A combination of factors have gotten Spotify where it is now. Market conditions, bad management, arrogance, stiffing songwriters and getting too big, too fast. Until all those things change to one degree or another, it’s likely that the Spotify IPO myth will remain just that.
Earlier in the summer we reported heavily on the democratic candidate for NY-19 congressional seat Zephyr Teachout. In particular we were very interested in her role as director of Fight For The Future because they have an extremely regressive anti-artist anti-copyright agenda. Further under her leadership Fight For the Future organized a mass copyright infringement campaign directed at the MLK estate. Only in a 90% white upstate New York district could this act be seen as “progressive.” See more here. (Fight For the Future has since removed her name from the website, but the candidate has failed to clarify if she is still director).
So what? Just another fake progressive politician right? Well we think it goes beyond that. We dug deep into the funding for the Fight For the Future. Of particular concern was something called London Trust Media. They gave more than $200,000 to FFTF when Teachout was director.
This is the address listed for London Trust Media on FFTF tax documents. Does this look like a company that normally gives $200,000k to non-profits? It is apparently located in an industrial park in Michigan. As it turns out, London Trust Media is some sort of holding or shell company, that appears designed to hide the true ownership of Private Internet Access.
However we know a lot about Private Internet access. Co-founder is Andrew Lee a long, a long-time Bitcoin promoter. He was also founder of Mt. Gox Live, that was subsequently sold to (or merged with) Mt Gox the primary bitcoin exchange. Mt Gox of course spectacularly collapsed when they “lost” 700,000 bitcoin worth an estimated $460 Million dollars. Bitcoin is the preferred currency of Anarcho-Capitalists and other fringe opponents of “fiat” currencies, not typically the kind of thing that a progressive typically endorses. Especially progressives that want to increase regulation of financial markets and banks. Does anyone else find this odd?
And BTW who is the “other” co-owner of London trust media?
Private Internet Access also lists Rick Falkvinge the founder of the Pirate Party as the “Head of Privacy at Private Internet Access.” You can’t get more anti-copyright than the Pirate Party.
Teachout needs to come clean on her views on copyright. Right now she looks like a Trojan horse candidate that will try gut artists revenue and rights when she gets into congress. Why won’t she clarify her positions? What is she afraid of?
In an explosive conversation, Michelle Lewis and Kay Hanley talk with David Lowery and Chris Castle about Songwriters of North America, their experiences with lawyers from the Department of Justice Antitrust Division in the lead-up to the DOJ’s decision on “100% licensing,” and disingenuous behavior by the government’s lawyers that crossed the line into “union busting.”
Cycling on the Autobahn
Would you cycle on a busy motorway? Probably not – and in most jurisdictions, you would promptly be arrested if you did. What does this have to do with the Internet? Quite a lot, actually. Road traffic rules and regulations are a prime example of rules which have adapted to changed circumstances over time.
Guest post by Volker Rieck
History is made very quickly on the Internet: eight years count as a generation. In real life, generations are significantly longer: family researchers see thirty years as normal, roughly the usual age gap between parents and children. So 20 years of evolution on the Internet, 2.5 generations, correspond to 75 years in human time.
Playing around with numbers like this may help us understand the limitations of current Internet regulations. Applying these regulations devised around 20 years ago (or two and a half Internet generations ago) today is (in analogue terms) like using rules from the time when radio was an emerging technology to regulate today’s streaming web radio and podcasts.
Am I online yet?
The US Digital Millennium Copyright Act (DMCA) and its European counterpart, the E-Commerce Directive (anchored in German national legislation in the Telemediengesetz [Telemedia Act, TMG]) were both drafted around 1997.
To understand the intentions of legislators back then, we need to turn back the wheel of history by around 75 analogue years. In 1997, the Internet was still learning to walk. It had not yet gone on to develop by leaps and bounds into a creative teenager and then into big business. Back in the late 1990s, the opportunities it offered were limited and easy to keep track of: Internet access was paid for by the minute. Some readers will, perhaps, remember finding CDs from AOL promising free minutes in their letterboxes on an almost weekly basis.
People mostly wrote emails offline and sent several once they were online again with their screaming 33.6k dial-up modems. Numerous Internet magazines existed: their website ratings could be perused offline in order to whittle down the number of sites to be visited online later and to avoid wasting expensive minutes on fruitless searches. Time was, quite literally, money.
Downloading a 100-MB file – corresponding to less than 10% of the volume of a Game of Thrones episode – took around an hour, and uploading the same quantity of data could go on for up to eight hours. Today, fibre-optic connections can handle the same volume in ten to twenty seconds. Using the Internet was fundamentally more complicated, more time-consuming and more expensive than we expect it to be now, in 2016. Desktop PCs, generally located in offices and home offices, were the gateways to the online world. Only visionaries could imagine accessing the Internet via smartphones or tablets.
Old times, old rules
The US Digital Millennium Copyright Act (DMCA) and the European E-Commerce Directive aimed to remove stumbling blocks that threatened to slow the rapid evolution of the Internet and to choke off its promise.
American legislators, in particular, anticipated that the Internet would generate commercial opportunities and saw the need for particular regulations covering copyright infringements.
US legislators and their EU counterparts implemented a notice & take down process: if a website was in breach of copyright, the rights holder could simply notify (serve notice) to the site operator or web services provider. The process was designed to cater to the particular needs of providers handling user generated content. The operator or provider was only obliged to remove (take down) infringing material at this point – providers enjoy safe harbour protection under which they are not liable for infringements. Fair enough.
This made sense at the time and in the context of an Internet which was more like a child’s bicycle than a Formula 1 racing car. Copyright infringements were seen as unintentional, as unfortunate coincidences. As monitoring the online activity of citizens was an unattractive proposition, it made sense to exonerate their unwitting accomplices.
Today, we know that user generated content consists almost exclusively of user uploaded content, most of it protected by copyright. We also know that the actions of the users’ accomplices today are far from unintentional. The Internet, fortunately or unfortunately, does not consist entirely of home videos of cute cats.
New times, still old rules
The safe harbour privilege limiting provider liability has now governed web traffic for 20 years – two and a half Internet generations.
In the meantime, the Internet has got faster and noisier. It has also become a considerably more hostile environment for rights holders. But decisive legislative change or adaptations to this process of digital evolution have been lacking.
The consequences for the creative economy have been little short of disastrous in some respects. As data transmission rates have climbed higher and higher, ever more creative “business models” have also emerged, fostered not least by the robust legal protection afforded to players in this area in the form of the safe harbour privilege.
Kim Schmitz, for example, came up with the file hosting service MegaUpload. Schmitz sold access to his service and to servers jam-packed with illegal downloads. He generated an estimated 150 million EUR from this activity before MegaUpload was spectacularly put out of action by law enforcement in January 2012.
Criminal proceedings against Schmitz (aka Kim Dotcom) have yet to take place in the US. It seems unlikely that copyright infringements will play a significant role; it is more plausible that the prosecution will focus on customs offences and money laundering.
But platforms such as YouTube also draw considerable benefit from the dubious privilege freeing them from all responsibility for uploaded content. With liability excluded, YouTube can view content uploaded by its members with relative equanimity: if the content is protected by copyright, rights holders are free to get in touch with YouTube and have it taken down, and if nothing is heard from them, YouTube can assume that nothing is wrong.
Rights management has effectively been outsourced to rights holders, and YouTube can quietly get on with exploiting user uploaded content to generate advertising revenue without needing to monitor this content, pay staff to do so, or entertain troubling thoughts about its role. No watchdog duties, no tedious licensing and rights clearance enquiries.
The birth defects of DCMA and Directive 2000/31/EC
DMCA and the E-Commerce Directive have several serious flaws:
- No binding timeframe for resolving issues
No binding rules exist to specify the maximum time period within which providers must investigate reported infringements (notices) and remove offending material (takedowns).
- Uploaders protected, rights holders left defenseless
What happens when disputes arise? When, for example, the rights holder serving notice is not recognized as such? Or the uploader maintains that rights have been legitimately acquired and submits a counterclaim? Disputes involving YouTube footage regularly feature such claims and counterclaims.
Bizarre cases arise in which YouTube even advises the parties to seek judicial resolution. This advice is distinctly unhelpful, especially when the uploader in question is located in a different country, invulnerable to legal action – or, indeed, completely anonymous. Protected content can be uploaded to YouTube from an anonymous Gmail account.
- Up again! (Whack-a-Mole)
Cases relating to new uploads of works which have already been taken down are ignored in current legislation. The consequences of this flaw are severe: practically every work that can be downloaded from, among other sources, the file hosting services that have taken on the mantle of MegaUpload becomes available again and again. What is taken down rarely stays down, and once content is uploaded again, the entire process begins afresh for rights holders.
- Law that is not enforced might as well not exist
Failing to delete content has no consequences in either system;
stakeholders whose actions are illegal have practically nothing to fear.
Courts in Germany have begun to develop the law further and address its obsolescence. A number of recent judgements have demonstrated that judges are aware of this weak point and willing to impose monitoring duties on file hosting services.
But these hard-won judgements relate only to individual cases, and some of these cases have already dragged on for years. During that time, moreover, the mentality of users has changed: users are now utterly habituated to operating in a legal vacuum. Investments cannot be recouped in this climate. Value loss and value transfer result.
- Nobody is responsible for anything: diffusion of responsibility
In the (online) world which has been created in this way, the buck stops with nobody: neither platforms nor operators of web services/pages nor users are held accountable and liable for rights infringements.
To make matters even worse, legislators have expressly insisted that the anonymous or pseudo-anonymous use of such platforms and websites must be permissible.
The consequences of these five design flaws are well known. They have caused disruption to almost every sector in the creative economy. The process ultimately leads to value being siphoned away from originators and their marketing partners and transferred to platforms and website operators. The work of content creators and their partners is no longer recognized as valuable: the services of – legal and illegal – distributors are now rated more highly.
YouTube is a perfect example for this, as are the file hosting sites. It is estimated that the latter group comprises more than a thousand sites with millions of users spread across the world. These sites generate vast revenue through advertising and/or selling premium access. Only a tiny proportion of this revenue, if any, reaches content originators, who are usually left entirely empty-handed.
We can take to the streets to address this – let us return to our traffic analogy. What would traffic look like today if it were regulated with laws from 2.5 analogue generations ago – from, in other words, the 1940s?
After World War II, around 1.2 million motor vehicles were in use on German roads. Today, over 45 million motor cars are registered in Germany. Nobody had heard of zebra crossings 70 years ago – and cycling on the motorway, introduced when fuel shortages bit in 1943, was still allowed.
As traffic levels increased dramatically, road traffic legislation was regularly overhauled to address new hazards. Many regulations that seem self-evident to us today (30 mph speed limits, shoulders, traffic lights, blood alcohol limits, licence plates) have resulted from this process of continuously evaluating and overhauling traffic rules.
Astonishingly enough, however, the regulation of the Internet has not been tackled in the same way. We have relied on DCMA, the E-Commerce Directive and the national legislation implementing EU rules (such as the German Telemedia Act) for too long. Rules have not been adapted in a timely fashion to address new circumstances. The result is that the Internet, to stick with our traffic metaphor, is still full of people cycling on the motorway with no fear of being picked up by law enforcement. People who see red traffic lights as mere suggestions.
Levelling the playing field
Multiple sectors in the creative economy have already recognized and analysed the issue. The Motion Picture Association (MPA) has, for example, demanded that the DMCA provisions be overhauled.
The music sector, representing over a thousand composers and artists, has complained to the European Commission.
These different sectors are all raising their voices to insist that a long-overdue evaluation of liability rules must be carried out now that 2.5 Internet generations have already passed.
This evaluation is necessary to prevent the increasingly one-sided transfer of value and to ensure that legislators create clear and fair regulations capable of levelling the playing field and putting stakeholders on a more equal footing.
One of the main sticking points will be the safe harbour privilege. Liability rules urgently need to be completely overhauled and adapted to current circumstances. This will not be easy, but now that the digital equivalent of three-quarters of a century have already elapsed, it is time to grasp the nettle.
Everybody demanding revised copyright legislation should also, in the same breath, demand the overhauling of the area of liability.
Otherwise we will continue to encounter the digital equivalent of cyclists on the motorway – and the damage resulting from our inaction will continue to mount.
Volker Rieck is Managing Director of the content protection service provider FDS File Defense Service. He is an expert on issues pertaining to the unregulated distribution of content on the Internet. FDS is active on behalf of numerous rights holders and also supplies data to law enforcement authorities and to industry associations engaged in research in the area.
[Chris Castle says: We’re pleased to have another outstanding guest post by Stephen Carlisle, an entertainment lawyer with over 25 years experience in private practice in the State of Florida. The post first appeared on the Nova Southeastern University Office of Copyright site where Mr. Carlisle is the university’s first Copyright Officer. Reblogged from MusicTechPolicy, posted with permission of the author.]
My previous blog post detailed all the reasons why the U.S. Department of Justice could not do what it had announced it was going to do: rule without any hearing, court order or rule-making procedure that ASCAP and BMI were required to engage in 100% licensing. 1 Now, we have seen the written ruling, and you can read along if you wish. 2 With all apologies to author Judith Viorst for stealing the title of her book 3 (which I read to my sons many times), what happened last week was a terrible, horrible, no good, very bad decision by the DOJ, which, in truth, is an unmitigated assault on the rights of composers by their own government.
What this decision represents is a thoroughly dishonest explanation of what is in fact a gross violation of due process. So, let’s take these one at a time.
The DOJ claims:
“First, the plain text of the decrees cannot be squared with an interpretation that allows fractional licensing: the consent decrees require ASCAP to offer users the ability to perform all ‘works’ in its repertory and BMI’s licenses to offer users the ability to perform all ‘compositions’ in its repertory.” 4
No, the consent decrees fully endorse fractional licensing. Here is what the 2001 revision to ASCAP’s consent decree says:
“ASCAP shall not restrict the right of any member to withdraw from membership in ASCAP…provided that any writer or publisher member who resigns from ASCAP and whose works continue to be licensed by ASCAP by reason of continued membership of a co-writer, writer or publisher of any such works, may elect to continue receiving distribution for such works on the same basis and with the same elections as a member would have, so long as the resigning member does not license the works to any other performing rights organization for performance in the United States.” 5
So, ASCAP cannot, by the very plain text of the consent decree, continue to license and collect the share of a former member who has licensed his share to another PRO. Yet, this is exactly what the DOJ says that ASCAP must now do:
“[F]or a song co-written by one ASCAP member and one BMI member, the co-writers might designate the ASCAP member to collect all revenues from the licensing of public performance rights to the song and require that the ASCAP member distribute a share of the revenues to the BMI member.” 6
Did you read your own consent decree, DOJ? You just suggested what the plain text of the consent decree states unequivocally is prohibited conduct!
The DOJ tries to wiggle out of these consequences by stating:
“Under these circumstances, the song would not be included in BMI’s repertory.” 7
No, you can’t go there either. Because your rationale for reading into the consent decrees the 100% licensing rule is that a PRO writer agrees to license everything in which they have an ownership interest to their PRO. Here is the direct quote from your ruling, DOJ:
“Similarly, a songwriter affiliating with BMI grants to BMI the right to license non-dramatic public performances of ‘all musical compositions . . . composed by [the member] alone or with one or more co-writers’ and promises that ‘no performing rights in [these compositions] have been granted to or reserved by others except as specifically set forth therein in connection with Works heretofore written or co-written by [the author].’ BMI Writer Agreement, available at http://www.bmi.com/forms/affiliation/bmi_writer_kit.pdf.” 8
Followed by this threat:
“In the process of clarifying the works that ASCAP and BMI are able to continue to license under a full-work licensing requirement, the PROs may remind their members that the members made grants of rights to their PRO to license all works of which a member is a partial or complete owner and warranted that there were no other agreements that would prevent licensing on the basis described in the grant of rights.” 9
In other words, DOJ, you’ve just recommended that composers breach their licensing agreements with their own PRO’s.
So, let’s recap the loopy logic of the DOJ’s argument:
- An ASCAP and BMI writer write a song together.
- ASCAP must now license both the ASCAP and BMI share and can collect for both writers, because “[u]nder the copyright law, joint authors of a single work are treated as tenants-in-common, so ‘[e]ach co-owner may thus grant a nonexclusive license to use the entire work without the consent of other co-owners, provided that the licensor accounts for and pays over to his or her co-owners their pro-rata shares of the proceeds.’” 10
- This is the case even though the ASCAP consent decree says that ASCAP cannot do this.
- The remedy for this is for the BMI writer to breach his agreement that licenses “all” of his works to BMI, and instead agree to let ASCAP collect everything.
So, this reading of the consent decrees is inconsistent with not only the plain text of the consent decrees, but the plain text of your own opinion.
Next, the DOJ attempts to say that the Courts have consistently ruled in favor of 100% licensing. Of course, it’s no surprise they have never said such a thing. The DOJ contends:
“[T]he Supreme Court explained that the ASCAP and BMI blanket license ‘allows the licensee immediate use of covered compositions, without the delay of prior individual negotiations, and great flexibility in the choice of musical material’… If the licenses were fractional, they would not provide immediate use of covered compositions; users would need to obtain additional licenses before using many of the covered compositions.” 11
This is, in fact, the time honored practice of taking a quote out of context. What the SCOTUS is explaining here is why the blanket license is not an anti-trust violation, not that fractional licensing is not allowed in the blanket license system. Because, without the blanket license, the broadcaster would have to perform thousands of individual negotiations, a net benefit to the broadcaster.
Here are the sentences that immediately precede the language quoted by the DOJ:
“This substantial lowering of costs, which is of course potentially beneficial to both sellers and buyers, differentiates the blanket license from individual use licenses. The blanket license is composed of the individual compositions plus the aggregating service. Here, the whole is truly greater than the sum of its parts; it is, to some extent, a different product.” 12
And the sentences which immediately follow the DOJ quote:
“Many consumers clearly prefer the characteristics and cost advantages of this marketable package, and even small-performing rights societies that have occasionally arisen to compete with ASCAP and BMI have offered blanket licenses. Thus, to the extent the blanket license is a different product, ASCAP is not really a joint sales agency offering the individual goods of many sellers, but is a separate seller offering its blanket license, of which the individual compositions are raw material ASCAP, in short, made a market in which individual composers are inherently unable to compete fully effectively.” 13
Quite a different thing, isn’t it? Nothing in this opinion says anything about fractional shares.
Next, the DOJ asserts:
“Similarly, the Second Circuit has held that ASCAP is ‘required to license its entire repertory to all eligible users,’ and that the repertory includes ‘all works contained in the ASCAP repertory…’ Accordingly, the consent decrees must be read as requiring full-work licensing.” 14
Baloney. Again the quote is taken out of context. The Second Circuit isn’t ruling on anything in the quote, it’s just providing factual background. In fact, all the Court is doing here is directly quoting from the consent decree! Here’s the complete quote, which, by the way, is contained in a section of the opinion labeled “Background:”
“The core operative provision of AFJ2 provides, in pertinent part, that ASCAP must ‘grant to any music user making a written request therefor a non-exclusive license to perform all of the works in the ASCAP repertory.’ AFJ2 § VI. The decree defines ‘ASCAP repertory’ as ‘those works the right of public performance of which ASCAP has or hereafter shall have the right to license at the relevant point in time.’ Id. § II(C). ‘Right of public performance’ is defined, in pertinent part, as ‘the right to perform a work publicly in a nondramatic manner.’ Id. § II(Q).” 15
The Court’s ruling here was whether ASCAP could withdraw “subsets” of their license, particularly digital broadcast rights. The Court concluded it could not. It did not rule that the consent decrees require 100% licensing. No Court has ever said that or anything close to that.
The DOJ is just making this up.
Then there’s this doozy of an explanation:
“This statement seeks to explain the bases for the Division’s determination and describe why an express recognition that ASCAP and BMI do currently and must continue to offer full-work licenses should not meaningfully disrupt the status quo in the licensing of public performance rights. As discussed below, the Division encourages the industry to use the next year, during which the Division will forgo enforcement of the full-work licensing requirement, to transition to a common understanding regarding the scope of the ASCAP and BMI licenses. This period should allow stakeholders to resolve any practical challenges relating to complying with the fullwork licensing requirement, including the identification of songs that can no longer be included in ASCAP’s or BMI’s repertories because they cannot be offered on a full-work basis or the voluntary renegotiation of contractual agreements between co-owners to allow ASCAP or BMI to provide a full-work license to the song.” 16
Let me get this straight:
- The Consent Decrees currently, and have always, required full work licenses.
- The fact that everyone thought differently doesn’t matter, and this does not evidence a change in policy.
- The fact that the PRO’s based their entire business model on an entirely contrary reading of the consent decrees will “not disrupt the status quo in the licensing of public performance rights.”
- Since this will not disrupt the status quo, we will NOT enforce what is NOT a new rule for a year, so you can figure out the “practical challenges” of what is NOT a new rule.
- And, BTW, since this is NOT a new rule, some songs will no longer be available through ASCAP and BMI as they were in the past.
If this were not bad enough, here’s the kicker:
““[T]he Division will not take any enforcement action based on any purported fractional licensing by ASCAP and BMI for one year, as long as ASCAP and BMI proceed in good faith to ensure compliance with the requirements of the consent decrees.” 17
Gee. You might as well get out your signet ring and hot wax, my liege. 18
Words cannot convey how much I resent being threatened by my own government. Because they won’t enforce their “new rule that’s not a new rule” for the next year, only if ASCAP and BMI knuckle under to their heavy handed violation of my due process rights as a composer. So, if the PRO’s go to Court to challenge this “new rule that’s not a new rule” (which BMI has already started 19), is the DOJ is going to drop the hammer on them?
You seriously call yourself the “Justice Department?”
It’s an unconstitutional taking under the 5th Amendment.
Says the DOJ:
“In the unlikely event that a user sought to depart from this practice by relying on a single PRO license as a basis to perform all co-owned works, the Division anticipates that the user would see an increase in the license fee corresponding to that portion of the works it is no longer paying for through a different PRO, as well as an additional administrative fee to cover the PRO’s costs associated with the license (which may include the cost of contracting with other PROs to make payments to those PROs’ members).” 20
Except there’s only one problem with this thinking. In the event of a dispute, the “rate court” gets to decide what ASCAP and BMI charge. Surely you remember, DOJ. You participated as amicus curae in the suit by Pandora Media against ASCAP on those very grounds. 21 So, the rate for thousands of licensees is already set(like Pandora), the result being that the PRO’s will be unable to charge any extra “administrative fees” as you so blithely indicate. This means the PRO’s will in fact earns less money, which turns into songwriters getting less money.
You cannot do this under the 5th amendment, namely, impose costly new regulations without “due process of law,” which you have utterly failed to do. Which, of course, is why the DOJ continues to insist that this is not a new rule, when it clearly is a new rule.
And what about SESAC? They are not a party to any consent decree. But this “new rule that’s not a new rule” makes them a party to the consent decrees if their writer has co-written with an ASCAP or BMI writer. What happened to their due process rights?
As explained before, this is really rule-making. 22 This would require all sorts of notices and procedures, and yes, due process that the DOJ doesn’t want to do.
Finally, don’t kid yourselves, folks. It’s going to be chaos.
The Copyright Office, in opposing the interpretation of 100% licensing, listed the numerous ways in which the current, very effective, licensing system would be damaged, not only in a practical basis but an economic basis: http://copyright.gov/policy/pro-licensing.pdf.
It’s already started. The Songwriters of North America have released the following statement:
“Based upon the marketplace uncertainty the DOJ’s proposal is likely to cause, some music licensees have already insinuated that they intend to withhold payments from ASCAP and BMI and rely upon an application for a license to continue to use our works free of potential infringement.” 23
This is because under section VI of the consent decree, ASCAP must give a license to anyone who requests one. They don’t have to pay what ASCAP wants. If there is a disagreement, they can then go to the “rate court” under section IX, under which ASCAP has the burden of proof. So, the music goes on playing, but the user stops paying.
And what about restrictive agreements between co-writers? At least the DOJ acknowledges that it cannot invalidate them.
“Of course, the obligation under the consent decrees that ASCAP and BMI offer full-work licenses binds only the two PROs and not any individual songwriter. Co-writers of songs remain free to split up their joint rights by contract in a way that makes their songs unlicensable (sic) by ASCAP or BMI… If co-owners decline to grant ASCAP and/or BMI the right to license the song on a full-work basis, the PROs will not be able to license that song.” 24
David Lowery over at The Trichordist has already suggested a civil disobedience strategy that will make the DOJ’s new interpretation unworkable.
A further complicating factor is that many times in this day and age, one becomes a co-writer of a song without a conscious collaboration to do so. This happens when a song gets sampled without permission, or in some cases, stolen.
It happened to a client of mine. Another writer completely ripped off my client’s song to serve as the verses for his song. Of course we caught him, but the problem was, the song was a hit. A Top Ten Billboard hit, in fact. So the smart thing to do was take ownership of part of the copyright of the new song, and not deep-six a song that was a hit. But, being the cautious attorney that I am, in the agreement, I provided that neither writer could license the song without the consent of the other. So, up to this point, we all assumed that BMI had one share and ASCAP had the other.
What happens now? Neither writer can grant full rights to ASCAP or BMI by themselves that the DOJ says they must have. So, if the other writer declines, or my writer declines, this song vanishes out of their catalogs. And this song is still popular, I just worked out placing it into a TV show. (And please note, the production company cleared both ends of the song without asking if it was necessary.) But now, the network that wants to show it, can’t, because neither ASCAP of BMI hold the necessary rights.
See? This “new rule that’s not a new rule” really isn’t going to cause any problems at all.
So, does either ASCAP or BMI know about our restrictive agreement? Nope. How could they? I guess the DOJ is going to insist that they send out letters to the composers of several million musical compositions to try and find out if there are any restrictive covenants between writers that they need to know about.
See? This “new rule that’s not a new rule” really isn’t going to cause any problems at all.
Further consider that “[i]n jurisdictions outside the United States, the default rule is that individual co-authors may license only their fractional share in a work (absent an agreement by all co-authors to the contrary). See 1 Nimmer on Copyright § 6.10 (“[I]n foreign jurisdictions, a license will not be valid unless all joint owners are party to it.”). 25
So, did you co-write a song with Max Martin, who is a resident of Sweden? Whose law applies, DOJ? Perhaps we’re going to see his 21 Billboard #1 hits 26 vanish from the airwaves?
See? This “new rule that’s not a new rule” really isn’t going to cause any problems at all.
Finally, consider that this “new rule that’s not a new rule” is likely to cause writers to remove their works from ASCAP and BMI, maybe taking them to SESAC, and maybe taking them to Irving Azoff’s GMR.
And then the fun really starts.
Consider an artist like Billy Joel. He single-handedly wrote all the music and all the lyrics to virtually every song he recorded. 27 What if he pulls his catalog and takes it to GMR? That means no Billy Joel gets played anywhere, unless you pay what he wants. If you do, you get a lawsuit by return mail. What if others do the same?
Chaos, that’s what will happen.
Which is what we’re going to get with this terrible, horrible, no good, very bad decision by the DOJ.
- You Can’t Make This Stuff Up! The Department of Justice v. ASCAP
- Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees
- Alexander and the Terrible, Horrible, No Good, Very Bad Day
- DOJ decision at 12
- United States of America v. American Society of Composers, Authors and Publishers at page 19.
- DOJ decision at page 20
- DOJ Decision at 6-7
- DOJ Decision at 21
- DOJ Decision at 8
- DOJ Decision at 12-13
- Broadcast Music, Inc. v Columbia Broadcasting System 441 U.S. 1 (1979) at 21-22
- Id. at 22
- Pandora Media Inc. v. ASCAP, 785 F.3d 73, Second District Court of Appeal 2015 at 77-78
- Pandora Media Inc. v. ASCAP, 785 F.3d 73, Second District Court of Appeal 2015 at 77
- DOJ Decision at 4
- DOJ Decision at 18-19
- Liege: noun (1). a feudal lord entitled to allegiance and service.
- Re: United States of America v. Broadcast Music, Inc., No. 64 Civ. 3787
- DOJ Decision at 21-22
- Pandora Media Inc. v. ASCAP, 785 F.3d 73, Second District Court of Appeal 2015
- You Can’t Make This Stuff Up! The Department of Justice v. ASCAP
- @wearesonala: Songwriters Organization of North America Letter to Renata Hesse at Dept. of Justice [sic] on 100% Licensing
- DOJ Decision at 21
- Re: United States of America v. Broadcast Music, Inc., No. 64 Civ. 3787
- Ask Billboard: Max Martin Has Written How Many Hot 100 Top 10s?!
- Billy Joel Song Lyrics
Next week we will continue discussion of the Department of Justice [sic] ruling on 100% licensing and partial withdrawals from the songwriter’s point of view. Participants will be songwriters Michelle Lewis and Kay Hanley of Songwriters of North America, David Lowery and Chris Castle. Watch this space for links to the podcast when it is completed.
Two vacancies near the top DOJ antitrust division give former Google lawyer Renata Hesse direct control of antitrust oversight of Google.
There is a tendency in the waning months of a two term presidency for political allies to cash in their favors; push through favorable rules and regulations; and set the clock ticking on those high paying private sector revolving door jobs. So we can’t help noting two curious vacancies in the upper reaches of the US DOJ Antitrust Division. The Chief of Litigation Section III and Networks and Technology sections.
Litigation Section III oversees the entertainment business and in particular songwriters’ performing rights organization. On August 4th this division released a controversial and devastating new rule which requires a single ASCAP or BMI co-writer to license and account on behalf of the other songwriters. This caused widespread outrage among songwriters and legal scholars who noted the disruption to the music licensing marketplace, international treaty violations and potential constitutional violations of the rights of songwriters. Up until a week ago David Kully was chief of this section. His position is now listed as vacant. We find this very curious. Especially as we are told Kully indicated in a communications to songwriters that he didn’t actually write the rule and refused to disclose who wrote the rule.
Meanwhile we notice that the Chief of Networks and Technology section is now also vacant.
Both of these sections have oversight over Google’s businesses. Does anyone else find it suspicious that these two sections are vacant and are now directly controlled by a former Google lawyer (and Obama administration ethics rule violator and resume fudger) Acting Assistant Attorney General Renata Hesse?
Now the questions are:
Are these business as usual departures? Or is something more sinister afoot? Is Kully the fall guy for Google hatchet woman Renata Hesse? Or is he off too Googleyer – oops I mean greener pastures?
After songwriters recent experience with DOJ ATR Litigation Section III Congress and/or the OIG should look into what is going on here. Even if nothing improper is found, it should be done to restore public faith in the department.
Remember Mike Masnick appeared on the so-called Oracle vs Google “shill list.” See here:
Since Mike addresses the Trichordist directly, let me answer directly.
I am all for the 100% licensing rule because it will break the exploitative and unconstitutional music licensing system. I will educate every songwriter on how to exploit this to our advantage. We have nothing left to loose. Why not cause absolute chaos for the music users? Let them feel our pain. And it’s all perfectly legal. It simply requires us not do something the DOJ can’t make us do. And it may even allow writers to selectively window their works on streaming services. Something that was impossible until now. Stay tuned for that!
And it has also shined a light on corruption and Google control of DOJ antitrust division.
Kully who was nominally in charge of this DOJ rule is suddenly gone? His position appears vacant. This happened yesterday.
The chaos has started!
(Editor note: Masnick thinks so much of himself that he offers to shut down Techdirt forever if someone pays him $100 million dollars. See below)
Songwriters should embrace the chaos. The DOJ really thinks that BMI and ASCAP have always performed 100% licensing. Even though they seem to contradict that by offering the PROs one year to comply with 100% licensing. Fuck these idiots just let them have it.
The new rule will force hundreds of thousands of songs, if not millions of songs to be dropped from the BMI and ASCAP catalogues. Especially Hip Hop songs and songs with Samples because of private co-administration contracts. Radio stations, television stations, bars, restaurants, malls, football stadiums, cable networks, interactive and non-interactive services will either have to drop the songs, buy direct license for these songs, or buy licenses from an alphabet soup of new PROs that will appear on the scene with none of them subject to consent decrees. Even if the DOJ tried to managed to put 26 new PROs under the consent decrees it would require a vast expansion of their staff.
Careful what you wish for fuckwads.
Also imagine the calls to the DOJ, congressmen and the lobbyists that thought this was a good idea.
“Are you fucking telling me I need 26 PRO licenses instead of 3? This is a fucking improvement?”
In the meantime it will be absolute chaos.. No one knows what they can or can’t play.
What have we got to lose anymore? The DOJ hates songwriters. They will never do right by us. They are making it impossible to make a living as a songwriter.
So let’s enjoy what we can.
I say just chill and enjoy the show.
Who IS running the shop over at DOJ Antitrust Litigation Section III? Really doesn’t it just makes a lot more sense for Google to directly pay/control the section rather than having to go through all the rigamarole of pretending to have an impartial and independent division, with revolving door Google lawyers?
You got to wonder.
Why is it that for the previous 75 years of DOJ antitrust supervision BMI/ASCAP were allowed to fractionally license music? Surely it didn’t escape notice that BMI/ASCAP were fractionally licensing songs? Fo 75 years they allowed ASCAP BMI songwriters to write co-administration agreements that require fractional licensing. I mean if the DOJ consent decree judge can issue a legal opinion that notes publisher Marty Bandier in a certain photo was wearing “short sleeves and smoking a large cigar” (clearly the judge intended this as a personal smear) surely the DOJ and rate court judges should have noticed the fact that for 75 fucking years songwriters have been writing private co-administration contracts that require fractional licensing and BMI and ASCAP have been obliging. Clear
So is the current crop of Berkeley/Harvard/Stanford/Silicon Valley DOJ antitrust lawyers just smarter than the previous 75 years of lawyers that were employed in the DOJ ATR Division?
Alternately are they more stupid? Like dangerously stupid. Like take their law licenses away because they don’t even understand fundamental things like the constitution, separation of powers and private contracts. Maybe I should be kinder. Perhaps the entire department suffers from a mass learning disability that makes it so they have a hard time understanding the Copyright Office report on the effect of 100% licensing on the existing music market. That the economic and structure of millions of private contracts concerning the administration of songs, would require pulling hundred of thousand if not millions of songs from BMI and ASCAP producing the exact opposite effect of what they intended with 100% licensing.
Or are they simply corrupt. Occam’s Razor would suggest so. It requires fewest assumptions to be added! I’m only half joking here. Consider the facts. It does seem to only benefit Google. This head of the Antitrust division is a former Google lawyer (Renata Hesse) and she appears to have pushed through the 100% licensing rule. And as Music Tech Policy notes in their devastating timeline of events, Google seems to have orchestrated a takeover of Antitrust division by Google friendly lawyers following the FTC investigation of Google.
So readers what do you think?