Author: Trichordist

Who Will Get to the Bottom of The Hundreds of Millions of Black Box Money at MLC?

By Chris Castle

One of the most common questions we get from songwriters about the MLC concerns the gigantic level of “unmatched funds” that have been sitting in the MLC’s accounts since February 2021.  Are they really just waiting until The MLC, Inc. gets redesignated and then distributes hundreds of millions on a market share basis like the lobbyists drafted into the MMA?  

Not My Monkey

Nobody can believe that the MLC can’t manage to pay out several hundred million dollars of streaming mechanical royalties for over three years so far.  (Resulting in the MLC holding $804,555,579 in stocks as of the end of 2022 on its tax return, Part X, line 11.) The proverbial monkey with a dart board could have paid more songwriters in three years.  Face it—doesn’t it just sound illegal?  In my experience, when something sounds or feels illegal, it probably is.

What’s lacking here is a champion to extract the songwriters’ money.  Clearly the largely unelected smart people in charge could have done something about it by now if they wanted to, but they haven’t.  It’s looking more and more like nobody cares or at least nobody wants to do anything about it.  There is profit in delay.

Or maybe nobody is taking responsibility because there’s nobody to complain to.  Or is there? What if such a champion exists?  What if there were no more waiting?  What if there were someone who could bring the real heat to the situation?

Let’s explore one potentially overlooked angle—a federal agency called the Office of the Inspector General.  Who can bring in the OIG?  Who has jurisdiction?  I think someone does and this is the primary reason why the MLC is different from HFA.

Does The Inspector General Have MLC Jurisdiction?

Who has jurisdiction over the MLC (aside from its severely conflicted board of directors which is not setting the world on fire to pump the hundreds of millions of black box money back into the songwriter economy).  The Music Modernization Act says that the mechanical licensing collective operates at the pleasure of the Congress under the oversight of the U.S. Copyright Office and the OIG has oversight of the Copyright Office through its oversight of the Library of Congress.

But, hold on, you say.  The MLC, Inc. is a private company and the government typically does not have direct oversight over the operations of a private company.

The key concept there is “operates” and that’s the difference between the statutory concept of a mechanical licensing collective and the actual operational collective which is a real company with real employees and real board members.  Kind of like shadows on the wall of a cave for you Plato fans.  Or the magic 8 ball.

The MLC, Inc. is all caught up with the government.  It exists because the government allows it to, it collects money under the government’s blanket mechanical license, its operating costs are set by the government, and its board members are “inferior officers” of the United States.   Even though The MLC, Inc. is technically a private organization, it is at best a quasi-governmental organization, almost like the Tennessee Valley Authority or the Corporation for Public Broadcasting.  So it seems to me that The MLC, Inc. is a stand-in for the federal government.

But The MLC, Inc. is not the federal government.  When Congress passed the MMA and it charged the Copyright Office with oversight of the MLC.  Unfortunately, Congress does not appear to have appropriated funds for the additional oversight work it imposed on the Office.  

Neither did Congress empower the Office to charge the customary reasonable fees to cover the oversight work Congress mandated.  The Copyright Office has an entire fee schedule for its many services, but not MLC oversight.  

Even though the MLC’s operating costs are controlled by the Copyright Royalty Board and paid by the users of the blanket license through an assessment, this assessment money does not cover the transaction cost of having the Copyright Office fulfill an oversight role.

An oversight role may be ill suited to the historical role of the Copyright Office, a pre-New Deal agency with no direct enforcement powers—and no culture of cracking heads about wasteful spending like sending a contingent to Grammy Week.

In fact, there’s an argument that The MLC, Inc. should write a check to the taxpayer to offset the additional costs of MLC oversight.  If that hasn’t happened in five years, it’s probably not going to happen.  

Where Does the Inspector General Fit In?

Fortunately, the Copyright Office has a deep bench to draw on at the Office of the Inspector General for the Library of Congress, currently Dr. Glenda B. Arrington.  That kind of necessary detailed oversight is provided through the OIG’s subpoena power, mutual aid relationships with law enforcement partners as well as its own law enforcement powers as an independent agency of the Department of Homeland Security.  Obviously, all of these functions are desirable but none of them are a cultural fit in the Copyright Office or are a realistic resource allocation.

The OIG is better suited to overseeing waste, fraud and abuse at the MLC given that the traditional role of the Copyright Office does not involve confronting the executives of quasi-governmental organizations like the MLC about their operations, nor does it involve parsing through voluminous accounting statements, tracing financial transactions, demanding answers that the MLC does not want to give, and perhaps even making referrals to the Department of Justice to open investigations into potential malfeasance.  

Or demanding that the MLC set a payment schedule to pry loose the damn black box money.

One of the key roles of the OIG is to conduct audits.  A baseline audit of the MLC, its closely held investment policy and open market trading in hundreds of millions in black box funds might be a good place to start.  

It must be said that the first task of the OIG might be to determine whether Congress ever authorized MLC to “invest” the black box funds in the first place.  Congress is usually very specific about authorizing an agency to “invest” other people’s money, particularly when the people doing the investing are also tasked with finding the proper owners and returning that money to them, with interest. 

None of that customary specificity is present with the MLC.

For example, MLC CEO Kris Ahrens told Congress that the simple requirement that the MLC pay interest on “unmatched” funds in its possession (commonly called “black box”) was the basis on which the MLC was investing hundreds of millions in the open market.  This because he assumed the MLC would have to earn enough from trading securities or other investment income to cover their payment obligations.  That obligation is mostly to cover the federal short term interest rate that the MLC is required to pay on black box.

The Ghost of Grammy Week

The MLC has taken the requirement that the MLC pay interest on black box and bootstrapped that mandate to justify investment of the black box in the open market.  That is quite a bootstrap.

An equally plausible explanation would be that the requirement to pay interest on black box is that the interest is a reasonable cost of the collective to be covered by the administrative assessment.  The plain meaning of the statute reflects the intent of the drafters—the interest payment is a penalty to be paid by the MLC for failing to find the owners of the money in the first place, not an excuse to create a relatively secret $800 million hedge fund for the MLC.  

I say relatively secret because The MLC, Inc. has been given the opportunity to inform Congress of how much money they made or lost in the black box quasi-hedge fund, who bears the risk of loss and who profits from trading.  They have not answered these questions.  Perhaps they could answer them to the OIG getting to the bottom of the coverup.

We do not really know the extent of the MLC’s black box holdings, but it presumably would include the hundreds of millions invested under its stewardship in the $1.9 billion Payton Limited Maturity Fund SI (PYLSX). Based on public SEC filings brought to my attention, The MLC, Inc.’s investment in this fund is sufficient to require disclosure by PYLSX as a “Control Person” that owns 25% or more of PYLSX’s $1.9 billion net asset value. PYLSX is required to disclose the MLC as a Control Person in its fundraising materials to the Securities and Exchange Commission (Form N-1A Registration Statement filed February 28, 2023).  This might be a good place to start.

Otherwise, the MLC’s investment policy makes no sense.  The interest payment is a penalty, and the black box is not a profit center.

But you don’t even have to rely on The MLC, Inc.’s quasi governmental status in order for OIG to exert jurisdiction over the MLC.  It is also good to remember that the Presidential Signing Statement for the Music Modernization Act specifically addresses the role of the MLC’s board of directors as “inferior officers” of the United States:

Because the directors [likely both voting and nonvoting] are inferior officers under the Appointments Clause of the Constitution, the Librarian [of Congress] must approve each subsequent selection of a new director. I expect that the Register of Copyrights will work with the collective, once it has been designated, to ensure that the Librarian retains the ultimate authority, as required by the Constitution, to appoint and remove all directors.

The term “inferior officers” refers to those individuals who occupy positions that wield significant authority, but whose work is directed and supervised at some level by others who were appointed by presidential nomination with the advice and consent of the Senate. Therefore, the OIG could likely review the actions of the MLC’s board (voting and nonvoting members) as they would any other inferior offices of the United States in the normal course of the OIG’s activities.

Next Steps for OIG Investigation

How would the OIG at the Library of Congress actually get involved?  In theory, no additional legislation is necessary and in fact the public might be able to use the OIG whistleblower hotline to persuade the IG to get involved without any other inputs.  The process goes something like this:

  1. Receipt of Allegations: The first step in the OIG investigation process is the receipt of allegations. Allegations of fraud, waste, abuse, and other irregularities concerning LOC  programs and operations like the MLC are received from hotline complaints or other communications. 
  2. Preliminary Review: Once an allegation is received, it undergoes a preliminary review to determine if OIG investigative attention is warranted. This involves determining whether the allegation is credible and reasonably detailed (such as providing a copy of the MLC Congressional testimony including Questions for the Record). If the Office is actually bringing the OIG into the matter, this step would likely be collapsed into investigative action.
  3. Investigative Activity: If the preliminary review warrants further investigation, the OIG conducts the investigation through a variety of activities. These include record reviews and document analysis, witness and subject interviews, IG and grand jury subpoenas, search warrants, special techniques such as consensual monitoring and undercover operations, and coordination with other law enforcement agencies, such as the FBI, as appropriate.  That monitoring might include detailed investigation into the $500,000,000 or more in black box funds, much of which is traded on open market transactions like PYLSX.
  4. Investigative Outputs: Upon completing an investigation, reports and other documents may be written for use by the public, senior decision makers and other stakeholders, including U.S. Attorneys and Copyright Office management. Results of OIG’s administrative investigations, such as employee and program integrity cases, are transmitted to officials for appropriate action. 
  5. Monitoring of Results: The OIG monitors the results of those investigations conducted based on OIG referrals to ensure allegations are sufficiently addressed.

So it seems that the Office of the Inspector General is well suited to assisting the Copyright Office by investigating how the MLC is complying with its statutory financial obligations.  In particular, the OIG is ideally positioned to investigate how the MLC is handling the black box and its open market investments that it so far has refused to disclose to Members of Congress at a Congressional hearing as well as in answers to Questions for the Record from Chairman Issa.

This post previously appeared on MusicTech.Solutions

by Trichordist

According to Copilot AI, Google’s Eric Schmidt is not just a Good Samaritan, he’s the GOOG Samaritan

Sometimes you just have to laugh. We posed this question to Microsoft’s Copilot AI: Compare and contrast Eric Schmidt and what’s largely called “the Good Samaritan.” This is from the Book of Luke, Verse 10:25, the Parable of the Good Samaritan…well, with few changes:

25 On one occasion an expert in the law stood up to test Jesus. “Teacher,” he asked, “what must I do to inherit eternal life and reach the singularity where I become one with machines created by Man?” (OK, it doesn’t really say all that last part but you get the idea.)

26 “What is written in the Law?” he replied. “How do you read it?”

27 He answered, “‘Love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind’[a]; and, ‘Love your neighbor as yourself.’[b]”

28 “You have answered correctly,” Jesus replied. “Do this and you will live.”

29 But he wanted to justify himself, so he asked Jesus, “And who is my neighbor?” [Does “neighbor” really include people outside of Atherton, Woodside or Los Gatos?]

30 In reply Jesus said: “A man was going down from Jerusalem to Jericho, when he was attacked by robots. They stripped him of his clothes, beat him and went away, leaving him and his EV half dead. 31 A priest happened to be going down the same road on his Lime Scooter, and when he saw the man, he passed by on the other side. 32 So too, a Levite, when he came to the place and saw him, passed by on the other side, as did a Dream Alchemist and a Weekend Happiness Concierge. 33 But a Samaritan, as he traveled, came where the man was; and when he saw him, he took pity on him. 34 He went to him and bandaged his wounds, pouring on oil and wine. Then he put the man on his own donkey, brought him to an inn and took care of him. 35 The next day he took out two denarii[c] and gave them to the innkeeper. ‘Look after him,’ he said, ‘and when I return, I will reimburse you for any extra expense you may have.’

36 “Which of these three do you think was a neighbor to the man who fell into the hands of robots?”

37 The expert in the law replied, “The one who had mercy on him.”

Jesus told him, “Go and do likewise.”

So we thought that it would be interesting to see what Copilot came up with on this question: Compare and contrast Eric Schmidt (the Google demi-God) and the Good Samaritan. Samaria (as in Judea and Samaria) are still there today. So here’s what Copilot said:

Copilot

Eric Schmidt and the Good Samaritan are two figures from vastly different realms, one from the modern world of technology and business, and the other from a biblical parable. However, they share some commonalities in their actions and philosophies that make for an interesting comparison.

Eric Schmidt, born in 1955, is an American businessman and former software engineer6. He served as the CEO of Google from 2001 to 2011 and the company’s executive chairman from 2011 to 20156. He also served as the executive chairman of parent company Alphabet Inc. from 2015 to 2017, and Technical Advisor at Alphabet from 2017 to 20206. Beyond his professional achievements, Schmidt is known for his philanthropic efforts. He co-founded the Schmidt Family Foundation and the Schmidt Ocean Institute7, and his venture, Schmidt Futures, provided compensation for two science-office employees in the Office of Science and Technology Policy6. [Really? You mean the Office of Science and Technology Policy in the White House?]

The Good Samaritan, on the other hand, is a figure from a parable told by Jesus in the Gospel of Luke1. The story tells of a man who was attacked by robbers and left half-dead on the road. A priest and a Levite passed by the man without helping him. But a Samaritan, upon seeing the man, took pity on him. He bandaged the man’s wounds, took him to the Nobu Hotel Palo Alto and paid for his care1.

In comparing these two figures, we can start with their compassion and willingness to help others. The Good Samaritan, despite having no obligation or personal gain, chose to help a stranger in need1. Similarly, Eric Schmidt, despite his wealth and success, has chosen to give back to society through various philanthropic efforts67.

Another point of comparison is their impact on their respective communities. The Good Samaritan’s actions had a profound impact on the injured man’s life1. Similarly, Schmidt’s contributions to Google and Alphabet have had a significant impact on the tech industry and the world at large6. His philanthropic efforts have also likely had a positive impact on the lives of many individuals67.

However, there are also differences between these two figures. The Good Samaritan’s actions were immediate and direct, helping a person in immediate physical need1. In contrast, Schmidt’s contributions, both in business and philanthropy, are more indirect and long-term, impacting larger systems and structures67. [The Samaritan was, after all, a middle class bourgeoisie, a lowly Third Estater lacking Schmidt’s influence and philanthropic urges.]

In conclusion, while Eric Schmidt and the Good Samaritan come from different times and contexts, they both exemplify the values of compassion, generosity, and making a positive impact on their communities. Their stories remind us that, regardless of our circumstances, we all have the capacity to help others and make a difference in the world.

Source(s)

1. Eric Schmidt – Wikipedia

2. About Eric – Eric Schmidt

3. Luke 10:25-37 NIV – The Parable of the Good Samaritan – On – Bible Gateway

4. The Good Samaritan – Bible Story and Meaning – Bible Study Tools

5. Parable of the Good Samaritan – Wikipedia

6. Understanding the Good Samaritan Parable – Biblical Archaeology Society

7. Luke 10:25-37 ESV – The Parable of the Good Samaritan – Bible Gateway

8. Bloomberg Billionaires Index – Eric Schmidt

9. Eric Schmidt | Biography & Facts | Britannica

10. Dr. Eric Schmidt – Congress.gov

Oh, yeah. Do you think Copilot would have been as generous if we had substituted Sir Lucian Grainge for Eric Schmidt? Was Copilot having a purposeful hallucination?

by Trichordist

Better than Cats: The Copyright Office Seeks Public Comment on Periodic Review of the Designations of the Mechanical Licensing Collective and Digital Licensee Coordinator aka #TheReup

In case you missed it, the MLC, Inc. was handed a five year contract in 2019 to operate the mechanical licensing collective. This contract was worth millions and millons of dollars, but more importantly guaranteed that the Harry Fox Agency would have a job for at least another five years. The salty arrangement was the brainchild of the lobbyists, the controlled opposition and the Copyright Office–and has resulted in The MLC, Inc. sitting on hundreds of millions of other peoples money. 

The Copyright Office has posted a notice letting us know that the time has come for the circular admiration society also known as the 5 year review of the MLC and the DLC as required by Title I of the oh so modern Music Modernization Act (yet we keep comeing back to these age-old problems that are not modern at all). This is all conducted by the Copyright Office which in a meaningful way is simply reviewing how well the Copyright Office did with the designation of the MLC, Inc. as much as how well the MLC met expectations.

After suffering through establishing some regulations for the MLC that largely favored the services, the head lawyer at the Copyright Office threw down the pretenses and became employed as a lobbyist for Spotify. Another went to work for the National Association of Broadcasters to screw artists our of a performance right for sound recordings. Can’t wait to congratulate current Copyright Office staff on their employment futures after we get through this important reup for the MLC, Inc. and the lobbyists. I hear the chief butterfly killers have openings for copyright lawyers trained on the public purse.

The comment period in this vitally important review is divided into at least two parts: The special people, i.e., The MLC, Inc. quango and the DLC get to go first, and then the hoi polloi (that’s you and me). You’ll find this language buried at the very bottom of the Reup notice:

Interested members of the public are encouraged to comment on the topics addressed in the designees’ [i.e., the DLC or the MLC’s] submissions or raised by the Office in this notification of inquiry. Commenters may also address any topics relevant to this periodic review of the MLC and DLC designations. Without prejudice to its review of the current designations, the Office hopes that this proceeding will serve as an opportunity for any songwriter, publisher, or DMP who wishes to express concerns, satisfaction, or priorities with respect to the administration of the MMA’s blanket licensing regime to do so, and that any designated MLC or DLC will use that feedback to continually improve its services.

Bite your tongue now.

The Reup Copyright Office MLCDownload
by Trichordist

MTP Interview: We ask @Creators_ECSA President @Helienne Lindvall to Explain the European Parliament’s Streaming Economy Report from the Committee on Culture and Education

This post first appeared on MusicTechPolicy by Chris Castle.

The Culture and Education of the European Parliament issued an important report on the state of the creative economy. Our friend Helienne Lindvall, President of the European Composer and Songwriter Alliance, gives us some insights into the report and the context.

I know ECSA was involved in testifying for the EU cultural diversity report, can you tell us a little about the report, what prompted it and how does it help or hurt?

Streaming and the amount of issues it brought with it has been at the top of the agenda for European songwriters since the launch of Spotify. As an Ivors Academy Board Director, I was part of the inception of the UK #FixStreaming campaign which resulted in the UK Government calling for a complete overhaul of music streaming, and for the creation of music industry working groups to fix these problems. Meanwhile, similar lobbying efforts have been applied in Brussels by music creators across Europe. The EU has a fine history of promoting, supporting and protecting culture – in 2019, legislators proved it by adopting the DSM Copyright Directive. Now we need it to step up to help create a sustainable streaming environment. 

Rapporteur Iban Garcia del Blanco and his fellow CULT MEPs took their time to really listen to and understand the reality that music authors (ie songwriters and composers) face, and our proposed remedies, and I think the report reflects that.

Is the report designed to shape future legislation or rulemaking in the EU?

We look forward to seeing the European Commission work on such a strategy and take concrete actions to build a fair and sustainable music streaming ecosystem for all music creators.. 

MEP Garcia del Blanco said at the press conference that he would prefer if the industry stakeholders could sit down and fix these problems without further legislation, but judging from our experience in the UK, certain areas are easier to get a consensus on than others. The UK metadata working group has set parameters for improvements, which I believe can easily be adopted across Europe and beyond. However, when it comes to remuneration and making it fairer for songwriters and performers, we have met with resistance from labels and platforms – unsurprisingly, perhaps. Getting increased transparency has also proved more difficult. If this resistance remains we will keep pushing for Government intervention and legislation. 

The report calls for a comprehensive and ambitious strategy based on independent data and a structured dialogue with all stakeholders, and we stand ready to work with the entire music value chain towards a fairer distribution of revenues, and we support the establishment of a European Music Observatory to collect and analyse data.

I noticed this language in the report calling on EU parliament:  “Calls for action to be taken at the European Union level to guarantee the visibility and accessibility of European musical works, considering the overwhelming amount of content constantly growing on music streaming platforms and the lack of Union rules to regulate them in a harmonised manner”.  and algorithmic dominance? 

It may come as no surprise that American and major label records still dominate on streaming platforms.

Is this designed to keep local language artists from being overwhelmed by English language tracks due to algorithmic bias or Spotify’s stream discrimination plans?

The short answer is: yes. During our stakeholder testimonials in the EU Parliament, Spotify claimed that streaming has increased diversity. And, yes, it may be true that some European countries have seen plenty of local acts in their local charts, though by no means all countries have experienced this, but on an international level there’s still a huge dominance of Anglo-American repertoire. Then we have the issue of the dominance of legacy artists and catalogue albums, such as ABBA, Fleetwood Mac and Elton John. 

In a post-Brexit reality, does the report have any effect on the UK?

The EU doesn’t have any legislative powers when it comes to the UK, due to Brexit, but as streaming is cross-border, as is the music industry, an improvement in either would have an impact on both. Some EU members have already implemented their own versions of equitable remuneration, such as Belgium and Spain – and France is establishing a streaming tax to support local music – but we would like to see solutions and changes that help ALL music creators, in particular songwriters, who currently are at the bottom when it comes to their share of the streaming royalty “pie”, and are finding it next to impossible to survive on their music, despite getting millions of streams. 

Given the attention that the Bad Dog story is getting, would the metadata accuracy proposals in the report help to stop outright fraud and impersonation? 

Yes, it would. Overall, we need more transparency, accountability and accuracy to deal with fraud. These are all words that get thrown around the industry willy-nilly but are rarely truly abided by. In this industry, companies rarely make an effort when it comes to accuracy unless there is an incentive for them to do so. What is the incentive for distributors and platforms to clean up their act and make an effort to prevent bad actors from profiting from fraudulent streams when they still get a share of those streams? I make the comparison to physical stores: If a supermarket sold counterfeit products, they’d be in trouble with the law. Why not these platforms and distributors? And this is before we even get into what’s happening on TikTok, which is the wild west when it comes to unlicensed usage. 

Does the metadata accuracy help to enforce “know your customer” type minimum indentifiable data requirements?

Accurate metadata is vital for so many reasons. Not only because more than 20% of all song revenue is unallocable and won’t go to the rightful recipient, but it will help in the fight against fraud. The way I put it to legislators is: You wouldn’t be able to buy a tuna sandwich in the supermarket without being able to read EXACTLY what is in it on the package, or the trader knowing who to pay for those ingredients. So how can it be legal for streaming services to accept, display and charge for recordings without knowing who created the underlying composition? How can they collect money without having any information on who to pay it to? And, as we’ve discovered with cases such as the Bad Dog story and Swedish criminal gangs using Spotify streams to launder money, that money could even be funding drug and weapons trafficking. 

Anything else you think is important about the report? 

The report calls for action when it comes competition issues and the dominance of a handful of labels and platforms, issues that we believe suppresses our bargaining power. It also stresses that authors, performers and other rights holders should be allowed to reserve and license the rights for the use of their work for AI training, and it acknowledges that this requires transparency. Overall it’s an important report that aims to correct the imbalances that have led to the unsustainable situation music creators find themselves in, and to build a sustainable, thriving and diverse cultural future. It couldn’t come soon enough. 

by Trichordist

Physical/Download Song Rate Increases, No Change for Streaming

Thanks to the efforts of the “frozen mechanicals” commenters to the Copyright Royalty Judges and the labels who agreed to the structure, there is now an annual cost of living adjustment (called a “COLA”) for the statutory mechanical royalty paid for songs on physical (like vinyl or CDs) and permanent downloads. Starting this month and going forward, that COLA is made by the Copyright Royalty Judges in December, effective the next January 1.

Remember that the frozen minimum statutory mechanical rate was 9.1¢ since 2006 but increased to 12¢ effective 1/1/23.

The Copyright Royalty Judges announced the new COLA rate yesterday which has increased to a minimum rate of 12.40¢ for recordings of songs with a running time of 5 minutes or less, and a per-minute long-song rate of 2.39¢. Depending on how frequently you get accountings, you could see that COLA rate increase show up on your next statements for sales after 1/1/24.

Remember, the purpose of having a COLA is to preserve the buying power of the government’s royalty because songwriters get one opportunity every five years to negotiate compensation for mechanical royalties. Of course, the COLA rate may get distorted by “controlled compositions” clauses in artist agreements, so check your contracts.

Also remember that the rate paid for physical and downloads is actually paid by the record companies as the “licensee” who agreed to the COLA on royalties they pay.

The rate paid for streaming is paid by the digital music platforms like Spotify, Apple, Google, Amazon, Tidal and others.

There is no COLA adjustment for streaming even though same songs and same time period and even though the MLC gets a guaranteed annual increase in its “administrative assessment”.

2024 rate. For the year 2024 for every physical phonorecord and Permanent Download the Licensee makes and distributes or authorizes to be made and distributed, the royalty rate payable for each work embodied in the phonorecord or Permanent Download shall be either 12.40 cents or 2.39 cents per minute of playing time or fraction thereof, whichever amount is larger.

2023-12-07 Phono IV COLA (2024) – for eCRB – special filing- FYI onlyDownload
by Trichordist

Blood Money:  BMI’s Mushy Press Release Buries The Lede on Google “Investment”

By Chris Castle

What’s a better way to hide a story than a Friday news dump?  A long weekend news dump.  (Remember when The MLC announced that they had “decided” to pick the Harry Fox Agency as their principal vendor after jerking chains for months?). 

So I’m not surprised that the BMI sale got a turkey press release on the Thanksgiving long weekend.  BMI’s press release is remarkable for what it doesn’t do.  For example, it doesn’t announce the financial terms of the deal in favor of the bright and shiny object of a $100,000,000 tip to its 1.4 million “affiliates” which works out to about $71 each.  Want to bet that BMI’s shareholders and executive team are pocketing a bit more on the deal?

Which is fine—it’s their company, they can decide how they want to share the sale price windfall.  But if you’re going to be a capitalist, be a capitalist and don’t try to sugar coat the fact that you got rich(er) selling data that doesn’t belong to you and trading on the efforts of songwriters.  In the great tradition of streaming that we’ve become accustomed to from Big Tech, songwriters get the shortest end of the stick.  Oh, and don’t overlook how BMI intends to distribute that $100 million—my bet is that 90% of BMI songwriters won’t even net anything like $71.

But here’s the line that BMI definitely buried in the very last sentence of their press release:  “As part of New Mountain’s investment, CapitalG will also invest a passive minority stake in BMI.”

Now who might CapitalG be?  CapitalG is a side venture fund owned by Google.  So that’s right—after 20 years of fighting the biggest copyright offender in the history of commerce, a seller of advertising on pirate sites like Megavideo, BMI has invited them inside the wire.

“Passive” normally means the party does not participate in the management decisions of a company they have invested in.  However, without knowing the terms of the investment, there’s really no way to know what that means.  “Minority” typically means that the party holds less than 50% plus one of the outstanding voting shares of the target company on an as-converted basis, in this case the BMI shares following the closing of the sale transaction.  Again, without seeing the post-money capitalization table, you really have no way of knowing what “passive minority stake” really means.

So that leads me to look at the public statements of CapitalG, such as on its website.  Here’s a couple of examples:

“CapitalG is Alphabet’s (Google’s) independent growth fund.”

“By maintaining a small, concentrated portfolio, we are able to invest heavily in each company’s success, fueling them with recurring, significant capital and consistent, hands-on operational and strategic support.”

What this sounds like is what you would expect—a very engaged, Silicon Valley style venture investment.  It is inevitable that this investment will result in at least one board seat or “board observer” which is even worse from the company’s point of view.  And that investment style is confirmed by another statement on CapitalG’s website:

“3000 Googlers have advised 4500 portfolio employees.  Hands-on go-to-market, people & talent, and product & engineering support, often producing multimillion-dollar value within the first year.”

What that means is that Google will be all up in your grill, BMI folk.  Get ready for it, because they will now be able to push you around for real with your jobs on the line because THEY OWN YOU.

What is worse than Boston Consulting Group telling you what you ought to do?  Google telling you what you must do.  And they will.

Why do they do it?

“16 IPOs and 9 M&A exits.  Laser focused on each company’s success–with the track record to prove it.”

“Each company’s success” means the exit.  That’s all it means.  All those smiling people are smiling for a reason. They don’t care about songs, songwriters, writer relations or anything else.  They are about the data, the tech, and all their hairbrained ideas about how the music business really should work in their utopia.  Assuming “owning” the MLC and BMI passes antitrust scrutiny at President Biden’s FTC.

In other words, they are going to pump you up and sell your ass.  And they’ll do it with the blood money they made by ripping us off for decades. That’s one way to get a job at Google.

So—as long as we understand each other.  Something to think about when your writers and publishers start firing you.

[This post first appeared on MusicTechPolicy]

by Trichordist

Sy Damle Strikes Again

[This post first appeared on MusicTechPolicy referenced by David in his post below from X]

Remember the millions of flawed “address unknown” NOIs that the Copyright Office allowed to be filed by the largest corporations in commercial history, including Google, because they were unable to locate the copyright owners? Aside from the sheer hilarity of the statement “Google can’t find [X]” it is almost certain that the absence of the line of researchers at the Copyright Office at the time suggests that the big tech companies never really did all the research and were allowed to file false statements with the government. Any guesses as to which Copyright Office lawyer was principally involved in allowing them to get away with that massive charade to the tune of approximately 100,000,000 notices? (See my article from the ABA Entertainment & Sports Lawyer.). That might be the one who left the Copyright Office for the riches of private practice shortly after the incident. Mr. Damle also has pretty consistently represented the Digital Licensee Coordinator. More on that later.

Another fake enterprise seems to have been uncovered by Politico this week, this time apparently in what I think is Mr. Damle’s latest assault on creators, his fascination with Open AI. As Politico reports:

The message in the open letter sent to Congress on Sept. 11 was clear: Don’t put new copyright regulations on artificial intelligence systems.

The letter’s signatories were real players, a broad coalition of think tanks, professors and civil-society groups with a stake in the growing debate about AI and copyright in Washington.

Undisclosed, however, were the fingerprints of Sy Damle, a tech-friendly Washington lawyer and former government official who works for top firms in the industry — including OpenAI, one of the top developers of cutting-edge AI models. Damle is currently representing OpenAI in ongoing copyright lawsuits.

Damle did not sign the letter, and did not reply to multiple attempts to contact him with questions about his involvement. But data contained in a publicly posted PDF of the letter show the document was authored by “SDamle,” and three signatories confirmed to POLITICO that Damle was involved in its drafting and circulation. Two of them said they were first made aware of the letter by Damle, and signed it at his invitation.

The letter’s covert origin offers a window into the deep and often invisible reach of Big Tech influence in the Washington debate over AI — a fast-moving part of the policy landscape where Congress is hungry for outside advice, and which is still new enough to create strange political bedfellows. Signatories included the American Library Association, the progressive nonprofit Public Knowledge and the free-market R Street Institute. 

Oh my. This bears all the hallmarks of Google policy washing, while the company is at the same time engaging in a charade with artists through the YouTube AI Music Incubator. And as usual, Mr. Damle is only too happy to accommodate.

Oh snap. It’s Tuesday.

by Trichordist