Texas Governor Greg Abbott Leads the Push Back Against DOJ’s Attack on Songwriters–will others join him?

It may be lost on the elites in Washington, but songwriting is not something that only happens in New York City, Nashville or Hollywood.  Music contributes billions of dollars to local economies in states all across the country and to cities all across those states.

Texas is no different–music contributes over $1 billion a year of economic impact to the City of Austin alone.  Many other states come to mind who are likely similarly situated in addition to California, New York or Tennessee.

A random choice would be  Illinois, Washington, Mississippi, Louisiana, Colorado, Oregon, Georgia, Florida and the District of Columbia in no particular order.  Chicago, Seattle, Clarksdale, New Orleans, Denver, Portland, Atlanta, Miami and DC all have associated themselves with music both culturally and economically.

In fact, one could pretty easily point to some aspect of every state’s economy that gets a significant contribution from music–and great records and great shows rely on great songs.

That’s why the Department of Justice Antitrust Division Litigation III Section’s decision to adopt the cockamamie position on 100% licensing that is so destructive to the music ecosystem is rightly of concern to governors and mayors across the country.  Protecting our songwriters is a bi-partisan issue that everyone can agree on.

That’s also why it is so gratifying and encouraging to see Texas Governor Greg Abbott lead the way for the protection of Texas songwriters against the DOJ’s Kafka-esque overreach by unelected and unconfirmed lawyers on its antitrust mandate.  Governor Abbot has asked U.S. Attorney General Loretta Lynch to reconsider the DOJ’s position in this letter.

We all truly appreciate his leadership at a time when we could all use some good news.

G O V E R N O R  G R E G  A B B O T T

August 29, 2016

The Honorable Loretta E. Lynch
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C. 20530-0001

Dear Attorney General Lynch:

I write to express my disagreement with the U.S. Department of Justice’s (DOJ) recent decision regarding the consent decrees in United States v. Broadcast Music, Inc. 1 and United States v. American Society of Composers, Authors and Publishers. 2 The Texas Music Office is housed within my office and is charged by law with promoting the Texas music industry. As the head of that office, I must object to the DOJ’s position in these cases, which is both legally flawed and threatens to harm the music industry in Texas. I respectfully request that the DOJ reconsider its position.

The DOJ ultimately concluded that the consent decrees require Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP) to offer only full-work licenses to their respective music repertoires, including those songs in which BMI or ASCAP only represent a fraction of the ownership rights. However, despite claims to the contrary, BMI and ASCAP have never offered full-work licenses to fractionally owned songs, and the consent decrees have never been interpreted by the DOJ to require that until now. This drastic change in course will have severe consequences for music artists and the music industry as a whole. Specifically, the DOJ’s conclusion will inhibit collaboration between music artists, upend longstanding practices within the music industry and further reduce royalty payments to music artists.3

The DOJ claims that the plain language of the consent decrees does not permit it to reach any other conclusion. That is incorrect. The decree language on which the DOJ bases its conclusion states  that  BMI  and  ASCAP  must  grant  to  users  licenses  to  “perform”  the  songs  in  their

1 64 Civ. 3787,  1994 WL  901652 (S.D.N.Y.  1994).

2 41 Civ. 1395, 2001 WL 1589999 (S.D.N.Y. 2001).

3 These effects, along with many others, are explained in detail in the dozens of public comments the DOJ received during its review of the consent decrees. See https://www.justice.gov/atr/ASCAP-BMI-comments-2015.

The Honorable Loretta E. Lynch August 29, 2016
Page 2

respective repertoires. From the word “perform,” the DOJ  extrapolates  an  obligation  that  was never in the contemplation of the parties to the consent decrees and that  runs  counter  to longstanding industry expectations.  Consent decrees are not  statutes to be construed based  solely  on their text. Instead, consent decrees are to be construed under the ordinary rules of contract interpretation. They should be  interpreted  in the  context  of the  lawsuits  from which  they  arise and in light of the expectations of the parties to those  lawsuits.  See  US. v. ITT  Continental  Baking Co., 420 U.S. 223, 237 (1975) (when interpreting a  consent  decree,  it  is  proper  to  consider “the circumstances surrounding the formation of the consent” decree); US. ex rel. Anti­ Discrimination Ctr. of Metro N Y , Inc. v. Westchester County, 712 F.3d 761, 767 (2d Cir. 2013) (reasoning that a consent decree should be read “in the light of the . . . intention of the parties as manifested” by the decree). There is no indication that these consent decrees were intended to  address the issue of full-work licenses or that full-work licenses were even at  issue  in  the  underlying litigation. The DOJ’ s conclusion is based on a technical construction of the  decrees’  terms rather than a contextual understanding of the  decrees’  role  in  resolving  discrete  legal  claims that had nothing to do with the full-work license issue. It is well-settled law that consent decrees of this nature should be given a narrow construction  See Perez  v. Danbury  Hosp.,  347 F.3d 419, 424 (2d Cir. 2003). The decrees in these cases are  susceptible  to  alternative interpretations, and they should be construed narrowly  to impose  only the obligations anticipated  by the parties to the  decrees.

Even if the plain language of the consent decrees did clearly impose an obligation to grant full­ work licenses, which it does not, the decrees  should  be  amended  to  recognize  and  legitimize BMI’ s and ASCAP’s current practice of fractional  licensing.  The DOJ  has  refused  to  agree  to any such amendment, claiming that it would not be in the public interest. The DOJ claims that permitting BMI and ASCAP to offer fractional licenses  would  impair the  function  of the market for public performance licensing and could  result  in  certain  music  not  being  played  by  users. But as previously noted, fractional licensing represents the status quo, and most music users recognize this fact. It is the  DOJ’ s new  interpretation  of the  consent  decrees that  would  disrupt the market, not fractional licensing. An amendment modifying the consent decrees to expressly permit fractional licensing  is in the public  interest,  and the DOJ  should reconsider  its opposition  to  such an amendment.

Thank you for your thoughtful consideration of these concerns. If you have any questions about this matter, please contact Brendon Anthony, Director of the Texas Music Office, at
(512) 463-6666.

Sincerely,

Greg Abbott
Governor

The “Zero Effect”: Do Consumption Charts Penalize Artists Windowing Streaming Services and Most Compilation Records?

The following is an excerpt from a post on MusicTechPolicy (Music Discovery and Purchasing Survey Results).  David thought it worked as a stand alone post, so here it is.

The “Zero Effect”:  Do Consumption Charts Penalize Artists Windowing Streaming Services and Most Compilation Records?

by Chris Castle

Although we can’t tell how consumption charts are weighted (as far as I know that information hasn’t been released publicly), it’s pretty clear that if you are not on streaming services–meaning you have zero streams–you will be penalized in the chart.

I picked the consumption chart for the first week of Taylor Swift’s October 27 release of the 1989 juggernaut to try to measure how the consumption chart reacted.  The choice was admittedly cherry picking, but with a purpose:  Taylor’s sales were historically significant and her reported streaming should have been somewhat muted given Spotify’s well-publicized decision to reject the record on the artist’s terms.  This would potentially yield good benchmarks for testing the consumption chart at the margins as well as the more bread and butter titles below the top 10.

Based on data for the week ending November 2, 2014, Taylor Swift’s first week sales were so strong it probably doesn’t matter that her streams were somewhat lower for the consumption chart.  At #1, she outsold the #2 NOW 52 title by 10:1, and NOW 52 outsold the #3 Sam Hunt album by 10:8–but Sam Hunt had 4 million streams that punched up the chart position.  NOW 52 had zero streams because it is a compilation record.

Compilation records and soundtracks do not get credit for streams because they have no streaming rights.  This is true even if the music services allow playlists–or possibly create playlists themselves–using the compilation or soundtrack brand in the metadata with the track listing of the underlying tracks.  These playlists work because the individual tracks are already available on the service under direct license from the label or artist licensing the tracks to the compilation or soundtrack. (This is the kind of free riding that was the heart of Ministry of Sound’s recent lawsuit against Spotify and probably why Spotify settled.)

The “zero effect” is much greater further down the chart, however.  In the same week of November 2, Frozen: The Songs, a compilation record, got credit for zero streams and 10,723 albums sales for a chart position of 49.  Blake Shelton sold 8,735 albums but got credit for 930,928 audio streams and a chart position of 44.  The same week Iggy Azalea sold 4,947 albums but got credit for 5,060,617 streams for a chart position of 25.  In other words, Frozen will never have any streams because compilation records typically do not get streaming rights, and got a much lower chart position in spite of selling over twice as many albums.

If you compared based on album sales alone, the Guardians of the Galaxy zero effect soundtrack would have entered the chart at #25, not #40, Sam Smith would have been #15 instead of #6, Bob Segar would have been #23 instead of #34.  Another zero effect soundtrack is Now Disney 3 that would have been #40 instead of #59, and U2’s Songs of Innocence would have been #64 instead of #94.

Seasonal records such as Christmas albums are also penalized.  The Nov 2 chart showed that based on album sales alone, Home Free’s Full of Cheer would have entered the chart that week at #66 instead of #104.  While the title had 26 streams, that was a sufficient penalty to cost the record 38 chart positions.

Conclusions?  Charts are relative beasts to begin with, and the consumption chart won’t keep a phenom like Taylor Swift from dominating the top position.  Measuring streams probably isn’t enough to affect the top 10 or the top 5.  But for records that are compilations, soundtracks, seasonal or other specialty titles that either aren’t allowed a streaming audience based on contract, are windowed, or haven’t found that audience yet for another reason, the consumption chart penalizes high sellers that are not present or are not credited with streams on streaming services.

If chart position matters to your record, then this should be of concern to you as the zero effect creates an incentive to stimulate streams for chart position–assuming you can get credit for streams.  Some would say that the more streaming, the lower the sales.  Without getting into cause and effect on that issue, it certainly can be said that the lower the streams, the lower the chart position even if sales of a given title are higher than another given title.

From a profitability perspective, artists whose records sell but don’t stream may well be thankful.  If that trend continues, then it would also stand to reason to question the benefit of chart position as a selling tool.  But then we hear about services like YouTube routinely deleting billions of fake plays in its video playlists during December.  If this same phenomenon is repeated in streaming services used to measure chart position….not to imply that anyone in the music business would ever try to rig the charts.  Perish the thought.

So what is it all about?  Is there a “zero effect” or is there zero affect?  Sales or streams?

Goliath Never Learns: Breaking: Sirius Appeals and Turtles Sue Pandora on Pre-72

Music Technology Policy

A quick note to point out that as we predicted, Sirius has announced they are appealing the ruling against them in the Turtles case–which may not put off the damages phase of the trial.  This was to be expected.

In even better news, The Turtles are now pursuing Pandora on the band’s pre72 recordings.   Eriq Gardner at the Hollywood reporter has the story:

Represented by Harvey Geller and Henry Gradstein at Gradstein & Marzano, the duo filed a proposed class action lawsuit on Thursday.

“Pandora understands that having a vast range and array of music is critical to the success of any music service which is why pre-1972 recordings constitute a significant part of the Music Service,” says the lawsuit. “Pandora offers and advertises stations dedicated to pre-1972 recordings, such as ’50s Rock n’ Roll,’ ’60s Oldies,’ ‘Motown,’ ‘Doo-Wop, ’70s Folk,’ ‘Early Jazz,’ ‘Standards,’ ‘Classic Soul,’ ‘Jam Bands,’…

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Thank you Pandora: DOJ to Review ASCAP and BMI Consent Decrees #irespectmusic

Music Technology Policy

Score one for the songwriters.

After the travesty of the Pandora rate court decision, a lot of people (including MTP) have been banging the drum about the unfairness of the ASCAP and BMI rate courts.  Nowhere has the Kafka-esque absurdity of the rate courts been more prominently on display than in Pandora’s recent lawsuit against ASCAP songwriters.

But however much Pandora has galvanized the creative community in a united response against greedy, entitled Silicon Valley overreach, the first step in correcting this festering wrong is for the PROs to convince the Antitrust Division of the U.S. Department of Justice to review the 70 year old consent decrees which haven’t been reviewed since 2001 in the case of ASCAP–a year before Napster entered bankruptcy–and 1994 for BMI, a year before the Congress recognized a performance right in sound recordings.

Thankfully, the DOJ is reconsidering fundamental reform of the rate court process

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What You Can Do Today to Stop Brand Sponsored Piracy Through Touring Contracts or Sponsor Deals: Artists Helping Artists

by Chris Castle

If you are like most artists, you feel overwhelmed by the alliance of Big Tech and Fortune 500 companies allied against us in the intricate network of brand sponsored piracy.  (If you need more background on what “brand sponsored piracy” means, just look around on the Trichordist or on MusicTechPolicy and you’ll get the idea.)  From Google search to Chilling Effects, some artists would like to know what they can do to fight back.  Of course, if artists wanted to fight piracy full-time, they would be cops not artists.  So we need to find ways to leverage your time more effectively and try to find everyday ways that artists can help themselves and each other to fight back.

You may not be aware of it, but clubs, tours and especially festivals or event programming take ads online.  Sometimes these ads appear on pirate sites.  Here’s an extreme example from the illegal lyric site, Lyrics007.com that rips off songwriters, in this case Adele:

Beyonce, Adele and the Super Bowl Exploited by Pepsi

Do I think that Beyonce knew that her name and likeness would be plastered all over illegal music sites?  Of course not.  Did the NFL know?  Unlikely.  Did Pepsi know?

Now that is a more difficult question.  The problem that these big brands have is that someone always knows.  Someone at their ad agency also definitely knows.  They’ll give you a big song and dance about it’s a big system, millions of transactions, but it is simply not possible that no one knows, yet a brand the size of Pepsi–a company that has been a very good friend to the music business, by the way–spends millions on an advertising campaign without knowing where its ads are going?

Put Them On Notice

Thanks to David Lowery, Camper Van Beethoven and Cracker, artists have come up with an easy way to create some incentives for their touring partners to take responsibility for where the promoters advertise their shows.  And this concept could fit in every artist agreement from an one-nighter agreement, to a recording agreement, to Beyonce’s Super Bowl promotion with Pepsi or any other event-driven advertising campaign.

The artist can tell them no.

With a simple contract clause that could go in the artist’s agreement (including in the tour rider), an artist can prohibit the artist’s work from being advertised on pirate sites.  Violating this clause could put the promoter in breach–but the point isn’t to sue people.  The point is to have a dialog, raise awareness and get people to be more careful.  Offer promoters a competitive advantage to get the deals in the first place.  If you want repeat business with an artist, don’t let the artist see ads show up on pirate sites.

So what’s a pirate site?  Big Tech would like you to believe that it is only sites that have been adjudicated an infringer in a final, nonappealable judgement before the highest court in every country of the world.

That’s obviously bunk and designed to make  you feel helpless because only Big Tech can afford that kind of litigation, so naturally that’s the bright and shiny object they want you to focus on.

Remember–you are talking about a private contract.  Your private contract.  How and where your show is marketed is a function of how much you trust your promoter to market your name…your brand…so it is absolutely reasonable for you to want to control how you are presented to your fans and to the general public when you permit someone else to make decisions about that marketing, just like you would decide that the headliner’s name came first in billing.

Meaning that if you are making a private contract, you are in control of your marketing (at least generally) and you can negotiate those terms.  The list of sites you want to exclude–if any–is up to you, a subjective decision.

You could also decide that you want the promoter to be able to refer to an objective list, that is, a list determined by a third party who you both agree will reasonably set the standard.  The USC-Annenberg Innovation Lab’s Transparency Report uses the Google Transparency List.  This is a good list, but Google has some pretty large exclusions from that report.  So the language that Camper and Cracker like also includes the US Trade Representatives Notorious Markets List, which is much shorter than the Google list, but uses US Government resources in its determination.

Suggested Contract Language

If you decide you want to go this route, the Camper/Cracker antipiracy clause covers three bases, which I think are probably good enough:  The USTR List, the Google List, and whatever list the artist may come up with that isn’t on either of those lists.  (The artist doesn’t have to give a list, but reserves the right to do so–the artist may also add back sites that USTR or Google would exclude.)

Here’s the language (“BUYER” usually refers to the talent buyer or promoter):

“THE BUYER WILL NOT, AND WILL NOT AUTHORIZE THIRD PARTIES TO, ADVERTISE THE SHOW ON ANY WEBSITE THAT IS LISTED ON THE CURRENT US TRADE REPRESENTATIVE’S NOTORIOUS MARKETS LIST (currently http://www.ustr.gov/sites/default/files/121312%20Notorious%20Markets%20List.pdf), OR THAT IS LISTED IN THE CURRENT GOOGLE TRANSPARENCY REPORT (currently http://www.google.com/transparencyreport/removals/copyright/domains/?r=last-month), OR THAT THE ARTIST HAS INFORMED THE BUYER IS A SITE ON WHICH THE ARTIST DOES NOT WISH THE BUYER TO ADVERTISE THE SHOW.”

Obviously, this is not meant as legal advice and you should confirm with your own lawyers how this language might affect your rights under the particular agreement, but it should be a good starting place for any show agreement that is based on the American Federation of Musicians “One Nighter” agreement or the equivalent.This language could be included in a watermark on any pdf version of a show agreement, or placed in the artist’s rider.

Flow Down Language

In more complex situations, you may wish to consider adding it as a flow down provision in a promoter agreement that requires the promoter to include the language in any show agreements.  A flow down provision is a clause that anticipates the other side will be empowered to make many contracts with third parties that give effect to the principal two-party agreement, and one side wants to control certain aspects of those third party contracts without negotiating or signing them.

For example, a US promoter might buy a 50 city tour and have an overall deal with the band.  The US promoter then goes out and contracts with local promoters for each of the 50 shows.  The artist may want to get the US promoter to promise the each of these 50 contracts will have certain clauses to protect the artist often relating to staging, insurance, venue sales and advertising.  That’s a good place to put the antipiracy clause, but the artist is not necessarily a party to those agreements.

Artists Helping Artists

It is easy to see how this language could be adopted in sponsorship or event agreements, and i  t would go a long way to raising awareness of the situation and incentivizing all concerned in the right way.

It’s nothing personal, it’s just business.

Music Technology Policy

[Editor Charlie sez:  Given that the Google Party in Europe is jamming a new orphan works on steriods bill through the UK and EU Parliaments, this is a good time to repost this history of orphan works from last year.  See “UK’s Brazen Copyright Landgrab Sneaked Into Enterprise Bill” and Photography Organisations Raise Objections to EU Orphan Works Law]

In the aftermath of the Google Books debacle, we are starting to hear noises that Google will back a new orphan works bill in this Congress.  There are some commentators—truly misguided in my view—who are calling for Congress to bring back the failed legislation from 2008 known as the “Shawn Bentley Orphan Works Act”.  (The late Shawn Bentley was a tech industry lobbyist and former Senate Judiciary staff counsel.)  Let’s review that legislation in light of what we now know.  (For a more detailed account, see Unhand That…

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Music Technology Policy

I was struck by a continuing theme during the recent hearing on “Music Licensing Part One: Legislation in the 112th Congress” before the House IP Subcommittee (the “IRFA hearing”).  Mr. Chaffetz wants to do the right thing but he got some really bad advice.  There were flickers of connections between Mr. Chaffetz’ questions and other statements by the usual suspects (and many Google Shill Listers) none of whom really know anything about the music business but all of whom “make stuff up” (to paraphrase the classic words of David Lowery at the Future of Music policy conference).

For example, Mr. Chaffetz asked Jimmy Jam whether Jimmy thought that the allocation of royalties among the sound recording owners, featured artists and nonfeatured artists was “fair.”  Now why would he ask that question and why was he surprised that Jimmy did think the allocation was fair?  The issue was not part of the bill and to my knowledge…

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Note that David will be speaking on this panel on Tuesday November 13.

12:50 PM – 1:30 PM
Radio-active: Internet Broadcasting and Artist Compensation

Learn more about Artists and Creators Rights:

Music Technology Policy

“People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Adam Smith, An Inquiry Into the Nature and Causes of The Wealth of Nations

The Future of Music Policy Summit will convene for the 12th year on November 13.  The Internet Radio Fairness Act will be front and center–both Pandora Founder Tim Westergren and Senator Ron Wyden have been added in the last few days and they are not there to talk about the weather.  Or stock options.

When FOMC first started, it was viewed as a grass roots organization and the policy summit was a new idea–bring current issues in the music industry before the Washington, DC policy environment.  New faces appeared on the panels as well as familiar ones.  A mix of Members of Congress and bureaucrats showed up as well…

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