Why I gave the National Association of Broadcasters, DiMA and CCIA the Shirt off my Back during Congressional Panel

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Diverse group of Washington DC lobbyists.

 

The major webcasters and broadcasters decided to convene a nearly secret last minute congressional panel to urge Congress and the DOJ to keep in place the 73 year old “temporary” consent decree that forces songwriters to let companies like Clear Channel, YouTube, Sirius, Pandora, Amazon and Spotify use our songs without any negotiation whatsoever.  The consent decree also empowers a single appointed-for-life federal judge to arbitrarily decide what a “reasonable” rate  is for songwriters.   In effect we have been forced by federal courts to provide  subsidy to corporations that have a combined market cap of more than a trillion dollars.

As I demonstrated in this an earlier post  as a songwriter I received less than $17 dollars from Pandora for over a million spins of my song Low. 

http://thetrichordist.com/2013/06/24/my-song-got-played-on-pandora-1-million-times-and-all-i-got-was-16-89-less-than-what-i-make-from-a-single-t-shirt-sale/

How is this a “Reasonable” rate?

The panel was hosted by Greg Barnes of DiMA.  Other panelists included David Oxenford National Association of Broadcasters and  Mathew Schruers from the  CCIA.   The companies represented by these lobbying outfits (Amazon, Clear Channel, YouTube/Google, Spotify, Pandora, Microsoft, Yahoo have a combined market cap of over a trillion dollars.  YET THERE WAS NOT A SINGLE REPRESENTATIVE OF SONGWRITERS ON THE PANEL.   This is particularly appalling considering that songwriters are the ones living and working under the consent decree.

I had prepared a short set of comments detailing my experience as a songwriter, especially the financial  effects of the consent decree on my digital royalties.    I parked myself in the second row and waited for the moderator Greg Barnes to start taking questions from the audience.  Mine was the first hand up and Barnes indicated that he would call on me but first he wanted one more comment from Oxenford.  It was during Oxenford’s comment that I noticed the lobbyist (?) seated directly in front of me pulled out her smartphone and started frantically texting something.  Curious I leaned forward and could clearly read my name and then the  phrase “watch out”.   Funny stuff.  I wanted to say “Hey dumbass, I’m sitting right behind you.” But I resisted.

Curiously it was immediately after this that Barnes suddenly announced that they would only be taking comments from “Staff” members and I would have to wait “til the vey end and time permitting only.”  He then proceeded to call upon a college student from GW.

SERIOUSLY? The Digital Media Association is in the business of selling songwriters music but their chief DC lobbyist is afraid of having a songwriter speak.  Spineless coward.  If that’s not clear, Yes, Greg Barnes, I am calling you a spineless coward. And I’m standing by it.

When the college student finished his comments I raised my hand again.  Once again Barnes told me that they were only taking questions from staffers despite the fact he had just demonstrated that they were in fact taking questions from anyone.

This went on for a while and I realize that Barnes clearly intended to not let me ask a question.  For amusement I started to stare down the not-quite-slimey representative of the National Association of Broadcasters.  He suddenly found something in his lap extremely interesting and wouldn’t look up.  If I was absolutely certain that he was not suddenly transfixed by the unexpected appearance of  a colony of miniature unicorns dancing on his lap I’d call him a spineless coward as well.  But as I actually couldn’t see his lap, I can’t rule out the possibility of miniature unicorns, and so for now I’ll give him a pass.

The night before this event I had been warned that it was likely that I would be blocked from asking any questions or making any comments.  Considering the fact I was gonna have to get up at 5:45 am to make it to the panel I wasn’t really in the mood to go to all this effort for nothing.  I had to have a plan B.

A few days before a songwriter friend remarked that the current licensing system for songs and digital services was so fucked up that songwriters really had nothing left to lose except “the shirts off our backs.”    I remembered this.  I went across the street to the local grocery store bought some gift bags and wrapping paper and proceeded to gift wrap  three shirts that had been worn by me and my bandmates  as “gifts” for the  NAB, CCIA and DiMA.  I figured that at the very least I could present them with the shirts off our backs and eke out a photo op.

Of course it didn’t go that way.   Clearly Barnes was terrified of having an actual songwriter air a viewpoint that was contrary to the party line.   When he asked for questions again,  I asked that as the only person in the room forced against their will to live and work under the consent decree I be allowed to speak.  He refused.

So shit, I did what I had to do. I marched up to the panelists and presented each of them with a gift wrapped “shirt off of a songwriters back”.    They looked like they were gonna pee their pants.  It was priceless.

“I got less than $17 dollars for a million spins on Pandora, that’s your consent decree at work.”   I told the room and walked out.

The whole thing was so fucking stupid on the broadcasters/webcasters’ part.  If they’d just let me speak they could have spent the final 15 minutes to counter my questions and statements with measured doses of non-sensical legalese and mock concern for the plight of the independent songwriters.    But by acting like spineless cowards they totally screwed themselves.  Just goes to show that if you  put on a “Show trial?” you very well may end up with a show you didn’t expect.

Welcome to Washington gentlemen.

For those of you keeping score it’s now

Scooby Doo Gang 2

Broadcasters 0

 

 

 

 

 

 

 

 

 

 

Some cold analysis of the YouTube-Indie labels story, and some long term reflections | Wildcat Blog

So what’s going on with Google, YouTube and Indie labels?

There’s been so much fuss, indies tearing their hair, lawyers trying to tone it down: I try to sum up the whole thing here for your delight and delectation.

Alright, this is not a music law blog. It is, however, a blog where law and music meet. So, here we go. If you don’t know the ante-fact, have a read here or here.

And there’s also this update that Google may be revising its position now.

Why is the contract so bad? Wait, is it really bad?

READ THE FULL POST AT WILDCAT BLOG:
http://blog.thewildcat.co.uk/post/91151130569/some-cold-analysis-of-the-youtube-indie-labels-story

Aiding and Infringing : iPad Music Apps – A New Low

Originally posted on The Trichordist:

Advertisers need to capture the mobile market. The problem is the functionality of the some of the most frequented websites by the coveted youth demographic is disabled on iDevices (the inability to download content to the idevice). In other words, there is no draw to pirate websites (and to the advertising they serve) if the infringing music is no longer accessible. Worry no more, there’s an APP for that… note the top grossing and most popular music apps for the ipad…

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And uhm… let’s not worry that ads for Adult Services are being targeted to minors…

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Help Project 72 Close the Pandora Loophole and #respectallmusic

Originally posted on MUSIC • TECHNOLOGY • POLICY:

Pandora and Sirius have decided to stop paying performance royalties to artists, producers and background performers who recorded before 1972–in other words, the creators of the greatest music that influenced us all and their heirs.  Billie Holiday, Duke Ellington, Louis Armstrong, Miles Davis, Aretha Franklin, Willie Nelson, Buddy Holly, Jack Teagarden, and everyone in 20 Feet from Stardom. Just to name a few.

This is due to a gotcha in the US copyright law–the Pandora loophole–that supposedly does not extend the SoundExchange royalty to recordings made before 1972 because the U.S. did not adopt federal copyright protection for sound recordings until 1972.  The only problem with Pandora’s position is that there are lots of Members of Congress still in office who passed the 1995 and 1998 laws that created the SoundExchange royalty–and there is no Member of Congress who thought that they were creating a loophole so that Pandora…

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Why Some Mangers and Agents Love Streaming and Piracy.

Seems like every six months or so I have friends  forward me an article or interview with a manager or agent extolling the virtues of streaming (and sometimes even piracy.)  Usually this comes with some note that reads something like this “Agent/Manager  X thinks streaming/piracy is a good thing, Why don’t you?”  I am always  perplexed by this.   Of course some managers and agents love streaming and piracy! Less revenue from recorded music means their artists must play more and more live shows to make up the difference.  I thought everyone knew this.

You see managers and agents make virtually all their money from an artist’s live performance not from the artist’s recorded music.    However screwed up it might seem from an artist’s perspective it makes perfect financial sense (at least in the short term) for managers and agents to turn a blind eye to piracy and low payouts for streaming. Precisely because  it seems to result in more touring.  You can’t really blame them for this can you?

I teach a class on the finance and economics of the music business at the  University of Georgia.  I usually spend at least one lecture on the differing financial incentives for artists, managers and agents, and in particular how managers and agents are often incentivized to work against the artists long term interest.  Let me try to summarize that lecture here.  Especially how it relates to streaming and piracy.

First , have artists resorted to playing more shows to make up for declining revenues from their recordings?   In my case? Yes, absolutely. So have virtually all my friends.   There are plenty of  anecdotal stories of artists touring into their old age because recorded music royalties have dropped off.  Levon Helm of The Band is one tragic case and here’s Robert Hunter from The Grateful Dead spelling it out clearly.    But you don’t have to rely on anecdotal data as it is clearly reflected in the records kept by companies like Pollstar.  It depends on how you interpret the data but even the most conservative reading suggests there has been a 200%  rise in the number of shows since the advent of Napster.  Now this would all be great news except that average attendance has fallen and any gains in revenue appear to have gone to the top 1% of acts.

So why is this good news for managers and agents but not artists?   You have to consider the order in which people are compensated.   Managers and agents are paid first and off the top before expenses.  Artists are paid last and after expenses. Let me explain.

Agents.

An agent’s only source of revenue is commissions on live performance.  So if artists play more shows this is generally good for agents.  But dig a little deeper. Specifically agents usually receive 10% of gross.   Not net, but gross.  You get what that means, right?  Whether the artist makes a profit or loss on the show the agents commission comes off the top.  The agent always gets paid.

Example: a baby band gets a $500 club show but it costs them $465 dollars, in hotels, gas, rental vehicle, meals etc.   The agent still get’s his/her 50 bucks.   Off the top. Before expenses.  So the band would actually lose $15 dollars on that show.

A more subtle example is to examine what happens when a  band that normally plays 75 shows a year  suddenly starts playing 150 shows a year to make up for lost recording revenue. My wife is a concert promoter and books hundreds of shows every  year.  We see this situation all the time.  We are very familiar with what happens.    In order to accomplish this an artist may needs to play smaller rooms;  go into smaller markets and overplay and hence saturate some major markets.  The artists annual gross for live shows will not double as the result of playing twice as many shows. If the band is lucky they will see a rise in revenue of around 50%.   But unfortunately for the band, expenses may come close to doubling! As a result the artist usually only sees a small increase in their income since they get paid after expenses.  In some cases I’ve seen artists actually earn less by doing more shows!  I think this was the case for my band  in 2007! Regardless the 50% rise in gross revenues never turns into 50% rise in income to the artist.  But the agent DOES see a 50% increase in income.   As a result the agent has a much bigger financial incentive to see an artist play more shows even if the artists doesn’t see a substantial increase in income.

Managers.

Unlike agents, a manager typically does make money from recorded music revenue.  So you would think a manager might be more concerned about piracy and low payouts from streaming services.   But as it turns out managers make such a small percentage from recorded music revenues when compared to live revenues their financial incentives are no different than agents.   Again let me lay it out for you.

Like agents, managers are paid a gross percentage on their artists live revenues.  Typically a manager will get between 15%-20% of gross from concerts.  But it is customary that a manager take their cut of all other income after all expenses have been deducted,  i.e. they get paid when the artist (finally) gets paid.

So for instance if a band receives a recording advance of $70,000 and the band spends $50,000 recording the album, the manager only gets 20% of $20,000 not $70,000!

Similarly an artist is typically compensated for recorded music with an “Artist Royalty” of 10-20% of the wholesale price of a download, “stream”  or CD.  So a manager’s 15-20% of that means a manager only  nets 1.5%-4% of recorded music revenue.  And these royalties are only payable  after the artist has recouped it’s recording and promotion costs.  So in practice a manager receives very little money from these sources.

Finally a time-tested way for a manager to generate additional revenue is to get the label to pay for “tour support” and send the artist out on an otherwise unprofitable tour.  Stick with me  on this one cause this is brilliant scam.

Let’s say band X is planning a  tour and they have gross guarantees of $50,000 dollars but they have $60,000 in expenses.   The band would normally cancel this tour and the manager would get nothing.  Instead the manager requests 10k in tour support from the record label.   The record label hoping to generate sales agrees. The band then goes out on a break even tour but the manager still  pockets 20% of $50,000 which is $10,000.   Now where does that $10,000 in tour support really come from?  Does it really come from the label?  No.   It’s almost always configured as an advance against the artist’s royalties.   So in effect the manager has traded  20% cut of $10,000 in future artist royalties for 20% cut of $50,000 in live revenues.   The manager turned $2,000 potential commission into $10,000 actual bird-in-the-hand commission.

There are a zillion of these clever tricks that managers have dreamed up over the years, but that’s not really the point of this post.  The point is that managers and agents don’t really make anything off of recorded music revenues at least when you compare it to the amount they make off of live concerts.  Managers and agents have never really cared about revenue from recorded music and they have even less incentive to care about it now that streaming has obliterated what little revenue there was.

So managers and agents are free to say whatever they want about streaming and piracy.  But just remember  what’s good for managers and agents is not necessarily what is good for artists.  Keep that in mind next time you see an agent or manager extoll the “virtues” of streaming or piracy.   Heck some managers even own pieces of these low paying streaming services or worse unlicensed services that pay nothing to artists. No wonder they love  streaming and piracy.

 

 

 

 

 

 

 

Garth Brooks Says I’ll Take The 80, They Can Have the 20

trichordist:

Go Garth! Why choice for artists remains important.

Originally posted on MUSIC • TECHNOLOGY • POLICY:

When Garth Brooks was at his peak the last time around, I remember a story about him that stuck.  Garth visited the sales teams at some of the biggest retailers along with his label sales executives to discuss the set up for one of his albums.  After they’d all visited for a bit, Garth asked the label execs to leave the room and he stayed with the retailer’s sales teams.  “Now tell me what you wouldn’t tell me if they were in the room,” he said (or so the story goes).

That, you see, is a business-savvy artist.  This isn’t for everyone, but if artists are interested in their business, this is exactly the kind of thing you should do.

So it’s not surprising that Garth Brooks has held his records back from digital distribution all this time.  Apple wanted to commoditize his albums by forcing him to sell on…

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EFF’s John Perry Barlow is Wrong, says Google’s Chief Economist

Trichordist Editor:

just in case you missed it the fist time around…

Originally posted on The Trichordist:

What Artificial Scarcity?

John Perry Barlow is the outspoken EFF co-founder who wrote the sophomoric and nonsensical manifesto for the internet. Much of Barlow’s principal talking points regarding his complete disregard for the protection of artists rights in the digital age centers around the idea that “property” especially of the intellectual kind should not exist on the internet.

“Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.”- John Perry Barlow

The fact that this is posted on the EFF website should be at the very least alarming, if not completely absurd for a policy group to display publicly as part of its mission.

There is much talk online by freehadist’s that digital bits are worthless and the cost of a copy is zero, therefore all content online has a near zero marginal…

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The Declining Utility of the ASCAP and BMI Consent Decrees: Music Licensing Study

trichordist:

Required Reading from Music Tech Policy.

Originally posted on MUSIC • TECHNOLOGY • POLICY:

The U.S. Copyright Office is conducting a “Music Licensing Study” as part of the government’s overall review of the U.S. copyright law with an eye to potentially overhauling the entire copyright system.  (See “The Next Great Copyright Act” by Maria Pallante, the head of the U.S. Copyright Office and the nominal go-to person for the U.S. Congress on copyright issues.)  The Copyright Office has received written public comments on questions posed in its Notice of Inquiry and is also holding public Roundtables in Nashville, Los Angeles and New York  (in that order).

I filed comments with the Copyright Office and this post is the last of a three part post focusing on each of the three points I made in my comments (see Songwriter Liberty and Audit Rights Under Section 115 and “Successful” Licensing Models and the Opt Out.)  This post discusses the out…

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Worth Repeating : Copylike.Org Artists Rights Postcards

In China Digital Music Services Go After Ad Supported Piracy and Illegal Services.

I’m in China for the next two weeks performing and doing a series of IP and Music Industry events.   I will be occasionally updating readers on my activities. 

Congress Should Ask Digital Music Services Why They Don’t Go After Ad Supported Piracy.

Why don’t services like Spotify go after unlicensed competitors like Grooveshark? Why didn’t Apple or Amazon complain about unfair competition from the likes of MegaUpload? Why don’t the ad supported services like Pandora or Spotify complain about the ad supported piracy that directly competes with their advertising dollars?  This is something that has always puzzled us here at The Trichordist.  Why would otherwise rational business people who are obligated to protect their shareholders interest allow unlicensed competitors to get away with it?   Hell I’ve watched them cozy right up to unlicensed competitors. I’m not gonna name names here but a little people watching at SF Music Tech is quite instructive.  (The FTC or DOJ should try it sometime).

Well we gave these services the benefit of the doubt.  “Maybe no one has really thought this through? So we  back-channelled to one of these companies and asked them to join us in our campaign against ad supported piracy.  They declined.  Why?  Because they claimed they didn’t want to be seen as “anti-consumer.”  Huh?!

While it’s tempting to just call the entire digital music distribution business a bunch of glassy eyed free-culture Kool-Aid drinkers who’ve never grown up and actually  turned a profit, I won’t.  Cause while they’ve never made a profit they aren’t totally stupid.   In fact I believe they are consciously (and perhaps illegally) running a fairly sophisticated racket.

I believe that the digital services have specifically used the threat of piracy to negotiate exploitative deals with artists and rights holders.  Now they can’t come right out and say “That’s a real nice album you got there, I’d hate for it to get torrented” cause that would be illegal.  But they can create a fake scientific corporate study that says the same thing and here it is.

But as a regular reader you know this is just business as usual for these guys. This isn’t really news. What is news, is that in China the services and the content owners have come together to fight the illegal services.  As  China Music Business reports

It is impossible to make a concerted switch into a paying model when there are hundreds of sites with freely available music. While there are definitely fierce rivalries at play here, the key stakeholders are making an aligned move towards addressing this, including setting up bodies like the Alliance of the Digital Music Industry (ADMI), representing both content and service providers.

Holy shit.  Why don’t the western services get this? It’s a no brainer.  Maybe it’s time for Shareholders to ask some questions.

Read the rest here: http://www.chinamusicbusiness.com/article/china-great-digital-music-leap-forward/