreement. So it’s also perfectly valid to say that Pandora should also turn over some data to artists in exchange for that – especially if the consumer is (and should be) given the choice to opt-in.

We are pro-choice and respect consent, and we believe that the internet and tech community should also as well.

Giving Thanks for Creators Rights and Copyright

It’s been said that the only thing more sacred than a human being sharing their love, is their labor. We agree. Copyright is the institution to protect the innovative artists, musicians, filmmakers, photographers, writers, illustrators and creators of all types. We are thankful for Copyright.

One of the enduring myths that we constantly hear from those who would deny individuals these fundamental protections of their labor is that copyright is an instrument of corporations to exploit artists and creative innovators. Fortunately this myth is not true. It is in fact very much a lie that copyright is for corporations. Copyright is the instrument that protects the individual from exploitation by and from the tyranny of exploitation by corporations.

Copyright is what grants the individual liberty as expressed in the freedom of choice as to who (if anyone) and how the creator allows their work, labor and love to be exploited. Exploitation in this sense is not a bad word, in so far as the creator has the right to determine who, where and how their work is exploited. Without copyright the individual is powerless from such unwanted exploitation, without consent or compensation. This is why copyright, in it’s essence, very much an issue of human and labor rights.

We are thankful for copyright and to all of our representatives and government officials who do so much good work on our behalf to protect the integrity of the individual spirit as expressed in our art.

Those who are against copyright are also fundamentally against personal liberty and aggressively against the pursuit of the freedom of choice. These are the people who wish to exploit artists for their own personal or corporate gain and like to suggest that artists would be better off without copyright. This is simply not true.

There are those who point to democratized services available to musicians such as TuneCore and CDBaby which allow any musician to access distribution such as Itunes, Spotify and others without the need for a record label. We wholehearted support these services as pro-choice for the power of the individual to make the decisions that are important to them.

These services that provide more choices to artist to determine how they choose to exploit their own work are only viable because the individual artist has the choice to use these services and not sign to a traditional record label. Without copyright, the artists ability to make these choices does not exist. The choices would be made for the artist without any ability determine the uses or the compensation for those uses. This would mean more predatory exploitation of artists, not less.

Copyright is Pro-Choice. Anti-Copyright is Anti-Choice, or Pro-Exploitation.

We think few artists would be in support of losing these rights for all the reasons detailed thus far. Opposition to copyright is opposition to individual rights and supports the unchecked corporate exploitation of artists which we have unfortunately witnessed for the past decade plus online.

We hear from many who are outraged by the wrong doings of record labels, and justifiably so. So let us be clear, any wrong doing should be unacceptable be it by record labels, or those exploiting artists online such as the many illegally operating and infringing business such as the pirate bay and others who literally pay artists nothing, not one penny. The logical disconnect that somehow record labels are bad and the illegally and infringing online businesses are good defies any reasonable justification. Unless of course the motivation is not actually the empowerment of artists, but rather the profits of these tech companies.

So lets get the facts straight. Artists have been given the choice of whom they wish to be in business with. Does anyone really think that artists will be better off with less protection of their work? There is no basis in reality for this assertion and as of this writing, over a decade into the digital economy no new robust middle class of professional musicians has been established in the one place where this theory is being tested. The exploitation economy has failed miserably to create a new sustainable professional middle class of musicians.

For those with an axe to grind with major labels and the RIAA please take note of this, without copyright, the record labels who are more powerful than the individual could just as easily take the artists work without compensation. Surely those who advocate for weaker copyright are not suggesting the records labels should be given more power over the artist? The same would be true of television producers and film studios. If these massive corporations were granted weaker copyright, than artists and creators would be subject to unrelenting exploitation. You can not weaken copyright in one area and not others. The true fallacy of the argument for weaker copyright is that in the areas where copyright is well enforced, creators are compensated greater than where copyright is weaker. This is just common sense.

Weakening copyright would not be isolated to just how rights are granted on the internet, but rather, the individual would be catastrophically disenfranchised. Those with power would exploit those with less power, be it by record labels, film studios, television producers or internet technology companies (as we’ve seen). We need to look no farther to the internet to see this already happening where copyright law is hopelessly out of date for the protection of individual freedom and where artists are so hopelessly disenfranchised and under compensated for their work.

Perhaps it is Metallica’s Lars Ulrich who first (and correctly) noted that “If the record labels are not going to get the money, the internet companies are – and if the internet companies are not going to pay artists that is profiting illegally.”

Copyright provides the foundation for each artist to make individual choices about how to leverage their work. So the truth is that every artists who has signed to a record contract has done so of their own free will, and negotiated contracts which have been reviewed lawyers. As a result of this protection of copyright the record labels must compensate the artists in exchange for a grant of rights. On the much of the internet however, there is no grant of rights, no consent and no compensation. This is categorically unacceptable.

In closing we are thankful for copyright in giving us, the innovative artists, writers, authors, photographers, filmmakers and creators the ability to chose a course of individual freedom and liberty that is fundamental to the ideals of good, fair and honest people everywhere.

David Lowery to speak at Copyright and Technology Conference 2012 NYC Dec 5th.

Please join me.  Judging by last weeks fireworks it should be fun! We have a Trichordist friends and family discount code.

Code: 100GBRJYH  Get’s you in and registered for $100!

From the website:

This special day-long event will examine the latest developments and technologies in the fields of copyright and content security.The nation’s leading experts in the fields will join GiantSteps Media Technologies, publisher of the Copyright and Technology Blog, and Gotham Media for a special program.

This conference is fully accredited for 4.5 CLE Credits by the NYS CLE Board. Financial assistance will be available and discounted rates will be available for government and non-profit attorneys.

Registration: $399 Before November 1; $450 After November 1

http://www.gothammediaventures.com/commerce/orderform.php?id=113

Lars Was First And Lars Was Right

Charlie Rose featured guests Lars Ulrich of Metallica and Chuck D from Public Enemy in 2000 to discuss Napster, the internet and the future of the music industry. In stunning clarity, Lars saw the grim future that would disenfranchise millions of artists, musicians, photographers, authors, writers and other creators who would have their living illegally appropriated by internet robber barons.

“if the record labels are not making the money, than the internet companies will be, and if they are not paying the artists, they are profiting illegally.” -Lars Ulrich

Nearly thirteen years later every statement Lars made in this interview has come to pass as truth. The new gatekeepers of the internet profit from the illegal distribution of  artists’ work while paying the artists nothing, nadda, zero, zip.

Meanwhile Chuck D’s prediction definitely did not come true:

“I think there’s going to be more music sold than ever,” – Chuck D May 2000 Washington DC

But Lars is still treated like a pariah.  Especially by those in the tech blogosphere who were wrong then and continue to be wrong now!

CNN: Music’s lost decade: Sales cut in half

And despite the predictions of legions of corporate false prophets there has been no emergence of a new independent professional middle class of musicians. In fact, the complete opposite has happened, there are 45% less professional musicians (according to the Bureau of Labor Statistics) from 20022011.

Lars was right on the money, literally.

This was never about art, music or freedom.  It is simply a new set of even more ruthless artist-exploiting corporations taking over for the old ones. For example,  in the image below Jeep is advertising on one of the top known pirate sites 4Shared via Google’s Doubleclick ad network. Google alone is estimated to make almost $35 billion dollars annually,  95% of that revenue coming from it’s advertising sales. Google is not sharing ANY of this money with artists that it is exploiting. At least in the 1950’s music business you got a Cadillac every once in a while.

As Lars predicted The New Boss is Worse Than The Old Boss.

Video of the “Radio Active” panel at The Future of Music Summit 2012.

Video from the Radio Active panel discussion of the Internet Radio (un)Fairness Act.  Most of the fireworks are towards the end between Michael Petricone of the Consumer Electronics Association (Why are they here?) and myself.

Of key importance is the slide I am showing on my computer

The Internet Radio Fairness Act’s Attack on Free Speech

In case you missed it: yesterday, the Future of Music Coalition held its annual summit, a full day’s worth of varied speakers and varied topics. The primary topic was the Internet Radio Fairness Act (IRFA) — Pandora’s Tim Westergren led off the summit with a “conversation panel” designed to drum up support for the bill. Senator Ron Wyden, sponsor of the Senate’s version of the bill, had the honor of keynoting the event, and his remarks centered around the legislation.

The Trichordist’s own David Lowery participated on a panel in between the two devoted to the bill. He was joined by General Counsel of the American Federation of Musicians Patricia Polach, SoundExchange General Counsel Colin Rushing, Consumer Electronics Association lobbyist Michael Petricone, and AccuRadio founder Kurt Hanson.

Lowery had earlier challenged Westergren on the free speech implications of Section 5 of IRFA. Westergren deflected: “I’m not going to get into a back and forth over legislative language.”

During the panel discussion, Lowery focused again on the chilling effect that Section 5 would pose to artists and artist organizations. The AFM’s Polach echoed his concerns.

When Senator Wyden took the podium, he attempted to address these concerns. With his voice raised, he conceded that “If the consensus in the legal community is that this restricts the First Amendment, it will be a very short-lived provision.” Techdirt’s Mike Masnick jumped to Wyden’s defense:

As we noted in our prior post, IRFA’s chilling effect on free speech is not a bizarre interpretation.

Satellite radio provider Sirius XM is currently suing SoundExchange and the American Association of Independent Music (A2IM) primarily because of blog posts expressing their opinion on direct licenses pursued by Sirius. It is seeking monetary damages, a permanent injunction, the dissolution of SoundExchange, and the invalidation of all copyrights licensed by SoundExchange — copyrights involving over 70,000 performers — because these organizations representing artists engaged in speech that Sirius disagrees with.

These groups have explicitly raised the First Amendment in defense. As A2IM argues in its memorandum supporting its motion to dismiss, filed last June, “a trade association’s mere recitation of facts and its opinion on an issue or standard cannot constitute an antitrust violation.”

Instead, such a recitation is protected free speech. … Sirius pleads nothing more than just such protected expressions of A2IM opinion.

Artists and artist advocates should not need to run things by their lawyer whenever they want to communicate to other artists their thoughts and opinions on deals offered by Sirius, Clear Channel, or any other business that relies on their music.

We don’t have to wonder if there is a free speech concern with Section 5 of IRFA — there is. We don’t have to guess if corporations will sue artist organizations for speaking up — they already are.

Section 5 would only codify and set in stone this suppresion of dissent.

That IRFA’s own authors, self-described defenders of the First Amendment, weren’t aware of the definite chilling effect of the bill until yesterday only reinforces the idea that Congressional tampering with artists’ royalties is not yet ready for prime time.