We were devastated to hear of the death of Scott Timberg, a good friend of the artist rights movement and gifted writer. His most recent work the definitive Culture Crash: The Killing of the Creative Classwill be a vital resource for advocates for many years to come.
We noted with some excitement last week that the new federal Music Licensing Collective has hired ConsenSys an Ethereum blockchain based ecosystem that also owns an asteroid mining subsidiary.
This is surely a sign the MLC is finally making plans for collecting streaming mechanicals from streaming services that serve extra-planetary mining colonies.
However there are many questions that remain unanswered. For instance while rules and laws that apply to US flagged aircraft and ocean vessels could be a guide, copyright laws that govern interactive streaming have never been tested in space beyond Earth orbit.
While it is likely that the MLC would have authority to license and collect streaming mechanical royalties on US flagged spaceships it’s not clear that privately owned mining facilities in the asteroid belt would be subject to US copyright law. Especially if the asteroid based mining facilities are owned by corporations headquartered in nations other than the US.
Then there is the matter of location of servers. Spotify, Apple Music and Tidal would be unlikely to stream songs from earth as wireless signals would take more than 30 minutes each way. While pause and rewind would not be problematic for the user, switching to an entirely different playlist or new album would require a long wait because of the hour plus round trip to Earth.
So clearly streaming services would require servers be located at the off-world mining facilities.
If the mining company is owned by a US headquartered company then one could reasonably argue US Copyright law applies. Relatively simple.
However, one must also consider the cost of shipping a single server into space. Extrapolating from cost of putting the slimmest 8 pound server into LEO (low earth orbit) it would cost approximately 170 million dollars to put a single server into an asteroid mining colony in the asteroid belt between Mars and Jupiter. Most off-world mining would be highly automated so mining colonies would have relatively low human populations. Thus yearly subscription fees for users would be in the $400,000 – $600,000 range. A family plan would be in the $600,000-$900,000 range.
It’s unlikely asteroid mining colonies could offer an ad supported tier as mining colony dining facilities or escort services would have no need to advertise as they would have no competition. Similar to military bases remote private mining companies typically grant monopolies in each service category.
There is however a silver lining: with only two streaming tiers, the All-in Pool and Total Payable Pool would be easier to calculate.
What about deductions from the All-In Pool for PRO payments in off world mining colonies?
This brings up an interesting side question. Is there a public performance royalty due on performances of music in a private asteroid mining camp? Are these facilities public or private? ASCAP, BMI and SESAC should start to think about this if they want to keep ahead of GMR as there are rumors GMR is already working on an off-world unitary direct license.
Of course everything becomes infinitely more complex if for instance miners in a US headquartered private mining camp subscribe to a streaming service based at a Shanghai headquartered private mining camp on an nearby asteroid. This is not improbable. As long as the orbits of the two asteroids were sufficiently stable this could be accomplished with a commercial grade WiFi router or a long CAT 5 cable.
In this situation it’s impossible to say if the MLC would have any authority to administer mechanical royalties. It’s likely an international agreement would need to be negotiated.
Or ConsenSys’ blockchain platform Ethereum could fix all this. And then we don’t have to worry about anything. Cause that’s what we’ve heard it does. It’s a solution for a lot of things. It’s just no one can really explain how it solves problems that you can already solve with an Excel spreadsheet and a few macros.
But it is a shiny new technology and a lot of money launderers and international criminal gangs prefer the technology so it has a sort of “cultural fit” with many of the music executives, personal managers and self appointed representatives of songwriters.
So how would we implement access to a blockchain distributed global music rights database in a remote asteroid mining facility? It is not clear but we do know that the current global Ethereum blockchain network can process 2400 transactions a minute, a node in a remote asteroid mining camp using only 50% of all available earthbound satellite bandwidth could probably process one database change a week. That’s assuming 40% of the robot labor could be diverted to process the transaction. Also some of the mining colony’s life support systems would need to be temporarily suspended using a “rolling blackout” system, but loss of life is expected to be minimal.
UPDATE!!!! I’ve indirectly heard from DiMA and I am embarrassed to admit that they share the same space cause this is a We-Work co-working space! There are dozens of businesses at this address. DiMA flat out deny they had anything to do with the selection of ConsenSys. Apparently they had no idea ConsenSys shares their address. I take them at their word, so should you.
Frankly I’m kind of impressed DiMA isn’t wasting money on fancy offices. They are down in the trenches rubbing elbows with farm co-op lobbyists and CBD-blockchain-startups. Good for them.
Now if we could only find a co-working space with marble parking garages we might be able to get the MLC to consider a co-working space and save all songwriters a little money.
Sadly, now we are left with the fact it was our side that picked ConsenSys.
Keep this correction in mind as you read the original article. The point of the article is that there appears to have been little due diligence on ConsenSys by MLC.
Honest. I’m not making this up. Look at screenshots above.
The Digital Media Association (DiMA) represents digital services. You know Google, Spotify, Youtube, Pandora etc. DiMA are on THE OTHER SIDE. I’m sure some of these folks are good people. At least a couple. Or at least one. But these are the people the Music Licensing Collective are supposed to be negotiating against on behalf of songwriters. Why did the MLC hire as a vendor a company that apparently is in the same building as the Digital Media Association?
Even if there is no actual funny business, it looks extraordinarily bad. It makes it look like DiMA is picking the MLC vendors. Surely that’s not what this tweet really means!
Lets review. It’s been less than a week since the MLC announced ConsenSys and HFA as vendors. What we know so far about ConsenSys:
National Security Investigation
The owner Joseph Lubin is one of the co-founders of the Ethereum Foundation a sort of governing body for the cryptocurrency Ethereum. The chief researcher for the Ethereum foundation was just arrested for allegedly conspiring with North Korea to launder money using cryptocurrency. Some might say that the Ethereum Foundation and ConsenSys are separate companies. Sure they are separate companies in the same way the Genco Pura Olive Oil Company was separate from Vito Corleone’s other businesses. And yes I know I’m implying there is a whiff of organized crime around all of this. Ethereum Foundation also shares a Zug Switzerland address with ConsenSys. Let’s see… crime? Check. Closely related entities working in concert? Check.
ConsenSys counts an Asteroid Mining company as one of its subsidiaries, or “spokes” as ConsenSys prefers to call them. That’s probably because many of these “spokes” do not appear to be legally registered companies of any kind (LLC, INC, S-Corp, LLP, GP etc).
Forbes came about as close as they could to calling ConsenSys a Ponzi scheme without actually using the word. Regardless of whether it is or not, without any real money-making businesses among its “spokes”, it’s possible it will collapse before it ever does the job the MLC hired it to do.
Songwriters should be alarmed. I mean like the-fucking-house-is-on-fire alarmed. Especially those independent songwriters that rely on mechanical royalties rather than performance royalties. The two vendors the MLC have hired HFA and ConsenSys are deeply troubling choices. When Jan 2021 rolls around I’m skeptical there will be a functioning MLC to pay out the mechanicals. If you are an independent writer and you have a mortgage? I’d be very concerned.
Maybe I shouldn’t say this is an “argument.” This is a plea. A rant. A tirade. A demand that our government enforce the rules and laws enacted by our elected representatives.
The last twenty years has been one venture-funded digital music “service” asshole after another ripping off songwriters and musicians with the same bullshit promise of “empowering” artists. It was bullshit before there was an “@” or “.com” attached to the swindle. And it still is a swindle. I’m pleading for someone in law enforcement to actually do their job. I’m not an attorney but when I read the applicable state and federal laws it is profoundly clear that most of these mass copyright infringing “services” are engaged in organized criminal activity. Yet rarely is anything done. And by letting them get away with it, time after time, year after year, law enforcement has essentially given the green light to the operators of these services to rip us off. Our only recourse is to resort to civil actions. These take years to complete. When these cases are settled the “services” and executives end up paying out a pittance, a small sliver of the profits they pocketed. Then they do it all over again. The same fucking scumbags. Aided by the exact same attorneys, VCs, investment bankers, bought off academics, fake NGOs and (worst of all) artist managers and former label executives now on the payroll of Swindle-dot-com. It is a racket in both the common and legal sense of the word. And the facts are staring everyone in the face.
I swear give artists one good solid investigation and everything will change. Put one of these digital music fucks in jail. Clawback a single VC’s profits. Disbar a single attorney. Suspend a single SEC license. Revoke the tax-exempt status of a single fake NGO and i promise artists can finally stop clogging up the courts with endless civil copyright proceedings.
And may I humbly suggest we start with the TikTok?
here's one explanation: "Defendants have engaged in a pattern of racketeering activity, as defined in 18 U.S.C. § 1961(5), through the repeated, relentless, and purposeful theft of the IP of others." https://t.co/Z5ZAM4TfD9
TikTok is probably one of the most popular apps in the world. The music-oriented short video app has been reportedly downloaded over a billion times. If you’ve never heard of TikTok just ask your kids. TikTok is owned by an opaque Chinese company privately valued at $73 billion dollars. TikTok was recently embarrassed when a memo leaked that appeared to instruct moderators to censor content sensitive to the Chinese Government. You know Tibet, Tiananmen Square, Uighur re-education camps you get the idea. The Washington Post also reports that Hong Kong protests are being censored on the platform.
Cute little TikTok app an instrument of Chinese state influence? Yeah all fun, games and Taylor Swift lip syncs until someone gets put in a re-education camp. Sorry to spoil the fun folks.
The Committee on Foreign Investment in the UNited States has finally started an investigation of the company for its handling of US citizens private data and the suppression of facts that are inconvenient to the Chinese Government. You know facts like Uighur concentration camps and the mere existence of Tibet.
But as bad as they are with suppressing inconvenient facts and privacy violations, they actually profit from IP theft.
What most people don’t realize is that TikTok lacks the most basic licenses for most of its content. I’ve spent the last few weeks researching this. Many of you know that I’ve been all over this on twitter with friends and strangers often pointing to new evidence or web documents that support my assertions. I could be wrong. But I don’t think so. 73 billion-dollar Chinese company with a stunning lack of licenses. Mind-boggling. US creators are clearly being ripped off.
ARGUMENT THAT THE DMCA “SAFE HARBOR” DOES NOT APPLY
TikTok’s need for licenses and massive copyright infringement is clear. And it is also clear they can not hide behind the DMCA. I quote from my original post:
After a couple of hours playing around with app it appears:
1.TikTok makes available my work and then provides the copy to the user before the user makes any content.
2. The copy would seem to be more than “ephemeral” (an important copyright act legal distinction) as at certain stages I repeatedly accessed the content even when my device lacked internet connectivity.
3. TikTok app “marries” or “syncs” the music to audiovisual content provided by their service or uploaded by the user. Note this is after the recording and composition have apparently been copied and distributed to the user’s device. In other words, the infringement occurs before the user supposedly “publishes” content.
4. Before the “marrying” or “syncing” of the music to audiovisual content if I cut off internet connectivity. The process of marrying the video to music seems to fail. This suggests TikTok service requires sync license, not the user.
5. Only after all sync has occurred does the user have the option to “publish” the work. This is long after TikTok carried out many infringing activities.
As the conversation spilled over onto social media “new shit, came to light.” And perhaps the single most compelling new fact is that Distrokid, an indie distributor popular with DIY artists has a deal with TikTok so “Independent artists can now use DistroKid to get their music into TikTok.” Good for them. Distrokid is (of course) partially owned by Spotify.
What is important about this little fact, is it seems to confirm that there exist servers that belong to TikTok (or a contracting party); these servers store copies of recordings and songs on behalf of TikTok; and these recordings and songs are provided under a license to TikTok. Distrokid’s official statement (from the Founder/CEO nonetheless) is clear: “into TikTok.” Thus there is no UGC and DMCA “safe harbor” does not apply. Further, the existence of this license indicates that TikTok is aware they need licenses. As one attorney on twitter noted a license from Distrokid would help prove willful infringement. Also apparently implicated is Engel v Wild Oats.
(Distrokid may want to clarify this is actually the case as certain alternatives could… well let’s just say there might be a lifeboat for one situation).
“Defendants have engaged in a pattern of racketeering activity, as defined in 18 U.S.C. § 1961(5), through the repeated, relentless, and purposeful theft of the IP of others”
The Racketeering Influenced and Corrupt Organizations Act doesn’t just apply to mafia-type organizations. And you don’t have to be a mobster to be charged with racketeering. Any company can get charged if greedy and stupid enough to engage in (for instance) the repeated, relentless and purposeful theft of the IP of others. In fact, it would seem to be easier to prosecute a corporation, than say someone in the mob, because everyone involved in the corporation has helpfully identified themselves publicly as a member of the organization on LinkedIn. Proving membership is usually the hardest part. Not in this case.
Pattern of racketeering activity? Two acts of infringement within 10 years of passage of the act? I’d guess we have millions here. Maybe in a single week. And as I demonstrated earlier it’s not like TikTok doesn’t know they need licenses. They’ve entered into licenses with some creators. Wilful infringement.
DECEPTION AT THE HIGHEST LEVELS?
I’d argue at the highest levels of the company executives are engaged in an elaborate ruse to mislead rightsholders about the nature of the infringement.
The TikTok website refers copyright complaints to a process that looks exactly like the DMCA notice and takedown process. But according to US law that process is reserved only for user-uploaded content. It is not for copyrighted work that TikTok is distributing themselves.
I found a few high level executives at TikTok on LinkedIn. I sent a similar message to several executives. The message read in part:
I am the artist’s rights advocate David Lowery. I’m the songwriter that originally launched the successful class-action lawsuit against Spotify in the US. Any idea how music I control ends up on TikTok? I can’t seem to track down the licenses. Further, if my analysis is correct the way your app appears to work, it looks like your company makes infringing copies before the user adds content. This would mean TikTok can’t claim DMCA safe harbor…
I explain in this article the actions that should be taken going forward:
But my question is this? If you folks are making so much money now. Why not be a decent human being and license the music?
I received this response from
Thanks for reaching out. TikTok is an exciting way for songs and emerging artists to gain exposure and breakthrough with a wide and varied audience. As a platform for unique and original creative content, TikTok places high value and respect upon intellectual property rights. I would recommend to use the usual channels as this is the fastest way for you to get support. TikTok has copyright policies in place (see the respective website in your location) and copyright infringement notice procedures available to assist. The email address is firstname.lastname@example.org. Please note that this is a private message and not a public statement. All the best, Joern
This may seem like a small thing. It isn’t. It’s major misdirection. The high level executive is directing me towards the DMCA process. This financially benefits TikTok (the hypothetical RICO organization) Because most artists know this is a pointless whac-a-mole™️ routine. A game the artist knows they will never win. So they usually don’t even bother. So it’s material that the company points artists at this process. It gives the impression the users are responsible for the infringing copies. Yet TikTok is clearly making the infringing copies. If this isn’t fraud it should be.
Maybe legal staff and IP counsel at TikTok do not know how their service works. Exactly how the copying and distributing of music files occur on their service. But I don’t think so. The guy who sent me the email response was once the head of licensing for ICE. What is ICE? From the UK PRS for music website:
ICE is the result of a joint venture betweenPRS for Music, STIM and GEMA with the collective aim of developing the world’s first integrated music copyright, licensing and processing hub, encouraging copyright data accuracy, aggregation of repertoires for multi-territory licences and the elimination of parallel processing against incompatibleworksdatabases.
So to consider this the head of content licensing at TikTok who is the former licensing chief for ICE doesn’t know the kind of licenses TikTok requires? Doesn’t know the service can’t rely on DMCA safe harbor process? I call bullshit. Further I suspect this executives knew he was misdirecting me.
I’d start by naming this guy as one of the conspirators and let him roll on everyone else.
Anyone else out there want to join me in a complaint to a US Attorney?
This is unacceptable and criminal behavior. It should not be tolerated from an American company much less a “sharp power” arm of a authoritarian foreign government.
Many readers of our blog know the story of the Google proxy Open Media, their subsidiary New/Mode and the spamming of the European Parliament during the debate over the Copyright Directive. If you are not familiar with the story here are two excellent pieces:
Today Hugh Stephens published an excellent blog on the GoldTV site-blocking case in Canada. I wasn’t aware of the case but Hugh’s opening paragraph is a good summary.
“Last week I wrote about the ground-breaking Federal Court decision that granted the request from Rogers Media, Bell Media and GroupeTVA to issue an injunction requiring Canadian ISPs to block pirated streaming content from offshore content provider GoldTV. This is the first such “site-blocking” order issued in Canada, although such orders are relatively commonplace in a number of other jurisdictions. The order was unopposed by all respondents in the case, which included all of Canada’s major ISPs, and some smaller ones, with the exception of Teksavvy, a small reseller of ISP access based in southern Ontario. Ten days after the order was issued, Teksavvy filed an appeal.”
Teksavvy is a small ISP and has an “net activist” sort of flavor. They proudly claim to be fighting cable and internet monopolies. As they proclaim on their website:
Good for them.
But anyone who has looked at enough Google proxy websites will note there is something familiar about the style of this website. Curious I switched to developer view and started searching the code for signs of Open Media et voilà!
A nice little call to action box powered by New/Mode.
I have no idea what this means, but of all the web tools out there for them to use they decide to use a Google proxy? A disgraced and “outed” Google proxy? Draw your own conclusions.
Our sister blog Artists’ Rights Watch just posted a new blog about one of the companies the MLC board has selected as a “digital vendor.” The company ConsenSYS will help match songwriters to royalties. The company also has an asteroid mining subsidiary. I swear to god I did not make that up. But hey maybe they are on to something. Maybe that’s where all those unpaid royalties are! Floating around in the asteroid belt! Read more below:
“MLC Pick ConsenSys Looking to Asteroid Mining, Fixing Employee Stock Mess, Will It Vanish Into the Ether? — Artist Rights Watch”
“There’s a sucker born every minute.” ― P.T. Barnum According to MusicRow: Technology company ConsenSys and mechanical licensing administrator Harry Fox Agency (HFA) received unanimous approval from the MLC Board to become the primary vendors responsible for managing the matching of digital uses to musical works, distributing mechanical royalties, and onboarding songwriters, composers, lyricists, and […]
A friend that has long been involved in the technology startup world refers to any and all cryptocurrencies as “LaunderCoin.” The point being that some significant portion of cryptocurrency activity is simply money laundering. So it was no surprise when I saw the headline above come across my newsfeed. Yawn.
A few paragraphs in though I nearly spit out my coffee. This isn’t any old cryptocurrency expert this is the Ethereum Foundation’s “research scientist” Virgil Griffith. Griffith is a well-known internet radical. The NY Times called once called him a “cult hacker.” “Internet zealot” might be a better description.
From the press release accompanying the complaint:
“As alleged, Virgil Griffith provided highly technical information to North Korea, knowing that this information could be used to help North Korea launder money and evade sanctions. In allegedly doing so, Griffith jeopardized the sanctions that both Congress and the president have enacted to place maximum pressure on North Korea’s dangerous regime.”
Assistant Attorney General John Demers said: “Despite receiving warnings not to go, Griffith allegedly traveled to one of the United States’ foremost adversaries, North Korea, where he taught his audience how to use blockchain technology to evade sanctions. By this complaint, we begin the process of seeking justice for such conduct.
So what does this have to do with the new Music Licensing Collective? Well one of the two digital vendors announced by the MLC is ConsenSys. ConsenSys is headed by Joseph Lublin who is the co-founder of Ethereum and COO of Ethereum Foundation. In 2014 Joseph Lubin described The Ethereum Foundation as a Canadian non-profit that “makes sure the Ethereum infrastructure run fairly and independently. However, a search of Canadian Government records shows no such non-profit or charity is registered in Canada under that name.
Even more confusing, the Swiss tax authorities have a non-profit Ethernet Foundation registered in Zug Switzerland where Lubin’s for-profit company is registered. And there are multiple and contradictory reports as to Lubin’s role in these various entities.
While it is unclear if Lubin or any entity that he directs is involved in the sanctions violations, he is awfully close and could be questioned. The US attorney is hinting at further arrests. The fact is the MLC board has somehow managed to put themselves awfully close to a national security investigation. This is outrageous. Where were the grownups?
The picture above shows dozens of backdated “NOIs” for compulsory mechanical licenses sent to me by HFA in 2016. By purporting to be valid NOIs for licenses when they were not, HFA committed mail fraud.
Music Row is reporting the music licensing collective board of directors has selected HFA as a digital service provider:
Technology company ConsenSys and mechanical licensing administrator Harry Fox Agency(HFA) received unanimous approval from the MLC Board to become the primary vendors responsible for managing the matching of digital uses to musical works, distributing mechanical royalties, and onboarding songwriters, composers, lyricists, and music publishers and their catalogs to the database.
The problem is that HFA was the 3rd party licensing contractor hired by Spotify and other streaming services to obtain licenses from songwriters and publishers. HFA did not properly do their job leaving streaming services exposed to massive copyright infringement lawsuits (from people like me). They created the problem that led to the creation of the Music Licensing Collective so now they are rewarded with the contract to run the matching of musical works and paying artists?!?! Didn’t they just fail spectacularly when asked by Spotify to do this job? Didn’t the Spotify class action and the four other private lawsuits prove HFA incapable of doing the job?
Even worse, in order to attempt to cover up the mess, they sent me, many fraudulent “Notices of Intent” or NOIs that purported to execute the federal compulsory mechanical license. They were not valid as they were backdated to make it appear they had sent the notices before the songs were streamed. I regret now that we didn’t pursue a RICO case against these folks when we were pursuing the copyright infringement cases against the streaming services. (See the screenshots below.)
Here’s what the DOJ says about mail fraud.
940. 18 U.S.C. SECTION 1341—ELEMENTS OF MAIL FRAUD
“There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts), and (2) use of the mail for the purpose of executing, or attempting to execute, the scheme (or specified fraudulent acts).” Schmuck v. United States, 489 U.S. 705, 721 n. 10 (1989); see also Pereira v. United States, 347 U.S. 1, 8 (1954) (“The elements of the offense of mail fraud under . . . § 1341 are (1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purpose of executing the scheme.”); Laura A. Eilers & Harvey B. Silikovitz, Mail and Wire Fraud, 31 Am. Crim. L. Rev. 703, 704 (1994) (cases cited).
Oh and one more thing. HFA was the company that was supposed to pay these streaming royalties back out to the songwriters. They didn’t do that either. Where is that money? Shouldn’t the Copyright Office look into this?
This is a travesty. The members of the MLC and those that purport to represent songwriters (I’m looking at you NSAI, SONA) have some serious explaining to do to songwriters. This company was one of the main reasons songwriters didn’t get their mechanicals for 7 going on 8 years. What the fuck were you guys thinking?
I’m posting my letter to the Copyright Royalty Judges about the Mechanical Licensing Collective “voluntary settlement” with the DLC. It may be voluntary for some people, but it was negotiated after shutting out everyone else from the negotiation on a technicality. Trichordist readers will probably be very interested in the issues and may want to send their own complaint to the Judges.
After delays for over a year that scared off any competition (whether or not intentionally), now they want to jam it through the Copyright Royalty Judges without a public comment from the people that will be most affected. Bad move because the public will comment anyway.
I call bullshit. Plus an astonishing attempt to deny the Judges the legitimate opportunity to hear new ideas that they might want to take into account in their decision. It is THEIR decision after all. We are not governed by unaccountable lobbyists.
You may have heard that the MLC and DLC have decided on how much the rich guys are going to pay the songwriters after forcing out any independent songwriter groups from having a voice in the “proceeding”. That maneuver prevented the Copyright Royalty Judges from hearing from independent songwriters and of course startups were nowhere to be seen, no doubt scared to death from challenging the big boys who can snap their hopes like twigs. (That is an old story. Remember the Microsoft anonymous amici who were too scared to reveal their identities to complain about Microsoft’s anticompetitive business practices?(
The Judges, who are supposed to now bless the settlement and turn it into law, have one more chance to hear from songwriters, publishers, and startups who will have to live with this thing.
The Judges have the power to open the settlement to public comment so the Judges may take into account any views from songwriters and startups brave enough to challenge their “betters” before they rule on the closed door settlement. We all know they will hear from us after, particularly since the settlement just happened to get announced before the December 9 “reply comment” deadline for the Copyright Office’s proposed rules on the MLC. It would be best to send your comments on the settlement directly to the Copyright Royalty Judges at Crb@loc.gov since the Judges, not the Copyright Office, have the power to change the settlement for good cause and fundamental fairness.
Here is my letter to the Judges:
David C. Lowery
Dear Copyright Royalty Judges:
I have read the proposed settlement reached by the MLC and the DLC that was posted on the CRB site. Without commenting on the substance of the settlement, which has many, many holes, I respectfully wish to call the Judges attention to one particular section:
Adoption of the Settlement by the Copyright Royalty Judges
Pursuant to 17 U.S.C. § 115(d)(7)(D)(v):
In lieu of reaching their own determination based on evaluation of relevant data, the Copyright Royalty Judges shall approve and adopt a negotiated agreement to establish the amount and terms of the administrative assessment that has been agreed to by the mechanical licensing collective and the digital licensee coordinator… except that the Copyright Royalty Judges shall have the discretion to reject any such agreement for good cause shown. An administrative assessment adopted under this clause shall apply to all digital music providers and significant nonblanket licensees engaged in covered activities during the period the administrative assessment is in effect.
Importantly, the settlement of this Proceeding is not subject to public comment. See id. (noting that the Participants are the parties that have to agree to settle this Proceeding); see also 37 CFR § 355.4(c)(4) (outlining procedure by which only other participants, and no others, may file comments on a proposed settlement within five days of the filing of a proposed settlement); Order Granting Joint Motion to Modify the Case Scheduling Order (setting the schedule for non-settling participants, and no others, to comment on any proposed settlement). The Participants are pleased to have reached the Settlement, which meets the statutory requirements of Section 115(d)(7)(D) for the initial Administrative Assessment.
This is outrageous.
First of all, I’m not a lawyer but when I read the authority these people cite for barring comments from the people who have to deal with the consequences of what they have negotiated, I don’t think the Judges are prohibited from taking comments from the public on the settlement. In fact, I find this paragraph to be extraordinarily self serving and makes me ask who do these people think they are?
The Judges should take into account that no startup has been present or able to negotiate the many burdens placed on them by this settlement. In particular, they have not been able to be heard by the Judges on the scope of these financial burdens that their competitors—some of the richest multinational corporations in history—have unilaterally decided to place on them with no push back.
This isn’t to say that any would be brave enough to come forward and challenge their betters if given a chance. But they should at least be given a chance.
Plus, the Judges need only take notice of some of the comments filed by songwriter organizations with the Copyright Office (Docket COLC-2019-0002) to read for themselves that many songwriters do not feel they have been represented in this proceeding. If that is not “good cause shown,” I don’t know what is.
Respectfully, I think it would be a grave, grave mistake and an unfixable miscarriage of justice, to deny the public the opportunity to comment on this settlement. Because the public will comment, maybe not in the proceeding but comment they will and for a very long time.
I hope the Judges will not miss this opportunity to exercise their legitimate oversight role for both the DLC and the MLC.
Is Ron Wyden an Idealistic Progressive or Just Another Sleazy Pol?
Sen Ron Wyden D-OR is the last congressional true believer in a completely unregulated wild-west cyber-libertarian-internet. A “free internet” that works quite well for internet wolves, but not so much for the rest of us. He seems to be the only guy left in the Senate willing to lay his credibility on the line to protect any and all internet bad actors. Is this radical idealism or is he just another politician pandering to rich and powerful interests?
I have already formed my opinion of Wyden. Sen Ron Wyden has been a relentless foe of copyright reform legislation that would benefit artists. And a champion of legislation that would benefit digital behemoths. Wyden opposed the Classics act and is one of two Senators currently opposing the CASE Act (the other is the kooky Sen Rand Paul). He sponsored the Orwellian named Internet Radio Fairness Act that would have slashed artist royalties more than fifty percent. This act would have benefitted a handful of multibillion-dollar tech companies. No one else. Pure corporate welfare. Fortunately, the bill was crushed. Wyden represents thousands of musicians that call Oregon home. Portland is arguably not far behind Austin TX as an independent music mecca. Aside from a handful of Silicon Valley engineers employed at server farms in the Eastern Oregon desert, he doesn’t represent Silicon Valley. He did, however, grow up in Palo Alto in the heart of Silicon Valley.
This guy claims to be a progressive democrat, yet aside from some lip service on social issues, there is no evidence he is actually progressive. Like Nike, the actual evidence is all to the contrary. Sweatshops and shilling for corporate monopolies is not a progressive value. Now perhaps because I am an artist and I am directly harmed by Wyden’s devotion to moneyed interests in Silicon Valley, I am looking at this through a different lens than the “average” American. I obviously have my biases.
What is something objectively bad that all Americans can agree is bad? What can we look at that will resonate with average Americans? Child sex trafficking? There are surely not two reasonable sides to this debate. Surely all Americans can agree it is horrific. Let’s look at Wyden through this lens. A decent non-kooky senator would not oppose a narrow amendment of Sec 230 (FOSTA/SESTA). A narrow amendment to make Backpage and other internet platforms liable for blatant child sex trafficking on their sites, would they? And surely a decent non-kooky Senator wouldn’t stick their neck out to oppose an amendment overwhelmingly supported (97-2) by a bipartisan coalition of senators?
Yet Wyden did. Wyden was one of two Senators to vote against FOSTA/SESTA and the only Senator to speak against FOSTA on the house floor. A rather dramatic and long speech. Read it here.
Why did all (non-kooky) Senators, other than Wyden see FOSTA/SESTA as a necessity? As NPR explains:
Over the years, victims and their families brought case after case against Backpage — and lost. The website kept convincing judges across the country that Section 230 shielded it from liability for the posts of its users. Major digital-rights groups, including the Center for Democracy and Technology, argued that holding Backpage liable could have chilling effects for social media and other websites.
This bewildered Mazzio: “How is it possibly legal that a website that makes millions and millions of dollars has no accountability for this crime?” she says. “Section 230 has turned into a Teflon shield, not to protect free speech but to protect business revenue.”
The Supreme Court last year declined to hear victims’ appeal in the case of Backpage and Section 230.
Why did Wyden oppose FOSTA? Wyden’s speech on the Senate floor is telling. Wyden argues making these sorts of child sex trafficking ads illegal would drive this activity underground and make it harder to prosecute. Sounds sort of reasonable. I guess. If you’re an idiot. By Wyden’s logic:
We should allow dogfighting ads to make this activity easier to prosecute?
We should allow black-market Fentanyl and Oxycontin ads to make dealers easier to prosecute?
We should allow ads for fake securities, insurance, and other financial scams to make it easier to prosecute the fraudsters?
Why stop there? We should allow murder-for-hire ads on internet platforms to make hitmen easier to prosecute?
How bout snuff films?
And yes he really does make this argument:
I fear that the legislation before the Senate will be another failure. I fear it will do more to take down ads than take down traffickers. I fear it will send the bad guys beyond the grasp of law enforcement to the shadowy corners of the dark web, where everyday search engines don’t go, but where criminals find safe haven for their monstrous acts.
This is the democratic Senator from Portland Oregon making this argument. I went to UC Santa Cruz in the 1980s. Banana Slugs. We didn’t have grades. We had a gay Marxist mayor. We had the first non-gender specific bathroom protests. My girlfriend was in a play in which she played a man playing a woman. I sold alfalfa sprouts in college. Not any alfalfa sprouts but organic alfalfa sprouts. Therefore I’m pretty sure Wyden’s argument above is not a progressive argument.
But Wyden doesn’t stop there. He also makes the dubious claim that internet giants like and backed this legislation because it cements their monopoly in place by burdening start-ups with new regulations. This is at best inaccurate. While it is true that IBM supported this legislation, Facebook was at best ambivalent, almost all the other big tech companies, and crucially the search monopoly Google did not. Further, Google and Google executives actively funded groups (and academics) that opposed FOSTA. And Wyden repeated their talking points nearly verbatim. As if he was simply a puppet. I say this because a highly trained registered lobbyist would not have been as on point as Wyden. Clearly, Wyden will have a cushy post-Senate career as a corporate mouthpiece and lobbyist. If he doesn’t work directly for a tech giant.
The most damning evidence of Google’s opposition to FOSTA comes in a bumbling hamfisted admission at a Google shareholder meeting. In the video below Consumer Watchdog advocate John Simpson reads a letter from “Nicole S” a young woman featured in the horrifying child sex-trafficking documentary, I am Jane Doe. In the letter, she asks Google why they are funding groups opposed to FOSTA. Eric Schmidt and other top Google executives squirm uncomfortably. Chairman Eric Schmidt is visibly angered by the end of the clip. If the subject wasn’t so sickening it would be delightful.
Google clearly did not like being called out on its involvement in the orchestrated campaign that apparently included a US Senator. In the end, Google lost and Wyden lost. But Wyden and Google managed to delay the bill for some time. How many children were trafficked or even killed during this time? It is not hyperbole to say Wyden and Google may have blood on their hands. Coincidentally (or not) a few months after this video was filmed, Google Chairman Eric Schmidt resigned as a wave of allegations of sexual misconduct by top Google executives became public. Wyden is still a US Senator. At least for the time being.
The Time I Met Sen Ron Wyden
I’ve written a lot about Senator Ron Wyden over the years. I think it may be of interest that I didn’t start out as a critic of Wyden. I criticized a bill he sponsored and he came looking for me! It was November of 2012 and I had been invited to participate in a panel at The Future of Music Summit. The panel was titled “Radio Active” and we were debating the merits (or lack thereof) of the Internet Radio Fairness Act (IRFA). I had a number of criticisms of IRFA, mostly concerning the slashing of artist royalties. But I was also concerned about what appeared to be an unconstitutional muzzling of the speech of independent artists and songwriters. I showed the slide below and argued that this part of the Internet Radio Fairness Act was written so broadly it would make any discussions of direct licensing and subsequent royalty rates among musicians a violation of the Sherman Act.
The century-old Sherman act was designed to break up trusts and cartels. It authorized the federal government to break up any businesses that prohibited competition. Wyden’s bill attempted to turn the act on its head and make it a tool to protect internet cartels from musicians. Appalling to say the least. Again, I went to UC Santa Cruz and I don’t remember “protecting monopolies from workers asking for fair pay” as a key tenet of progressivism. But I don’t know, I smoked a lot of weed back then, I could have missed something. But I digress.
About an hour after my panel, Wyden came blustering into the conference, ostensibly for his keynote address. But as soon as he took the microphone he started asking who it was that said he (Wyden) was limiting free speech? He was pointing around the room. He is a tall man and I suppose he is physically intimidating. He was clearly angry. I have a terrible impulse to laugh in these sorts of situations. Despite this, I managed to keep a straight face and raise my hand. He asked me if I knew anything about his career and his unwavering support of free speech. I didn’t know what to do other than read him one of the offending passages from his own bill:
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).
This clearly took him by surprise and after hemming and hawing about boilerplate language for ephemeral copies(?) he conceded:
“I certainly would never ever support anything that would restrict free and open speech, particularly artists’ expression,” Wyden said. “If the consensus in the legal community is that this restricts the First Amendment, it will be a very short-lived provision.”
I appreciated the sentiment, but unfortunately for Wyden, this implied he didn’t know what was in his own bill. Not a good look. It’s an open secret on Capitol Hill that industry lobbyists, attorneys from trade groups, astroturfs and bought off academics often write the legislative language. So who wrote this bill? Pandora? SiriusXM? Paid lobbyists? Professor Google Money?
About a year later I was considering speaking at SF Music Tech. This conference is sponsored by a host of technology companies (but most notably Google) When I spoke to one of the organizers of this conference he informed me that his “sponsors” wouldn’t appreciate me speaking there because (among other things) I had been “incredibly rude to a US Senator.”
What? I don’t even know where to start with that! SF and the Tech Industry? I thought these guys and that town loved disruption! What is more disruptive than an indie musician taking on a Senator that’s been in Washington 30+ years! I see. It’s like the old Mr. Show skit featuring an employee training tape for the Marilyn Mozzarella Pizza Rella Pie Parlours “Don’t forget to break some rules!.. but don’t really break any rules.” No wonder the SF Music Tech Summit was held at the Hotel Kabuki!
But the whole episode got me thinking about Wyden’s relationship with these Silicon Valley companies. Yes, Wyden did grow up in Palo Alto in Silicon Valley. I’m sure there are a number of one or two-degree separations from tech executives. But there was a hint of “our guy” in the way he was being treated. If this were 1920s Chicago I could easily imagine someone saying “You insulted our bought and paid for Senator!” Not that I’m saying he is bought and paid for. Nor does this article offer any definitive evidence of some such scheme. But I was getting the impression Wyden was Silicon Valley’s Senator. This gave me the idea to poke around in the Senator’s campaign finances.
“The Hedge Fund is Coming From Inside The DC TownHouse!” Or “Don’t Go Down Into The Basement Hedge Fund!”
Which title do you like better? I couldn’t decide so I used them both. Might as well use this as an opportunity to poll you.
I accidentally stumbled across the story above when I was researching Wyden donors. D.E. Shaw caught my eye. Shaw has an eponymous 80 billion dollar hedge fund. So Wyden’s son Adam does an internship for a campaign donor. Okay. Nothing illegal. But then when he’s finished “someone” gives the kid 3 million dollars to start a hedge fund in dad’s basement?
If that investment came from D.E. Shaw or any other campaign donor (who else would it come from?) that could be a campaign fund violation. Or outright bribery. Or maybe not. I mean sure, plenty of people give 3 million dollars to a 26 year who spent a few months making coffee or fancy excel spreadsheets for Wall Street Brahmin. Most journalists who reported on the story clearly had an eyebrow arched. Here Business Insider reports
But a D.E Shaw spokesperson assured Bloomberg, “Adam went through the same rigorous vetting and interview process as all other D.E. Shaw group interns.”
The reason observers might think otherwise is because David Shaw has donated thousands of dollars to Senator Wyden’s election and re-election campaigns in 2004 and 2010. Shaw and his wife each gave the maximum $4,800 each that they’re allowed to donate for any single election cycle, to Wyden.
Shaw also contributed $5,000 in 2010 to Holding Onto Oregon’s Priorities, a political action committee established by Wyden, according to Campaignmoney.com
And apparently, the younger Wyden had a pretty good first year. As Bloomberg reported in 2011:
Wyden’s best personal trade last year was an investment in IDT Corp. starting in February, when the Newark, New Jersey, telecommunications company traded at an average of $4.84 a share, he said. IDT now is at $23.90
Adam Wyden’s fortuitous timing on IDT shares.
IDT. The company was a total mess at the time of the younger Wyden’s bet. Good timing on his part. I guess. I found only two curious things about this investment. According to several DC insiders, Senator Wyden was once quite close to IDT’s chief lobbyist at the FCC. A guy named John Windhausen. Funny name. Should have been a politician with that name. There were some FCC decisions during this time that seemed to have benefitted IDT. This may have sent the stock up. Or maybe not. But also odd, Adam Wyden in a fairly long interview talked about his big gain on IDT but he doesn’t mention once the company’s main business: Prepaid calling cards. A business heavily regulated by the FCC and highly dependent on favorable rulings from the commission. A small change in interconnection fees/rules would make or break this company.
Do Spies Go With That Shake?
Spoiler Alert: ADW Capital Management and ADW Capital Partners together own approximately 20% of this defense/intelligence contractor. But the investment is tucked inside a restaurant point-of-sale (POS) software company. Senator Wyden is on the Intelligence Committee.
I wrote about all this ADW Capital Partners nonsense a while back but no one seemed to think it was unusual a Senator’s son had a hedge fund in the basement. So I sort of gave up. We seemed well on our way to the same sort of senatorial kleptocracy that destroyed ancient Rome and this was not even a sideshow to the main circus. I get it. No One Cares.
The Senator has since continued to make life miserable for artists. Recently he and the kooky senator from Kentucky put a “hold” on the Case Act in the Senate. The CASE Act is a voluntary copyright small claims court proposal. It enjoys widespread support in the House (410-6) and Senate. But it will never be voted on because Senate rules allow a single Senator to block a bill. That seems unconstitutional to me as well.
Whenever Wyden does something like this I poke around in his campaign finances. And this time just for the hell of it, I decided to look at what his son’s hedge fund was doing. I hadn’t checked in a while and was surprised to see ADW Capital Management and ADW Capital Partners now have over 300 million dollars. Is it any surprise a Senator’s son can raise $300 million dollars? Credence Clearwater Revival would not be surprised. He also has hired one employee since his basement days. So two folks manage a 300 million dollar hedge fund out of a 700 square foot suite in Manhattan. I guess that’s normal.
ADW Capital Management and ADW Capital Management Partners Holdings according to WhaleWisdom.com
I went to Whalewisdom.com to look up the holdings. An odd set of companies. A very small set of companies. Four companies in total. Plus something derivative traders call a “covered call” strategy. I’ve never seen a hedge fund with such concentrated holdings. The second hedge fund has three of the same four companies. Weird. He’s also doing quite poorly this year. But hey, maybe there is some real science behind this. You don’t make money doing what everyone else does.
RACE is Ferrari. And it’s coupled with the sale of “calls.” Essentially a bet the stock won’t rise.
EVI is a dry cleaning supply, equipment, service, and franchise business. Mostly in Carribean and South/Central America.
SIC is basically a distributor of stone countertops and such.
The last is ParTechnology which seems to be a maker of restaurant point of sales software. As I was typing this into a search engine I got “PAR government” as an auto-suggestion. I assumed it must be a similarly named unrelated company. Because PAR Technology is a restaurant point of sales software company and there is no mention of a defense and intelligence division on their website. However, a quick search of the SEC website turned up a Form 10-Q that confirmed PAR Government was indeed a subsidiary of the restaurant point of sales company. Interesting.
According to the website GovernmentContractsWon.com, in 2018 Par Technology won 27 defense contracts for a total of $21,652,632. Over the last two decades, this company has won 187 defense contracts worth almost $300 million. This amount would not include pure intelligence agency contracts as generally those are classified.
There is also another subsidiary of ParTechnology called Rome Research Corporation. This is another defense intelligence contractor based at the same address. According to GovernmentContractsWon.com this company has received a whopping $567,265,220 in defense/intelligence contracts since 2000. Since they share the same parent company it is possible some contracts are counted twice. But I didn’t immediately see any overlap.
Okay. I guess I’m burying the lede here, but it would appear that the defense/intelligence subsidiaries discreetly tucked into PAR Technology Corporation are not the tail at all. No, they seem to be the dog. And between ADW Capital Partners and ADW Capital Management, Adam Wyden, son of Senator Wyden, controls 20% of these companies.
And guess who sits on the Senate Select Committee on Intelligence?
JFC! Shouldn’t someone investigate this shit?
Also, next time Wyden takes a stand on civil liberties, government spying or drone strikes? Remember it’s utter bullshit. His son seems to be waist-deep in all of it. So Sen Wyden doesn’t know? I don’t believe it for a minute.