New Adventures in Copyright Enforcement @SXSW #SXSW

Friday, March 14 | 2:00PM – 3:00PM
New Adventures in Copyright Enforcement
Austin Convention Center | Room 17B | 500 E Cesar Chavez St

lthough debates about how to protect copyright online might seem so 2010, they certainly haven’t abated. The current conversations aren’t as contentious as the SOPA skirmishes, but that doesn’t necessarily mean consensus. Current attempts to address piracy are taking place outside of Congress, and include efforts to establish “best practices” between stakeholders. From the recently-minted Copyright Alert System to voluntary agreements meant to curb unauthorized activity within ad networks and payment processors, new experiments in rights protection abound. What’s the thinking behind the various approaches? What does a “win” look like, and what are the parameters for oversight? How can artists get involved?

MMODERATOR
Casey Rae
Interim Exec Dir – Future of Music Coalition

Sherwin Siy
VP, Legal Affairs- Public Knowledge

Jill Lesser
Exec Dir- Center For Copyright Information

David Lowery
Musician/Internet Content Provider – Cracker

David Lowery in The New York Times | Defining and Demanding a Musician’s Fair Shake in the Internet Age

The New York Times business reporter Ben Sisario profiles David Lowery on the artists rights in the Copyfight. Maybe advocacy is the new radio?

The issue has become hot as technology companies like Pandora and Google have replaced major record labels as the villains of choice for industry critics. Recently, Thom Yorke of Radiohead caused a stir by removing some of his music from Spotify and saying that the service would hurt new artists.

To his detractors, Mr. Lowery is a divisive ranter who pines for a lost, pre-Internet economy. But his knowledge of legal and technological minutiae — he is a lecturer at the University of Georgia’s music business program — make his arguments hard to dismiss.

“He’s telling his personal story and standing up to the big corporations who claim to support songwriters, even as they work to undermine our rights behind the scenes,” said Paul Williams, the songwriter and president of Ascap. “He hasn’t flinched, and I think that’s given courage to other artists.”

READ THE FULL STORY HERE AT THE NEW YORK TIMES:
http://www.nytimes.com/2013/10/01/business/media/defining-and-demanding-a-musicians-fair-shake-in-the-internet-age.html?_r=0

Third Nyan Cat Award For Web Based Idiocy: Cathy Caverly of Creative Commons.

Nyan Cat awards are given for outstanding achievement in disinformation, web myths and general web based idiocy.

I just read with some amusement this article in the UK Guardian whereby author Phillip Pullman rightly calls piracy “Moral Squalor”. But that’s not the part that’s funny. It’s the quote that they use for “balance” from Creative Commons Chief Cathy Caverly.

“By default, copyright closes the door on countless ways that people can share, build upon, and remix each other’s work, possibilities that were unimaginable when those laws were established.”

NO IT DOESN”T. IT JUST MEANS THAT YOU HAVE TO ASK PERMISSION OF THE AUTHOR OF THE WORK IF YOU USE IT PUBLICLY AND/OR COMMERCIALLY EXPLOIT IT. HOW CAN ANY DECENT HUMAN BEING BE AGAINST THAT?

Permission is the foundation of civilization or have you forgotten that Ms Caverly?

But it shouldn’t surprise anyone that the Chief of Creative Commons would utter such idiocy. For they claim they offer a license “that lets creators take copyright into their own hands”. WTF? It actually does the opposite. Isn’t this a false statement? False advertising? Fraud? Reading that statement I can’t imagine there are NOT artists out there that unwittingly put their now valuable work into Creative Commons thinking they were gaining more control over their work when in actuality they were doing the opposite. I’m not a lawyer but isn’t there a problem misleading people in this manner?

Plain old normal copyright IS creators right to their works in their own hands.

Creative Commons licenses are a permanent surrendering of some or all of your copyrights as an artist. To use the same analogy these CC licenses take creators’ works from their hands.

Now some people see Creative Commons as a elaborate put up for a particular large Internet corporation that would like nothing better than to monetize every book, film, photograph and song without ever having to ask permission of the author. They often point to Sergey Brin’s (Google) financial support of the organization and the fact that his mother-in-law is the vice chair. Or they point out that their board is completely dominated by people with ties to technology companies and opponents of Copyright. I don’t agree with this. The pseudo-intellectual Creative Commons movement was afoot long before Google existed. Still one can certainly argue that Creative Commons are “useful idiots” and I won’t object.

But here is the question that no one is asking:

“Why are Creative Commons licenses even necessary?”.

For you can do everything you do with Creative Commons that you can do with old-fashioned-non-googly copyright! For instance I allow the non-commercial sharing of recordings of my bands live shows on the non-profit Internet Music Archive. There are thousands of our recordings on the internet music archive. All I had to do was state on our website that we allow this. Voila. Thousands of recordings appeared.

Neither do we object to fans posting ukele cover versions of “Take the Skinheads Bowling” on their facebook pages. And may I remind you that the Grateful Dead enacted their famous taping policy without a Creative Commons license?

Photographers who wish to freely share their photos in any manner commercial or non commercial may state so on their websites without using a Creative Commons license. Plus they have the added advantage of being able to change their minds later. Something that is not possible with a Creative Commons License.

Why is it left to me rather than a real journalist to point out that there is no point to Creative Commons licenses? Where are the grown-ups?

Well perhaps I’m too hasty. There may be ONE point to these Creative Common licenses:

They serve to confuse the public as to the true nature of copyright. And that looks suspiciously like propaganda to me. “Useful idiots” indeed!

Therefore we hereby present our 3rd Nyan Cat Award to Cathy Caverly of Creative Commons. Enjoy.

Time For Silicon Valley To Grow Up And Take Responsibility For Their Online Advertising Business Model.

Time For Silicon Valley To Grow Up And Take Responsibility For Their Online Advertising Business Model.

Whitelist vs Blacklist Advertising.

Last week much of the world was horrified to learn that Facebook was serving ads from major brands on pages devoted to what the Huffington post described as:

horrific rape-oriented Facebook pages… (including) graphic images of gore and horror, beaten children, naked children, women bound and gagged, or thrown down stairs.

The public outcry against the brands and Facebook was overwhelming. Facebook and many brands were forced to apologize and revise policies (let’s see how long this lasts!).  Dove may have suffered long term damage to their brand.

WAM (Women Action Media), feminist Soraya Chemaly and Everyday Sexism should be commended for bringing this issue to light and achieving real change (and the stunning coordination of their campaign should be a lesson to artists advocates).

What we find interesting here at The Trichordist  is that many of our brands were the usual ad-supported piracy suspects.  In particular  Nationwide and American Express.  We have repeatedly called out these companies for advertising on cyberlocker sites that exploit artists and others.  And as we have noted over and over again this is not just about music.  Generally these sites  include links to bestiality, rape, illegal pornography videos as well as music (Urban Outfitters and Lexus advertising against beastiality links.)  We’ve both publicly and privately reached out to many of these advertisers to no avail. www.adland.tv  actually ran an article entitled “American Express Thinks You Might Like Piracy and Child Pornography” after reviewing my research.

Just as Facebook was long aware of these horrific pages, American Express and many other companies have long known their advertising was ending up on these pages. This latest brouhaha shows (as we have noted) they have yet to take effective action.

And we know why.  Total obfuscation by the online advertising ecosystem: in house ad buyer, Madison Avenue advertising agency, online ad network, ad exchanges and possibly complicity by the brands themselves.

We have seen and documented the following responses from the online advertising ecosystem (In fact I just got a refresher course May 28th at Westminster College in London as I participated in a panel discussion  “Follow The Money: Can The Business Of Ad-Funded Piracy Be Throttled?):

Lame Excuse #1.   We can’t control where these ads end up.

Response:  Then why on earth would anyone pay for your product?  Are you  admitting that your product is faulty? Cause I can think of a couple of lucrative class action lawsuits.   We think you can control where the ads end up. You just want the money.

Lame Excuse #2:  We are not the internet’s policeman (most recently by Google at Westminster College London).

Response: This is a “straw man” argument.  No one is asking YOU to be the web’s policeman. We are simply asking you to run your  company ethically and responsibly. Please stop obfuscating.  Sure the police arrest the thieves, but just like pawnshops, Google and the rest of the online advertising ecosystem have a ethical, moral and LEGAL obligation to make sure they are not selling stolen pageviews.  If a pawnshop used this excuse to sell stolen goods they would be shut down and the owners would go to jail.

Lame Excuse #3:  We don’t know who the bad guys are.

Response:   Really? Then who get’s the money for the CPMs  and/or Clicks?  Are you just leaving suitcases of cash in lockers at greyhound stations?  And if you are doesn’t that seem a tad suspicious? Who pays the taxes on these transactions?   If you don’t know you are probably in violation of many tax laws in many countries. And that’s how they put Al Capone in jail. Don’t mess with the tax man.

Lame Excuse #4:  Apple and Coca Cola don’t end up on these sites because they use “White Lists”.   This was the response from Alexandra Scott the UK Public Policy Executive for Internet Advertising Bureau.  This as always was delivered with an undertone of dismissiveness. As if Apple and Coca Cola just “don’t get it!” and should be advertising on shitty file infringing sites next to trojan downloads and Russian bride ads.

Response: Exactly. Whitelists.  They actually vet the websites on which they are advertising. They check to see if these sites are legitimate sites.  Using the pawn shop analogy.  They actually check to see if the goods-in this case pageviews- are stolen.

And this brings us to the fundamental problem with the internet advertising ecosystem.  It’s not the obligation of artists, feminists, anti-human trafficking activists and animal rights groups to tell you where you should not be advertising. It’s your job. Grow up. Quit trying to force us to do your job for you.

Blacklist systems too often put the burden on the victims or advocates for the victims while enabling brand advertising and Madison Ave/Silicon Valley profits at the expenses of others.

Whitelist systems put the burden on those reaping the benefits:  Brands, Madison Ave. Silicon Valley and Publishers.   This is the ethical model.

Note:  whitelists and blacklists are not created by the government.  These lists are designed for a narrow purpose–brands should be able to spend their advertising dollars in a predictable way that results in the brand being able to control the brand’s own speech.  These lists are not designed to block anyone’s speech.

There’s another way to look at this from the brand’s point of view, which may be better than developing “lists” that are either/or lists that put a site in or out or operation.  It is entirely consistent with the brand’s ability to control the integrity of their products and their right to not be defrauded out of advertising money for the brand to put together lists of sites that they want to avoid, or “undesirable” sites as Google’s Theo Bertand said on our panel in London.

Time for the internet advertising ecosystem and their Silicon Valley enablers to learn to act ethically and responsibly.  Companies like Starbucks and Costco have figured it out.  Companies like Walmart that came under criticism for various unethical practices mostly addressed these problems.  What is Silicon Valley’s response?  “Censorship” and “You silly people don’t understand the internet.”

I call bullshit on this argument.  And we “silly people” understand you better than you think.

Silicon Valley is the new wall street.  Sure they have green buildings and make the occasional charitable donations.   But mob bosses were notorious for making donations to the local orphanages and policemen benevolence societies.

Silicon valley doesn’t give a damn how it makes money. It will do anything to make money.  No matter what the moral implications.   It has a fake censorship argument that it uses to mask it’s fundamental amorality and greed.   Entire PR campaigns (including fake paid bloggers and fake public interests groups) are devoted to promoting a techno Nihilism: If you can do it on the internet-no matter how horrific that act may be-stopping someone from doing it is “censorship” and  infringes someone’s “freedom”.

This is the kind of argument a 13 year old wouldn’t even make.  And it’s amazing that the mainstream press never calls them out on this.  Again why is it left to a 50 year old  moderately successful indie rocker to call them out on this bullshit?

Look it’s very simple.

Grown up style freedom:

“My right to swing my fist ends at the tip of the other man’s nose.”

Silicon Valley petulant 13 year old style freedom:

“My right to swing my fist is absolute.  And you’re not the boss of me!”

Silicon Vallley and the rest of the online advertising ecosystem needs to grow up.

YOU MAY ALSO ENJOY READING:

Google, Advertising, Money and Piracy. A History of Wrongdoing Exposed.

ADWEEK : “Ad Industry Takes Major Step to Fight Online Piracy”… Again…

Over 50 Major Brands Supporting Music Piracy, It’s Big Business!

Look who’s Pirating now! University Of Georgia Music Business Program’s Preliminary Study Of Advertising On Copyright Infringing Sites.

David Lowery Debates Google on Ad Sponsored Piracy in London

A full transcript of the debate is available at Music Ally. Here’s the set up…

The topic of ad-funded piracy has been increasingly prominent in recent months, with musician David Lowery, Beggars Group founder Martin Mills, music industry body the BPI and the University of Southern California’s Annenberg Innovation Lab (among others) questioning why so many big brands’ ads appear on sites that are engaged in piracy.

Google agrees with David that Music Piracy is a for profit business…

Google’s Theo Bertram gave his company’s view, suggesting that he agreed with most of what Lowery had said. “It does seem to me to be an entirely sensible way to tackle piracy… most people doing piracy are not some guy in his bedroom altruistically sharing music with his friends. It’s people making money out of piracy, and it’s big business: some of these sites have 2m visitors regularly, and they’re not doing a bad business from advertising.”

READ THE FULL TRANSCRIPT AT MUSIC ALLY:
http://musically.com/2013/05/28/live-google-david-lowery-and-the-bpi-talk-ad-funded-piracy/

Why I Was Banned From Speaking At San Francisco Music Tech #SFMUSICTECH

this photo says it all

“This says It all”

I was supposed to speak at the SF Music Tech Summit Feb 19th 2013.   A few days before my scheduled appearance I received a call from  SF Music Tech and Fututre of Music Coalition co-founder Brian Zisk explaining that I would not be allowed to speak because I tweeted/blogged the above picture with the following caption “this says it all.”   Further he noted that “certain sponsors” would not “appreciate” me speaking at this event.

I love the hypocrisy of the Silicon Valley. They are all for free speech until they aren’t.

The fundamental American right is Free Speech. SF Music Tech (and Silicon Valley in general) do not really respect this right. Especially when it begins to interfere with their bottom line.

So what do you say we just end the charade? SF Music Tech Summit is biased against creators/musicians and their rights. It’s a pro-tech industry event.  It’s held in the Kabuki Hotel in San Francisco.  Because it is a giant Kabuki.

Three times a year  you find Tech Industry “entrepreneurs” who’ve never turned a profit “debate” un-elected artists rights advocates who as it turns out work for opaque 501C  foundations and organizations  that are funded by technology companies like Google.

If it’s not clear I’m talking about you, Future of Music Coalition and Cash Music.  Sorry guys/gals you had your chance to do the right thing and  speak out publicly against me being banned and you didn’t.  That makes you at best quislings and at worst shills.

SF Music Tech and Brian Zisk have every right to do whatever they want with their #SFMUSICTECH summit but I just ask them to stop pretending it reperesents anything other than the technologists that wish to exploit artists.

Have a good SF Music Tech.  I’ll be off touring the UK.

Getting Copyrights, Right. David Lowery at Politico

Our own David Lowery makes a lot of compelling arguments in Politico on Monday morning, but this one in particular regarding a copyright registry and orphan works should be of interests to all consumers and individuals as well as all creators. Copyright effects everyone, not just musicians.

Register Your Family Albums

Both conservatives and liberals should be frightened by the “Principles’” attempt to “reformalize” effective copyright protection by encouraging Goodlatte to take away “rights and remedies” for those who do not register their works. Especially those works that the report deems to have “no commercial value”—as decided by the elites rather than the market, apparently.

So if one of the “users” the principles seem to think they represent — like me — posts a photo of my children on my Facebook page but I don’t register it, and somehow a company or individual then uses this picture commercially, or in some other vile manner, this report explicitly states that I would not have the same “rights and remedies” that I currently enjoy. In fact my reading of this report says I would have no remedies unless I were to win an argument that my family photos have commercial value — full employment for lawyers.

So are we all gonna have to register our family photos with Big Brother in order to keep control of them?

Read the full article here at Politico:
http://www.politico.com/story/2013/05/building-a-real-copyright-consensus-91231.html

Streaming Services Ranked By “Artist Friendliness”

There is a lot of debate concerning the amounts paid to artists by streaming services.  It’s often very confusing because what an artist sees in royalties on their statements is highly dependent on a number of factors including whether they have a record deal, publishing deal or whether they are a solo performer or a band.  From an artists perspective royalties may accumulate from multiple sources. The other problem is that in general royalties are based on a percentage of the streaming services revenue.  So the amount may vary month to month and year to year.

Still one good  way to compare services is to look at statements for a moderately sized catalogue and calculate the revenue per stream they pay to “the rightsholders” (label/publisher/performer/songwriter) over a period of months.   This would also be the same amount that a completely independent artist that owns 100% if their own recordings and songwriting receives.

But this is not the only way to look at these streaming services from an “artist friendly” viewpoint.   We also need to look at whether these services respect artists rights. That is, whether these services respect the Artists right to choose how to monetize their music.   When you look at it in those terms the picture is a little different.  Here I’ve ranked the 7 most common services.

1. Rhapsody (Napster/Zune).  These three “on demand” services allow you access to virtually any song at any time. From an artist’s perspective they are identical.   These all work on a paid subscription model.  Like Spotify these services pay a percentage of revenue to rights holders.   But because they do not offer an ad based free service they have more revenue and pay more per stream to each artist than Spotify.  All these services  (like Spotify) operate under a private license.  They do not rely on a government imposed compulsory licenses or rates.  This also means rightsholders can theoretically “opt out” of this service if they think it doesn’t pay well enough. Or better yet negotiate a better deal.

I’m not opposed to compulsory licenses and rates in certain situations. But as  an artist I have to note that these rates are set by political appointees.  Broadcasters generally have a lot more money than artists and are thus better positioned  to influence the political process.  This is not some sort of tin foil hat paranoia.   If you were paying attention this fall you will note  that this is exactly  what happened  with the Orwellian-named Internet Radio Fairness Act.  Pandora fronting for Clear Channel,  Sirius XM and various Silicon Valley firms tried to use their lobbying money and influence to force the government to reduce those compulsory license rates!  Artists could have got an 85% pay cut!  So in general private blanket licensing is better for the artist.  Compulsory federal government imposed rates benefit the politically connected.

As previously noted have access to the streaming royalty payments for a moderately sized catalogue. Here are the average per stream rates paid by these three services Jul-Dec 2011.

Zune 2.8 cents

Napster  1.6 cents

Rhapsody 1.3 cents

These are close to being a sustainable* rate for artists.  (See footnote at end for an explanation.)

As a consumer I enjoy Rhapsody’s  256k mp3s.  As a consumer I prefer Spotify’s interface. I’ve never tried Zune or Napster.

2. Spotify.  #2 ?!! This surprises many of you.  Right? Let me explain.

Currently Spotify appears to be paying rightsholders about .5 -.7  cents a stream.  Considerably lower than the three services above.     While my colleagues here believe this is not a sustainable rate and that it may never become a sustainable rate we can’t know for sure.   It  is unclear how much streaming services  “cannibalize” or displace traditional sales. If streaming services  displace 20% of sales Spotify’s per stream rate could be sustainable.  If they displaces 80% of sales? Probably not.

Spotify  relies heavily on it’s free streaming service that is ad supported.  Spotify pays 70% of revenue to rightsholders.  If Spotify manages to convert more users to it’s premium subscription services revenues will rise.  As a result  rightsholder’s revenues rise.  If the ratio of paying subscribers to free subscribers rises substantially the per stream rate rises to something  sustainable.

What we  like about Spotify:  It operates (mostly?**) under  private licenses which means that rightsholders can withdraw from the service if they wish.  More importantly Spotify  has quietly allowed individual artists to “window” their releases and limit which singles or albums are available in the free service.  This is very important. For instance my band Cracker which has had four top ten rock tracks might find it’s revenues from Spotify acceptable.  But a niche artist like Zoe Keating might find she is losing sales to streaming services. She might chose to have only some or none of her catalogue available.  Choice is the foundation of free markets. Allowing artists to experiment with how to use streaming services, and how to monetize their songs is good for everyone. It will eventually be clear the best way to balance revenue and access.

I also should note that Spotify is being unfairly blamed for the knock on effects of disintermediation.  Disintermediation creates winner-take-all markets, and in an industry that was already winner take almost all, the small and middle class artists have gotten clobbered.  On a positive note, in these kind of markets there are usually countervailing market forces at work that nudge us towards  risk and revenue sharing. Or in Layman’s terms: It usually gets better.    The explanation is kind of complex so I’ll skip it for now.  Suffice it to say that right now it’s not so much Spotify taking artists’ royalties but the superstars taking everyone else’s royalties.

Finally Spotify has gone out of it’s way to engage artists, even critics like myself.  The fact that they were willing to sit down with me and discuss my issues with  their service is encouraging.

#3 Pandora.   Oh how the mighty have fallen.    Once they were our favorite.  Look at early Trichordist blogs and note our enthusiastic tone whenever we speak of Pandora!

For those of you that don’t know Pandora is NOT an on-demand streaming service.  I call it a “virtually on demand streaming service.”  If I type in a song title and artist name, I dont’ get that song.  But I usually get a song by that artist.  Pandora is a music discovery service.  It’s not a replacement for owning an album.  As a result Pandora gets and should get a lower rate than on demand services.

What we don’t like about Pandora:

They operate under a compulsory license so artists can not opt out of the service if they do not like the rates!! But what is worse is they have adopted the tactics of Silicon Valley’s hardball monopolists.  Proudly on display are  lobbyists, fake bloggers, planted stories, paid mouthpieces  and all the usual Kabuki Theatre bullshit we’ve come to expect from the “innovators” of Wall Street- er I mean Silicon Valley.  As I mentioned previously  Pandora fronted for the Internet Radio Fairness Coalition and pushed the Orwellian-named Internet Radio Fairness Act. The bill had nothing to do with Internet radio or fairness and everything to do with screwing artists out of 85% of their royalties.

Curiously the Internet Radio Fairness Coalition which supports the bill  has a lot of traditional broadcasters like Clear Channel and Sirius XM. Kind of odd for an organization with the publicized  purpose of leveling the playing field between Internet broadcasters and traditional broadcasters. The CCIA and CEA are also  inexplicably members of the IRFC.  Well maybe not inexplicably.  Just as the Four Horsemen herald the Apocalypse,   The CCIA  and CEA seem to always herald  La Chingada of someone, somewhere by Google.

So for participating in this rapacious anti-artist skullduggery we move Pandora from the top of the list  to #3.   We would put it at the bottom of the list but the other two lower ranking  services in my humble opinion are not even completely legal.

#4.   YouTube/Google.   YouTube is the biggest on demand streaming service. I know people think of it as a video service but it turns out that it’s the most popular music streaming service.  The main problem is that a lot of the music is uploaded and monetized by people that have no right to the music in the first place.  For example here is one of my recordings:  All Her Favorite Fruit. The problem is I didn’t authorize this person to upload this song, nor did I authorize YouTube to sell advertising or sponsored videos against this song.  It’s possible that the record label did but as I am also the songwriter and legally I should have been consulted.  Worse, the person who uploaded the static image can receive advertising revenues  since they “own” the video.  This is no different than Kim Dotcomm/MegaUpload paying people to upload the most popular movies and songs.  Further I have no idea where the money goes since you can’t audit YouTube without signing an agreement with them that basically says you can’t audit them!  YouTube is like the exploitative 1950’s music business but even worse, as  the artist does not receive the occasional Cadillac in lieu of royalties.

Now consider this:  This track is competing with legitimate authorized  streams of my track on other services.  These services generate some revenue for me.  So say I find it in my financial interests  to take this down?  I have to file what’s called a  DMCA notice.  When I do this Google can place my DMCA notice  on this website to try to publicly shame me into not doing this anymore.  I don’t file DMCA notices with YouTube/Google because I don’t want some deranged Freehadists showing up at my  home or office. This is not a far fetched idea, many of us in the vanguard arguing for artists rights and the preservation of copyright receive constant threats from seriously deranged free culture nutbags.  So the result is I don’t file a notice and I let YouTube/Google get away with this. This website is a tool of intimidation. It is my belief that this is exactly what Google intended when it launched this site.

If Google and UC Berkeley (which hosts the site and lends it intellectual legitimacy) had any common decency they would stop this practice cause someone is gonna get hurt one day. Now while  I don’t hold out hope for Google developing any common sense anytime soon (they are still allowing advertising for no prescription Oxycontin despite a half a billion dollar fine and threat of jail time)  maybe the Chancellor of UC Berkeley will recognize how screwed up this is.  You should ask Chancellor Birgeneau yourself: “Why is UC Berkeley supporting Googles intimidation scheme?”  chancellor AT berkeley.edu.

My friend East Bay Ray of The Dead Kennedys  told me he recently got an “offer” from YouTube/Google to let him claim  his own songs and start receiving royalties.(“Really you’re letting me have control over my own songs? Gee thanks how nice!”).  All he had to do was sign away most of his rights and in return the band would get about .1 cents a view.   Considering your typical banner ad on a shitty pirate website gets 1.5 cents an impression,  this is not even a joke.  It’s an insult.   Honestly I can’t understand how artists can complain about Spotify when YouTube/Google is so much worse and certifiably evil.  As I’ve said before “Don’t be Evil” is not their corporate slogan, It’s their widely ignored corporate reminder. 

#5 Grooveshark.   Many young people I run across seem to think this is a legitimate streaming service. It’s not.  My entire catalogue is on this service. No license, no permission and not a dime ever from these guys.   The sooner these guys go to jail the better.  I’m tempted to have a conversation with Ted Nugent. You think he’s mad about Obama raising his taxes and restricting his gun rights?  Wait till he finds out that Grooveshark is not paying him royalties.

* “Sustainable Rate” is my attempt to figure out a streaming rate that compensates artists well enough to continue to write (and especially) record albums.   I’ve examined a lot of iTunes libraries and “most played” lists.   A typical 20 year old college student seems to play a track they have purchased around 25-30 times before they seem to tire of the track.   So if on demand streaming replaces all album sales a stream should pay about 2.3-2.8 cents to be the equivalent of the 69 cents net received from iTunes on a 99cent download.  But if on-demand streaming only replaces 50% of album sales it could be half that rate.  You see?

But a  word of caution.  First this assumes that 99 cents a track is the right price for all songs.  Not necessarily true.   This is a price that iTunes essentially imposed on the record business, against a backdrop of mass piracy.  You can make an argument that this artificially lowered the price of music.

Second the music business has always worked on a revenue sharing model that assumes the “winners” subsidize the “losers” through record companies, publishing companies and their advances.   If you have total disintermediation in the streaming market even with high per stream rates  niche artists like Zoe Keating and Camper Van Beethoven would never generate enough revenue to record albums.  Music sales exhibit a “wild” variation and with total disintermediation almost all the revenue goes to the winners.   So this “sustainable rate” is not necessarily sustainable at all.  It is only one piece in the puzzle.  Eventually the revenue and risk sharing roles once assumed by record labels will need to be assumed by the record labels again, or other mechanisms need to be developed.

Other’s have suggested non market based  mechanisms which  include “crowd funding” government subsidies and corporate patronage.  I am uncomfortable with all of these.   Government and Corporate funding allow powerful elites to decide what music is made.   Crowd funding works for the most extroverted and popular personalities.   While crowdfunding comes closest to market based incentivizing  I don’t believe crowd funding would have ever given us  important artists  like Jimmy Hendrix, Captain Beefheart, Frank Zappa,  NWA,  Black Flag or Nirvana.   Can you imagine Kurt Cobain or Jimmy Hendrix offering a premium support package that includes the artist coming to your house and cooking dinner for you and 4 of your friends? No crowdfunding works for people like me who already have a career or extremely extroverted self promoting personalities like Amanda Palmer (no offense intended). 

One day I hope that all my musician and digital utopists friends wake up and see that the West’s private market based system for creating culture  has produced some extraordinarily profound and non-mainstream work.   No other system can match it. Why are some so  hell bent on throwing it away?  

** My understanding is that there is a compulsory on demand rate for songwriters (song in abstract) not performers.  It’s not clear to me whether Spotify uses this rate.   And I can’t two experts that agree.  But certainly the bulk (if not all) the revenues Spotify pays our are under the private license not compulsory license.

Reading Between The Lines Google Tells The Truth On Ad Supported Piracy, Now Let Markets Do Their Work.

An Elegant Non-Denial And It’s Implications.

We previously noted that USC’s Annenberg Innovation Lab released a report detailing their initial observations regarding the top online advertising networks that appear to facilitate the payment of advertising revenue to sites that exploit artists without compensation, i.e., pirate sites.

In the 1950s, record labels (often controlled by shady figures of legend and myth) exploited songwriters and artists without compensation.  When artists complained, the label might give the artist a Cadillac in lieu of their royalties. When we hear these stories about how some of the music moguls from those days exploited artists we are rightly outraged.

Today, sites like The Pirate Bay, Hotfile and Isohunt exploit artists in a similar way except the artists don’t even get the occasional  Cadillac.  And not many people seem outraged.  In fact journalists (like this Spin Magazine writer ) seem to want to romanticize the operators of these sites as folk heroes. Instead of portraying them as they truly are: sleazy opportunists and scam artists waving the banner of “freedom” while they rob artists blind.   The really sad part is “respectable” Fortune 500 companies seem to be complicit in this racket.   By advertising on these sites, these otherwise respectable companies fund these illegal operations that exploit artists.

But there is good news.  At least one company, Google has accidentally admitted to being complicit in this racket.  Well maybe that’s not quite right.   Perhaps a better way of phrasing it is they simply didn’t categorically deny their involvement and invited us to read between the lines.   Still I’m taking this as an admission the industry has a problem.  And admitting you have a problem is the first step to recovery. Even if it’s only a read-between-the-lines kind of admission.

The reason I say this is because Google issued a curious and very carefully worded response to the USC report. I am quoting from the LA Times reporting on the study.

“To the extent [the study] suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken,” a Google spokesperson said. “Over the past several years, we’ve taken a leadership role in this fight. The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google.”

I don’t know-perhaps I’m crazy but I think they did this purposely. There is almost a deconstructed  free jazz beauty to this statement.  It’s like they hired the Ornette Coleman of press releases. The melody is there, but it’s in the omissions, the implied notes,  the silences and the negative spaces.  And using a little mathematical logic you can reconstruct that melody.  You can clearly deduce the statements that they specifically intended to not deny.  Probably just so they couldn’t be accused of lying later.  You follow my logic?

The four read-between-the-lines admissions are as follows.

1. Google is a source of some funding for some pirate sites.

“To the extent the study suggests that Google ads are a major source of funds for major pirate sites, we believe they are mistaken.”

Google  is not denying that it is a source of funds for pirate sites.  They are simply proclaiming (without evidence) that they are something less than a major source of funding.  So they are a moderate source of funding?  A minor source of funding? Just shy of being a major source of funding?  Left unexplained is how Google can measure major versus minor funding and how Google has knowledge of the revenues generated by these illegal and mostly offshore sites.

2. Google funds pirate sites, just not the top 8 sites.

“To the extent the study suggests that Google ads are a major source of funds for major pirate sites, we believe they are mistaken.”

Read this sentence again.  They are denying funding the “major” sites. But they are not denying they may be funding sites that they don’t (arbitrarily) consider major.  Now in this case we were able to do a little reverse engineering to figure out the cut-off between major and non-major websites.  As noted before on the Trichordist we have caught Google providing ads (and we can only assume revenue)  to http://www.filestube.com.  They admitted that filestube had an account and have since disabled it (thank you).  According to web traffic analysis site http://www.Alexa.com there are only 8 file-sharing/cyberlocker type sites that rank higher than filestube!  Google’s own transparency report names http://www.filestube.com as the #1 recipient of valid notices of copyright infringement.

Since Google is basically an engineering operation, you should consider  it significant that it has implicitly  created 4 quadrants for their involvement:

A.  Major Funding For Major Sites

B. Less Then Major Funding For Major Sites

C. Major Funding For Less Than Major Sites

D. Less Than Major Funding For Less Than Major Sites.

They are specifically not denying that they may be operating in quadrants B, C and D. They are only denying that they are in quadrant A.

3. Google lacks sufficient corporate oversight to really know if they are providing funds to illegal sites or not.  

“…we believe it to be mistaken.”

Note the use of the word “believe.”   They are hedging their bets.  They don’t really know.  Google claims its mission is to “organize the world’s information” (whether the world likes it or not).  How can a company that can organize the world’s information lack sufficient knowledge of their own data to know where they are sending revenue? Don’t they issue 1099s in accordance with tax laws?  We can only assume that they are specifically not denying a lack of corporate oversight.   Because the other possibilities are terrifying.

What are the other  possibilities?

A.  The online advertising network has grown so complex it is actually a sentient being.  And like Skynet in Terminator movies, Google has lost control of it and it is now trying to kill us all.  (I’d assign this a low probability, Google’s fascination with The Singularity notwithstanding.)

B. They do know where they are sending revenue.  And if this is the case, Google shareholders may be in for another $500 million dollar fine, like the one they got in the illegal online pharmacy settlement.

For the sake of Google stockholders, lets just hope they are merely disorganized.

4. Google is not denying that their source code on pirate sites means that they have a financial relationship with these sites.

“The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google.”

Read this very carefully.  This is very, very clever. Or to keep using the Ornette Coleman analogy this is like the Science Fiction of  this press release.  It’s explosive, wild and takes a while to understand.  No one is really clear why there is a recording of a baby crying in the middle of the saxophone solo.   I’m sure it will confuse a lot of overworked underpaid journalists.

Note the words “some” and “any Google code”.  By using the word “some” Google has set up a hypothetical “straw man” to knock down.  For this statement to be true all they need is ONE example in which a pirate site  contained any Google code (Google Plus, Google Analytics) and someone  mistakenly thought Google was serving ads on the site.  It’s a beautiful hypothetical and that seems to “explain” everything.   When it really doesn’t.  That’s a wild bit of science fiction.  Or as one of my colleagues puts it  “a totally unrelated story that cross-dresses as a reasonable explanation.”

So once again Google cleverly DOES NOT deny that when we see Google or DoubleClick ad code or publisher IDs on rogue websites this confirms a financial relationship with Google.

But perhaps most telling of all is Google’s description of the ad networks as “complex.” And I heartily agree.   In the financial world there is an old adage “complexity is fraud.”   That is honest markets and financial products tend towards simplicity. But in the online advertising world you have ever increasing complexity. This usually indicates there is some fraudulent aspect to the market.  I believe that much of this “complexity” is there to simply insulate the big firms from illegal and unethical practices up and down the chain.  Because complexity has a useful byproduct: deniability.

To be fair, it should be noted that the online advertising ecosystem was not created by Google alone.  Other networks and the Madison Avenue agencies had a hand in creating this system.  I find it very interesting that not one of the Madison Avenue agencies has anything to say about this report.  Why the silence?

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

Transparency + Markets.

So my conclusion from all of this is probably not what you expect.   I think Google and the other ad networks are unreachable on this matter and we artists  shouldn’t waste time engaging them in a public relations battle.  They would love to confuse us with sideshows about ad exchanges, open protocols, “self-serve accounts”  and the complexity of the system.  None of that really matters.  What matters is that companies like State Farm and Amex show up on these sites.  We artists need to focus on the brands that are advertising on the these sites and nothing else.

The other thing to consider.  It is becoming ever more apparent that Google gets a form of “celebrity” justice when it comes to their wrongdoing.  A minuscule $25,000 dollar fine in the Google WiFi snooping case? How did that happen?   Or Friday’s mysterious  FTC announcement that the Obama Administration won’t be pursuing an anti-trust investigation of Google.  Google has too much clout in the political system.  While it’s reported that Google’s PAC may have divided its contributions between Republicans and Democrats, its employees and executives overwhelmingly supported Democrats and Obama.  The technology sector is one of the few industries that Democrats can rely upon to counter the Republicans’ advantage in corporate political donations.  This gives me little hope that Washington will ever punish Google or any other tech company involved in the online advertising cesspool.

Now I’m not in favor of this sort of cronyism, I’d love to see Congress investigate these ad networks, especially Google.   But ultimately I think it doesn’t matter.  What matters more is that we shine a light onto these practices. This is the best way to attack the problem.

The silver lining is that companies like Google are  helping us.   Their protestations are inadvertently providing transparency into how the online advertising ecosystem truly functions:   It’s out of control, un-reliable, and does not work as advertised.  It may actually do harm to some brands.  To paraphrase Chris Castle at Music Tech Policy: Online ad networks are Silicon Valley’s exploding Pinto. The mother of all product liability cases.  I believe that as this information becomes widely known  market forces will correct much of the problem, for there are clear financial incentives.

This will happen in two distinct but interrelated ways.  Downward pressure on share prices and lower revenues.

The money starts with the Fortune 500 brands.  We don’t need to know every single place where it ends up. We can see it in the screen captures.  We don’t need to follow the money to every Vladmir and Constantin running a pirate site.  We just need to cut off  funds at the source. And transparency is the most effective AND easiest way to do this.

As Fortune 500 firms become aware of how these ad networks really work, brands will abandon the “bad” networks reducing their revenue, or force the “bad” networks to change their practices. Either way funding for these sites should drop.

Part of the reason I’m so optimistic is that I’ve discovered that it’s really pretty easy to get a bad network in trouble with its clients. Let me demonstrate.   Virtually every illegal file-sharing and/or “cyber locker site”  will auto-suggest “recently downloaded” or “popular files”.  Every once in a while they suggest files that appear to be illegal pornography.  The site http://www.stopfilelockers.com  explains this  in detail.  But as an example even this innocuous search for “camper van beethoven pictures of matchstick men” on a site like http://www.filestube.com immediately autosuggested some very sketchy links at the bottom of the screen.

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And because these sites are completely unregulated eventually something really embarrassing happens to a major brand.  Like this real screenshot I captured earlier this fall:

“Bestiality brought to you by Lexus.”  For their “The Golden (Retriever) Opportunity Sales Event” advertising campaign

lexus and bestiality

And the same thing happened to  Urban Outfitters.  Although honestly I really can’t be 100% sure this isn’t intentional.  You follow me? This  may be some high level extreme branding. You never can be sure with a brand that uses  a litter box with cat poop spelling out “2013” for it’s web catalogue.  Not kidding.

urban outfitters and bestiality

Transparency + Markets is quite a wonderful thing.  Isn’t there now a high probability that  someone at an ad agency or an entire ad network somewhere gets fired over these two screenshots?  The ultimate effect is that it reduces revenue to http://www.filestube.com.

But even more interesting is that the  publicly traded companies that operate ad networks,  like Google, Microsoft, Yahoo and ValueClick expose themselves to civil and criminal liability by doing business with these websites. What happens if one of these networks get caught up in a RICO investigation? What happens to the share price?

Many of these websites pay “affiliates” money for  uploading popular files.  In the case of MegaUpload I’d imagine many of these affiliates are in the US.  Do you really think MegaUpload sent 1099’s to these people? Do you think these affiliates declared this income on their taxes?  What happens to one of these ad networks when they get caught up in a US tax evasion investigation?  You do realize that the US Government is likely in possession of this data?

What happens when a major brand like Ford that doesn’t want their ads on these sites sues the ad network for a refund?  What happens if  hundreds  of brands sue the same ad network for a refund?  what will happen to the share price? I’m told that at least the big ad agencies require the ad network to submit to a compliance audit that could allow some brands to receive refunds on commissions if their ads end up in the wrong places.

And finally for finance geeks:

None of these things even has to actually happen for share prices to plunge.  The mere possibility that this could happen, the mere possibility that these companies have exposed themselves  to large  unpredictable downsides can drive the share price down. Influential stock analysts may notice these dangers  and issue bearish warnings.  But the more  likely scenario in my mind is a large hedge fund may make a big bet that these dangers are “underpriced” and start buying puts on one or all of these companies.  If it’s a large enough bet option market makers will have to sell short the stock to hedge potential losses.  This drives prices down.  Then “momentum” players  begin short selling further depressing shares.  Soon you have a vicious cycle.

Google, Yahoo and ValueClick are particularly vulnerable in this scenario since more than 90% of their revenue comes from advertising. Watch out when analysts start to ask the question “what percentage of their revenue is from rogue sites?”

So instead of arguing tit for tat with Google and their many paid bloggers and sock puppets, we artists should direct our energies elsewhere.   Let me humbly suggest that all artists should start searching these sites for their own music and observing which brands are financially supporting these sites.  Take screenshots and send them to us here  at the Trichordist.  We will then publicize these and notify the brands.  But by all means post them to your own facebook and twitter accounts.  You never know who’s gonna see them.

Remember : Transparency + Markets is usually a good thing.  The online advertising ecosystem is in desperate need of transparency. But we don’t have to wait for “the grownups” to get their shit together.  We can do this now!

I’ll get us started. It’s easy.  Here is Traveler’s Insurance, Metlife and Quickbooks  helping fund the massively infringing site http://www.weblagu.com.  And since they are ripping me off.  I get to say:

SCREW YOU QUICKBOOKS/INTUIT.   GNUCASH IS JUST AS GOOD AND IT’S SHAREWARE! DOWNLOAD HERE.

Try it yourself.  http://www.weblagu.com/index.php?search=camper+van+beethoven.  See which advertisers pop up for you. Put in your own band name.

(Since I’m speaking to musicians I’m gonna assume you are on a mac .  So you can select an area for a screenshot by pressing Command+Shift+4. Your cursor turns into a sort of gunsight.  Click and drag  until you get a box the correct shape and area.  When you “let go” you will hear a snapshot sound and there  will be a .png file on your desktop. It’s name will reflect the date and time. 

If you have a PC you  probably already know how to do this 50 ways and  I don’t need to tell you how to do this.

Oh and those of you who are even more advanced,  use firefox and install the firebug plugin so you can capture the served source code in your screenshots.  Even better get a packet logger.  If you don’t understand what I’m talking about you won’t know how to do this anyway.)

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