This study showing the negative economic effects of safe harbors is great timing as we are reviewing multiple brand new safe harbors proposed to great fanfare in the Music Modernization Act that protect Spotify.  More on this to come as we review the welcome study by economist Stan Liebowitz, Ashbel Smith Professor of Economics at the University of Texas at Dallas.

PRESS RELEASE

Paris, France –  February 27th, 2018 – Copyright “safe harbour” rules, drawn up a quarter of a century ago to help nurture early online commerce, are today distorting the digital market, profiting tech giants and leading to significant underpayment of copyright owners, a new US economic study says.

“Economic Analysis of Safe Harbour Provisions”, by Ashbel Smith Professor Stan Liebowitz of the University of Texas at Dallas, is the most detailed economic examination to date of how copyright owners have been damaged by so-called “safe harbour” rules in copyright law.

The economic study has been commissioned by CISAC, the International Confederation of Societies of Authors and Composers. CISAC is the world’s leading network of authors’ societies, with 239 member societies in 121 countries together representing over 4 million creators of music, audiovisual, drama, literature and visual art.

Commenting on the study published today, CISAC Director General Gadi Oron said: “This study shows that copyright safe harbours, designed for a 20th century internet, urgently need re-examining in the 21st century.  Instead of shielding internet companies that merely offer storage facilities, as was their original purpose, safe harbours are today being used to shield tech giants from rewarding creators for their work [like the eminent domain sections in MMA that take away rights to sue infringers retroactively]. This is not a problem that can be solved by industry alone – it is a responsibility for governments that care about the cultural and creative sector. Creators deserve 21st century laws that ensure fair payment for their work, not laws that cause the value of their works to be siphoned away to global tech companies. Technology has evolved, and the law should evolve with it”.

Professor Liebowitz is a leading author, researcher and academic in the economics of intellectual property, networks and new technologies. Among the findings of his study are the following:

• Because of the safe harbours, User Upload Content services such as YouTube have “an inefficient and unfair advantage” when they negotiate rates for permission to use copyrighted works on their sites.

• As a result, UUCs either do not pay for copyright permissions or, if they pay something, they pay less than the market rate.

• Other online services (such as subscription services, e.g. Spotify and Apple Music) are at a competitive disadvantage when competing with UUC platforms. These services generate lower revenues and have a reduced user base, because of the distorting impact of safe harbours.

• As a net result, because of the distorting knock-on effect of safe harbours on the wider market for creative content, copyright owners are seeing reduced copyright payments from both UUC and other services. These reductions would appear to be “very substantial”.

Read the one page summary of the study here.

Read the study here.

Guest post from The Invisible Stagehand.

I’d like to offer an alternate theory on the foundering attempt by the American Law Institute to “restate” copyright law.  While my colleagues make good points on the lack of transparency, openness and fairness with the current ALI process; rightfully note the conflicts of interest; and excoriate Sprigman for taking money (however indirectly) from Silicon Valley while working on the project, the most obvious conclusion is that those in charge of the restatement are incompetent.  Not devious.

I refer you to Hanlon’s Razor:

Hanlon’s Razor: “Never attribute to malice that which is adequately explained by incompetence.”

Now incompetence rather than malice doesn’t mean that someone shouldn’t be fired. Someone probably should be fired. Start with Sprigman. He’s in charge of the project. If that doesn’t work fire someone else. Repeat until incompetence stops.

The case for incompetence.

Exhibit One: The fact that this is now a PR issue for the ALI is the clearest example of incompetence.  Sprigman or Director Revesz could have made some relatively small changes to the project in 2015 (as many suggested) and the acting Register of Copyrights would have never written the now infamous “pseudo version of the copyright act” letter. This of course was the basis of the Billboard story that enraged artists. In other words an easily avoidable mistake started the entire controversy. Incompetence.

Exhibit Two: Leader of the project Christopher J Sprigman.  Good lord does the man have a shred of common sense?  I assume the position as “reporter” on the ALI Copyright Restatement is a position that confers some prestige. Why screw it up by taking on Spotify as a client in the middle of the project? Or co-author papers that are directly or indirectly funded by Google at the same time? It’s not an “impartial” look. Did he need the money? I doubt it. Now, not only does his reporter position NOT impart prestige, his own reputation is in tatters. What a screw up.  Clearly not a devious mastermind.

Exhibit Three:  Sprigman’s letter proposing the project clearly indicates he had a result in mind. It reads like a police confession. He admits to everything he is accused of by his critics.  A scholarly project like this is not supposed to start with conclusions and work backwards. Yet he pretty much admits this is his intention in the letter. If I intended to do something this dishonest I wouldn’t start by writing it down in a letter that would surely one day become public. I was too dumb for law school. But this guy must be dumber. Again not a devious mastermind.

Exhibit Four:  If you choose to measure incompetence by quantity, look at some of the letters that take issue with the drafts. For instance the Author’s Guild wrote a long letter to ALI Director Revesz detailing 16 major mistakes in the draft of the first chapter.   Some of these mistakes are just bizarre, (I can’t see the draft) but apparently royalties and fees paid to creators are referred to as “taxation.”  This is either a dumb mistake, or an unnecessary provocation of copyright holders that only an incompetent person would make while trying to build consensus for a draft. Incompetence.

Exhibit Five: Just for fun, let’s take last exhibit and assign deviousness to Sprigman and Revesz.  Suppose they were attempting to pull a variation of a machiavellian committee minority strategy. A competent strategist wouldn’t needlessly antagonize the committee minority by using the term “taxation.”  The minority (pro copyright members) are not supposed to see that the game is rigged. The marks are supposed to think they were simply outvoted. That’s how the con works!! Again incompetent not devious. Maybe add arrogant.

Exhibit Six:  Sprigman took to facebook to call out his critics describing them as “hacks engaging in hackery.” I was speechless when I came across this on facebook. This is not the kind of thing that a competent leader does when faced with criticism.  The guy is clearly out of his league.  Again not a devious mastermind.

I think you get my point.

The Invisible Stage Hand works in the live music business.

 

 

The music world continues to be exceedingly vulnerable, and there are looming questions that desperately need to be addressed. Most important: How can artists distribute and sell their work in a digital economy beholden to ruthlessly commercial and centralized interests? Enter Spotify, a platform that is definitely not the answer.

via @lizpelly: The Problem with Musak — Artist Rights Watch

Great news today that the appeals court upheld BMI’s ruling by the BMI rate court judge that there is no such thing as 100% licensing under the consent decrees. Although it’s like winning an appeal that the Sun really does rise in the East (attention Cal students), it’s good to put that issue to one side and to poke a stick in Google’s eye.

via Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters — Music Technology Policy

Billboard reports today the government’s decision on the performance royalties SiriusXM pays to artists (effective January 1, 2018):

The Copyright Royalty Board [“CRB”] has determined that Satellite Audio Radio Services, i.e. SiriusXM will pay 15.5 percent of revenue for the next five years beginning in 2018 to 2022, although the full determination has yet to be posted on the CRB’s website while the participants scrutinize the document to make sure proprietary data is not publicly revealed.

That represents a nearly 41 percent jump from the 11 percent the service was paying in the current year, although it’s short of the 23 percent that SoundExchange was advocating to the CRB judges, who are appointed by the U.S. Librarian of Congress. But its better than the static rate that Sirius was hoping from the judges.

SoundExchange press release says:

The CRB increased the rates for Sirius XM by more than 40%, from 11% of revenue to 15.5% of revenue, effective January 1, 2018. Sirius XM is the only satellite radio service in the United States and reported revenues of $5 billion in 2016. By contrast, the CRB reduced the rates for Music Choice’s and Muzak’s services from 8.5% to 7.5% of revenue. SoundExchange advocated on behalf of its artists and rights owners in this rate litigation, which spanned 24 months.

“We thank the CRB for its work and appreciate their consideration of the case we laid out,” SoundExchange President and CEO Michael Huppe said. “SoundExchange is dedicated to our mission of ensuring that creators are properly recognized and compensated for the use of their work. And while the Copyright Royalty Board did not adopt the rates we proposed for Sirius XM, its ruling demonstrates an important step in the right direction toward valuing the contributions of the music creators represented by SoundExchange.”

Yesterday’s decision confirms the need to change the so-called Section 801(b) rate standards under which satellite radio and the “grandfathered” cable radio services operate, and which permit the CRB to adopt rates different than what the market would provide. As a result of that rate standard, Sirius XM has paid below-market rates for years, and the recording artists and rights owners SoundExchange represents have subsidized the company’s growth.

Major score for artists, musicians, vocalists, as well as major and indie labels.  More to come when the Copyright Royalty Board releases its written opinion.

LOS ANGELES, Nov. 28, 2017 /PRNewswire/ — Today Crunch Digital, a music metadata management, reporting, and licensing service that bridges music rights owners with content users, is announcing the launch of the Crunch Digital Sandbox™.

The Sandbox is a music licensing platform that enables qualified app developers to include music legally from participating major and indie record labels and music publishers under short-term developer licenses – and do it faster.

The Crunch Digital Sandbox™ directly addresses the much-publicized problems and concerns surrounding music licensing, which have stymied innovation critical to new business models and new revenue streams for the music industry.

On one side, you have innovators and startups who need licenses now – because tech moves fast.  On the other side, you have record labels and music publishers who are inundated with emails and pitches for licenses, all vying for their attention.  It’s unrealistic to expect record labels and music publishers to take time away from their core business to quickly vet and assess the viability of all the incoming license requests.  You also have investors who have been shying away from backing new music companies due to scary infringement lawsuits and high licensing transaction costs.

In making the announcement, Keith Bernstein, Founder of Crunch Digital said, “With the Crunch Digital Sandbox™, app developers can prove out their concepts and features before engaging in all-encompassing music licensing negotiations.  They will have a better opportunity to gain market traction and attract potential investment for a full product launch. For record labels and music publishers, the Sandbox helps them to focus their attention on viable opportunities.  For investors, they can invest in companies that show proof of concept and mitigate the concerns they have about music licensing.”

Getting started with the Sandbox is easy.  Interested developers submit an application to Crunch. Crunch will vet the applications.  Once an application has been approved, Crunch will work with the applicant to help present their idea to labels and publishers who are participating in the Sandbox.

Crunch will then assist developers in requesting a customized limited use license for access to catalogs, either for a period of time or until the company hits a certain success threshold.  Crunch will share growth metrics with participating labels and publishers – and standout developers can start the conversation to “graduate” from the Sandbox and move up to a long-term licensing deal.

Bernstein added, “For innovators and entrepreneurs, being a part of the Sandbox gives them an invaluable opportunity to go from having no meaningful knowledge about music licensing, no meaningful connections, and probably no awareness of who to contact at labels and publishers, to working with a team of people at Crunch who can help to put them on a path to legally launch with music that will help them find an audience.”

The Sandbox will officially launch in January 2018, and Crunch is already accepting applications at www.digitalmusicsandbox.com.  Record labels and music publishers can also visit the site to become a content participant.  View a fun video about the Sandbox here:

via @crunchdigital Announces Digital Music Sandbox for App Developers — Artist Rights Watch

NY Post says Google actually took down the C3 “YouTube Can Do Better” video–from YouTube!

via Goliath Never Learns: Tone Deaf Google Takes Down a True Parody by Content Creators Coalition — MUSIC • TECHNOLOGY • POLICY

These 21st Century Robber Barrons will expect the taxpayer to pay for those smart roads or if the beneficiaries of the infrastructurer will pay, they will expect to own the roads, no doubt. So the taxpayer will pay for the roads for the driverless cars that create the automation to creat mass firings and so that the taxpayer will pay Universal Basic Income to quiet down the clingers.

via The Flaw Behind Zuckerberg’s Universal Basic Income Scam — MUSIC • TECHNOLOGY • POLICY