Breaking: Source Claims Spotify & Google Fund “Independent” Music Managers Forum and Featured Artist Coalition

Image courtesy Digital Music News.  See full DMN story here.

Music Managers Forum and its sister organization The Featured Artist Coalition are two UK based organizations that purport to advocate for managers and artists. These two organizations have in the past done some excellent work for artists.   But over the last few years they seem to have become the PR mouthpiece for Spotify and to a lesser extent YouTube.   One can confirm this judgement by going to the MMF website and searching “Spotify.”   Some sample search returns:

“MMF and FAC Welcome Spotify Artists As A Big Step Forward”

“Recommended Reading: Spotify’s Financial Viability and Pernicious Fallacies (Op-Ed)”

“MMF event: Get the most from Spotify”

“Love Spotify?”

We were particularly concerned when they posted this piece which at times matches word for word press releases and comments from Spotify flacks.   It also carefully creates the false impression that Taylor Swift withheld her album from Spotify, but “irrationally” DID NOT withhold her album from YouTube.   (Swift DID withhold her album from YouTube and other free streaming platforms, she did not single out Spotify.)  But mostly it was shocking to see an organization like MMF/FAC  come out against an individual’s right to choose where their work appears and under what conditions. Instead MMF/FAC came out  in favor of a streaming corporation’s “right” to have everyones music.  I guess this is the UK version of “corporations are people.”  Very odd.

Well, now we know why.

We have a high level source that is willing  to confirm our long held suspicion that Spotify and Google are funding the Music Manager Forum and its dependency the UK’s Featured Artist Coalition.  According to our source Spotify’s contribution is significant, ongoing  “and quite a lot of money at that.”

This is very important because neither MMF nor FAC have sufficiently disclosed the financial support, yet have presented and continued to present events on Spotify and streaming AS IF THEY ARE NEUTRAL OBSERVERS.  Last year MMF and FAC sponsored a round of public forums on Spotify in the US.  They did another round this last month.   On the flyer for last years events (see above) there is no mention that MMF and FAC are taking money from Spotify and Google.

While this non-disclosure and fake partiality is a problem,  what really concerns us is that Spotify and YouTube appear to be setting the agenda now.   Below is the official agenda of the Music Managers Forum.  Like most artists I am in agreement with virtually every point.   Except #4: “No windowing”.  A “no windowing” policy would hurt artists and help only two companies, Spotify and YouTube.    Let me explain.

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“Windowing” can be used in many different contexts.   Windowing can mean that an album is only available for sale and not streamable for a certain period of time.  Windowing may mean that an album or song might be available exclusively on one service but not others.  It may mean it’s only available behind a paywall.   Regardless of what is meant by windowing, they are all important monetization and promotional tools for artists.    For instance my last Cracker album Berkeley to Bakersfield was a two disc set, with the second disc being a country disc.  Cracker “windowed” this album in two different ways:

1) Since we are not normally considered a country act we gave Rolling Stone Country the exclusive right to stream a track from the country disc for a month in advance of the album release.   In exchange we were prominently featured on the website and gained valuable exposure in the country music world.

2) Similarly in exchange for prominent positioning (ie advertising), we allowed Amazon an exclusive “window” to stream/sell the album 1 week early.

Both of these in-kind trades are widely used by cash poor independent artists who can’t afford to put up cash for advertising.  This important promotional tool would likely fall afoul of a “no windowing” policy. Meanwhile  Apple and Amazon do not seem to have a problem with this kind of windowing, however Spotify and YouTube actively try to restrict this practice.   Spotify has been especially vocal on the topic.   It is not unreasonable to assume that this agenda item is there to please MMF’s and FAC’s  financial backers.

But we don’t have to speculate, MMF and FAC could easily explain how this agenda item got there. For instance were the 4,000 artists that are members of the Featured Artist Coalition allowed to vote on this item?  Were they even consulted?   How about the rank and file manager is the MMF?   How exactly did this come about?   And why is the Featured Artist Coalition now run by a former city banker not a featured artist?

Has MMF/FAC become just another in a long line of fake artist advocacy groups secretly funded by technology companies?

Briefing Op Ed: Should the Feds Shoulder Some of the Blame for Low Digital Music Royalties?

Lowery briefing screen capture

I have an exclusive op ed at Briefing this morning.  It’s making waves.

“If you step back from the debate about whether Spotify or Pandora pay fairly and look at the big picture, something very ugly becomes apparent: The playing field is not even at all. The federal government protects the corporate broadcasters, technology firms and digital services from market forces when it comes to paying artists. But when it comes to ad supported piracy and “user generated content” the federal government sits on its hands, refuses to enforce performers’ legitimate property rights, and in effect provides another subsidy to many of these same companies. Constitutional scholars might term this a “taking.” For this reason I say much of the blame for low pay to artists in the digital realm stems from gross mismanagement by the federal government.

Full piece here: http://briefi.ng/perspectives/david-lowery

AIM Stands Up For Indies Against Apple, So Where Were They On Spotify?

Alison Wenham of the UK Association of Independent Music helpfully pointed out the problems with the 3-month free trial for apple music.

“The main sticking point is Apple’s decision to allow a royalty free, 3-month trial period to all new subscribers. This means that no royalties will be paid through to rights holders during that 3-month period.

This is a major problem for any label that relies on new releases rather than deep catalogue as the potential for this free trial to cannabalize not only download sales, which remain a very important revenue stream, but also streaming income from other services, is enormous.”

She makes an excellent point.   The free period would pay no royalties and has the potential (like all free streaming services) to cannibalize sales and subscription streaming revenue.  So this brings up an excellent point.  Where has AIM been when it comes to Spotify? Cause it does exactly the same thing?

StreamingRatesandPercentagesUSA

Real Spotify revenue data from a moderately sized independent label 2014. Broken down by free, premium and trial tiers.

 

As we have demonstrated over and over again here on this blog Spotify free tier in the US pays about 1/7th per spin compared to the premium tier.   AND since Spotify requires that your entire catalogue be available on both the free and premium tier, this simply allows the free tier to cannibalize not just sales but also spins on the higher paying premium tier.   That is, Spotify does exactly what Wenham accuses Apple of doing.

While we certainly appreciate AIM and Wenham rallying and defending the indie community against Apples predatory pricing,  it also illustrates the hypocrisy of  advocates for indie music industry when it comes to Spotify.   AIM’s licensing partner MERLIN has been a strident defender of all things Spotify.  This blog was singled out early on by MERLIN for mildly criticizing Spotify.  We suspect this is because Indie labels got stock in Spotify and they are willing to look the other way.  Either that or MERLIN is corrupt.  And I do mean corrupt in a legal way. Like there exists some sort of quid pro quo to defend and favor Spotify in the digital streaming space.  Let us not forget that MERLIN  cooked up a likely illegal and anti-competitive deal with Pandora in which indie labels trade lower rates for more spins.  This certainly meets the letter of the law for Payola in the US.

We’d like to see AIM apply the same logic to Spotify free tier, because it’s increasing looking like they are giving Spotify a pass.   Given that we now have multiple anti-competitive investigations into Apple  in the EU, DOJ and New York and Connecticut AG offices, this is starting to  look like “lawfare” between Spotify and Apple with the indie community as partisans.  Apple partisans are already whispering that the EU action is “backdoor protectionism.”  This is a terrible mistake for indies and artists.  We might never get a fair shake from these institutions again.  And there is gonna come a time when we need these government institutions to defend our economic interests.

#irespectmusic Invades the Boardroom: @sivers Calls Out How Pandora Hides Its War on Songwriters from Shareholders

davidclowery:

I Believe Castle and Sivers are largely right on Pandora. But there is an alternative hypothesis to consider. The very public nature of Pandora’s fight against Songwriters and Performers was designed to keep their stock price high while insiders sold millions in stock. By some measure the stock compensation to executives has reached 1//2 a billion dollars. Quite rich for a company that continues to lose money. Now that court rulings are going against them -Pandora lost to BMI and the Turtles case looks very bad for them- they are silent on these issues. Why? To keep their stock prices high. I continue to maintain that Pandora is no longer simply an issue for songwriters and performers. I believe the SEC should investigate on behalf of shareholders.

Originally posted on MUSIC • TECHNOLOGY • POLICY:

The arc of the moral universe is long, but it bends toward justice.

The Rev. Dr. Martin Luther King, Jr.

A common criticism of both public and private companies that waste the stockholder’s money is “where was the board?”  The company’s board of directors are charged by stockholders with providing the first line of oversight over a runaway executive team that act against the company’s interest.

If the board fails in its role, one of the ways that individual stockholders can call executives and board members to account is by attending an annual meeting.  Most of the attending stockholders have already voted by proxy (often by proxies given to vote in line with recommendations of the company’s board of directors–who are usually a slate approved by the company’s senior management.  Unfortunately for the attending stockholders, given the proxy system, voting at an annual meeting is quite the kabuki dance as…

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The Serial Dissembling of Daniel Ek and Spotify on Artist Pay (and Just About Everything Else)

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 Dissemble

Verb, dissembled, dissembling.

to give a false or misleading appearance to; conceal the truth or real nature of

For the past three years I’ve been advocating for better pay for artists from digital services.  However when I started on this quest Spotify was not at the top of my list.  While I have never been enthusiastic about having all my catalogue on the free tier of streaming services (there is a substantial difference in pay per spin on free and premium platforms)  I was willing to put this issue on the back burner while we focused on much bigger  problems like ad-funded piracy and much much lower rates from services like YouTube and Pandora.

But over the last three years I’ve come to believe that Spotify is a much bigger problem.  Not only because of their low rates  but because they deliberately use highly manipulative tactics, paid flacks, proxy organizations, leaked documents, and even paid bloggers to intimidate critics and counter criticism of their service.   As a former State Department employee remarked  “their public relations strategy resembles the playbook of an authoritarian regime.”  The real problem with Spotify is that you cannot trust them.

The latest object-lesson is the still-unfolding kabuki surrounding the leak of the Spotify-Sony Music contract  to the  technology website The Verge.   The Verge is the same site that leaked the  Sony pictures hack.  The Verge apparently has a hard-on for Sony.

Now I have to admit to some schadenfreude when I heard about the Spotify contract leak.  For the last three years we’ve taken significant pushback from the recording industry over our criticism of Spotify.   Major labels have strongly defended Spotify against criticism from artists like myself.  Meanwhile Sony went so far as to replace its own streaming service on the playstation with Spotify.  So yes,  I have to admit it was kind of awesome to see Sony get stabbed in the back by their “partner” Spotify with the contract leak.  On behalf of artists everywhere I must issue a pro forma “We told you so!”

And yes it’s abundantly clear  that it was Spotify that leaked the contract.  Who else beside Sony and Spotify had paper copies of this contract?  The leak helped Spotify and clearly hurt Sony.  Spotify had motive, Sony did not.

Plus it was excellent timing for Spotify.   Let’s review timeline of the kabuki so far:

1. Tuesday Spotify-Sony contract leaks to Sony hater The Verge.  The Verge doesn’t really understand the contract but eviscerates Sony anyway.   Internets go crazy.

2) Wednesday Spotify has press conference (live streamed by The Verge ) announcing new Spotify features. Internets go “meh.”

3) Thursday Daniel Ek does interview with NY Post which results in a convenient headline that reads: “Spotify CEO Says Middlemen Gobble Cash”

So what Spotify and their publicity flacks would have you believe is that this whole problem with artists being fairly compensated has nothing to do with them. It is all the fault of the record labels.   In the NY Post Ek goes pseudo diplomatic and says “I don’t want to point fingers, it’s a systemic thing.”  Meanwhile the  little green men over at The Verge do all his finger pointing for him.

And this is why I say Ek and Spotify are dissembling on artist compensation.  While the major labels like Sony or WMG are contributing to the problem of low compensation by treating revenue as sales (10-20%)  not licensing (50%), the problem still starts with Spotify.  And specifically it starts with the free tier.  Spotify and Ek know this.

We didn’t need a leaked Sony contract to know this.   We have access to digital revenue reports for a moderately sized indie label catalogue and we have diligently reported on the payouts for the last 18 months.  These are the rates paid FROM Spotify TO the labels.  No middlemen involved.  The rate on the free tier in the US is abysmal.

 It takes 7,000 spins (not 1,500 as Billboard magazine would have you believe) to generate the same revenue as a digital album download.

StreamingRatesandPercentagesUSA

Spotify pays out at seven different rates with the free tier being the majority of spins. 

 Artists would make SEVEN times as much if consumers could be converted from the free streaming tier to the paid tiers.   One way to do this would be to have exclusive content on the paid tier right?  An incentive to subscribe to the service.  But Spotify refuses to do this.   Spotify insists there be no exclusives and all music on the service is also available for free.  This specifically led  to Taylor Swift’s album not being available on the service.

Ek does not get it. Why would anybody in their right mind switch to the paid service if they can get the same service for free?

Ek and Spotify need to come clean.  They need to stop playing games and admit they have as much to do with bad pay to artists as the major labels.

Google Proxies Double Down on Piracy AND Child Prostitution

Where do we even begin?

Google anti-copyright proxies Electronic Frontier Foundation and Center For Democracy and Technology file amicus briefs in support of defendants in Backpages Child Prostitution case. Wow.

http://www.theregister.co.uk/2015/05/21/backpage_ruling_dismisses_child_prostitution_allegations/ 

Meanwhile down in Florida a very modest bill aimed at pirate websites gets the hysterical “break the internet” treatment from other Google proxies.

Center For Democracy and Technology has a busy week, by also opposing this  bill.  I guess because it’s important to be able to buy music from anonymous pirate websites on the internet?    And artists really want their music sold and distributed by anonymous websites because it’s so much easier to get paid when we don’t know who it is that is selling our music.  Right?

Not to be outdone Fight for the Future the biggest fake-grassroots-internet-corporation-ass-kissing organization of all time weighs in as well.   Fight for the Future does its usual routine of making up the most far fetched interpretation of the bill (what most reasonable people would term “a total lie”) and tries to whip up the old “censorship” hysteria.

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Did Holmes Wilson and Tiffiniy Cheng dream  “One day I’m gonna grow up to totally manipulate the public by demagoguing on behalf multi billion dollar internet corporations and get paid for doing it.”  Because if they did it would appear they have succeeded beyond their wildest dreams.  There’s a special place in…. er… uh… Mountain View for these two.

And in case you are just joining us.  Why does Google care?  Google is an advertising company. And they are still advertising on many sites like these. They’ll apparently advertise on anything. Including ISIS training videos.  Report here.

PROXY:  Acting on behalf of another party. For instance filing an amicus brief on behalf of the other party. Like here, here. herehere, here and here.

You still don’t think these groups are Google Proxies?   Have you been sniffing glue?

http://voxindie.org/google-funded-interest-groups-come-defense-sugar-daddy/

https://musictechpolicy.files.wordpress.com/2014/09/cy-pres.jpg

http://www.washingtonpost.com/Politics/How-Google-Is-Transforming-Power-And-Politicsgoogle-Once-Disdainful-Of-Lobbying-Now-A-Master-Of-Washington-Influence/2014/04/12/51648b92-B4d3-11e3-8cb6-284052554d74_Story.html

Media Democracy Fund gave over a million dollars to Fight For the Future.  Google at the very least indirectly funds the Media Democracy Fund.  They may directly fund  MDF but no one knows for sure because they don’t fully disclose their funding.   Certainly there is significant overlap between Google Public Policy Fellowships and grants made by MDF. I’ll come to your house and wash your car if it turns out they aren’t funding MDF.  Regardless FFTF is right there with Google on every single issue.

 

UN Airlifts Calculators, Clues to The Verge: $25 Million is Tiny Advance and @Verge Missed Real Story

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Norwegian UN Peacekeeper reacts to news that The Verge thinks $25 million dollar advance for streaming rights to 25% of music market is a lot of money. Photo by Русский: Фото: Михаил Евстафьев English: Photo: Mikhail Evstafiev (Mikhail Evstafiev).

 

The UN announced today that it is airlifting calculators, music industry textbooks and clues to Silicon Valley tabloid tech blog The Verge.   This was prompted by an article published by The Verge that seemed to completely misunderstand the scale of revenues generated by the recorded music business (even with widespread piracy). As a result The Verge missed the real story contained in the leaked Spotify-Sony contract: Sony gave away streaming rights to our music for (pardon the pun) a song!

Sony represents about 25% of worldwide recorded music revenue. In 2011 (the date of contract) recorded music revenue was around 16 billion dollars.   Sony’s share was actually higher then but we can safely assume they were responsible for approximately $4 billion dollars.   So the $25 million over 2 years (or $43 million if you optimistically interpret the contract like The Verge) is a pittance for these rights.   The Verge then made a big fuss about whether this advance was likely to be properly credited to artist accounts.   But that’s missing the point because everyone knows the real payout was probably in the Spotify stock that Sony, key managers, artists and executives received. Now, that’s the story. How is the equity to be credited to artists? Not the $25 million. That’s chump change.

Now I understand how The Verge may have missed this.   They consulted the MySpace of music industry experts, Rich Bengloff for comment.  Bengloff who is highly unlikely to look kindly on his former employer Sony Music,  piled on saying that Sony artists were unlikely to receive any of this advance. What Bengloff didn’t note was that the “indie” labels that he represents are also unlikely to share these advances with artists either.

Pot,kettle,black.

Finally here is another clue for The Verge: Does Sony Entertainment CEO Michael Lynton (not Sony Music chief Doug Morris) have some sort of special (investor?) relationship with Spotify’s Daniel Ek? Might this have something to do with what looks like a remarkably good Sony catalogue deal for Spotify?

I mean I’m just guessing here but has anyone bothered to search the Wikileaks archive for some keywords?  I dunno… different combinations of  “Spotify, Lynton, Daniel, wife, manuscript?”

Did Spotify Leak Their Own Contract With Sony?

Just think about this.

This document was scanned 13 days ago?!  If The Verge scanned this document why did they wait so long to “break” the story?

So it seems likely The Verge did not scan this contract and this is the original leak.

Only two parties had access to this agreement before The Verge got a copy:   Spotify and Sony.

Sony clearly does not benefit from the leak. This is a disaster for Sony. Now it could be a disgruntled employee.  But it would have to be quite a high level employee to have access to this contract.  My understanding is that contracts like this are stored in highly secure locations.

My bet is on Spotify.  Why? Because they benefit from this leak in two ways:

1) It helps Spotify with their complaint to EU against Apple and major record labels over the new Apple streaming service. Especially the disclosures about “Most Favored Nations” clauses, which UMG is forbidden to use.

2) The leak happened a day before Spotify’s big press event announcing new partnerships.   This event was coincidentally live streamed by The Verge.  (hmm….was The Verge in on it?)

But my speculation doesn’t really matter.  Both Spotify and Sony could review their internal network traffic.  They probably already have.  It’s a simple question who was using a Canon imageRUNNER ADVANCE C5051 at 10:41:36 Am on May 7th 2015? Who was using the Cannon iR-ADV C5051 App on a relatively new Mac?   Does Sony even use Macs?

Sony already knows whether this was an internal leak or if Spotify leaked it.

Things are about to get very, very interesting.

 

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Stockholm Syndrome: Do DC and LA Insiders Really Think Artists Need to Demonstrate They Can Work With Google?

We’ve now heard this rumor from multiple sources and we believe it to be accurate:

There is an idea going around in Washington DC (and LA) that somehow “the music industry” (whoever that is) needs to find a project to work on with Google to show congress that we can all get along.

Huh?

This is an idea that manages to be both hysterically funny (as a joke) and highly offensive (wait, you’re serious!?) at the same time.  It’s not like we performers and songwriters  are remotely capable of doing anything to a company with a market cap of $360 billion.  Especially Google which  seems to enjoy the complete political protection of the executive branch. Nor have we performers ever done anything to Google. Quite the opposite, any rational and sensible person would look at this situation and reasonably conclude that it is the performers and songwriters that are abused by Google. There are no two sides to this situation.   Perhaps the most accurate way to view the situation is to imagine Google as the schoolyard bully, sitting on the chest of the skinniest kid on the playground (performers and songwriters), slapping them silly with their own fists and DC and LA insiders are chanting:

“Stop hitting yourself, stop hitting yourself, stop hitting yourself!”

Is everybody now smoking weed up there in DC? On what planet are songwriters and performers required to demonstrate that we can work together with our serial abuser?  Who’s insane idea is this?

However to demonstrate we have a sense of humor and are willing to play along,we’ve come up with some specific ideas for how Google and “the music industry” could work together.  Google could demonstrate it will “stop hitting us”  by doing the following:

 

1.  Fix the Defects in Google’s Search Algorithm to get DMCA Notices below 100 million a Year:  Google gets over 350 million take down notices a year now.  This is mostly due to ad supported pirate sites that Google not only drives traffic to but for which Google may also be serving advertising or using Google Wallet to fulfill transferring revenue to publishers.  How much longer must this charade go on?  Did any sitting Member of Congress who drafted the DMCA really think that their handiwork would produce hundreds of millions of notices to one search service?  Does anyone really believe that Google is not running their search algorithm exactly the way they want it to perform?

Google Trans

2.  Fix ContentID Rights Registration:  Every rights holder who’s both honest and can afford it will tell you that they spend extraordinary amounts of time fixing the broken ContentID system on YouTube.  Before trusting Google to do anything like creating a rights database, they really need to fix the absurd ContentID system.

3.  Provide Independent Artists the Same Tools that Taylor Swift Has:  Taylor Swift showed everyone what happens to sales when you can control your rights on YouTube and bless her for showing everyone it can be done.  But it also must be said that it takes an expensive effort to use those tools the way she did.  YouTube needs to make these same tools available to everyone.

4.  Stop Threatening Independent Labels and Artists:  As we saw with Zoë Keating and the indie labels, Google will use whatever leverage they have as a monopolist and strong arm goon to try to force their will on anyone who can’t push back hard–which is essentially everyone.  Before doing anything that gives Google even more leverage, they need to demonstrate that they can be trusted.

And no one trusts them.

5.  Audit Rights for Songwriters:  Google routinely denies independent songwriters (and we hear independent publishers as well) the right to audit royalty payments.  This is something they could change overnight but they haven’t and have given no indication that they ever intend to do so.

So like the man said, trust but verify.  If the Congress wants to see us work with Google, then the Congress needs to level the playing field because they’re the only ones who might–might–be able to stand up to Google.

We see little indication that the Congress has the stomach to do so.

Pandora Demands Lower Rates From Artists While Playing “Bro Ball”

These are the people that are demanding the government bail out their bad business model by lowering performer and songwriter royalties.

These are the people that refuse to pay royalties on pre-1972 recordings.

How ’bout y’all try making money the old fashioned way?   You know, by working for it.

(Just in case the video has been deleted, below is a static screenshot)

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