You See What Happens When You Find a Stranger in the Alps? Sirius Screws It Up For All Broadcasters.

“You see what happens when you find a stranger in the alps”-Television censored version of Walter’s magnificent rant in The Big Lebowski.

We told you so.  Sirius, Pandora and other digital broadcasters in refusing to pay royalties on pre-1972 masters have created total chaos for digital broadcasters and enormous liabilities for their shareholders.  A federal judge has ruled that Sirius has no license to play these songs.  This is not a just a devastating setback for Sirius.  It has wide ranging repercussions for the entire broadcasting industry.  Does any service have a license to play any pre-1972 recording? That is now an open question.

We’ve always maintained that the position that Sirius and Pandora have taken in regards to pre-1972 recordings was extremely dangerous,  for it could result in a judge ruling that  no digital broadcasters have compulsory licenses to play these songs.   And now that’s what has happened.  If this ruling stands every digital broadcaster may have to obtain a license to play pre-1972 recordings from every single master recording owner.  That is what I would call a clusterjam™ of epic proportions.

In the equity trading business there is a little adage:  “Any idiot can lose money in the stock market, you have to be really smart to lose a lot of money.”   So here is the corollary:  “Any idiot lawyer can make a bad legal argument that leads to copyright infringement liabilities,  It takes a really smart lawyer to make an entire industry liable.”

The thing for Pandora and Sirius to do now is to immediately start paying royalties under the 1995 DPRA act (and subsequent acts).  Why? Because they’d at least have a fig leaf of a claim to a license for these recordings. With all due respect to our lawyer friends and law professors who have insisted that we are wrong about this,  the federal 1995 DPRA act DOES cover pre-1972 recordings (and a careful reading of the latest ruling does not contradict our position). To claim otherwise is as plausible as a belief in unicorns.  Just look at the text* of the 1995 DPRA.  Nowhere does the text make any distinction between pre-72 or post 72 masters. Further you would have to believe an extraordinary claim that congress intended to exclude an entire class of recordings, without testimony or debate.    The act also goes out of it’s way to specifically exempt terrestrial radio, if congress had intended to exempt pre-1972 recordings wouldn’t they have specifically exempted it? After all they declared themselves to be in the business of handing out exemptions!   Further the law says “copyrighted work”,  but does not specify federal copyright as the unicorn wranglers claim.  And lets be consistent here, by inductive logic why aren’t the unicorn caballeros claiming that  the DMCA safe harbor doesn’t apply to pre-1972 recordings?  I just hear crickets on that one.

[DOCID: f:publ39.104]
        DIGITAL PERFORMANCE RIGHT IN SOUND RECORDINGS ACT OF 1995

[[Page 109 STAT. 336]]


Public Law 104-39
104th Congress

                                 An Act


 
To amend title 17, United States Code, to provide an exclusive right to 
perform sound recordings publicly by means of digital transmissions, and 
         for other purposes. <<NOTE: Nov. 1, 1995 -  [S. 227]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Digital 
Performance Right in Sound Recordings Act of 
1995. Copyrights. Communications.>> 

SECTION 1. SHORT TITLE. <<NOTE: 17 USC 101 note.>> 

    This Act may be cited as the ``Digital Performance Right in Sound 
Recordings Act of 1995''.

SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.

    Section 106 of title 17, United States Code, is amended--
            (1) in paragraph (4) by striking ``and'' after the 
        semicolon;
            (2) in paragraph (5) by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(6) in the case of sound recordings, to perform the 
        copyrighted work publicly by means of a digital audio 
        transmission.''.

SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS.

    Section 114 of title 17, United States Code, is amended--
            (1) in subsection (a) by striking ``and (3)'' and inserting 
        ``(3) and (6)'';
            (2) in subsection (b) in the first sentence by striking 
        ``phonorecords, or of copies of motion pictures and other 
        audiovisual works,'' and inserting ``phonorecords or copies'';
            (3) by striking subsection (d) and inserting:

    ``(d) Limitations on Exclusive Right.--Notwithstanding the 
provisions of section 106(6)--
            ``(1) Exempt transmissions and retransmissions.--The 
        performance of a sound recording publicly by means of a digital 
        audio transmission, other than as a part of an interactive 
        service, is not an infringement of section 106(6) if the 
        performance is part of--
                    ``(A)(i) a nonsubscription transmission other than a 
                retransmission;
                    ``(ii) an initial nonsubscription retransmission 
                made for direct reception by members of the public of a 
                prior or simultaneous incidental transmission that is 
                not made for direct reception by members of the public; 
                or
                    ``(iii) a nonsubscription broadcast transmission;
                    ``(B) a retransmission of a nonsubscription 
                broadcast transmission: Provided, That, in the case of a 
                retransmission of a radio station's broadcast 
                transmission--
                
[[Page 109 STAT. 337]]

Call to Action: Don’t Let ICANN Give Our “Dot Music” Domain Names To Tech Giants, Hedge Funds and Shady Brokers.

screen-shot-2014-08-23-at-3-59-46-pm

 Some of the groups and companies vying for the .music gTLD.   That is, the people that will be selling you http://www.YourBandName.music back to you at possibly exorbitant prices. 

Let’s take a trip to the near future. It is August 2015 and the new .music  top level domain names (gTLD) have just launched.

Now, hypothetically let’s say you have a moderately successful  indie rock band named Leland Stanford’s Octopus.  Your band has  been around since 2005 and you’ve developed a loyal global following.   Yes I know , it’s a funny name for a band but perhaps you and your bandmates were particularly interested in California-based 19th century railroad monopolies, corrupt politicians and robber barons. And why not?  Leland Stanford like many railroad tycoons and robber barons of the 19th century had a hipster beard and a sort of devil-may-care longish hairstyle. You could do worse for band name inspiration.

Now for 10 years you’ve had http://www.lelandstanfordsoctopus.com as your main domain name, but with the launch of the new “dot music” domains like most bands you decide you want to migrate to the new .music gTLD.   The only problem?   The board of ICANN gave the rights to administer  the .music domain to a for-profit consortium formed by Google, Amazon and Cerberus capital.  Never mind that none of us ever voted for the members of ICANN and it’s not clear how they have amassed such awesome power with so little oversight or transparency.  With no real accountability to the public much less to your band, ICANN members simply let the close friendships and revolving door between ICANN and companies like Google  influence their decision. Thus they rewarded their cronies with the rights to the .music domain (and probably more of the dozens that these tycoons want to control).

And of course what will give the .music domain any value is not the consortium–it will be the artists and musicians who brand the gTLD by migrating to it.

Now in order to make it appear not to be a forced collectivization of hundreds of thousands of artists’ intellectual property rights for the benefit of some of the richest corporations on earth, there was a “sunrise” phase in which artists who had spent the thousands of dollars to trademark their names  and hundred more to register them with the Trademark Clearinghouse (TMCH) could get their domain name for a nominal fee.  However like most bands Leland Stanford’s Octopus didn’t have the money nor the wherewithal to trademark their name and register it internationally.  Now their domain name along with tens of thousands of artist’s domain names have been snapped up by mysterious brokers registered in places like Malta, Belize, Gibraltar and Panama City.

A mysterious former “Canadian pharmacy” promoter turned cybersquatting domain name broker is holding  www.lelandstanfordsoctopus.music and is asking $2,200 dollars for the domain name.  Of course you are outraged.  Having to buy back your own domain name from anonymous brokers?

So what are you gonna do?   Rationally, the cheapest thing to do is just to simply pay the shady broker (and indirectly Amazon, Google and Cerberus) to get your intellectual property back.  And soon, because next year it may not be the same price.

Far fetched?  Nope we’ve seen this sort of abusive cybersquatting happen with far less valuable and potent domain names while the registrars, governments and ICANN stand idly by.   It surely will happen with .music unless we have a group running .music that is truly on the side of artists and performers and empowered to decide that a band gets to control its own domain name with a .music gTLD.  If we are not vigilant this could be the choice facing many artists.

+++++++++++++++++++++++++++++++++++++++++++++++++++++

Here’s the problems the way I see it:

The .music gTLD should be owned by at least a neutral party with real knowledge of the business.  It shouldn’t favor record labels over artists (especially after labels sold artists down the river on streaming, trading low royalties for equity in these companies).  But most importantly  this valuable bit of virtual real estate should not be handed to  Silicon Valley and Wall Street.  And not just because they are the 1% of the 1% and have the cronies to get control of yet more Internet real estate.

Google and Amazon have shown their true colors and have no cred with creators.  Google actually funds ad sponsored piracy and uses their monopoly power to cram down deal terms on indie labels.  Amazon routinely jams up authors and uses indie record stores as unpaid showrooms with predatory pricing designed to drive mom and pop record stores out of existence.

Giving these people control over the .music domain would just be increasing their domination of the music business.  Google is already facing an antitrust complaint in Europe from indie labels.  UMG controls over 40% of the recorded music market no one in their right mind would give them exclusive control over the dot music domain.  So why would someone even consider giving Google  dot music when  YouTube has a virtual monopoly in online video (with much of it is illegally uploaded)?

This is like giving the fox control of the domain name .chickens.

This is just completely wrong and almost guarantees that the only artists who will use the .music gTLD will be those who don’t know any better until it is too late.

Please let ICANN know how you feel.  Be firm but polite.  Please write Akram Atallah  at  akram.atallah@icann.org

My letter is below.

To: Fadi Chehadé, ICANN President and CEO and Akram Atallah, President, Global Domains Division, ICANN

 

I’m writing to oppose your handing off control of the .music domain to any tech giant especially Google or Amazon (or both of them).  I am a songwriter and founder of the band’s Cracker and Camper Van Beethoven.   I also teach the economics and finance of the music business at the Terry School of Business at the University of Georgia.  I have spent many years studying the effects of the dominance of massive tech companies on the music industry as a whole as well as individual performers and songwriters.  Regulators not unlike yourselves have allowed theses companies to extract monopsony pricing and unjustified rents from artists. Giving these same companies control over the .music gTLD would essentially hand these enormous companies valuable intellectual property that rightfully belongs to the artists.  They would then be in a position to sell artists their own intellectual property back to them.  

After a review of the ICANN leadership, it is obvious that none of you have any real world experience in the music business.  After reviewing my resume, you should come to the conclusion that I have no experience with what you do.  Fair enough. 

 However when it comes to your decision as to who should control the .music gTLD, you are injecting yourselves into my business and you appear to be doing so in a way that increases the domination of already dominant companies like Google and Amazon.  Because you have chosen to do this, I must point out to you how ill qualified ICANN is to take such decisions.  I mean this with respect and with the full knowledge of how sensitive tech people are about their expertise.  While my criticism may sound insulting to those who carefully guard their turf and titles, it is not intended to be. 

However, the insults likely will come from far and wide if you hand over the .music domain to people who are culturally like yourselves but are largely despised by huge swaths of the professional creators as well as the larger music industry.  Why?  Amazon has made no bones about using it’s power to exact monopsony pricing from authors and recording artists.  What will happen when they control our most valuable domains?  In the case of Google, many of us believe that Google continues to  directly profiting from piracy—a crime—on a massive scale through its Adsense and Doubleclick operations. Google has also shown a willingness to use its online video monopoly to extract monopsony pricing from independent labels for its proposed YouTube music streaming service.   Further Google should be disqualified simply because they have demonstrated a willingness to do business with criminals.

 FACT:  Google paid a half a billion dollar fine to avoid CRIMINAL prosecution by the US Department of Justice  for assisting criminal groups in selling drugs in the United States.  

Google, Amazon and a host of other big tech companies lack the bona fides to control an asset as key to the music business as .music.  If you allow them to own it, you will be participating in just another Internet farce.  I for one will do everything I can to see to it that no self-respecting artist uses the .music gTLD.

The registrar for the new gTLD .music should have a record of treating artists fairly and should not be simply extracting further rents from artists by selling them back their own intellectual property at inflated prices. 

 

Does Failure to Pay Pre-1972 Royalties Put Trillion Dollar Hole in Pandoras Bottom Line?

christopher-harrison

Pandora’s Harrison may soon be asking “Brother can you spare a trillion?”

Did Pandora’s legal eagle Chris Harrison create a  trillion dollar hole in Pandora’s balance sheet?

Last month’s earnings report by Pandora was interesting in many ways. But the most interesting thing about it was what was not mentioned. The stunning omission of potential liabilities associated with Pandora’s refusal to pay royalties on pre-1972 sound recordings.

Under the leadership of Chris Harrison, Pandora’s legal team has adopted a bizarre interpretation of federal copyright law that in essence argues that statutory royalties for pre-1972 sound recordings were not federalized. As a result Pandora is not paying royalties to performers on recordings made before 1972. This is potentially a significant amount of revenue for the money losing company.  (Pandora trumpets Non-GAAP “profits”, or “Non Generally Accepted Accounting Principals” calculations of profit. Or as prefer here at the Trichordist “Unicorn Dollars”).

While Sirius and Clear Channel have adopted this funky legal rationale as well, it should be noted that more sober firms like Apple and Microsoft have not.

The problem with this legal strategy is that if this goes to court, win or lose,  Pandora has created huge liabilities either way.

Pandora “wins”

Let’s give Harrison the benefit of the doubt. Let’s say that the federal copyright act in fact did not federalize performance royalties for sound recording copyrights pre-1972. The only logical conclusion is that the State laws that protected sound recordings in 1972 still cover those recordings.

Wow. Time to dust off the bell bottoms and dig into some vintage state laws.

There are 50 states, Washington DC, and several US Territories that could now be potentially brought into the dispute.(There are pre-1972 performers and rights holders in every single US state and surely most territories). It’s highly likely that at least some of those state protections would kick in again. All it would take is one performer or rightsholder  from one state to successfully assert their rights and all digital broadcasters would be screwed.  This is not such a remote or theoretical possibility. I’m told that The Turtles’ lawsuit against Sirius for $100 million dollars already anticipates this. (The Turtles have sued Sirius in NY, Florida and California so if The Turtles beat Sirius…Pandora could be next.  In NY, Florida and California for starters.)

But more troubling, is the fact that if there is no federal copyright protection for these recordings, then Pandora lacks a clear compulsory license–or any license–to play or reproduce any of these recordings. Compulsory licenses are what allows the company to play the recordings without negotiating directly with the rights holders. All webcasters rely on these compulsory licenses so they don’t have to go around and license each and every single song.

This would be a clusterjam™ of epic proportions. I don’t’ think it is possible to effectively quantify the  downsides of this outcome. Uncharted territory. Total uncertainty.  It would effectively throw not just Pandora but the entire broadcast, webcasting and web industry  into chaos.  (NAB are you guys paying attention to this shit?  You might soon have a very big problem on your hands.)

Pandora can’t possibly want to really win this one right?

Pandora Loses.

Alternately it’s equally bad if Pandora loses.  Suppose a legacy artist like The Turtles sues Pandora and federal courts determine that performance royalties for Pre-1972 recordings are in fact covered by the federal copyright act.   First Pandora would presumably have to pay  for years of royalties owed on ALL those pre 1972 recordings.  (Do they have reserves for this? A cursory glance at their financials did not show this.)  But the real problem for Pandora is that they could be liable for huge penalties for copyright infringement. And I mean GDP scale liabilities.

Pandora CEO McAndrews noted in 1st quarter 2014 earnings that pre 1972 recordings represented about 5% of the spins on pandora.   So 5% of all of Pandora’s spins would then be infringing.   McAndrew in that same report noted listening hours of 4.6 billion for the quarter.   So conservatively ten songs an hour that means 46 billion streams a quarter or 184 billion streams a year.  Now by McAndrews own reckoning 5% or 9.2 billion of those streams are infringing each year.   What are the penalties for willful copyright infringement?

$200-$150,000 per infringement.  So on the low end that’s 1.84 trillion dollars.

Now obviously Pandora is not gonna get fined a trillion dollars.  But if they lose a class action suit because of this?  The damages will be substantial.   Will it be $100 million? $250 million? $1 billion? If the Turtles are asking $100 million from Sirius,  BILLIONS is not an implausible number. Obviously it’s a substantial risk (even if the relatively short 3 year federal copyright infringement statute of limitations applies–which Pandora says it doesn’t). 

I’ve had some people suggest that Pandora could settle bit by bit with each major record label which have aggregated most of these recordings  and hence limit their liabilities. But this seems unlikely to me as:

1) Record labels no longer need Pandora as they have substantial interest in Spotify and Beats.

2) Pandora’s scorched earth policy towards rightsholder has left it NO friends in the music community . Zero. Zilch. Like,  “I wouldn’t even piss on you if you were on fire.’ That kind of “no friends.”

Further these missing royalties are not only due to record labels, federal laws require 45% of these revenues go to the performers.  Pandora would have to buy off all the performers as well.

McAndrews and Harrison’s best hope is that they can keep kicking the can down the road for a few more years.  Just enough time for all those options to vest and leave some sucker holding the bag.

 

Individual Songwriters Come Out In Droves, Submit Large Number Of Comments To DOJ

Thank you readers.  You all rock!

When a government agency like The Copyright Office or The Department of Justice asks for comments,  they usually generate a few dozen. And the vast majority of these are from lobbyists, trade groups and law firms engaged in policy fights.

So this week the Capitol has been buzzing about the surprising number of comments that INDIVIDUALS submitted to the DOJ on the consent decree that governs songwriters.  There were over 180 comments from individuals submitted!   And we recognize that many of these comments are from fellow songwriters and readers.   We have made our voices heard.

So let’s keep it going.  Tweet the link to your DOJ comment at us and we will retweet it!  @thetrichordist

Here’s my own comment. 

 

 

The Consent Decrees Violate Individual Rights. My comments to DOJ.

What follows are the comments I submitted to the DOJ against the  ASCAP/BMI consent decrees. You have until the end of the day today to submit comments.  http://www.justice.gov/atr/cases/ascap-bmi-decree-review.html

 

The Consent Decrees Violate Individual Rights.

 

I am an American songwriter, a member of BMI and a member of the bands Cracker and Camper van Beethoven. I’m submitting this comment on my own behalf in opposition to the ASCAP and BMI consent decrees. I believe these government actions essentially are a compulsory license outside of the Congress and take away songwriters’ rights to due process of law.

 

Just to be clear, I am not saying that Justice Department consent decrees in general are oppressive. I am saying that the way these particular consent decrees operate is oppressive to songwriters. That operation is oppressive because of the extremely long period of time they have been in effect, because they take away our valuable property rights to negotiate our own licenses, and they essentially force songwriters into being judged guilty before we’ve even expressed ourselves.

 

Why Songwriters Matter

 

Most discussions surrounding the consent decrees start with a striking fiction: The consent decrees only apply to BMI and ASCAP but not to individual songwriters. From a songwriter’s perspective, this is extraordinary sophistry.

 

As a practical matter, all American professional songwriters have to join one of ASCAP, BMI or SESAC in order to earn a living from their chosen craft. Sure, it’s possible that SESAC (which is not yet under one of the government’s consent decrees) might invite someone like me to join. But they are known to be more difficult to join than ASCAP or BMI.

 

The only certain choice for all songwriters is joining one of ASCAP or BMI. And that means that the vast majority of songwriters are subject to the consent decree from the time they write their first song. Unless something is done about it, they will remain subject to the rate court until they write their last song and even beyond the grave.

The DOJ has essentially created a single exchange within the federal courts that requires songwriters to join a regulated PRO in order to participate in the market.

 

So in practice as soon as an individual decides to take the tiniest steps towards being a professional songwriter they immediately fall under one of the two consent decrees and the jurisdiction of one judge in one court. Let’s dispense with the fiction that the consent decrees do not apply to songwriters and hence dispense with the fiction that it does not limit the rights of individuals—living, dead and yet to be born.

 

The Single Exchange Takes My Right to Negotiate

 

The government limits my ability to participate in a free market; it takes my property rights without due process or just compensation; it even limits my kind of speech (public performance of my songs) as I must participate in this process or effectively forgo compensation when I perform my songs in the public square.  I know that there’s always the theoretical possibility of a direct license outside of the consent decrees, but as a practical matter, I can tell you that is very rare because it is rarely offered.

 

I am not a lawyer or a constitutional scholar but I believe the consent decrees violate the American social contract for many reasons, not the least of which is that in practice songwriters are singled out for the government’s scrutiny before they have done anything except engage in speech and create songs. When you are on the receiving end, this feels like a kind of writ of attainder. Allow me to explain.

 

A) Typically when we limit the rights of individuals in the manner prescribed by the consent decrees one of three things must occur:

 

1) Legislative action by elected officials.

2) Judicial proceedings finding a particular individual (not a class of individuals similar to that individual) guilty of something.

3) The individual must consent to have his/her rights limited (usually to avoid judicial proceedings or because they participated in an election).

 

As an individual songwriter the consent decrees effectively compel me to submit to this process. At least the compulsory license in the Copyright Act is a legislative action by elected representatives and if I don’t like that rule I can work to get someone unelected. Under the consent decrees, generations of songwriters are powerless to stop the government from taking our rights without that legitimacy—for decades. I do not understand how the Department of Justice has the authority to force us to submit to this process.

 

B) As soon as an ASCAP writer creates their first song, the writer is forced into a court proceeding that was opened in 1941, seventy three years ago.   The BMI consent decree is from 1964, fifty years ago. Many songwriters who are subject to the consent decrees weren’t even born when the Department of Justice opened the cases.

 

Even if I accept the premise that I am guilty until I can prove to the government that I am not, and that my licensing decisions require review by a federal judge at great social expense, what possible justification can there be for my decisions today being subject to a case opened so long ago? This seems like some arbitrary federal assignment of “original sin” to a class of Americans. Does the federal government have a crystal ball? Can they see into the future? Can they read my thoughts? How do they know that every single member of this class is doing something wrong? How is that possibly Constitutional?

 

C) How many of the government’s court cases are “open” for 73 years or even 50 years? How is that not a violation of due process? Why am I and all future songwriters required to pay for whatever misdeeds that occurred decades ago?

 

D) I can’t emphasize enough that from my point of view as a songwriter, the consent decrees act as a kind of compulsory license by government edict. The government compels songwriters to allow music services to use our songs whether we like it or not. And unlike the Copyright Act, I can’t complain directly to rate court except at great expense. There is nobody to get unelected if we don’t like the rate court’s decision except very indirectly.

 

As Ari Emmanuel once said, “Fair is where we end up.” He would be wrong in the case of these consent decrees. In practice the consent decrees effectively substitute the opinion of a federal judge for that of a fair negotiation to set the rates at which those services compensate my fellow songwriters and me. After 73 years this has effectively become an unlegislated compulsory license. The consent decrees walk and talk like a compulsory license and after decades of practice they effectively are a compulsory license. At least with a compulsory mechanical license we know where we will end up on the rate.

 

E) Essentially the consent decrees take valuable rights to negotiate the exploitation of property from over 500,000 Americans simply because they write songs. And there is no end in sight. (Not to mention the foreign songwriters whose works get swept up and who can’t afford to complain to the WTO.)

 

F) If we must live under consent decrees, why must all the cases be heard before the same judge in New York City? Not only do the consent decrees unfairly impose the government on songwriters, they also force music services to make their case before a single judge in New York City—twice, once for ASCAP and again for BMI. This is a very expensive process that only the most well-heeled services can afford.

 

Why shouldn’t a service be able to bring their rate case in San Francisco, Los Angeles, Nashville, Austin, Athens—or any federal court?   Respectfully, are two federal judges in New York the only federal judges in the entire country capable of trying PRO cases? Surely that can’t be true.

 

I believe that the decrees have become a crutch on which those well-funded music services that can afford the litigation have come to depend. Instead of actually innovating and improving their revenues they use the rate courts as a perceived competitive advantage at great expense to their own shareholders, songwriters and, of course, the taxpayer.

 

There’s also a question of how many new entrants don’t come into the market at all because they are scared off by the expense of the rate court process and the uncertainty of litigation.

 

So not only have the operation of these consent decrees created a single market inside a federal court, I suggest that the consent decrees actually limit access to that market to the number of potential buyers who can afford the millions in legal fees required to participate. I think most songwriters would say that they want to license their works to innovators, and yet access to the rate court market is limited to the rich innovators as a practical matter.

 

Yes—in practice the consent decrees may well be anticompetitive.

 

Are the ASCAP and BMI Consent Decrees Unconstitutional?

 

I pose this question not because I’m a learned lawyer or constitutional scholar. I pose it because I can tell you that living under these consent decrees feels oppressive and I have found that when the government acts oppressively it is often acting outside of the Constitution.

 

This is not to say that the government should not pursue claims against songwriters if we actually do violate the antitrust laws. I’m not asking for a free pass. We should get the same treatment as Google, Microsoft or anyone else.   It’s also not to say that there wasn’t some justification for the consent decrees long ago.

 

But from this songwriter’s perspective, that time has passed. As James Madison wrote in Federalist 44, “[government] interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding.” Respectfully, I suggest that Madison could have been describing the Kafka-esque rate courts.

 

 

David Lowery

Aug 1st 2014

Athens Georgia

 

DOJ Has Collusion Backwards. Google and YouTube Executives Move Into Spotify.

As the guardian reported last week, a high ranking Google Executive has taken a seat on Spotify’s Board. This weekend we learned that the Google/YouTube’s Shiva Rajaraman is moving from YouTube to Spotify.  Rajaraman was part of the team launching YouTube’s music subscription service that would compete with Spotify.   While it is quite common for technology executives (and entertainment executives)  to move from one company to another, and for one company to have a seat on the board of another company, the fact that both of these companies are involved in licensing songs and recordings should raise concerns with The DOJ. Why?  Because it makes a mockery of the consent decrees that govern songwriters in their negotiations with these services. Because in effect the consent decrees are now backwards. There is a very real possibility of collusion and anti-competitive behavior from the services. (some would argue it’s already happened with YouTube’s indie label outrage.)  Couple this with the enormous resources that these companies have and it seems pretty ridiculous to keep songwriters under the consent decree.

One of the rationales of the World War II/Cold War era consent decrees was that songwriters and their PROs (our equivalent of unions) could collude against broadcasters (and now webcasters ) to fix prices.  But remember the consent decrees were enacted in the days that radio station ownership was severely limited. In 1941 ASCAP had a very strong negotiating position when it was up against individuals that might own one or two radio stations.   But those ownership limits have since been lifted and we now have companies like Clear Channel with over 840 stations.  In the digital realm we have Google/YouTube which is in effect an online video monopoly. Pandora has 77% of the webcasting market and is a near monopoly.   Everyone knows the internet wants only one or two of each kind of service,  it seems prone to monopoly. So it seems a little strange to think the federal government needs to protect these effective monopolies from  songwriters.

It’s even stranger when you consider the NOW very real possibility for collusion that exists on the part of broadcasters and webcasters.  Google/YouTube essentially has a seat on the board of Spotify and the Rajaraman has left YouTube for Spotify.   Are we really supposed to believe that details of deals and negotiations with Spotify are not gonna get back to YouTube?   Are we supposed to believe the deals the major labels  cut with YouTube won’t get back to Spotify?  We already know that Google/YouTube conspired with other technology firms to depress wages for software engineers by entering into an illegal agreement with other firms to not “poach” each others engineers.   Shouldn’t the DOJ be examining Google/YouTube and now Spotify for collusion?   Instead of songwriters?

And this isn’t even taking into account that the major labels own a large portion of Spotify?  This is a clusterjam™  of epic proportions.

The DOJ has collusion backwards.  The consent decree should not be pointed at the songwriters. And you can do something about this.  The DOJ has solicited comments on the consent decrees. You have till the end of the day wednesday.   You can be passionate but be polite:

http://www.justice.gov/atr/cases/ascap-bmi-decree-review.html

Although the DOJ has a series of specific questions on which it seeks comment, you can also make general comments about the fairness and even abolishment of the consent decrees.

You can read my fairly detailed comments which question the constitutionality of the entire process at the end of this article:

http://thetrichordist.com/2014/08/03/call-to-action-songwriters-submit-comments-to-the-doj-on-the-consent-decrees-now/

 

 

Call to Action: Songwriters Submit Comments to the DOJ on the Consent Decrees Now.

The DOJ is reviewing the WWII era consent decrees that force songwriters under federal court supervision for supposed anti-competitive practices.  Yes the awesome power of the federal government is being used to protect multi-billion dollar companies like Clear Channel, Sirius, Pandora, YouTube/Google, Amazon and Spotify from hippy freak songwriters. Considering that many of these companies are effective monopolies it’s a stunning abuse of federal power on behalf of a few politically connected corporations.

The consent decree forces songwriters to allow these services to use our songs while a single appointed for life judge (song czar) sets our rate of compensation.   You may remember that I posted that my million spins on Pandora earned me less than $17?   I can’t even opt out of this service, how is that even fair?  That’s how this kind of outrage occurs.  This amounts to an government mandated subsidy from songwriters to some of the largest companies in the world.

If you are a songwriter, please submit comments.  The DOJ specifically would like to hear from you.  If you don’t’ understand the legalese just make a simple statement about how you feel about the compensation from these digital services that results from these consent decrees. Be passionate but polite.  Here are the instructions:

http://www.justice.gov/atr/cases/ascap-bmi-decree-review.html

Here are my comments. I took a constitutional approach. You don’t have to be as esoteric or as detailed. Simple heartfelt comments are just as important.

 

The Consent Decrees Violate Individual Rights.

 

I am an American songwriter, a member of BMI and a member of the bands Cracker and Camper van Beethoven. I’m submitting this comment on my own behalf in opposition to the ASCAP and BMI consent decrees. I believe these government actions essentially are a compulsory license outside of the Congress and take away songwriters’ rights to due process of law.

 

Just to be clear, I am not saying that Justice Department consent decrees in general are oppressive. I am saying that the way these particular consent decrees operate is oppressive to songwriters. That operation is oppressive because of the extremely long period of time they have been in effect, because they take away our valuable property rights to negotiate our own licenses, and they essentially force songwriters into being judged guilty before we’ve even expressed ourselves.

 

Why Songwriters Matter

 

Most discussions surrounding the consent decrees start with a striking fiction: The consent decrees only apply to BMI and ASCAP but not to individual songwriters. From a songwriter’s perspective, this is extraordinary sophistry.

 

As a practical matter, all American professional songwriters have to join one of ASCAP, BMI or SESAC in order to earn a living from their chosen craft. Sure, it’s possible that SESAC (which is not yet under one of the government’s consent decrees) might invite someone like me to join. But they are known to be more difficult to join than ASCAP or BMI.

 

The only certain choice for all songwriters is joining one of ASCAP or BMI. And that means that the vast majority of songwriters are subject to the consent decree from the time they write their first song. Unless something is done about it, they will remain subject to the rate court until they write their last song and even beyond the grave.

The DOJ has essentially created a single exchange within the federal courts that requires songwriters to join a regulated PRO in order to participate in the market.

 

So in practice as soon as an individual decides to take the tiniest steps towards being a professional songwriter they immediately fall under one of the two consent decrees and the jurisdiction of one judge in one court. Let’s dispense with the fiction that the consent decrees do not apply to songwriters and hence dispense with the fiction that it does not limit the rights of individuals—living, dead and yet to be born.

 

The Single Exchange Takes My Right to Negotiate

 

The government limits my ability to participate in a free market; it takes my property rights without due process or just compensation; it even limits my kind of speech (public performance of my songs) as I must participate in this process or effectively forgo compensation when I perform my songs in the public square.  I know that there’s always the theoretical possibility of a direct license outside of the consent decrees, but as a practical matter, I can tell you that is very rare because it is rarely offered.

 

I am not a lawyer or a constitutional scholar but I believe the consent decrees violate the American social contract for many reasons, not the least of which is that in practice songwriters are singled out for the government’s scrutiny before they have done anything except engage in speech and create songs. When you are on the receiving end, this feels like a kind of writ of attainder. Allow me to explain.

 

A) Typically when we limit the rights of individuals in the manner prescribed by the consent decrees one of three things must occur:

 

1) Legislative action by elected officials.

2) Judicial proceedings finding a particular individual (not a class of individuals similar to that individual) guilty of something.

3) The individual must consent to have his/her rights limited (usually to avoid judicial proceedings or because they participated in an election).

 

As an individual songwriter the consent decrees effectively compel me to submit to this process. At least the compulsory license in the Copyright Act is a legislative action by elected representatives and if I don’t like that rule I can work to get someone unelected. Under the consent decrees, generations of songwriters are powerless to stop the government from taking our rights without that legitimacy—for decades. I do not understand how the Department of Justice has the authority to force us to submit to this process.

 

B) As soon as an ASCAP writer creates their first song, the writer is forced into a court proceeding that was opened in 1941, seventy three years ago.   The BMI consent decree is from 1964, fifty years ago. Many songwriters who are subject to the consent decrees weren’t even born when the Department of Justice opened the cases.

 

Even if I accept the premise that I am guilty until I can prove to the government that I am not, and that my licensing decisions require review by a federal judge at great social expense, what possible justification can there be for my decisions today being subject to a case opened so long ago? This seems like some arbitrary federal assignment of “original sin” to a class of Americans. Does the federal government have a crystal ball? Can they see into the future? Can they read my thoughts? How do they know that every single member of this class is doing something wrong? How is that possibly Constitutional?

 

C) How many of the government’s court cases are “open” for 73 years or even 50 years? How is that not a violation of due process? Why am I and all future songwriters required to pay for whatever misdeeds that occurred decades ago?

 

D) I can’t emphasize enough that from my point of view as a songwriter, the consent decrees act as a kind of compulsory license by government edict. The government compels songwriters to allow music services to use our songs whether we like it or not. And unlike the Copyright Act, I can’t complain directly to rate court except at great expense. There is nobody to get unelected if we don’t like the rate court’s decision except very indirectly.

 

As Ari Emmanuel once said, “Fair is where we end up.” He would be wrong in the case of these consent decrees. In practice the consent decrees effectively substitute the opinion of a federal judge for that of a fair negotiation to set the rates at which those services compensate my fellow songwriters and me. After 73 years this has effectively become an unlegislated compulsory license. The consent decrees walk and talk like a compulsory license and after decades of practice they effectively are a compulsory license. At least with a compulsory mechanical license we know where we will end up on the rate.

 

E) Essentially the consent decrees take valuable rights to negotiate the exploitation of property from over 500,000 Americans simply because they write songs. And there is no end in sight. (Not to mention the foreign songwriters whose works get swept up and who can’t afford to complain to the WTO.)

 

F) If we must live under consent decrees, why must all the cases be heard before the same judge in New York City? Not only do the consent decrees unfairly impose the government on songwriters, they also force music services to make their case before a single judge in New York City—twice, once for ASCAP and again for BMI. This is a very expensive process that only the most well-heeled services can afford.

 

Why shouldn’t a service be able to bring their rate case in San Francisco, Los Angeles, Nashville, Austin, Athens—or any federal court?   Respectfully, are two federal judges in New York the only federal judges in the entire country capable of trying PRO cases? Surely that can’t be true.

 

I believe that the decrees have become a crutch on which those well-funded music services that can afford the litigation have come to depend. Instead of actually innovating and improving their revenues they use the rate courts as a perceived competitive advantage at great expense to their own shareholders, songwriters and, of course, the taxpayer.

 

There’s also a question of how many new entrants don’t come into the market at all because they are scared off by the expense of the rate court process and the uncertainty of litigation.

 

So not only have the operation of these consent decrees created a single market inside a federal court, I suggest that the consent decrees actually limit access to that market to the number of potential buyers who can afford the millions in legal fees required to participate. I think most songwriters would say that they want to license their works to innovators, and yet access to the rate court market is limited to the rich innovators as a practical matter.

 

Yes—in practice the consent decrees may well be anticompetitive.

 

Are the ASCAP and BMI Consent Decrees Unconstitutional?

 

I pose this question not because I’m a learned lawyer or constitutional scholar. I pose it because I can tell you that living under these consent decrees feels oppressive and I have found that when the government acts oppressively it is often acting outside of the Constitution.

 

This is not to say that the government should not pursue claims against songwriters if we actually do violate the antitrust laws. I’m not asking for a free pass. We should get the same treatment as Google, Microsoft or anyone else.   It’s also not to say that there wasn’t some justification for the consent decrees long ago.

 

But from this songwriter’s perspective, that time has passed. As James Madison wrote in Federalist 44, “[government] interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding.” Respectfully, I suggest that Madison could have been describing the Kafka-esque rate courts.

 

 

David Lowery

Aug 1st 2014

Athens Georgia

 

 

Why is Billboard Writer Defending Pandora Radio On Anti-Gay Politician Contributions?

glenn peoples billboard

 

You can see the whole conversation here. 

Why is Billboard writer defending Pandora Radio on Founder, CEO, 1/2 the Board and other top executives giving money to anti-gay politician Jason Chaffetz.  You know the guy that tried to nullify a bunch of same sex marriages in Washington DC?  I really don’t’ understand why the writer is “helping” me or Pandora Radio on this one.  The Billboard writer could easily go on record and explain the “nuances” of why Pandora apparently chose a well known anti-gay demagogue to sponsor their Orwellian named  Internet Radio Fairness Act. How does this soomehow this makes the $13,000 dollars they gave this politician ok.   And why is Billboard demanding that I soften this story?

Just saying…

UPDATE Pandora Radio’s Gay Marriage Problem Just Got Worse: CEO and 1/2 Board of directors also supported radical anti-gay politician

 

Looks like Pandora’s anti-gay marriage problem just got  much much bigger.  This is no longer just a Tim Westergren problem.  Looks like it’s a company wide problem. Pandora’s Founder, 2013 CEO and HALF the board of directors donated money to a radical anti-gay congressman from Utah,  Jason Chaffetz.

This looks bigger than the Mozilla scandal. Not just a single executive, this is five key executives and directors.

 

Screen Shot 2014-07-27 at 3.14.12 AM

These guys can’t claim they didn’t know this politician’s views as Chaffetz is quite famous for grand standing on this issue.  Among other things Chaffetz is the guy that sought to have the federal government step in and nullify the votes of citizens of Washington DC and have gay marriages banned in the city.  Essentially he wanted to un-marry same sex married couples in Washington DC.

In 2013 CEO Joseph Kennedy donated money to Chaffetz (Kennedy has since stepped down).   Pandora board members Peter Gotcher, David Sze and Westergren also donated money to this demagogue. And tellingly Rena Shapiro Pandora’s political ad director donated to the anti-gay Chaffetz. I think with this many high level Pandora insiders donating money to this candidate it’s a reasonable question to ask whether the company has an anti-gay bias.

And this revelation could not come at a worse time for Pandora.   For Pandora has recently and very publicly embraced Rev Jesse Jacksons PUSH campaign to increase diversity in Silicon Valley. And diversity includes sexual orientation.  Silicon Valley’s brogrammers  are well known for their misogyny and homophobia.   The fact that McAndrews embraced Rev Jackson’s campaign so quickly and readily brings Hamlet  to mind.  The lady doth protest too much, methinks.  

As SF Bay View reported:

 CEO Brian McAndrews of Pandora said in his letter to Rev. Jackson, “Thank you for reaching out. We were excited to hear from you because we have been discussing our own path towards transparency and amplifying our efforts around building a more diverse workforce….. We hear your urge for data transparency . . .There is no doubt that knowledge leads to awareness, and to actions.”

Well Mr McAndrews? Here is my contribution to your quest for “transparency.”  The upper management of your company apparently supports a radical anti-gay politician.  What does that say about your attitude towards diversity?

Gentlemen we’d love to hear from you.  So would many of your listeners.

kennedy

Screen Shot 2014-07-27 at 3.22.20 AM

 

Screen Shot 2014-07-27 at 2.59.33 AM

Westergren Chaffetz

Pandora’s Tim Westergren Supports Radical Anti-Gay Politician Jason Chaffetz UT.

Tim Westergren David Shankbone 2010 NYC.jpg
Tim Westergren David Shankbone 2010 NYC” by David ShankboneOwn work. Licensed under CC BY 3.0 via Wikimedia Commons.

Forget Mozilla’s anti-gay CEO.  We have confirmed that Pandora’s Tim Westergren contributed  funds to radical anti-gay politician Jason Chaffetz  for his 2014 race.   This is the guy that among other things tried to legislate away Washington DC’s same sex marriages.

Wow.  I guess Pandora not only has no R E S P E C T for Aretha Franklin,  they must not think much of their gay subscribers and employees either!

You’d think that in the wake of the Mozilla scandal companies like Pandora would know better.

But first a little backstory cause this is not just simple homophobia or ignorance .  It’s a very nasty story of anti-gay demagoguery, political corruption, corporate skullduggery and pay-to-play politics.

Last year Pandora pushed the Orewellian-named Internet Radio Fairness Act.  The way that Pandora presented the bill was that it would level the playing field for internet broadcasters against those “bad” terrestrial broadcasters.  The problem with this characterization is that the bill did no such thing. It was a sharks belly stew of gifts for the broadcast industry.  Internet and Terrestrial. Why else would Clear Channel support a bill that would help internet radio “compete with it’s 840 terrestrial stations?  The real reason the internet radio AND terrestrial  broadcast industry supported this bill is that it would have used the awesome power of the federal government to mandate lower performer royalties by 80 percent!

Wow. I wish I could go to congress and have them mandate that my suppliers  charge me 80% less for everything they sell me.  But I digress.

Those of us outside Washington have come to expect this sort of pay-to-play nonsense from Washington, and so it’s not really a surprise that these politically connected firms could get this into a bill and then get it seriously considered by congress.

What was surprising is that Pandora was pushing a bill  sponsored by a well known anti-gay demagogue, Utah politician Jason Chaffetz.

Now we didn’t’ make a big deal about it before because it could have just as easily been the National Association of Broadcasters, Clear Channel any of the other ethics impaired corporations that had a relationship with this politician.  Surely the “progressive” leaders of an internet radio station based in Oakland a city that Rev. Jesse Jackson recently called the “rainbow city”  would never support an anti-gay politician!

Think again.

Below is a screenshot from opensecrets.org clearly indicating that Tim Westergren founder and spokesperson for Pandora personally gave money to this anti-gay demagogue. Apparently a thank you for sponsoring the bill Westergren pushed so strongly.  That is Westergren personally supports this anti-gay demagogue.

 

Westergren Chaffetz

 

Now remember this  is for this upcoming 2014 election.This is not a long time ago. This is long after Chaffetz’s  various anti-gay outbursts were known.  This is after Chaffetz famously sought to overturn the will of the voters in Washington DC, essentially nullify their votes and institute a federally mandated ban on gay marriage in Washington DC.   That’s right Chaffetz wanted to impose his religious (?) views on 650 thousand citizens of a city 2000 miles from his home district in Utah. Imagine if you were a same sex couple in DC, and you had your marriage nullified because a Utah politician wanted to grandstand for voters back home?

Tim Westergren had to know what this guy stood for and yet he personally donated money to him.

This revelation could not come at a worse time for Pandora.   For Pandora has recently and very publicly embraced Rev Jesse Jacksons PUSH campaign to increase diversity in Silicon Valley. Diversity includes sexual orientation as well fellas.   Silicon Valley’s embarrassingly misogynistic and homophobic brogrammers have started to become a liability for these companies. Notably Pandora embraced the effort so quickly and readily that Hamlet comes to mind.  The lady doth protest too much, methinks. 

As SF Bay View reported:

 CEO Brian McAndrews of Pandora said in his letter to Rev. Jackson, “Thank you for reaching out. We were excited to hear from you because we have been discussing our own path towards transparency and amplifying our efforts around building a more diverse workforce….. We hear your urge for data transparency . . .There is no doubt that knowledge leads to awareness, and to actions.”

Well Mr McAndrews, here is my contribution to your quest for “transparency.”  Your companies founder apparently supports radical anti-gay politicians.  What does that say about your attitude towards diversity?