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

Two Sincere Questions for The Future Of Music Coalition #SFMUSICTECH

We notice that Future of Music Coalition has submitted testimony to congress asking that they “represent” artists in the Copyright Reform process begun by Congress.

So since they’ve  volunteered to represent us.  We feel it only fair that they answer these two questions:

1. Who selects your advocacy positions?  
AFM, AFTRA, NARAS, Nashville Songwriters Assn, and ASCAP all have democratically elected boards who set the organizations’ positions.  Do you have members who vote for leadership?  If not, who is making those decisions?

2. Who funds your organization?
Google is listed as your first sponsor of your primary event.
http://futureofmusic.org/events/future-music-summit-2012

How much money do you get from Google?  Do you think you should be taking funding from a source many artists believe to be opposed to their interests?

FOMC Spondors

How Musicians Are (Not) Making Money, and who is… @SFMusicTech w/ East Bay Ray

SF Music Tech is always a great place to get the temperature of the current ideology and trends relating to music and technology. Brian Zisk does a great job of creating an environment for the tech community to explore it’s relationship to music and musicians.

Respect Musicians Choices. Musicians need to get Paid.

Artists should have creative control over their work, their careers and they should be paid fairly. We couldn’t agree more. This sentiment was echoed by Emily White of Whitesmith Entertainment on one panel and was ofter heard repeated during the day. Whenever there was a “shout out” to give props to musicians it was almost always met with universal applause from the audience regardless of the panel topic.

During the day the mantra of how artists deserved respect and payment was heard over and over. Everyone loves musicians. Musicians need to be paid. But some struggled to truly accept this as a universal concept that extended to businesses operating on the internet as well.

We’ve all heard the stories of musicians being exploited by record labels, music publishers, band managers, booking agents, etc. These tales are almost universally met with disgust, as they should be. But when artist exploitation takes the form corporate profiteering on the internet the tech community often recoils into a bit of selective reasoning and double standards.

So let us say this loud and clear about people throwing stones inside of glass houses… any wrong doing of illegally exploiting musicians for corporate profiteering should be unacceptable even it is happening on the internet.

How Musicians Are (Not) Making Money

Kristin Thompson from the Future OF Music Coalition noted that even though there may be many new revenue streams available to musicians, many of them only pay “micro pennies.” The consensus was clear and perhaps best summed up by Incubus manager Steve Rennie who essentially said, “eventually this should all work it self out where musicians can earn professional careers again, but the timing might just be really bad for this generation of musicians, and that’s the luck of the draw in life.” We actually don’t find that to be encouraging.

The irony and the disconnect didn’t take long to surface when East Bay Ray from the Dead Kennedy’s pointed out how exactly musicians don’t get paid from corporately funded music piracy sites when he showed a screenshot from mp3skull providing free downloads of his bands music financed by 1-800 Flowers and Alaska Airlines.

Willful Blindness

Of course those who believe in the exploitation of musicians for the profit of internet businesses had no problem rapidly resorting to name calling when it would be a lot more productive to acknowledge the problem as a detriment to the livelihood of musicians, and seek to work towards a cooperative solution to help musicians get paid.

What about Transparency, Being Open and More Human?

Ray went on to note how the negative effects of these sites create an environment that allows companies like YouTube to operate as an opaque black box. Using the best publicly available information he quickly calculated that YouTube’s 35% payment to artists (versus Itunes and Spotify’s 70%) could be a contributing factor to the 45% decline in professional musicians in the last decade. By Ray’s calculations (here at Digital Music News) the numbers may create a loss of 12,000 middle class musicians.

The Elephant In The Room

Some would like to argue that the revenue these sites are generating is inconsequential. These people seem to have difficulty understanding that if brand sponsored piracy can support 200,000 infringing domians that Google is tracking in it’s transparency report, then there is clearly enough there that musicians should be getting paid.

The real point is that there appears to be plenty of money being made online from the distribution of music, it’s just that the money is not being “shared” with musicians.

200kDomainsTracked

Any honest conversation about compensation to musicians has to address the single largest detriment to the revenue of artists at any level, which are the ad network financed music piracy sites. Ignoring these sites leaves out the most critical variable in evaluating fair and ethical compensation models when over 200,000 sites pay nothing at all to musicians with unlimited access to illegally free inventory. These sites profit from exploiting musicians and paying the musicians nothing.

Any legally licensed, legitimate music tech start up also has to acknowledge that mass scale, enterprise level, commercial infringement of music does NOT create a better environment for innovative entrepreneurs but rather a much more difficult one.

The truth is, there is no new professional middle class of musicians. The grand experiment of the digital utopia has been a massive failure for musicans and everyone at SF Music Tech now knows it. The soft back peddling by most on old hard line positions shows clearly that the reality for professional musicians has gotten worse, not better.

One of the most overheard phrases of the conference was, “we have to do better to get musicians paid.” Indeed, as we have noted here the truth is self evident, if the Internet is working for musicians, why aren’t more musicians working professionally? Not everyone aspires to work a day job, make music as a hobby and allow internet corporations to profit from their labor, illegally.

“Here we are, stuck with all these people who want music for free,” said Dave Allen, founding member of Gang of Four and interactive strategist at the branding agency North. “We have to find a way for musicians to make a living.”

If the tech and internet community are truly interested in getting musicians paid wouldn’t it make sense to start where money is already being made?

Muzzling Free Speech By Artists: IRFA Section 5 Analysis

The “Internet Radio Fairness Act” has a lot to concern artists. Today, we’re continuing our section-by-section analysis of the proposed legislation because knowing is half the battle. We’ve been looking at how the bill would affect current law: strikethrough text shows what the bill would remove, while underlined text shows what it would add.

SEC. 5. PROMOTION OF A COMPETITIVE MARKETPLACE.

17 USC § 112 – Limitations on exclusive rights: Ephemeral recordings

(e) Statutory License.—

(2) Notwithstanding any provision of the antitrust laws, any copyright owners of sound recordings and any transmitting organizations entitled to a statutory license under this subsection may negotiate and agree upon royalty rates and license terms and conditions for making phonorecords of such sound recordings under this section and the proportionate division of fees paid among copyright owners, and may designate common agents, on a nonexclusive basis, to negotiate, agree to, pay, or receive such royalty payments. Nothing in this paragraph shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).

17 USC § 114 – Scope of exclusive rights in sound recordings

(e) Authority for Negotiations.—

(1) Notwithstanding any provision of the antitrust laws, in negotiating statutory licenses in accordance with subsection (f), any copyright owners of sound recordings and any entities performing sound recordings affected by this section may negotiate and agree upon the royalty rates and license terms and conditions for the performance of such sound recordings and the proportionate division of fees paid among copyright owners, and may designate common agents on a nonexclusive basis to negotiate, agree to, pay, or receive payments.

(2) For licenses granted under section 106 (6), other than statutory licenses, such as for performances by interactive services or performances that exceed the sound recording performance complement—

(A) copyright owners of sound recordings affected by this section may designate common agents to act on their behalf to grant licenses and receive and remit royalty payments: Provided, That each copyright owner shall establish the royalty rates and material license terms and conditions unilaterally, that is, not in agreement, combination, or concert with other copyright owners of sound recordings; and

(B) entities performing sound recordings affected by this section may designate common agents to act on their behalf to obtain licenses and collect and pay royalty fees: Provided, That each entity performing sound recordings shall determine the royalty rates and material license terms and conditions unilaterally, that is, not in agreement, combination, or concert with other entities performing sound recordings.

(3) Nothing in this subsection shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).

(4) In order to obtain the benefits of paragraph (1), a common agent or collective representing copyright owners of sound recordings must make available at no charge through publicly accessible computer access through the Internet the most current available list of sound recording copyright owners represented by the organization and the most current list of sound recordings licensed by the organization.

This section is far more troubling than it first appears.

The effect of IRFA as a whole would be to reduce the amount of royalties that companies like Clear Channel, Sirius XM Radio, and Pandora have to pay to recording artists.

For most companies, arrangements between buyers and sellers are negotiated on the open market. But for a number of reasons, the Copyright Act establishes a compulsory license for certain uses of digital sound recordings with the license terms and rates set by the Copyright Royalty Board.

So companies like Sirius XM and Pandora already have an advantage that many businesses don’t have: government-guaranteed access to the content that drives their business at a rate set by law. Compulsory licensing is compulsory: there is no opting in or opting out for artists.

But compulsory licensing doesn’t preclude direct licensing under the current law — that is, without IRFA. Copyright owners are — and always have been — free to negotiate privately with copyright users. Sirius XM has been particularly aggressive in recent years in pursuing such direct licensing, and Clear Channel is right behind Sirius with their own direct deals.

What does this mean for artists? First of all, in practice, this means that the rates set by the Copyright Royalty Board act as a ceiling — no licensee is going to pay more than the compulsory rate. They are guaranteed access to every sound recording on the market at the CRB’s rates.

So why would recording artists or sound recording owners want to accept a deal that gives, say, Sirius XM more rights for less money?  (Bearing in mind that many artists own their sound recordings.)

Here’s one reason. During recent proceedings, Sirius XM Executive VP David Frear testified that “Among other things, [record companies] recognized that by entering into direct licenses with Sirius XM, they gained the potential for enhanced airplay and greater exposure for their recording artists.” Left unsaid was the corollary to this: refusing to enter into a direct license could mean less (or no) airplay.

Direct licensing, in conjunction with a compulsory licensing scheme, thus gives licensees all stick and no carrot. And when you’re terrestrial radio giant Clear Channel, or the only satellite radio provider, or Pandora — which accounts for 37% of all digital sound recording royalties — that’s a pretty big stick. (Pandora and Sirius XM together account for 90%.)

Section 5 of IRFA is perhaps the most pernicious part of the bill, for it would make it illegal for anyone to criticize digital sound recording licensees. If IRFA becomes law, artists and artist organizations will need to watch what they say in public in opposition to Sirius and Clear Channel’s direct licensing efforts.

This is not an exaggeration or hyperbole — it is already happening. The provisions of Section 5 seem to be a direct response to groups like American Association of Independent Music (A2IM), SoundExchange, and major record labels cautioning recording artists about the drawbacks to a push by Sirius XM to license recordings directly following the latest rate-setting proceedings.

In March 2012, Sirius XM filed a lawsuit against SoundExchange and A2IM alleging anti-trust violations for their efforts to resist what SoundExchange and A2IM saw as a raw deal from Sirius XM’s direct licensing push. Now, for starters, it might seem odd that a company with an effective monopoly on satellite radio is complaining that a non-profit nonexclusive collecting agency and a trade association representing hundreds of small companies are violating anti-trust laws.

But the allegations that Sirius made in the lawsuit should concern any artist. Sirius XM essentially argues that various public communications concerning its direct license program amount to anti-competitive behavior — not anti-competitive conduct, just speech.

One such communication identified in Sirius XM’s anti-trust suit includes this August 2011 blog post by A2IM. In its lawsuit, Sirius XM points specifically to a paragraph that states:

In general statutory licenses have been good for the independent music label community as statutory licenses insure that all music label copyrights, whether those of the major labels or those of independent labels or artists, are treated equally and paid the same rate amount for each stream (play) of that music. Under direct licenses there are cases where independents have received less than equitable rates.

And lest you think only industry groups would be caught in the crosshairs, it’s not unlikely that artist advocacy organizations could face legal liability. Sirius XM also refers to a statement made by the Future of Music Coalition, in its November 2011 newsletter:

Here at FMC, we want artists to get the money they’re owed for the use of their music on any platform. The statutory rate for digital performance plus direct payment via SoundExchange is an important piece of the compensation puzzle for creators. Bypassing it might benefit the bottom lines of major corporations in the short run, but it’s a dangerous thing for performing artists.

This is the type of explanatory speech — not conduct — that Sirius XM thinks is illegal and IRFA definitely would outlaw. Again, it would make it a violation of the Sherman Act for “any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing.” Whenever two or more artists are gathered, Sirius XM (and Clear Channel, and Google) will be there.

The statements above are already alleged by Sirius XM to violate existing anti-trust laws. To be clear, the allegations are absurd — these statements are clearly not urging an unlawful “boycott” against Sirius XM’s direct licensing, and even if they were, Sirius doesn’t lose out since it already has access to every sound recording on the market under the compulsory license. There’s also a much simpler and way less conspiratorial explanation to the public response that Sirius complains of: maybe the labels who spurned Sirius XM’s proposal just didn’t like the deal. But Section 5 of IRFA would ensure that the law explicitly prohibits any criticism of direct licensing deals.

So if IRFA becomes law, if you don’t like the deal, you better keep it to yourself.