In case you were scratching your head about why Nebraska Senator Ben Sasse decided to stick his beak into trying to continue discrimination against recording artists who had the misfortune to record before 1972–here’s a possible explanation. Maybe he was just getting his beak wet?
Remember, Senator Sasse introduced an amendment to the Music Modernization Act in the dead of night the day before the markup of MMA in the Senate Judiciary Committee. While Senator Ron Wyden–another data center beneficiary of Amazon, Facebook and Google–was at least trying to dress up his complicity in a Chanel suit and Louboutin shoes. Senator Sasse went the more direct route:
Now why might Senator Sasse be so interested, particularly given Nebraska’s musical history? It turns out that there is quite the competition between Nebraska and Iowa for Silicon Valley’s data center business, particularly given the renewable energy profile of each state (wind is 37% of Iowa’s electricity production and about 20% of Nebraska (including hydro). That checks the box for Silicon Valley.
Of course, as we see from Senator Sasse’s tone deaf foray into copyright lobbying, Silicon Valley thinks they can play the rubes in return for building data centers in their state, just like they did with Senator Ron Wyden and the people of Oregon. What does stiffing pre-72 artists have to do with data centers? Nothing. What does it have to do with playing footsie with royalty deadbeats like Google and Facebook?
Everything.
And rumor has it that there is a deal in the wings for a new Google data center in Nebraska. Which also explains a lot.
But somehow, Facebook knows that its Silicon Valleyness may not be that popular with the rubes.
According to the Data Center Dynamics site, Facebook has been going to great lengths to hide its involvement in massive data centers being built in Nebraska, which gives “Cornhusker Kickback” (or Facebook Fakeout) a whole new meaning:
Operating under the alias Raven Northbrook, Facebook has its eyes on Nebraska, DCD can exclusively reveal.
Late last year, local council officials granted approval for a large data center project in Sarpy County, Nebraska, but the company behind the huge facility was kept a secret.
Now, DCD can confirm that the corporation hoping to build four 610,000 square foot (56,670 sq m) data center halls at the Sarpy Power Park is Facebook.
Sarpy County documents reveal that the company, which is publicly represented by infrastructure engineering and design solutions company Olsson Associates, goes by the name Raven Northbrook.
So maybe the Sasse sledgehammer amendment to discriminate against pre-72 artists is easily explained–just another swamp dweller swamping up the cash.
This is, of course, the classic back stabbing we have come to expect from Public Knowledge, so is par for the course. What that means, of course, is that Google gets to screw the pre-72 artists andget their new reachback safe harbor that the songwriters and publishers gave up.
We need to move on this quickly. If you can call your Senator and ask them to oppose the Sasse amendment to the Music Modernization Act (bill number S. 2823), that would be great. You can look up your Senator’s information on Phone Congress at this link. Choose “Any Other Topic Not Listed Here” on the pull down “Topic” menu.
Who took on the Standard Oil men
And whipped their ass
Just like he promised he’d do?
Ain’t no Standard Oil men gonna run this state
Gonna be run by folks like me and you
Kingfish, written by Randy Newman
If you’re one of the small group that has actually read the Music Modernization Act, I think you’d have to come away with the idea that this is legislation by the big boys for the big boys. Nowhere is this unfortunate flaw more apparent than in the way that digital media companies “modernize” the way they treat themselves. No wonder Digital Media Association (Amazon, Apple, Google, Pandora, Spotify) and the Internet Association (Amazon, Facebook, Google, Pandora, Spotify) love it so much–it’s just the same old story from Standard Oil or United Fruit.
But is MMA really intended for the biggest corporations in commercial history playing footsie or should we believe the sales pitch that it is intended for the innovative startups and new entrants?
It is not surprising that startups were apparently excluded from the legislative process that created MMA and are themselves silent–or silenced–observers.Given that Google, Amazon, Apple and Spotify are on the other side, startups know which side butters their bread and what will happen if they voice any criticisms.Like the python in the chandelier, nothing really need be said; startups know what happens if they challenge the big boys, particularly Google and Amazon who probably host their companies, serve their advertising or drive traffic to them.
The MMA permits these massive and aggressive incumbents to ultimately decide how much startups pay for access to the blanket license that we are told by DiMA’s CEO will unleash innovation and “fuel the next wave of creativity“. Yet–if startups can’t afford to buy in to the license, it won’t do them much good, and as drafted the MMA allows their incumbent competitors to decide how much that buy-in will cost any startups or other of the much ballyhooed new entrants. This all before a startup has to pay royalties to the collective–and in addition to any royalties.
How can this be fair? It’s easy when your lobbyists write the rules.
The Congress delegates the government’s authority under the Music Modernization Act by creating two main bodies around the new government-mandated blanket license: The “mechanical licensing collective” which is to represent those with songs to be licensed and the “digital licensee coordinator” which is to represent music users wishing to license those songs under the new blanket mechanical license. Music users will answer to the “digital licensee coordinator,” presumably under some membership agreement yet to be drafted.
Both these bodies are supposedly approved by the Register of Copyrights (the head of the U.S. Copyright Office), but the Register has the unenviable position of being constrained to appoint certain types of entities or people by statutory criteria in the MMA.
One of those criteria is very majoritarian, if not downright oligopolistic–and I would suggest that for both the collective and the digital licensee coordinator the math alone limits the Register’s choice to one entity. Here’s the relevant language for how the Register selects the collective:
“[The Register must choose an entity that] is endorsed by and enjoys substantial support from copyright owners of musical works that together represent the greatest share of the licensor market for uses of such works in covered activities, as measured over the preceding 3 full calendar years;”
And here’s the mirror version of the relevant language for how the Register selects the “digital licensee coordinator” (or “DLC”):
“[The Register must choose an entity that] is endorsed by and enjoys substantial support from digital music providers and significant nonblanket licensees that together represent the greatest share of the licensee market for uses of musical works in covered activities, as measured over the preceding 3 full calendar years”
So one thing seems true for both the collective and the coordinator: They can only be entities enjoying “substantial support” by at least a plurality if not a majority of their respective markets on either side of the same coin. I’m not quite sure how that definition presents a choice to the Register–more like it allows the biggest players to dictate the Register’s choice. (How can there be two pluralities much less two or more?)
I would submit that this structure is a long-term recipe for disaster.
Others have and are writing about the conflict-ridden aspects of the collective, so I will focus here on the digital licensee coordinator which is equally, if not more, conflict-ridden than the collective.
By definition then, startups–who are potential music users most in need of the blanket license without having to pay minimum guarantees–are evidently excluded from any possibility of becoming the digital licensee coordinator. The Congress effectively prohibits the Register from appointing one of them as the DLC, even if they were brave enough to raise their hand (see Yelp in the EU antitrust ruling against Google).
And don’t forget a main selling point of the MMA: The music users (i.e., the “licensees”) pay an “administrative assessment” to cover the costs of running the mechanical licensing collective. (An inherent conflict?) The MMA authorizes the DLC to “equitably allocate the collective total costs across digital music providers…but shall include as a component a minimum fee for all digital music providers.” (Although note that the assessment as a whole and perhaps the allocation ultimately has to be approved by the Copyright Royalty Judges–and good luck to startups being able to afford to appeal to the CRJs or a higher court.)
Plus the MMA authorizes the DLC to “[e]ngage in efforts to enforce notice and payment obligations with respect to the administrative assessment….” AND the DLC also gets to set the “dues” payment for each “member.”
So if a startup wants the blanket licence, they have to pay a share of the assessment apparently determined by a representative of their biggest competitors PLUS a membership fee. And then they get to pay royalties to the collective. Note that this is a radical departure from the current law and adds another gatekeeper in between songwriters and their money.
If a startup fails to make all these payments, they can lose the blanket license even if they have paid all royalties on time. No one can tell you what the minimum fee will be or the startup’s share of the assessment. In fact, as new startups will likely enter the allocation for “membership” all the time, a real time percentage allocation for each “member” of the DLC will likely change pretty much constantly. Plus the collective can enforce the blanket license royalties and the DLC can enforce the assessment payments and membership “dues” (aka rents).
It’s also important to realize that there is an exponential difference between the group of companies that the Register takes instruction from on the MLC compared to the group instructing the Register for the DLC. Candidates for the DLC include Amazon, Apple, Google and Spotify–three of the biggest companies in commercial history plus the streaming platform that is easily the dominant actor in its relevant market both in the U.S. and many other countries. This basically assures that no startup will ever be included as the DLC absent a government-mandated rotation.
The Music Modernization Act is a great opportunity to do something positive for the market rather than continue to reenforce the most dominant incumbents in history (see 60 Minutes, “The Power of Google“). After all, it was their own carelessness and “permissionless innovation” that got us to this point.
Here’s some free advice to Congress: Go wild. Require appointing a startup or two or three as the DLC from time to time. And since you’re dictating many attributes of the MLC’s board, if you really want to go truly off the reservation, require one of those startups to be from some place like Austin, Athens, Northern Virginia or Salt Lake–anywhere but Silicon Valley. Wouldn’t that be real modernization rather than real entrenchment?
As a wise old Member of the Texas Congressional delegation once told me, they get to climb the ladder to the American Dream like everyone else. What they don’t get to do is pull the ladder up behind them once they get to the top.
By limiting the choices of who can be the DLC, the government is mandating control to only the biggest of the big. And giving them an antitrust exemption as the cherry at the top of the ladder.
40 IP Law Professors wrote a letter to the US Senate opposing The Classics Act. Most of the claims in the letter have been previously debunked by Terry Hart here. Google funded astroturf Public Knowledge has distributed the letter. This raised some eyebrows. Lowery was trying to get at least one of the 40 Law Professors to reveal who actually authored the letter. Lowery was repeatedly stonewalled. One of the signers Law Prof Aaron Perzanowski seemed to threaten Lowery with a defamation suit, for previously noting that Prof Perzanowski appears in the Google Academics Inc report. Perzanowski (a lawyer) was clearly attempting to dissuade Lowery from pursuing this line of questioning.
From Wikipedia:
A strategic lawsuit against public participation (SLAPP) is a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition.[1] Such lawsuits have been made illegal in many jurisdictions on the grounds that they impede freedom of speech.
BTW Lowery eventually found other sources that report the letter was proposed and organized by Google outside counsel Mark Lemley and Stanford Prof Phillip Malone. It’s still not clear who wrote the text.
This isn’t some petty twitter dust up. There is an important public policy concern, because the U.S Senate was presented the letter as if it was a spontaneously organized letter by a group of independent IP Law Professors. The story seems to be much more complex. If Google did have a hand writing this letter, or encouraging it, Senate staff should be advised.
Really great news! It was recently announced that the head of the Justice Department’s Antitrust Division will speak at the National Music Publishers Association annual meeting in June!
As David said a few weeks ago before this announcement, Mr. Delrahim is reviewing hundreds of DOJ consent decrees that have accumulated over the decades to see if these government orders should be continued. This review includes the ASCAP and BMI consent decrees that Mr. Delrahim specifically mentioned in an address at Vanderbilt Law School earlier this year. He seems to have come to this idea all by himself.
What’s really great about this is that it could mean the end of consent decrees in a relatively short period of time. Since it’s never happened before, we don’t know exactly how the end of the consent decrees would impact ASCAP and BMI, but presumably the impact would be positive and quick. Goodbye rate court! The smart money would probably be on existing rate court cases continuing, but disallowing new cases. (Mr. Delrahim has been clear that the enforcement side would remain in place, meaning we guess that actual antitrust law violations would be dealt with case by case, just no ongoing regulatory oversight by unelected rate courts. Example would be Global Music Rights awesome antitrust case against the broadcasters after the broadcasters brought one against GMR.)
It could possibly open the door to both organizations getting into the mechanical licensing administration business in competition with whatever comes of the collective established by the Music Modernization Act (which permits voluntary licenses outside of the collective). In fact, BMI has already said they intend to pursue licensing outside of performances because their consent decree allows them to do so unlike ASCAP’s:
BMI is also evaluating the option of licensing beyond the performing right. We have long believed our consent decree allows for the licensing of multiple rights, which is why four years ago we asked the DOJ to amend our decree to clarify that ability, among other much-needed updates.
Of course, the last thing that anyone would want is for the DOJ to end the consent decrees, just to be replaced by some other bunch of regulations or bureaucracy. For once, broadcasters will just have to suck it up.
So it’s a great idea that NMPA is inviting Mr. Delrahim to speak to the publishers who are most in the position to take advantage of a new dawn in songwriter freedom. Many if not most of the NMPA members will be in the voluntary licensing category under MMA and outside the collective. They would be in a fantastic position to support a one-stop shop for performance and mechanical licensing from ASCAP and BMI in line with what SESAC/HFA can offer, and presumably GMR could do as well.
From what we have gathered, on May 15, the Senate [held a hearing] on the Music Modernization Act (which now includes the Classics Act and the AMP Act). It’s flying through the walls of government faster than anything we’ve ever seen. Some call it unprecedented. Some say it’s been a long time coming. The music member organizations are touting this as if we are finally getting our moment in the sun. But are we really?
ASIDE FROM CREATING A DATABASE — IS THE MMA A LANDMARK OR LANDMINE FOR MUSIC CREATORS, PRODUCERS, AND PERFORMERS?
There are arguments on both sides from within the music creator community, and it is hard to know who is “right.” All we know is that all of the “member” organizations that directly impact how musicians and music creators get paid (the AFM, ASCAP, BMI, SoundExchange) have communicated to their members to support this bill, to sign numerous petitions to Congress to ensure it passes, etc., without much member discussion on what the cons are of the legislation. In addition, the advocacy organizations (NARAS, SONA, NSAI, the SCL) have also trumpeted support without much point by point member discussion or debate, which to us is deeply concerning.
Is the MMA truly a landmark win for ALL music creators? Will money start flowing to the “little guy” who doesn’t have a publishing deal and plans to utilize streaming services to distribute his/her music, who is totally DIY, who doesn’t understand/care about the inner workings of the music industry and what the difference is between AFM, SAG-AFTRA, ASCAP, BMI, SoundExchange, and Advocacy-only groups such as NARAS, SONA, and NSAI? (This, by the way, is the majority next generation DIY musicians who upload millions of tracks into the streaming services every year.) What will REALLY change for that DIY music creator, producer, or performer? Can he/she plan to retire off of the whopping increase in earnings that passing the MMA will provide? Will they be able to figure out how to register to get their windfall in time before the publishers who are behind the MMA claim it?
If the MMA legislation is so much of a windfall moment for all music creators, producers, and performers — why is it so hard to find a concrete example (or have the advocacy groups even CREATE an example to relate to) of a DIY music creator and how the MMA will help him/her earn more income for their music (or musical contribution) from streaming? Why haven’t the member organizations provided examples of “if you wrote this, recorded this, produced this, and/or released it on a streaming platform, this is how passing the MMA will improve your music creator/producer/performer life” as a part of their non-stop rally of support for this bill? And what about the musician unions? If they want musicians to support the MMA, why haven’t they provided any examples of how a session musician (or lead singer) who played/sang on a track that is now released on a streaming service will benefit?
YOU HEARD IT HERE FIRST: THE “LANDMARK” DATABASE WILL MAKE OR BREAK THE MMA’S (THE MLC’s) SUCCESS
[Editor Charlie sez: As David Lowery has posted, it’s looking like the Senate version of the “Music Modernization Act” may not include the CLASSICS Act which would require royalty deadbeats at the Digital Media Association, SiriusXM and Pandora to pay their fair share of performance royalties for our legacy artists who recorded before 1972. This loophole has been exploited and defended by the head of the Digital Media Association while he was formerly at SiriusXM and Pandora. David caught him promoting a position from Google shills Public Knowledge and now Terry Hart has called out Professor Mark Lemley for trying to pull the bait and switch from the House bill to the Senate version of MMA (which means “Music Modernization Act” not “Make More Algorithms”). Professor Lemley has plenty of entries in the “Google Academics” database, a handy tool for tracking Google’s influence.]
While several pieces of music legislation have been introduced in the Senate, there is not a single comprehensive package yet. We are encouraging our Senate allies to bring these many issues together into a single, comprehensive Music Modernization Act, like the bill passed in the House.
Guest Post from the legendary guitarist Marc Ribot. One point that Mr. Ribot makes we would like to further emphasize at the outset: without DMCA reform there is no “market” for Copyright Royalty Judges to set rates under the MMA. This comes on the heels of a paper from Stan Liebowitz at the University of Texas. The Liebowitz study clarifies how the safe harbor, contrary to its intended purpose, creates an inefficient and unfair advantage for UUCs when bargaining with copyright owners, meaning that UUCs either do not pay for copyright permissions or, if they pay something, they pay less than the market rate.
____________________________________
The following article examines the effect of ECM’s switch to Spotify – and the larger, tectonic shifts in the industry of ECM’s move is part –on indie jazz labels and artists: and suggests a course of action.
The Red Ink Beneath Streaming’s “New Dawn”
“structural” failure, “not viable” “we’re fucked”
The Music Modernization Act (MMA) , creates a mechanism for setting of rates and payment of royalties to publishers by streaming services, while insulating the services from liability for claims outside its structure. It is widely seen as clearing the way for Spotify’s long awaited IPO.
This, in turn, is seen as a harbinger of the coming of Age Of Streaming.
I don’t think there’s been so much unanimous celebration of a “new dawn” since Joseph Stalin grew a mustache.
The MMA will indeed, if adopted with the changes proposed by Music Answers and others in the indie world, hopefully expand collection and distribution of songwriter royalties for interactive streaming. But even at the most optimistic outcome, streaming is simply not viable for the majority of indie recording musicians and labels. [1]
And it never will be viable, as long as internet giants like Google/YouTube can profit from copyright infringement with impunity by hiding behind the “safe harbor” clause of section 512 of the DMCA.[2] [see glossary of acronyms at the end of the article].
Until then, for the majority of indie artists, the MMA will at best re-arrange the deck chairs on the Titanic, and at worst, weaken the coalition that might have made a real solution possible.
In genres such as jazz, where clusters of small labels have been able to survive the already devastating effects of bit torrent/piracy and YouTube et al’s legal infringement (60% collapse of industry revenue) by creating niche markets based on physical object sales and legal downloads, the signs are already clear that this consolidation/rationalization of streaming (of which the MMA is a component) will drive many of the current labels out of business.
What does “not viable” mean? It means that where once revenue received from the sale or licensing of a recording amounted to more than the cost of producing it, now, it doesn’t.
“Our issue with streaming is so much greater than just whether an organization like A2IM can double the payout from Spotify from $0.004 per stream to $0.008 per stream. The issue is more structural cause we’re fucked at either payout rate.”
(Yulun Wang, co-owner Pi Recordings).
The problem isn’t just that streaming rates aren’t viable, its that they are displacing forms—cd’s, vinyl, and legal downloads—that are (or were).
I’m an indie artist who has lost money on three of the last four cds I’ve made. What made them possible at all was the investment of record companies like Pi, whose co-owner is quoted above.
(Pi happens to specialize in jazz: the economics for indie labels in rock, classical, or other niche markets are similar).
After an initial attempt to distribute through Spotify resulted in receipts of less than $200 — for the entire catalogue!— Pi withdrew.
Pi’s experience with Spotify is typical of small labels on other streaming platforms as well.
John Zorn’s Tzadik label has been a central institution of NYC’s Downtown New Music scene since the early 90’s . Recently, the entire Tzadik catalogue was (accidently, and against John’s specific instructions) placed on Google’s streaming network for 6 months. When John found out about this, he immediately withdrew the catalogue: his 6 months of streaming had produced over 250,000 streams, generating: $300 in total for the entire catalogue.
Tzadik’s total annual budget for recording is c/a $60,000usd. [3]
You don’t need a supercomputer to see what the $300 dollars in 6 months “Age Of Streaming” will do to Tzadik.
That’s what “not viable” means.
What has enabled Pi and other small Jazz labels to survive outside the streaming world thus far has been the existence of a market for CDs and downloads. What in turn kept that market viable was that other important jazz labels, notably ECM, had also withheld their catalogues from Spotify. This meant that a significant jazz buying public participated in the CD/vinyl economy: ie: they owned cd players and turntables, and acculturated to going to stores, visiting Bandcamp, Amazon, or label websites, to order their music.
Below is the reaction from Yulun Wang, one of the two co-owners of Pi Recordings to news that ECM had finally capitulated to Spotify:
“ECM embracing streaming so wholeheartedly feels like a dagger to the heart – We had long felt that they were part of some informal bulwark of independent jazz labels who were the final holdouts from the streaming platforms. With them falling, it just makes it more difficult for us to continue hold out…
Of course this past weekend it was announced that Cuneiform, a fine jazz label that has been around for over three decades, has decided to take time off to reconsider their future.
I hate to be so dark, but it’s just looking so bleak. [4]
Yulun isn’t an engaged artist rights activist. In fact he tended to be fairly apolitical on these issues…until recently.
“Structural” Failure, “Not Viable” “We’re Fucked”
This isn’t just a problem for labels.
It costs me as an artist 5-15 thousand to make a record: and months to years of work.
On a recording I released with a label other than Pi that did stream with Spotify, I made c/a $260 from Spotify for the first 18 months—the prime sales period.
When I asked what passage of the MMA would really mean, a trusted insider to MMA negotiations (and an MMA supporter) told me: “you know those artist checks you get from Spotify? Well, now you’ll get another one for publishing.”
If the rationalization of streaming further displaces the physical object and legal download market that used to pay for my recordings and leaves me with $520 for a $10,000 expense…?
That’s what “We’re Fucked” means.
If, for Taylor Swift, streaming was a bad deal, for indie artists and their labels, particularly those catering to emerging artists, or to niche markets like Jazz, Classical, and experimental, the damage is often terminal.
Whether the MMA will make that deal more beneficial for small songwriters rests heavily on the degree to which indie songwriters advocates like Music Answers succeed in amending it.
But its beneficiaries will in either case not include most indie labels or non-songwriting recording musicians. [1]
The root cause of the damage is not Spotify per se. Spotify is, first of all, legal: unlike YouTube or the pirate sites, its business model is not dependent on the mass violation of artists’ copyrights. I see no reason to disbelieve Spotify’s claim that they are charging consumers, and maybe even paying artists, as much as the market will bear.
The underlying problem is that there IS no market…nor can there possibly be one, so long as YouTube and pirate sites make our work available, without our consent or remuneration, for free.
And YouTube et al will continue to do so as long as section 512 of the DMCA gives them a special privilege “safe harbor” protection from liability for the damage we suffer when they do.
The “grim” reality faced by Pi and other indie labels or the musicians whose recordings they finance[d] isn’t going away until YouTube et al’s special privilege “safe harbors” are made contingent on their adopting real measures[2] for stopping mass infringement. The technology already exists for doing so—without hurting “fair uses”.[3] The legal framework for protecting start-ups or “small business” OSPs[4], or ANY business for which adoption poses a problem is already written into the DMCA.
Section 512 reform wouldn’t “force” anyone to do anything.
But if major corporate online platforms specializing in the distribution of content (like YouTube) failto take reasonable action to address infringement, including through the use of readily available technologies to avoid providing access to clearly infringing materials, they would lose their special privilege Safe Harbor protection from normal liability.
If section 512 reform passes, we get a market back. If it doesn’t we don’t.
All the rest is hype: NO industry can survive in competition with an open Black Market making its products available for free. Sadly, ours is no exception.
SO WHAT CAN WE DO?
The real practical solutions to the current market failure have already been written: The Music Community Response to the Copyright Offices inquiry on section 512 of the DMCA.[5]
In order for there to be a market in recorded music, these solutions now need to turned into law.
And in order for that to happen, we’re going to need all the Music Community signatories to commit their full energy and resources to reforming section 512.
Make no mistake: Google, YouTube, and others making billions annually in ad-based and data mining profits on infringing content do not like 512 reform. They’re going to fight it tooth and nail…and they have the sharpest teeth and nails that money can buy. Any realistic chance that such powerful opposition can be overcome lies in the hope that the Music Community’s power can be expanded – for example by mobilizing the memberships of its mass organizations – not reduced.
The coalition which drafted and signed that “Music Community” document, including the AFM, SAG-AFTRA, A2IM and, (after negotiating amendments) SGA, have stuck together to endorse the MMA, even though their non-songwriting or small songwriting memberships will benefit only marginally, if at all, from the bill’s passage.
Its time for those “Music Community” coalition organizations whose members will benefit from MMA—NMPA, SESAC, ASCAP and BMI –to return the favor by demonstrating in some tangible form their commitment to fighting for 512 reform now.
Some trustworthy advisors have warned that failure to pass the MMA would kill the chance for ANY pro-artist legislation—including section 512 reform—for at least 10 years.
Others have claimed that making the MMA’s passage contingent on section 512 reform is simply not realistic.
But “realism” cannot mean participating in the rationalization of our own extinction. Drowning under 3 feet of water instead of four is not an acceptable compromise.
If the MMA’s “Grand Bargain” being negotiated by our leaderships paves the way for streaming to kill cds and downloads, leaves us with $500 to pay $10,000 bills, drives labels that used to fund our records out of business, and splits the coalition that would have enabled meaningful reform, then why should we care whether it passes?
The large majority of my union’s recording members are indie musicians.
What good does it do us to read from a distance of the gleaming benefits and protections of a union contract while, like the urban slum dwellers of Blade Runner, our real lives consist of scavenging to self-finance recordings in the wreckage of the recording economy (or doing sessions for equally cash starved indie labels or artists subject to the same impoverishment)?
And what good will it do any AFM or SAG AFTRA member if, as some have predicted, the Major labels – which DO pay scale – are only backing the MMA to pave the way for Spotify’s IPO, after which they can cash in their equity, write golden parachute contracts for their chief executives, downsize into distribution offices for their back catalogue, and cease (directly[6]) funding new recording?[7]
Beneath the unanimity of the Music Community’s support for the MMA, there is deep dischord, with many quietly pushing for amendment behind the scenes; and many others (including trusted artist advocates David Lowery, and atty Chris Castle opposing the bill outright.
My union, the AFM, supports the MMA. But my AFM Local, 802, has quietly urged the AFM to support Music Answer’s proposed amendments.
Having attended an open meeting on the MMA at local 802, I can tell you that even such conditional support was contentious among rank and file union members.
If the MMA’s backers want to keep simple narratives of unanimous musician uplift and support in the public eye, if NMPA, ASCAP, and BMI want to deliver the MMA’s substantial benefits to their big publisher and major songwriter members, and if their Music Community union allies want to avoid a rank and file revolt, then I would advise all the above to take immediate steps to ensure inclusion of Music Community section 512 reform in Senator Goodlatte’s proposed comprehensive reform bill.[8]
If such attempts prove impossible to achieve, the Music Community organizations—ALL OF THEM– should present tangible proof that they are willing to develop, FUND, and commit to a campaign to fix the real problem: 512 of the DMCA.
Maria Schneider and Chris Castle’s opposition to the MMA has focused on the ways the bill’s fine print undermines some of the gains for songwriters advertised as it goals. Other pro-artist groups—SGA, SONA, and Music Answers – have pursued the bill’s amendment, rather than its defeat, because, while acknowledging many of the same critiques as the bill’s opponents, they believe that its aggregate effect, if amended, would be beneficial for songwriters.
But while feverishly guarding the castle walls against the MMA’s hidden effects on songwriters, we may have permitted the real Trojan horse to pass through the main gate unopposed: and that horse is strategic: the undermining of the basis for unity of the ONE coalition – the “Music Community”[9] which up till now has included major labels, major publishers, and major songwriters– that can achieve section 512 reform.
It is my strong suspicion that if indie artists/musicians wait till after the MMA passes to try to get the Music Community to win or commit to 512 reform, we— and small songwriters– are going to be left with about as much negotiating power to achieve that goal as the Trojan women[10] after their city’s defense was breached.
I want to be clear that I consider payment of royalties to songwriters — the stated intention of the MMA– entirely justified and fair. And I’m grateful to Hakim Jeffries, Bob Goodlatte, and the MMA’s other congressional supporters for their efforts to redress this longstanding injustice.
But the economic survival of the majority of working recording musicians[11] and the labels which finance them is dependent on 512 reform. That statement is true today, and will be radically more true in the future streaming economy that the MMA will help create. [12]
Our representatives can address our grave concern by acting to put their budgets and political leverage where their USCO policy statements[13] are. We need an actionable plan to win section 512 DMCA reform NOW—while united action is still possible. “Call us after the MMA is passed” won’t do.
Because if the MMA means that our realistic hopes for section 512 reform are being sold, then as far as I’m concerned: Spotify can keep its $260 spare change, and, to paraphrase Johnny Paycheck, they, and Google, and ALL the powerful organizations which have signed on to it can ‘take this “Grand Bargain”… and shove it.’
A GLOSSARY OF ACRONYMS:
A2IM American Association of Independent Music: the indie label trade organization.
AFM American Federation of Musicians: the musicians union
DMCA: Digital Millenium Copyright Act of 1997-98: the US law governing copyright on the internet.
MMA: Music Modernization Act.
NMPA National Music Publishers Association: representing large publishers
RIAA, Record Industry Association of America: the major label trade organization.
SAG-AFTRA Screen Actors Guild—American Federation of Television Radio Artists: the union representing vocalists and actors.
SGA, Songwriters Guild of America, an indie song writers organization.
SONA Songwriters of North America: an indie songwriters organization
Jobs: although the indie sector is a minority of market share, it provides the large majority of work.
Culture: every single current pop genre began as a niche market. If you kill the cultural goose, no more golden omelettes.
[2] > end special privilege ‘safe harbor’ protections for corporate Online Service Providers (OSPs) with ‘red flag’ knowledge of mass infringement.
>end the game of whac-a-mole: reform the DMCA so that a single take-down notice effects the take-down of all identical files on a site…permanently.
> The technology to protect our rights – without harming freedom of speech or genuine ‘fair uses’ — exists now: and should be made standard (Standard Technical Measures, or STM’s) for all major hosting platforms specializing in the delivery of content. No “Safe Harbor” for for major corporate Online Service Providers (OSPs) which fail to adopt STM’s.
[3] See Audible Magic’s 2016 submission to the Copyright Offices inquiry on Section 512 of the DMCA
[4] The figure cited by a PRO-artist advocate for defining “small” was capitalization of 30 million usd or less.
The bullet points in footnote 6 are consistent with its recommendations.
[6] The practice, already begun, of licensing non-union indie recordings would no doubt continue.
[7] And what good will it do our culture and economy? Back catalogue sales are great: but we didn’t become a world emulated cultural model or a major exporter of music by funding the dead.
[10] suffice it to say that 3000 years after the sacking of their city, the word Troia still means prostitute in Italian.
[11] including small songwriters who will receive some benefits under the MMA. Songs large and small don’t produce income if they’re not brought to market in the form of a recording. We all rely on section 512 reform to restore a healthy market for recording.
[13] Music Community Response to the USCO Inquiry in section 512 ibid.
[1] note: although indie artists’ work accounts for a minority of market share, it represents a large majority of employment in the industry, and we represent an even larger majority of working artists.
[4] I’ve heard similar expression from other indie labels and musicians, but it rarely finds its way into the media. Then again, no major conglomerate is paying the publicists who might put it there.
Not only does the move to streaming favor the large-back- catalogue Majors against their indie competitors, but the Major Labels all have equity in Spotify, whose coming IPO would not benefit from the amplification of voices such as Yulun’s.
I received your point-by-point response that you apparently shared with legislators and interested persons in response to my 10-point critique of the MMA. Thank you for your perspective. Perspective is important. But in my opinion, your letter contains misdirection, many important omissions, and inaccuracies. I explain this below, and in much greater detail in this downloadable PDF point-by-point response to your letter. I’m just giving my perspective, but I think it’s an opinion educated by years in the real trenches of the actual music business.
The letter below is long – I know. But THAT’S how many things are problematic with this bill in my opinion. I hope we all agree, expediency shouldn’t supersede getting things right for music creators and industry sustainability. I ask creators, industry people and lawmakers to read this entire letter with a mindset of getting this bill drafted right. I believe these points aren’t only optimal for achieving success, I believe they’re mandatory for achieving success.
Mr. Israelite, you used the word “confused” several times in referencing my open letter. I’m not confused. But, my perspective is very different than yours. I’m asking you to read my perspective which I know I share with countless musicians and songwriters in this country. I’m asking you to advocate for nine simple “fixes” that will ensure the MMA is a success for music creators, and ultimately, everyone.
We both respect and are deeply grateful for the amazing support we have received from our Congress. That’s wonderful. But the MMA, as currently written, is not yet wonderful. Congress is expecting the MMA to directly help music creators who have been severely damaged from the current streaming market, and I’m throwing out my ideas to get us to that goal.
Here’s a new sobering statistic: This recent article points out how 99% of all streaming on Spotify involves only 10% of all songs. If true, that means 90% of music is splitting only 1% of the financial pie. Who is living on molecules of pie? Musicians and composers I revere: Pulitzer Prize winners, MacArthur winners, NEA Jazz Masters, Grammy-nominees and winners (those you don’t see on the telecast), musical icons, contributors to American and world culture, masterful musicians and songwriters revered in local communities but that aren’t widely known, leaders of orchestras and bands, teachers at conservatories and colleges, and selfless mentors. We are in niche genres: jazz, classical, Latin, world music, as well as hip-hop, folk, gospel, blues, electronic, rock, indie, etc. It’s a massive and diverse group, the vast majority of songwriters in the U.S.
We, the 90%, are the collateral damage in the digital economy as presently structured. And much of it has come at the hands of the very same corporations that you trying to make sure will run this next MMA show. While the MMA has some strong ideas, it vests WAY too much power in the hands of the biggest publishers and streaming companies. Why am I so concerned? Because I and countless colleagues in these niche genres have learned painful lessons we’re not keen on repeating.
Lesson 1: The three major music companies that are locked and loaded to run the music licensing collective (let’s call it Corporation A) are the same companies that allowed themselves to be enticed by the self-serving Svengali, Daniel Ek, whose beginnings were built on infringement (uTorrent). The day Warner, Universal, and Sony bit a huge chunk of poison apple in the form of equity in Ek’s Spotify, they traded their contracted musicians’ and songwriters’ valuable creations for ads. That tectonic shift gave Ek most of the world’s music, it legitimized “free,” and it created a gaping conflict of interest for the Big 3.
Songwriters and attorneys argue if it was a “fiduciary breach.” In my opinion it is a massive breach of trust and ongoing conflict of interest. And as the 90% have suffered a huge collapse in income, inversely, we watch these companies celebrate their earnings from 10% of songs. That conflict of interest and breach of trust are very relevant to the MMA, and this history absolutely must not be ignored in writing the governance sections of the MMA. And, if that reality is painful or upsetting for industry to read, I can only answer that they themselves created it.
Lesson 2: There’s something else occurring as a result of streaming that’s critical to understanding the niche musician’s and songwriter’s perspective. It’s that many, if not the vast majority of record companies, are no longer advancing money for a lot of music on their labels. It’s now the artists and creators, in countless numbers, who are each sinking tens of thousands of dollars into making their own records. Many still go with a label despite having to front the costs themselves just to be part of a distinguished label roster. There are many fine small labels doing everything they can to make that a worthwhile trade, and some still struggle to front budgets. The point is, those niche labels and independent musicians face either a zero, or statistically insignificant, chance of a return on their investment through streaming. Many report barely paying for a sandwich with their royalties.
If one only cares about the top 10% of songs and launching superstars to the stadium echelon, and keeps the blinders on for the rest, I suppose one can claim some successes with streaming. But if one values the wide array of music our country and the world has to offer, then our biggest music corporations have failed us, and failed our culture of music as a whole, by cashing in on Ek’s unsustainable business model. Spotify’s IPO papers confirm to me the streaming model’s income and wealth inequality as well as unsustainability. The 90% knew this years ago.
Lesson 3: As I see it, those set to run the show under the current draft MMA have a terrible track record in this arena: The NMPA owned the Harry Fox Agency themselves and was already once tasked with solving the Spotify mechanical issue. In my opinion, that effort failed miserably: the feuding, in-fighting and finger-pointing that occurred between the NMPA, Spotify, and HFA, and the ugly lawsuits brought by independent songwriters and small publishers resulting from what seems to me to be a collective failure to properly handle and respect mechanical royalties, left these companies acting like the Keystone Cops. Yet ironically, it is the NMPA and the Digital Media Association (DiMA – companies like Google, Spotify and Amazon) that, in my view, are steering all power under the MMA to the same cast of characters, while conspicuously avoiding objective oversight and reasonable checks and balances.
I have no problem with the NMPA or its members and Spotify being involved in the solution. But I have a HUGE problem with them controlling the solution, and controlling the entities that will be formed under the MMA.
These three lessons frame many of our perspectives on the MMA. It’s a grim reality that explains why I don’t trust certain entities to run the show.
Below are simple, specific proposals that I think are rooted fairness and common sense that will greatly will improve the MMA’s actual chances of ongoing success for all of us.
1. Songwriter. If you’ve not yet amended the definition of “songwriter,” will you agree to advocate for a rewrite that would requires a “songwriter” to be someone with a recognized and substantial professional career based on songwriting or composition? By the current definition, even an employee of a publisher who long ago wrote part of a lyric of one song would qualify as a “songwriter.” A definition that gives songwriters and composers that assurance is necessary.
2. Equality. Imagine that Congress passed an Act that would set up a private entity to tackle the issue of “Women’s Health in the United States.” Then imagine that the board of directors was crafted to have only TWO women on the board of TEN people. Pretty outrageous, right? Now, further imagine that women were offered the prospect of the board being expanded to 14 total members, and instead of 2 out of 10 being women, it was now going to be 4 out of 14 (an 8% increase, but still a very small minority). Finally, imagine that the 10 male members were all executives at big Pharma, earning big salaries and bonuses from expensive and very controversial women’s pharmaceuticals. We’d all find that horribly outrageous, right? Now, imagine how infuriated women (and men of conscience) would be if the trade association for Big-Pharma consoled women who advocated for a balanced board, with the following catchphrase: “don’t let the perfect be the enemy of the very very good.” (your words at the end of your letter)
I hope this spot on analogy offers you and others perspective. Therefore, can we agree that the “Collective,” (I call it Corporation A) should have governance that, as between publishers and songwriters, has at VERY LEAST, 50% songwriters – songwriters chosen by songwriters themselves? Independent songwriters deserve an equal presence with publishers on a board that will control OUR works and economic future. Who wouldn’t support a 50/50 board?
3. Board Diversity. Can we agree that the Board for the “Collective” (Corporation A) would be MUCH better if it also had several “outside” totally independent voting board members, especially members who have actual experience and success in leading the development of new software, database and cloud based systems? There are countless such all-stars and experts. Corporation A is really a technology company that will be based on system design, program management, and vision in the field of data management and cloud services. To achieve success with that tall order, technology expertise must be included on the governance board itself, not relegated to some “advisory” committee, or worse yet, to some downstream subcontractor (who could be a conflicted DiMA member like Google).
What on earth are 10 publishers doing at the helm of a technology company? If our company was tasked to design and build a new artificial heart, we’d want the worlds’ best surgeons and bioengineers on the board, not 10 big insurance company representatives and 4 sick patients. Independent objective technology experts (e.g., obviously not Google or anybody else from, or related to, Corporation B due to conflicts of interest) will bring more value to this board than the songwriters and publishers combined. I am confident our elected leaders would agree that this would markedly increase the chance for this “technology company” to be a success.
4. Open Competition. Can we agree that a) the publishers should not have a veto power over who is selected to be Corporation A; and b) the members of DiMA should not have a veto power over who is selected to be Corporation B? The language in the MMA, “endorsed by, and … substantial support of,” (used for both Corporations A and B, pages 17, line 21, and page 58, line 8 of the Government PDF of the MMA) basically gives outright veto power to the big players. I am willing to bet that Congress would be more comfortable if the selection of these two entities was done in an open, competitive process, where creative and talented teams of people: small business, minority-owned, women-owned, technology-based collaborative teams could freely assemble and compete, and would be assured of a fair shot at winning this great opportunity.
The Register of Copyrights should be able to pick these two entities through an open market, not have her choice restrained by a closed back room. Replace the language, “endorsed and supported” with language requiring that each entity: “will be chosen by the CO through an open and competitive process, where selection is based on the strength and merits of each applicant, and where conflicts of interest are disclosed and addressed.” Our government mandates that same process even for choosing a vendor for toilet paper! Surely we’d expect just as much when entrusting an entity to guard the economic future of music creators. Wouldn’t we?
5. Business Continuity. Can we agree that if either Corporation A or B goes belly up, and/or the CO needs to pull the plug, the MMA should clearly state to everyone that none of the software, data analytics, or algorithms, belongs to the entity? We can all fairly agree that Spotify would not exist if not for the music, right? So then, considering that this whole investment is basically underwritten by revenue generated by the music that songwriters have written, we need to be assured of “business continuity” should things go sour.
The MMA is NOT intended as an opportunity for a private entity to build trade secret assets that could further cripple the industry. We cannot allow this huge investment in technology to be usurped by any party should Corporation A fail in living up to its expectations. It’s Business Continuity 101 stuff. So rather than assure us that somewhere downstream, there MAY be regulations that might clarify this as you suggest, let’s build that HUGE point right in the section of the MMA (page 31, line 16) that addresses the Database. Something simple, like: “All data submitted to the Collective will be owned by those parties submitting the data, and is licensed to the Collective for the sole purpose of fulfilling its duties under the MMA, and will not be assigned to any other party. All data analytics, algorithms, software, APIs, software tools, resultant data, and aggregated data developed by [the Collective] or its subcontractors will be held in trust by the U.S. Government, and will not be exploited or encumbered by [the Collective] for any purpose other than as authorized under this Act, and will not be encumbered or sold or assigned to any other party.” Should something unforeseen happen, we’ll all need to be protected.
6. Meaningful Audit Rights. Can we agree that meaningful audit rights for independent music creators are necessary? After all, the MMA IS stripping away our rights to bring a suit for infringement, so let’s look at the tradeoff: The current provisions (page 42, line 5, through page 45, line 20 of the government PDF) are great, if we’re talking about Sony, Universal, and Warner, that can afford Deloitte. But if I want to audit a $25 payment I received from Spotify, I can’t be expected to hire Deloitte for the impossibly complex multi-step process laid out in the MMA. Two simple requirements wouldn’t hurt anyone: 1) a streamlined audit right for small amounts (details could be ironed out through regulation), and 2) spot audits every six months of random independent music creators’ accounts, just so the CO is exercising some ongoing QA/QC on the Collective’s systems and performance. Both create great incentives for the Collective to do a good job, saving money in the long run, and increasing everyone’s confidence.
But there’s something else lurking in those audit rights: Today, if I sue someone for infringing my copyright, I have the right to recover attorney’s fees in certain cases. But under the MMA, not only is that absent, but I’d be required to hire a CPA and pay for my own legal and audit fees, even if I win. That’s not fair in light of what we’re giving up. We deserve the right to recover our reasonable costs if we’ve been wronged by Corporation A or B. It’s fair, and keeps entities on the up and up. That’s the purpose of the attorneys fees provision in the current copyright law. Why should we give that up?
7. Black Box. Independent creators will most likely be the ones who won’t know to sign up with the Collective, or who won’t have filed a registration with the CO. Their money, largely, will end up in the black box. I meet countless musicians and songwriters who know nothing about mechanical rights or copyright.
My opening statistic showed that 90% of the music on Spotify shares 1% of the pie. The black box money will most assuredly be out of that group. If Corporation A can’t control their budget, why should these unpaid creators unknowingly foot the bill? Shouldn’t the money be “borrowed” from those that MOST benefit from the MMA? (If it’s even legal for trustees to “borrow” money held in trust.) This bill needs to create meaningful incentives like this for the Collective to not overspend. (Not to mention this “borrowing” right of the Collective seems to be contradicted by the obligation to hold those royalties in a black box for 3 years.)
Secondly, the idea that this black box money should be distributed (after 3 years) to songwriters and publishers according to market share is absolutely abhorrent. I don’t often bet my life, but I’d bet my life that Kendrick Lamar, Taylor Swift, Bruno Mars, Lady Gaga – name any bigtime music creator – would not want to receive black box money belonging to independent music creators who haven’t received it because they didn’t yet know how to get it, or whose song had a wrong spelling, wasn’t filed at the CO, or whatever. No music creator would knowingly endorse something so skeevy. That money should be held until it is claimed, and if after many, many years, it’s still unclaimed, perhaps it could go to scholarships or something else worthy.
8. Immunity. Some legal commentators have given “just cause” to be concerned whether parts of the MMA are unconstitutional. Today, many creators don’t file copyrights: it’s expensive, and it’s not required under international laws. I have that right under the Berne Convention that the U.S. has signed. If a band of young kids in Peru, Canada, Nigeria, the UK, you name the country, records 10 of their songs, they submit them to Spotify, and it goes viral, are you telling me that they won’t get paid until they figure out that they need to first file the papers and possibly pay hundreds of dollars in fees to the U.S. CO to register the songs in the U.S.? That’s the way I read the bill. Can it be that we’d require the entire world to pay registration fees to the U.S. Copyright Office before they are allowed to get their first dime from Spotify? In addition to possibly being unconstitutional and in violation of rights under the Berne convention, it smacks of musical colonialism. I suggest the MMA be fixed so creators aren’t left with the short stick.
9. Immunity for the “Collective” (Corporation A). If you hired a financial planner for your mother, and that planner gave you a contract saying, “Even if I am negligent, sloppy or incompetent, and/or even if my services deviate from the standard of reasonable care, you and your mother can’t come after me when I lose all of your money,” you’d be shocked at their nerve. The same goes for surgeons, accountants, or anyone else in society that owes us a duty of care. So, I was shocked to read the fine print (page 93, lines 9-24) about the Collective’s lack of liability, should it screw up.
The MMA basically says that the Collective “shall not be liable to any person or entity” for negligence, sloppiness, or incompetence, but can only be liable if proven “grossly negligent.” “Gross negligence” is nearly impossible to prove. In fact, “gross negligence” basically requires conduct to be intentionally reckless – conduct so bad, and so rare, insurance companies won’t even insure against it.
As I read the MMA, the “Collective” (and its board) are basically immune from liability, even if they completely screw up the whole system through incompetence and negligence, and even if there are millions lost. In my opinion, that’s extremely irresponsible.
Let’s change the tricky phrase “in a manner that is not grossly negligent” to “in a manner that uses reasonable care, and is not otherwise negligent, or grossly negligent.” Let’s make sure Corporation A would be liable if it acted with incompetence, or negligence.
None of these points are unreasonable or illogical. Each directly reduces risk of failure. I would hope we’d all advocate for these common sense, simple language changes to the MMA.
Let’s create a new version of the bill that maximizes the chances of success, minimizes the chances of conflicts of interest and/or failure, and fulfills the fundamental goal of Congress to directly help the music creators.
And for anyone who received David Israelite’s letter and would like to read my point-by-point response, you may download it here.
The Trichordist 
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