Author: Trichordist Editor

Trichordist Editor

A new proposal for songwriters in the Imperial City

[This post first appeared on MusicTechPolicy]

By Chris Castle

As MTP readers will recall, the National Music Publishers Association and the Nashville Songwriters Association International purported to agree on behalf of a “consensus” that never seemed to materialize to extend the long-frozen 9.1¢ mechanical rate for physical and downloads in the form of a settlement agreement in the Copyright Royalty Board’s Phonorecords IV proceeding.  I thought this deal reeked and so did a number of other people, including the Copyright Royalty Board itself which rejected the settlement.

To their great credit, Sony, Universal and Warner stepped up and agreed to offer all the world’s songwriters increased rates of 12¢ plus inflation indexing for the next five years which they didn’t have to do (and was a deal that the CRB hinted that they would find acceptable when they resoundingly rejected the first settlement).  Assuming the Copyright Royalty Board accepts the deal—a step you might miss out from the press coverage–this had the effect of a quick end to a process the labels had every right to litigate at the CRB.

The other benefit to the settlement is that it should—if it doesn’t get screwed up again—it should take away a major argument that the digital retailers are using against songwriters in the streaming part of the Phonorecords IV proceeding.  That argument is the most obvious negotiating tactic in the world:  What’s good for the goose is good for the gander.  The services are essentially saying that if the rates should be frozen when the labels are paying the mechanical (which they are on physical and downloads), then the rates should be frozen when the services are paying the mechanical (which the services are on streaming).  And no inflation adjustment. Well, no kidding.

In one power move, the labels did something fair for songwriters and incidentally also helped publishers in spite of themselves by taking away a major argument from the digital retailers.  Rather than play a schoolyard game of high/low bargaining and stretching out the process for another couple years, the labels cut to the chase and closed. Hopefully the CRB will agree (again, don’t forget that the CRB still has to approve the proposed deal.)

Do we still have bones to pick with the labels?  Absolutely.  Could the rate have been even more fair?  Sure.  Might it have been if the publishers had actually done their job and negotiated in the first place?  Maybe.  Probably.  But they didn’t so we’ll never know.  However, credit where credit’s due, the labels pulled this one out and saved the publishers’ bacon in spite of themselves.

I do have to note in passing that when you read the press coverage on the filing of the settlement, there’s not one US group with a press release today that actually picked up a pen and filed a comment at the CRB when they were needed and duty called.  The awesome UK songwriter group Ivors Academy stepped up and bled with songwriters like Rosanne Cash, George Johnson, Helienne Lindvall, David Lowery and Blake Morgan and all the other commenters who took one for the team when it was unpopular to do so. And as that guy said, he who sheds his blood with me shall be my brother.

You’ll hear a lot of hoorah about how streaming is what’s important from people who are trying to CYA today.  Here’s a hot tip:  IT’S ALL IMPORTANT IF IT’S YOUR MONEY.  Why is that so hard to understand?

Which is why going forward all songwriters and all publishers need to be involved with the rate-setting proceedings at CRB including on streaming.  The CRB knows this and acknowledges.  I think the labels know this on their side.

The question is whether the publishers do.  The announcement of this settlement proposal is both inauspicious and true to form.  Remember—they had practically nothing to do with making the deal they celebrate today.  But don’t let that stop anyone.

We need fairness at the Copyright Royalty Board.  Notice I’m not using the word “transparency” which means whatever the speaker wants it to mean.  I’m very specifically talking about a seat at the table not just for songwriters, but for independent labels and publishers as well as the majors.  As Ann Richards used to say, if you’re not at the table you are on the menu, and this was a very, very close run thing in Phonorecords IV. 

If it weren’t for all the people who commented negatively and resisted the rates that had been bootstrapped in the past and would have been again, I don’t know where songwriters would be today. You gave the Judges the truth, straight from the heart and they responded. So thank you, all of you. And thank you to the readers of MTP and The Trichordist who raised hell right along side. It’s a good day for everyone.

Remember–keep coming back because it works if you work it.

by Trichordist Editor

Guest Post by @georgejohnson: The only songwriter in Phonorecords IV speaks his mind

[You may have never heard of George Johnson, but you should have. He’s the only songwriter in the Phonorecords III and IV rate proceedings at the Copyright Royalty Board, representing himself. It’s also important to understand that if George wasn’t carrying the flag as a “participant” in the proceedings, it’s unlikely that the Copyright Royalty Judges would have rejected the bizarre “settlement” proposed by the major labels and publishers paving the way for the second proposed settlement announced today that raises the mechanical rate to 12¢. George asked us to post a short comment on today’s settlement.]

Unfortunately, as glad as I am to see the labels finally offer a slightly better rate of 12 cents, the Judges have not even ruled on the last unreasonable settlement that they rejected, nor had time to hear a back from the Register on the Novel Question of Law proposed by the 3 Major Record Labels. Therefore, it would be premature for me to agree to any rushed deal before first hearing the Register‘s and the Judges’ rulings of law on this issue, and the many other problems the Judges pointed out with these extremely flawed settlements.

Furthermore, the multiple conflicts of interest, self dealing, vertical integration “warning flags”, side deals, and other problems may still need to be resolved by the Judges before any new settlement can be approved.

NMPA CEO David Israelite even stated in 2015 that the rate should be 50 cents, yet he continues to fight me to keep the rate frozen and below market, despite now being forced to offer 12 cents to the Judges which he absolutely did not want to do and fought every step of the way. He is no songwriter advocate whatsoever. He also makes $2 million dollars a year in salary and extra compensation to keep songwriters frozen at 9.1 cents all these years because he really works for the parent record labels, not their vertically integrated publishing division as he claims. It’s a total waste of time for songwriters and I hope Congress puts a stop to this self-dealing and increasing antitrust issues created by these two-timing lobbyists’ behavior.

Btw, when the rate is accurately calculated for inflation since 2006 it’s actually 13 cents, not 12 cents like they offered, but it’s still way below market considering the rate was 2 cents in 1909.  A rate based on today’s marketplace reality would place the rate at a break-even point of 58 cents per song to make up for 89 ignored years of zero inflation adjustments for songwriters, who are entitled to a raise, much less a simple cost of living adjustment for 2022 real world prices. Plus there is no legal difference between adjusting from 2006 or 1909.  NMPA, NSAI, and RIAA just don’t want to increase the profits for their own songwriters, much less all their competitors who have to have their rates frozen by NMPA, NSAI, and the RIAA, which is extraordinary and must end.

There is also the issue of the free unlimited “limited download” loophole which must be paid a mechanical and, of course, the labels completely ignored this core issue which goes hand in hand with a properly adjusted 58 cent inflation royalty rate which all songwriters and publishers deserve now.  Apple and the other Services need to reduce their 30% per dollar fee on downloads to help share in the cost of the Judges’ ruling of no more static rates for songwriters.  If the labels offer a reasonable rate and fix their self dealing conflicts and side deals, along with a paid mechanical for limited downloads, then I would sign a deal like that. Plus, the labels refuse to address the issue of old controlled composition clauses at 75% of the lawful statutory rate or any new controlled composition clauses to reduce any new agreed increases.

by Trichordist Editor

Please take our physical and download mechanical royalty rates survey and help decide the new rates!

We are participating in a survey being conducted by a number of songwriter groups around the world to ask our readers what you think the new un-frozen mechanical royalty rate should be since the Copyright Royalty Judges rejected the settlement that would have extended the 9.1¢ freeze. Trichordist readers have heard a lot about the frozen mechanicals but after the Judges rejected extending the freeze we have moved on now to a new phase–if the rate isn’t 9.1¢ anymore, what should it be?

This Survey Monkey questionnaire is anonymous and easy to take–3 minutes to complete–and you could really help a lot by giving your opinions on what you think the rate should be! We will post the results so everyone can see.

You can start the survey at this link. Thank you!

by Trichordist Editor

Is @UMG coming to the party on unfrozen mechanicals?

By Chris Castle

[This post first appeared on MusicTechPolicy]

I have it on good authority from someone close to the talks not authorized to speak on the record that Universal is taking the lead on solving the now un-frozen mechanicals crisis. This obviously needs to be confirmed and may not be final, but I think it’s well worth posting about.

Recall that the crisis pertains to the so-called “Subpart B” mechanical royalties paid by record companies for permanent downloads, vinyl and compact discs. The mechanical rate has been frozen at 9.1¢ since 2008 and the Copyright Royalty Judges recently rejected a settlement among the NMPA, NSAI, Sony, Universal and Warner to extend the freeze in the Phonorecords IV proceeding. Having rejected the proposed settlement, the next step could be knock down, drop dead, drag out litigation that would, in my view, be totally unnecessary. Or the next step could be the labels and publishers submitting a new proposed settlement and asking for the Judges’ approval. 

Also recall that the Judges hinted at a potential deal they would like to see in their rejection of the proposed settlement that would essentially uplift the current 9.1¢ rate by an inflation factor since the rate was set in 2008, bringing the minimum statutory rate for all “Subpart B” configurations to 12¢ that would be further uplifted by an annual cost of living adjustment based on the Consumer Price Index (CPI-U in this case).

We’ve written about this topic so much that you’re probably sick of hearing about it–but if this source turns out to be correct, it’s a real step in the right direction by Universal taking a leadership role that will no doubt be controversial.

As I understand it, Universal may propose a minimum statutory rate of 10¢ for permanent downloads and 12¢ for both vinyl and CD configurations. All three rates would be adjusted annually by the Consumer Price Index (in a similar way that the Judges just indexed the webcasting royalty in Webcasting V applicable to sound recordings). This rate would apply to all songs–not just to George Johnson–as one would expect.

There’s no way to know at this point today whether all the participants in the Phonorecords IV proceeding will accept these terms, including George Johnson who has held out for a much higher minimum statutory rate. Some may scratch their head over why the download rate is less, but my suspicion is that it’s because Apple and Amazon have been inflexible on increasing the wholesale price and I could understand why a label would give themselves some headroom on downloads going into what will surely be highly inflationary times but at the same time agreeing a cost of living adjustment. (When the dust settles, it may be worth a discussion in the artist rights community about whether to campaign against Apple and Amazon.)

I do think it’s commendable if Universal is taking the first step toward bringing fairness to a process that has been unfair for many years. We’ll see what happens, but it looks like it could be light at the end of the tunnel. Watch this space.

by Trichordist Editor

Unfrozen: What will the new physical mechanical rates do to or do for valuations? — Music Tech Solutions

There are some decades in which nothing happens and some weeks in which decades happen. This was one of those weeks. You no doubt have seen that the Copyright Royalty Judges offered a breath of fresh air in the contentious and labyrinthine Phonorecords III and IV proceedings by refusing to accept the insider “settlement”…but if mechanical royalties have been understated, what does it mean for catalog valuations in the past and in the future? Looking at you, Bob Dylan!

Unfrozen: What will the new physical mechanical rates do to or do for valuations? — Music Tech Solutions
by Trichordist Editor

Major Labels Pounce on Copyright Royalty Judges in Effort to Cram Down Frozen Rates

By Chris Castle

[This post first appeared on MusicTechPolicy]

“The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.” 

Anatole France

It’s hard to believe, but the major labels have filed an “emergency motion” at the Copyright Royalty Board asking the Judges to “clarify” their historic rejection of the insider deal to extend the freeze on physical mechanical royalties for songwriters that many have criticized as being flat out corrupt (and the Judges certainly hinted at it, smoke and fire being what they are). I don’t know about that, but what they seem to really mean is for the Judges to limit the rejection to George Johnson because he’s the only songwriter in the Phonorecords IV proceeding–like that will help them–but screw every other songwriter in the world, and indie label, too, for that matter.

Look, everyone is entitled to a hail mary, but the labels are essentially asking the Judges to say “just kidding” about their rejection of the insider deal. I must say that it’s kind of hard to follow the pretzel logic in places, but one point was very, very clear and it is this:

Nor would there be any basis for the Judges to reject the Settlement as to non-participants [that would be every songwriter except George]. Non-participants take a calculated risk when they choose to sit out a proceeding. Specifically, they decide that to save the expense and burden of participating in a proceeding, they will live with the outcome of the proceeding whatever it is. In particular, just as a dissatisfied non-participant [that would be you and me] cannot seek appellate review of the outcome of a rate proceeding, non-participants may not object to any settlement reached by those who are prepared to undertake the expense and burden of participation. [Well judging by the uniformly negative public comments lots of people including me did not get that memo.] Thus, while Congress has authorized the Judges to decline to adopt a settlement as to an objecting participant, it expressly did not authorize the Judges to decline a settlement as to non-participants who, by definition, have chosen to allow the participants to reach an agreement on their behalf. In so doing, Congress reasonably chose to promote participation in proceedings while also giving settlements broad effect.

Guys, guys, guys…there are a lot of ways you could have said this, but why on Earth you chose this one is beyond me. By definition, non-participants have chosen to allow the participants to reach an agreement on their behalf? Really? Really? By whose definition? I’m sorry, but that just does not pass the laugh test.

And are they really saying that the preferred outcome–promoted by Congress, no less–is to have every songwriter and independent label in the world crammed into the Copyright Royalty Board’s hearing room? Do they really want a line out the door and around several blocks? Because if that’s really what they want, maybe that could be arranged in Phonorecords V. But we also may see real scorched earth litigation ensue here if the Judges refuse to reverse themselves instead of making lemonade out of lemons.

Actually, Congress did not charge the well-heeled major label and publisher participants to look out for the interests of nonparticipants. (Almost sounds like…gasp…a fiduciary duty, don’t it?) You know who Congress does charge with that obligation as true blue fiduciaries?

The Judges. That’s their job. And the Judges showed up for work, rejected the insider deal, and did their job just as they are supposed to in order to preserve equal justice under law.

[If you want to tell the Copyright Royalty Board what you think, try crb@loc.gov]

by Trichordist Editor

@digitalmusicnws: Is TikTok Safe for Kids? Platform Faces At Least Eight State Investigations Over Its Impact On Children and Teens — Artist Rights Watch

Remember this meme from the Stop Enabling Sex Trafficking Act hearings?

Is your children’s online privacy worth $92 million?

@digitalmusicnws: Is TikTok Safe for Kids? Platform Faces At Least Eight State Investigations Over Its Impact On Children and Teens — Artist Rights Watch–News for the Artist Rights Advocacy Community

This post first appeared on Artist Rights Watch

Eight states (Massachusetts, Florida, California, New Jersey, Vermont, Kentucky, Nebraska, and Tennessee) just recently announced their investigations into TikTok, which settled an Illinois privacy lawsuit for $92 million in 2021. The coordinated scrutiny arrives as TikTok – which has been described as “legitimate spyware” – remains extremely popular, reportedly boasting north of three billion downloads and more traffic than Google.

Furthermore, TikTok’s userbase reportedly skews young, and higher-ups have capitalized upon the platform’s prominence within demographics that are relatively difficult for companies to reach.

Read the post by Dylan Smith on Digital Music News

by Trichordist Editor

@MartinChilton: ‘He made sure that she got nothing’: The sad story of Astrud Gilberto, the face of bossa nova — Artist Rights Watch

[Editor Charlie sez: When you read this cautionary tale for artists, remember that like so many other artists we look up to, Astrud never got a penny from radio performances of her records in the US which would have given her a direct payment outside of her recording agreement through SoundExchange.]

“The Girl from Ipanema” was one of the seminal songs of the 1960s. It sold more than five million copies worldwide, popularised bossa nova music around the world and made a superstar of the Brazilian singer Astrud Gilberto, who was only 22 when she recorded the track on 18 March 1963.

Yet what should be an uplifting story – celebrating a singer making an extraordinary mark in her first professional engagement – became a sorry tale of how a shy young woman was exploited, manipulated and left broken by a male-dominated music industry full, as she put it, of “wolves posing as sheep”.

Read the post on The Independent

by Trichordist Editor

@agraham999 and @musictechpolicy: Forever is a Long Time–thoughts on the state of NFTs

By Alan Graham and Chris Castle

If you’ve followed any of the drama surrounding the NFT music infringement marketplace Hitpiece, you know it has deservedly received a lot of grief—and at least one pretty potent cease and desist letter–for its blatant attempt at profiting from allegedly scraped IP it didn’t own. But the interesting thing is that it actually gives us an opportunity to discuss some of the greater potential challenges surrounding NFTs, and how it may in fact be impossible to live up to their promise. Let’s start by picking apart Hitpiece, and see where we get with this teachable moment.

Blockchains or databases that represent ownership, must have one trait in common to provide value, and that is a consensus mechanic whereby each party that is allowed to write data is known to the system, therefore the data that is written is trusted, and then all copies (or nodes) can commit these changes. Ta-da.  There is an inherent logic to the consenus mechanic.  It’s what Shawn Fanning’s SNOCAP accomplished with its registry in sharp contrast to the Wild West of p2p and essentially lies at the heart of Hernando de Soto’s extensive work in macroeconomics.  Good things can happen when people trust the system.

It’s also the starting point of what went wrong at Hitpiece.  Instead of using a blockchain solution like Ethereum, we’re told Hitpiece operates some kind of a “private blockchain.”

So what does that actually mean? It should suggest a distributed ledger, hosted by multiple separate parties to keep everyone honest, with a method of cryptographic consensus (who can write data, how are they known to the system, how is it trusted).  Remember, the definition of “good faith” is “honesty in fact” and it is an essential condition of contracts, all contracts be they smart or just human. 

The novel bit Hitpiece was doing, from what we can read, is that they were using regular credit card payments, not crypto, to allow collectors to mint/purchase the NFTs, which is actually very clever. Seriously, there’s no reason you have to use a cryptocurrency to pay for something, if you are in fact also hosting the blockchain/database. A private blockchain doesn’t need a cryptocurrency, it just needs trusted parties, and there’s the rub. Cryptocurrency is a sufficient condition of a successful NFT platform, but a trusted consensus mechanic is a necessary condition.

Now while we could go on and on picking apart many of the flaws in the Hitpiece model, it opens up a broader discussion that we’d like to have as to how NFTs plan to offer their grand promised future of benefits and entitlements (buy my NFT and get xyz). Whenever you challenge someone in the crypto space about how they plan to handle this, they simply say “smart contracts”, when what they really mean is, “I have no idea how/if this is going to work”.

Terms of Service

First, in order to have a product or service that you sell or provide online, there has to be a series of terms as to what is being purchased, who is paid each successive purchase price, what is being provided to the purchaser, and for how long. That means, in the case of a platform that allows creators to mint/sell/auction NFTs, the party that is minting/selling the NFT has to provide a Terms of Service as to what can be expected, not the platform. The platform is simply a service provider. It’s buyer beware, because the seller doesn’t necessarily have any technical solutions for supporting future benefits.  It’s also seller beware because if the initial seller specifies terms for the sale (and subsequent sales), there ought to be a believable and efficient way to enforce those future rights and post-sale conditions.

So if you are a creator promising this, you need to spell out what those might be, the term of that relationship, and be damn sure you can deliver on it. Likewise, if you are a creator being promised something will happen after the initial sale, you have to believe that your rights can be enforced in an efficient way (like the future sale can’t close without X being the case or $Y being paid to you).  This is a concern for both featured and nonfeatured recording artists (as well as union signatory record companies with collective bargaining obligations), plus co-writers of songs and their publishers.

To pluck two examples from the headlines on The Trichordist, Neil Young might want to place conditions on future NFT sales that have nothing to do with money;  elderly songwriters might want to be assured of a stream of future income from NFT sales that they can ill-afford to sue over.  This is not hard—it happens with real estate every day of the week in practically every country of the world (and was at the heart of Hernando de Soto’s “Peruvian miracle” that started with land reform).  If you don’t meet the sale conditions, you don’t close on the property and the title company won’t take money from the buyer or pay it to the seller.

Perhaps this is especially true of collectibles where resales may be part of the buying motivation.  (See for example, the pending lawsuit over the Quantum NFT against Kevin McCoy and Sotheby’s regarding the Namecoin blockchain that is for “slander of title” among other things—a real estate concept.)  The expectation most buyers will have is that the thing in question will live in perpetuity. For example, If you purchase a physical painting, you have the expectation of enjoying that painting as long as you possess it.

But what are your expectations regarding the NFT? This entire subject seems to be heavy on promises of future benefits and entitlements, but lacks any hard explanations of how that’s possible and for how long. That puts creators and collectors at great risk, because there’s no guarantee of being able to deliver on that promise—until there is. Technology practically assures us that whatever you buy today, will not necessarily work 10 years from now.  How’s that WordPerfect program working out for you?

Technical Challenges

The second issue we never see talked about derives from the first. It seems common for promoters to promise benefits/entitlements in the future from owning NFTs, but how? Where’s the mechanic that makes this possible? Simply saying “smart contracts” is just procrastinating and hoping something will exist later. In order to provide a series of benefits, like exclusives, you have to also provide a structure to interpret these, and we’re dealing with potentially thousands of intermediaries, and millions/billions of NFTs. We don’t have any idea how anyone expects this to work with the existing NFT model.

Say you want to provide exclusive first access to concert tickets to anyone who has a particular NFT. The ticketing site or agency has to be able to recognize this NFT and be able to trust it. One way to do this is they can run native code that runs independently on the site that can say, “I know this collectible” by being able to recognize who cryptographically signed something with a known set of keys. Or they could run an embed from a third party that did the same thing. The most secure way to do any of this is likely having more than one party sign the NFT to prove it is real, but not really something trustless blockchain folks like.

The ability to trust the NFT sale and automatically enforce the terms of each sale is vital for creator-driven NFTs.  If a creator places marketing restrictions on how the NFT can be used downstream, there ought to be a way to enforce those restrictions.  Recording artists and songwriters commonly have such restrictions in their artist or songwriter agreements with record companies or music publishers.  They have approval rights over how their works are used and they have blanket prohibitions.  Approval rights means they are asked before a license is granted by their label or publisher and they can sue if that fails to happen.  A blanket prohibition could, for example, prohibit the use of the work in a commercial promoting a product, say firearms, that the artist or songwriter doesn’t agree with, or a country whose laws the creator rejects, say Beastie Boys with China over Tibet, or a platform that distributes a podcaster the creator doesn’t want to be associated with.

The punchline there is why would a creator take, or allow their label or publisher to grant, lesser rights in an NFT than the creator has for the same work outside the NFT?

You Can Check Out Any Time You Like

Then we get into talking about serious security implications, as NFTs might have both a monetary value, and a potential “smart contract” that remunerates/rewards the purchaser, and has an ancillary connection to the collector’s wallet. Any compromise in this chain and you could not only put one creator or collector at risk, they could all be at risk including the seller (All apes, everywhere, stolen). A single errant smart contract or malicious developer, could put creators or downstream sellers at serious legal risk because they exposed the collector’s wallet to compromise. That means you’ll want to see that every NFT marketplace has serious security experience and precautions, but also as a collector, you’ll want to know that everything you purchase has an audit trail whereby you can verify the NFT is authentic and each link in the chain can be trusted.

That’s a whole lot of magical hand waving.  And title insurance or the equivalent.

In any case, not only does someone need to build, service, and maintain this, but also has to maintain it forever, and it can never fail.

And forever is a long time.

by Trichordist Editor