As COVID Decimates State Revenues Tennessee Franchise Tax Comes for out of State Performers

Most people do not realize this, touring bands end up paying income taxes in multiple states. It tends to be the high population states in the West and Northeast. Think California and New York. This makes sense in some ways as the income tax is based on revenue you make in these states. Big states big revenue. It’s a pain to file multiple state returns but at least there is a reasonable rationale.

A franchise tax is different and is not usually based on a businesses income. It is essentially a flat fee tax on the corporate or LLC entity doing business in that state. The idea is that a business based in that state should pay for the services the state provides. These franchise taxes generally have minimum fees between $150-$800. Bands that use a corporate or LLC structure pay these taxes in their home state because they have a “nexus” in that state. A nexus generally means you have some regular place of business in that state. However some states try to apply the franchise tax even when an out of state business or band has no nexus in that state. However it is exceedingly rare. At least until recently…

Over the last couple months I’ve been hearing anecdotal stories about bands suddenly getting tax bills from the State of Tennessee. Odd. The music state? Aggressively taxing musicians? I didn’t think much of this as, it’s pretty common for bands to not realize they owe sales or income tax in states in which they perform frequently.

But last week I received a surprising notice from the State of Tennessee. A retroactive assessment for 7 years of Tennessee franchise tax. As far as I can tell we have no nexus in that state. I have not heard back from the Tennessee Department of Revenue, but apparently the State of Tennessee considers us to be subject to their franchise tax (now?) because we played a single show in the state in each of these years. Wow. This is ridiculous. Imagine if every state you played in required you to file taxes and pay $150-500 in franchise taxes for the privilege of playing a single show in the state?

Further, this retroactive assessment (including penalties and interest) comes at a time when most states are facing tax revenue shortfalls. When states and local governments face revenue shortfalls they have a bad habit of enacting dubious “revenue enhancement” schemes. Often these amount to badgering businesses and taxpayers into paying taxes and fees they would not normally be assessed. I have no evidence this is what is happening here, but something has changed with way my band is being treated by Tennessee tax authorities. And it is apparently happening to other bands.

WTF? I won’t be rushing back to Tennessee to play shows, record albums or even co-write songs until I have some clarity on the tax situation. I suggest other bands also exercise caution.

One last thought: The federal Music Licensing Collective will come online next year. The MLC is based in Tennessee. Does this mean every songwriter and publisher will now have to pay the Tennessee Franchise Tax? Hardly seems fair but it’s possible.

Open Letter to Jeff Bezos from Trixi the Three Legged Rescue Dog

Todays guest opinion is by Trixi a 5 year old female Pit Bull/American Bulldog mix and cancer survivor.

Hi Jeff

You don’t know who I am, but I’m pretty familiar with who you are.  You are the guy that sends those men and women up onto my front porch. This happens nearly every day. I’m not sure what it is I ever did to you but it is quite annoying. The newspapers that line the floor around the cat’s litter box (yes, I know I have a problem) also tell me you are the richest man in the world with a net worth of 188 billion dollars. I understand that your company has benefitted enormously from the current pandemic.  Those same newspapers report you and your fellow tech titans Zuckerberg and Musk have seen your net worth rise $115 billion just this year.  It is a good year to be a tech titan.

In contrast to that the family I live with is largely supported by money earned from performing music.  Concert musicians and concert promotion is the family business.  Since mid march there has been no concert income for my family. In fact our family income has fallen 80%.  Fortunately for me and my family we still receive songwriting royalties from streaming and sales. These royalties are from songs my dog dad wrote over the last 40 years.  My understanding is my family uses these royalties as a kind of rainy day fund that helps us get through tough times and the dry periods between albums and tours.

To be clear I’m not whinging here. I have it pretty good for a dog. I spent much of my first few years in kennels having puppies. I know how fortunate I was to be adopted by my family.  But back in the spring I developed a dull pain in my left front shoulder.  At first I thought it was a muscle injury from trying to scoot under the couch to get what I thought was an old dried up bit of bacon. Long story it wasn’t. It was pretty good. But it wasn’t bacon. Anyway,  the pain rapidly worsened until I couldn’t eat or even drink water.  I tried to crawl under the house to die. It was that bad.  The vet told us I had a malignant bone tumor.  I would need my left front leg amputated at the shoulder and a few rounds of chemo.  Fortunately the surgery and chemo appear to have been successful. Knock on wood.  It took me about a week to figure out how to walk. Now I get around pretty good. Here’s a little secret dogs: It’s easier to run than walk with three legs.

The point is without those songwriter royalties I don’t know if my family would have had the cash to pay for that surgery and treatment.  Well maybe that’s not quite true as I’m certain my family would have done anything they could to save me.  Put the surgery on credit cards or even taken out a loan.  But you get my point.  My life is an expense that many music families might not be able to afford.

Now the other day I was in the recycling bin checking to see if all the cans were properly washed out and I came across the full docket for the United States Court of Appeals Washington DC Case No. 19-1028.  Fascinating.  Basically you, Jeff Bezos, the richest man in the world sued the Copyright Royalty Board to “recalculate” songwriter royalties retroactively 2018-2022. And you won! Now the trade organization that represents you is claiming this is simply a technical detail. But that is not true. it is clear from the actual court filings that you (and your buddies Spotify and Google) want to retroactively reduce songwriter royalties from the current 13.3% downward to around 10.4%.  That is, a retroactive 28% pay cut to my family. There is a very real possibility of negative songwriter royalty checks in late 2020 or early 2021.  This is during a worldwide financial crisis. When my family has already lost 80% of their income.

So I just have one question for you Jeff.

“How much more fucking money do you need?  What kind of asshole sues to retroactively take pay from songwriters during a pandemic?”

Okay that’s two questions. I’m a dog. I’m not good at math.  I am good at empathy.  You should learn.

You can read the court opinion at link below.

2020-08-11 Case No. 19-1028 GJ v LOC UNSEALED OPINION FINAL

My Complaint to FTC Over Spotify False Claims They Weren’t Suing to Lower Songwriter Royalties

Spotify is completely full of shit (as usual). Spotify for Artists webpage the day after they argued in federal court to lower songwriter royalty rates.

Spotify’s claim that they are not suing to lower songwriter royalty rates appears to be a form of False Advertising, that may give them a competitive advantage over competitors.  For this reason I filed a complaint with the FTC.  Below.

On March 11th 2020 Spotify through its Spotify for Artists webpage made false claims about the nature of its appeal of songwriter royalty rates. ( ). They also made these claims in a circulated press release on or around March 11th 2020. Specifically, they imply they were not trying to lower songwriter rates. The United States Court of Appeals For the District of Columbia ruling on their appeal (USCA Case #19-1028 Document #1856124 Filed:08/11/2020 Argued 10th of March) clearly indicates this is not the case. Further, Spotify apparently manufactured out of whole cloth the story that their appeal was centered on a technical matter of “bundling” lyric and video rights. On the webpage cited Spotify says “A key area of focus in our appeal will be the fact that the CRB’s decision makes it very difficult for music services to offer ‘bundles’ of music and non-music offerings.” The Appeals Court ruling nor the rest of the docket appear to support this contention. It appears the intention of this statement was to create the false impression that the goal of the appeal was not to lower songwriter rates, thus making consumers think Spotify was not taking a hard line towards songwriter pay. Consumers may have been misled and purchased Spotify subscription over competitors (like Apple) because they thought Spotify was not deeply hostile to pay raise for songwriters (Apple did not appeal songwriter royalties.) Finally, Spotify argued complaint March 10th 2020. The company had to know the March 11th statement was false.

If you want to file your own complaint go here

Just use the “other complaint” form.  Let them sort it out.

Use this address for Spotify.

Spotify USA Inc.
4 World Trade Center, 150 Greenwich Street, 62nd Floor, New York, NY 10007

I would use Horacio Gutierrez Head of Global Affairs & Chief Legal Officer at Spotify as the contact responsible for the false claim on FTC form.

United States Court of Appeals DC ruling on Mechanical Royalties Unsealed

Here is the ruling. Unsealed.  I just read it and I’ll tell you this, although it is a technical ruling in many ways, it clearly goes against songwriters.  There is little chance this will not lower your royalty rates in the subsequent rehearing.

First, The Court of Appeals all but directs the CRB to put the cap back on “total content costs.” This clearly will have a depressive effect on the alternate mechanical royalty calculation.  Second, the court seems to be fundamentally uncomfortable with the fact that songwriters get a (phased in over 5 years) 40% raise. Like everyone involved in the proceedings so far, no one seems to understand the initial rate was arbitrary. It was picked out of thin air when no one knew what streaming meant.  Finally it’s totally depressing to see a federal court reiterate the notion that the federal government can not put a streaming service out of business by raising songwriter rates too high.  It’s not the governments job to save companies that have bad business models.  If the streaming services can’t pay fair rates to songwriters perhaps they should charge their customers more, not pay songwriters less.  Why do the federal courts think songwriters have to subsidize the streaming business?  All in all a depressing read.  The system is broken.  Songwriters who every day add value to the GDP of this country are robbed and brutalized by their own government. A distant unaccountable unelected elite that has no concept of our lives.  Meanwhile they make Daniel Ek billions of dollars richer every year.  Does that seem right to you?


2020-08-11 Case No. 19-1028 GJ v LOC UNSEALED OPINION FINAL

Not the Onion: Spotify Claims it is Suing to Raise Songwriter Royalty Rates


Look! It says so in this blog post! Spotify says it is “supportive” of the 15% effective royalty rate to songwriters but it just wants you to throw in  a bunch of other rights for which you are already paid a separate fee.  See? That’s cool right?  That’s not a pay cut.  The appeal of the Copyright Royalty Board rate-setting is actually done to help songwriters!

I mean you can kind of sort of maybe say they are reducing your pay because yes that separate income you get from micro sync and lyric display will be deducted from the 15% effective rate.  But no they aren’t trying to lower your mechanical royalty rate, they are just trying to take away other streams of revenue that you already have.  I suppose you can say technically they are slashing your pay. While technically correct that would be silly!

I know it’s a little confusing cause by law the Copyright Royalty Board was charged with only setting the streaming mechanical  rate in this proceeding. But hey, these are extraordinary times, its okay if the CRB just goes ahead without any constitutional authority and effectively ex-post facto eliminates royalties paid under a different private contract. Sure that’s technically unconstitutional and administrative judges don’t enjoy the same immunity from liability that other judges enjoy, but yeah why not?   In times of extraordinary hardship, if streaming services have to wield the awesome power of the federal government to hurt the little guy, so be it. I mean you have to starve a few million peasants to make a crony capitalist omelette right?   What’s a 20-30% pay cut to help a billionaires get by?


Negative Royalty Checks: Streaming Service Appeal Makes it Real Possibility

Billboard has reported that streaming services have won their appeal to force the Copyright Royalty Board to recalculate songwriter streaming royalties for 2018-2022. Yes, that means retroactively calculate 2 1/2 years of royalties.  This could easily lead to songwriters getting reduced or negative royalty checks.

Here is how:

In 2017 the royalty rate per stream for songwriters was calculated by dividing 10.4% of gross streaming service revenue by the total number of streams.  In 2020 it is calculated using 13.3% of gross streaming service revenue by the total number of streams.  If streaming services like YouTube and Spotify get their way that 13.3% will be reduced dramatically.  Let’s say streaming services manage to get the Copyright Royalty Board judges to reduce it retroactively to 10.4%.  Spotify and  YouTube would back out the overpayment from songwriters future royalty checks.  Remember Spotify has already done this once when they claimed they overpaid on family subscriptions.

Example: suppose you earned exactly $1000 per quarter over the last 2 1/2 years, or $10,000.  Streaming services could contend that they “overpaid” you 28% each quarter.  They would be within their rights to back out $2,800 from your next checks.  Negative royalty checks. Expect that in late 2020 or early 2021 just when your BMI royalties will shrink from the pandemic induced collapse in local advertising.

Now various industry and trade operatives are trying to spin this ruling as just a technical setback. That the Copyright Royalty Board used a flawed process to calculate songwriter royalty rates. The recalculation is no big deal. They would have you believe that streaming services spent millions of dollars on a federal appeal to get the same rate, to pay songwriters the same amount of money.  Does that make any sense to you?  Do not be fooled by this exercise in covering their ass.  It is unlikely that songwriters rates will remain the same.   The purpose of the exercise is to get lower rates and these lower rates will come retroactively out of your checks.

You have to wonder what kind of people work at these streaming services.  What kind of person is fully on board with a corporate policy to claw back pay from workers, when those workers have already lost most of their live music income.  I urge anyone that knows employees of these three companies (Google, Amazon and Spotify) to publicly out/shame these individuals. Force them to denounce their companies regressive and inhuman policies. Shun them from polite society.  Further any artists still cooperating with the digital services like Spotify, Amazon and YouTube should be regarded as strikebreakers and scabs. These artists should be treated accordingly.  Artists should pull new releases from streaming services that are pursuing this policy.

This is war.

Good data in Garbage Out: The MLC/HFA Data Disaster


As many of you already know the new federal Music Licensing Collective has selected Harry Fox Agency as the vendor to provide song data to the MLC. It is rapidly becoming clear that what this really means is that the MLC will start with the HFA song database and then through a rather convoluted and manual process, songwriters will be required to “ensure the quality of that data” if they expect to get paid. In other words songwriters will do all the heavy lifting.

I’m a little confused here.  The MLC received $37 million dollars in startup costs from digital music services.  Clearly an accurate database is necessary to start up an entity designed to distribute song royalties.  So it should be a start up cost, not an after thought outsourced to songwriters. Especially after we songwriters were told over and over again that the streaming services would pay for MLC.

As an aside,  we will never know much about what the MLC spends its money on  because the whole fucking budget of the MLC has been redacted on the copyright office website.  This is not a joke.  How is this even legal?  Why the fuck is the budget secret from the songwriters/public it’s supposed to serve? You think the so-called songwriter groups represented on the various boards of the MLC would be the least bit embarrassed by this.  Apparently they aren’t.

Figure 1.  MLC filing on Copyright Office website.  The entire budget is redacted in the public record. 

But I digress. That’s another blog. The much bigger problem is the MLC is apparently building the database around the existing HFA database.  You know the database that got Spotify and Rhapsody sued.  This will be the MLC database. Garbage in Garbage out. This will be an unmitigated disaster.  Let me show you:

In 2019 I chose HFA to administer the mechanicals on the self-published part of my catalog.   When my team first contacted HFA they were told HFA had information for around 80 of my songs already.  Unfortunately the data was wrong.  It showed me as 100% writer on many songs that were co-written and co-published. Interesting cause at that point I’d  never been paid by HFA. And I am not sure where this information came from as at that point I had never given any splits to HFA.  I suspect ass covering because the Spotify/Rhapsody lawsuits involved this part of my catalog (HFA was vendor hired by Spotify to clear songwriter licenses and pay songwriters. They failed and the lawsuits were the result.)

Regardless my team proceeded to update the data and provided the proper splits and co-publishers to HFA.   And this is where it gets weird. We received this email from HFA.  Here is a snippet.

“For updating songs it is most efficient to process them manually, by entering specific song codes in the “Add/Update Song” section of the eSong tool. Additionally, you cannot relinquish or decrease your splits on songs in our system, as this requires an agent to do it on your behalf. I say this because it appears you have a 100% split on nearly all songs in your catalog. (Emphasis added.)

The wording is a little unclear.  But I thought that this meant I could “decrease” my share on specific songs, and have the co-writers co-publishers attributed if I went through the manual process.  So we sent a list with updated songs splits,ISWC (unique international identifier for a composition) and IPI numbers (unique international identifier for a songwriter or publisher).

I didn’t think any more of this until I had my team build a CWR file.  CWR is the most widely used international data format for song information (The MLC is not using this format for some reason).  When we created the CWR file we discovered that the HFA publisher data still did not match. Not only that it seemed to be missing important data (ISWC, IPI and ISRC) that we had provided.

Here is an example song:

Our Data (submitted in 2019 based on BMI records):


Resulting HFA data (2020 public facing database):

First thing we notice is that HFA is reporting that I am not an HFA registered publisher. WTF? Second problem is that Trent Summar’s publishing share (Farm Rock Music) is not listed. This has instead been assigned to “copyright control.”  It is unclear what that means. It is clear that since this song was previously mis-registered as David Lowery/Bicycle Spanaird 100%, HFA records have been updated. The co-writer has been added, but not the co-publisher. But curiously they somehow have Trent’s middle name. Now I thought perhaps this was just a deficiency in the public facing database.  So I double checked by looking up the song from my own HFA account.

Here is the (internal data) that search returned.

No IPI numbers? Well maybe those are hidden for privacy. But no ISWC number? And Farm Rock Music is still not listed as a publisher.  That is again listed as copyright control. This is really shoddy work. How is the MLC supposed to distribute royalties based on this data?

I checked an additional 25 co-written songs and the data was fucked on all of them: multiple song codes, incorrect splits, missing co-publisher information, missing ISWC codes, and some songs were just not in the HFA database.  Honestly it looks like someone never finished doing the job.

It’s possible that I or someone on my team somehow screwed this up, but it seems unlikely. I have copies of the HFA formatted excel sheets that were submitted and they are correct.  If all the self-published songwriters are in the same situation then we are likely talking about millions of songs that have bad data. This is very troubling.

“But my BMI Data is Correct.  Why Didn’t MLC Start With That Data?”

Really odd, right? The data the MLC is seeking already exists in a machine readable format at the PROs (BMI, ASCAP, SESAC etc).  Why is it that songwriters can’t simply opt in to have their data transmitted to the MLC? Wouldn’t this be the easiest way to correct the MLC database?  Instead songwriters are going to have to go through and get HFA to manually update each song.  For an average songwriter like myself, even at minimum wage that’s probably several hundred dollars worth of work. And my data is pretty organized!

The sad thing is we were told over and over again that streaming services were supposed to pay for costs of the MLC.  Why are songwriters being asked to do all this unnecessary work? Even the MLC’s official title they’ve given to the effort make songwriters clean up their mess is insulting: “Play Your Part™.”  They thought it so clever apparently they have trademarked the phrase.

The US Copyright Office should step in and look at whats happening with the MLC database.  Something is very wrong with the HFA data.







Copyright Office Regulates The MLC: Selected Public Comments on the Copyright Office Black Box Study: @SoundExchange

[The Copyright Office is asking for public comments on best practices for dealing with the black box as part of the “Unclaimed Royalties Study” mandated by the Music Modernization Act.  We are posting comments or excerpts from comments that we found interesting.  You can find other the posted comments here.

This post is from SoundExchange’s filing.  I have to say that I have long been impressed by SoundExchange’s problem-solving abilities and commitment to get artists paid. SoundExchange sets the standard that The MLC will be measured by and should try to live up to.  Unfortunately, The MLC’s selection of HFA as their data vendor immediately means The MLC is unlikely to have a functioning much less accurate database by the January deadline.  They should really pay attention to SoundExchange’s example.]

Core strategies

Through its experience, SoundExchange has identified and embraced certain core
strategies for administering a blanket license that have had the direct effect of minimizing the incidence of unclaimed royalties. First, a collective must act with a total commitment to transparency and accountability.

Second, to the extent possible, a collective must build systems and practices around standard unique identifiers, which are the best way to manage the huge volume of usage and repertoire data that a collective receives in the digital age.

Third, in building its systems and practices, a collective should rigorously distinguish between repertoire data and usage reporting data, and base the repertoire database on data from authoritative sources, typically rights owners. Fourth, it is essential for a collective administering a statutory license to prioritize education and outreach to those who will receive royalties under the blanket license because the collective represents all payees, not just those who have the sophistication or knowledge to register with the collective in the first place. While no system will ever be perfect, a collective that embraces and implements these core strategies will be best positioned to minimize unclaimed royalties. We address each in more detail below.

A. Commit to transparency and accountability

As a collective, it is critical for SoundExchange to commit to transparency and
accountability. We must be responsive to our stakeholders – the people we pay, who have
entrusted us to collect a critical component of their income. As a baseline, a collective must be governed by those it pays. As a next level, a collective must provide tools to stakeholders that give them transparency into how their royalties are collected and distributed, and a means for providing feedback on the metadata associated with their works.

SoundExchange has adopted a policy and practice of continuous improvement. Most
recently, SoundExchange has rolled out new features in SoundExchange Direct, our online account management portal that allows recording artists and rights owners to navigate their digital performance rights and royalties. SoundExchange Direct allows users to manage multiple SoundExchange accounts and add guest users, update account information including contact and payment or banking information, view payment history and revenue data by top recordings and top services and, most relevant here, upload and manage their repertoire data.

[Read the full post here.]

$2 Billion: US Should Make TikTok Sale Contingent on Paying Songwriters

The Twitter-sphere has been captivated by the imminent ban of TikTok or forced sale to American investors. What many people do not realize is that the service, built on a foundation of stolen songs, has refused to license or pay royalties to songwriters.

Songwriters have been forced to finance the hyper growth of the social media phenomenon. So why shouldn’t they be rewarded like any other venture capitalist? Further why should the venture capital firms like SoftBank be rewarded for knowingly financing an apparent criminal RICO racket. Give songwriters their share.

And I’m not exaggerating when I say “apparent criminal RICO racket.” Normally major publishers and trade organizations  would be all over a deep pocketed infringer like TikTok. Songwriters have been puzzled by their apparent lack of interest in TikTok before national securities concerns began to threaten to shut the service down. Fueling suspicions that something nasty is afoot, is the fact several digital licensing executives from major publishers seem to have let TikTok slide and then a few months later started working for TikTok (here, here, here) . This by itself deserves a look from the DOJ. It stinks to high heaven. Especially as these executives were fully aware of the scale of ongoing and willful infringement.

Some of you may have seen headlines announcing that major labels entered into licensing agreements with TikTok.  Those licenses are for the recordings but not the underlying compositions which are generally owned by songwriters and publishers.  To make matter more confusing the National Music Publishers Association announced a settlement in the last few days. Curious timing, right?  This is an opt-in agreement for publishers not songwriters. Further no one knows the terms of this deal. If it’s anything like the Spotify-NMPA settlement, the vast majority of the settlement was split between the big five publishers.

Regardless the main US trade beef with China has been the theft of IP from US businesses. Songwriting is a business and TikTok has engaged in blatant infringement of our IP. This is no different than theft of trade secrets or infringement of technology patents. It is not beyond the scope of a US directed settlement to make TikTok and its investors pay for its crimes committed against US songwriters before a sale is allowed.

Given the scale of the apparent willful infringement and the rumored $30 Billion price tag for TikTok. Two billion dollars is quite reasonable.

Further this settlement should be paid directly to songwriters as it appears major publishers did nothing to stop infringement of songwriters’ works. These publishers have an implicit fiduciary responsibility to songwriters and they apparently did nothing.  They should not be rewarded. Pay the settlement through songwriter PROs at 100% writer 0% publisher. This could be wrapped up in a few weeks. Fairness dictates songwriters, the victims of the apparent racket, should be compensated and TikTok and its investors punished.

DOJ Workshop on Free Market for Music Licensing Lacks Free Market of Voices

The Antitrust Division of the Department of Justice has announced the speakers for a series of public–but not too public please—workshops regarding the competition in licensing  music public performance rights.  Inevitably, this means a discussion of the ASCAP and BMI consent decrees.  So why wouldn’t you want to be as inclusive as possible in a discussion about free market competition?  Doesn’t the free market start with the free market of ideas?

Let’s be clear—as a general proposition, we despise these ancient consent decrees.  There’s a very simple reason for that view:  The consent decrees are like original sin visited upon the unborn.

We’re fully prepared to believe that some paper pusher pensioner at ASCAP overreached at some point in the distant past, just like paper pusher pensioners overreached with The MLC (another story, but a fine example of government run amok).  People at ASCAP no doubt deserved punishment in 1941 (but the offenders no doubt kept their salaries and their pensions unlike the songwriters whose catalogs they mishandled).  Instead of going after the individuals at ASCAP who broke the law, the government punished generations of songwriters, including those who were not even born yet  The fundamental question is should the later generations of songwriters be denied due process because of something some nebbish did in the 1940s?

We think not.  Yet what we have seen happen for generations is that all those who benefit from the administrative state created by the consent decrees want to keep it going.  Like the cockroaches who survive nuclear holocaust, the destructive effects for songwriters matters little to these people as long as they get their salaries, bonuses and pensions unlike the songwriters they purport to represent.  Because let’s remember—it wasn’t the songwriters who caused the problem.  And if you want to fix the anticompetitive problem, just make it the personal responsibility of whichever bureaucrat messed up, not the organization and certainly not the songwriters.  You won’t hear that idea from anyone on the DOJ’s panels.

In other words, whichever executive caused the problem in 1941 mishandled their responsibilities to the songwriters they were allowed to represent, and they are still doing it today.  Nothing much has changed.  And you know what else hasn’t changed?  They are still collecting their salaries, bonuses and pensions.  Songwriters still have the government’s boot on their throats with judges still trying to conjure up “market rates” where a free market doesn’t exist.  The free market hasn’t existed for so long and technology has changed so much you could say a free market never has existed and all of this is a kafka-esque charade.

The point being—the Justice Department is on the right track in reviewing the consent decrees to absolve songwriters of the original sin.  The push back DOJ is getting from the administrative state that has sprung up around the consent decrees should not be surprising.  The transaction costs to songwriters are astronomical given the full employment for lawyers, accountants and experts required by rate setting under the consent decrees, all of whom no doubt make more from administering the consent decrees that over 50% (at least) of songwriters will ever make from royalties under the consent decree rate setting.

Case in point from Zoë Keating who will be watching the DOJ panels:


It’s for reasons like this that we look askance at the PRO’s braying about their collections and distributions.  If they distribute $1 billion, we ask, how much did you cost the songwriters in hidden transaction costs for compliance (you know, like an unfunded mandate)?  How much money did you miss in your porous collection system?

Another example:  YouTube fails to pay songwriters for score or licensed music embedded in user-generated clips that the DMCA permits but does not provide guidance for (the related administrative state two aisles over in the “Safe Harbor” department).  This is the DOJ’s consent decree at work with the equally pernicious DMCA safe harbor.  Is anyone going to raise this issue?  I doubt it.  Why should they?  DOJ has the government’s boot on the songwriters neck and the administrative state has their boot on the songwriter’s wallet.

Will these issues come up on the DOJ panels?  Not from the line up of speakers that the lobbyists picked for the Antitrust Division’s public workshop.  Those speakers will present a very tightly messaged order of battle to preserve the administrative state, their jobs, their bonuses and their pensions.

Another case in point is the movie theater exception. Unlike most of the rest of the major economies, movie theaters in the US do not pay songwriters and composers public performance royalties.  This is the result of another ancient DOJ settlement that unfairly constrains income for composers and songwriters.

Let’s be very clear about movie theaters—what is about to happen due to the “COVID Consolidation” is that the streaming services are going to start buying theater chains.  It’s already started with Netfix buying the Paris Theater in New York and the Egyptian Theater in Los Angeles, and analysts are anticipating Amazon would tie movie theater tickets to its Amazon Prime subscriptions, using content as yet another loss leader that drives down value of music and movies. Once that happens the antitrust consent decrees will be protecting the monopolies from songwriters.  Does this seem completely ass-backwards to anyone else?

As the Society of Composers and Lyricists and the Songwriters Guild of America noted in their comments to DOJ:

[T]he principle “evidence” offered by the [National Association of Theater Owners in support of stiffing songwriters and composers] was, in fact, a forty-five year old case in which a mid-level employee of a third-party music licensing agent testified that she thought the forced combining of synchronization and movie theater performing rights was not an obstacle to her productivity. Citing CBS v. ASCAP, 400 F. Supp. 737, 760 (S.D.N.Y. 1975), the movie theater trade group stated:

In CBS, Albert Berman, managing director of the Harry Fox Agency, Inc. and Marion Mingle, the Fox employee who handled music rights, gave testimony describing the simple process they use to license both synchronization and performing rights for use in a theatrical motion picture—which can be completed roughly simultaneously most of the time. Mingle and her assistant were able to license “several hundred movies each year” this way.

Much has changed in the past half-century in regard to the licensing of musical works in films, but both SGA and SCL have little doubt one aspect of the process has not evolved in favor of music creators since the days of Ms. Mingle: that the Movie Theater Exemption has by default artificially relegated the value of US performing rights in motion pictures exhibited in US movie houses to at or near zero.

There is no good reason why the consent decrees ever needed to reach movie theaters as far as songwriters are concerned.  We see only one reason why anyone wants that travesty to continue.  As was widely reported at the time, streaming services—and theater owners—like Netflix got caught trying to jam buyouts of performance rights down the throats of composers:

At the end of October [2019], close to 90 composers and songwriters from around the world traveled to Budapest to discuss a contentious issue: streaming services’ efforts to upend how composers are compensated for their work.

Headlining the two-day International Council of Music Creators (CIAM) General Assembly was top Netflix music lawyer Carolyn Javier, who sought to defuse composers’ concerns over licensing contracts, known as buyouts, in which the streaming service pays them a one-time fee for all or most of the rights to their work, precluding them from receiving any backend royalties in the future. It has long been standard procedure for composers to be paid royalties for their compositions each time one is performed in a public setting: on the stage, at a bar, in a network TV or cable series, and now in audiovisual content streaming worldwide.

It’s obvious that if streaming services negotiate a buyout of performance rights for the music in their shows, it will apply across the board to the theaters they own.  This gives them added protection just in case the movie theater exception should go away.

We believe this is exactly the plan that these Big Tech companies have in mind.  Of course, if the DOJ had invited the CIAM—or its US affiliate Music Creators North America of which both the Society of Composers and Lyricists and the Songwriters Guild of America are members—then the Division might have had the opportunity to hear this side of the story directly from the songwriters and composers most directly affected by the shortcomings of the pensioners.

Motion picture and television composers are overrepresented in performance royalty earnings.  By any estimates, a significant chunk of performance royalties are earned by these craftsmen and they are directly affected—almost exclusively—by the movie theater exception which the PRO pensioneers blithely give away.  It is shocking that the DOJ has not included at least the Society of Composers and Lyricists in the not too public workshops, but it is not surprising—industry lobbyists have systematically excluded both the SCL and the Songwriters Guild of America from such hearings.  Whenever we see the lineup of songwriter groups present at the not too public workshops, we know exactly how they came to be selected.  It was not based on merit or representation.

You have to appreciate the irony of an anticompetitive suppression of voices by dominant forces being used to explore whether the consent decrees promote competition in the free market.

We can’t even have a free market of ideas to talk about the free market for songwriters.