When you write a song with another songwriter, do you ask them “Who’s your PRO?”  Never, right?  If the U.S. government has its way, you better start–because the Department of Justice wants to force ASCAP and BMI to license 100% of any song their affiliated songwriters control any part of, like a government-mandated controlled compositions clause.

Yes, you read that right. Example:  You write a song 50/50 with another writer.  One of you is ASCAP the other BMI.  The U.S. government seems to think that the rule always has been–which we all know is utter and complete bullshit–that ASCAP and BMI could both license 100% of that song.  Even though ASCAP and BMI want no part of it and have never done 100% licensing, the U.S. government wants to force them to do it.  How would that work?

It can’t possibly work, never was the deal, and will stand the entire songwriter community on its head.  This will screw up co-writes, parodies, samples, you name it.  It will change everything for the worse.  It will be a disaster. It’s all based on a quirky theory of U.S. real estate law applied to copyright that has never been applied to PROs.

It will also create a huge disincentive for anyone outside the U.S. to co-write with a member of ASCAP or BMI.

We’ve all suffered through the U.S. government’s regulation of songwriters.  The worst example of this is the regulation of songwriters through the ASCAP and BMI rate courts from antitrust consent decrees that are imposed on songwriters by the Department of Justice.  Why?  Wait for it…to promote competition.  But what is really happening is that the Department of Justice is attempting to change the rules of the road to something manufactured out of thin air and then pretending those new rules were there all along.

Instead, the U.S. government and their consent decrees and hugely expensive rate courts have caused many songwriters to exit ASCAP and BMI for SESAC and Global Music Rights.  So why can’t that solve the problem?

Because the U.S. government wants to fix it so that even if you leave ASCAP and BMI, if you write with a songwriter who is a member, then the government will force ASCAP and BMI to license 100% of your song.  That’s right–even if you are at a PRO that isn’t subject to government regulation like SESAC or Global Music Rights, then the long hand of the Department of Justice can still take your rights by regulating your co-writer.  Don’t we still have a Constitution in this country?

That’s interesting because Google, Pandora and the National Association of Broadcasters formed the MIC Coalition along with the Computer and Communications Industry Association, the Consumer Electronics Association, the Digital Media Association as well as hotel owners, retailers and of course Clear Channel (the absurdly rebranded iHeart).  Purpose?  To stop artists getting paid for radio play.

But the first official act of the MIC Coalition was to ask a revolving door lawyer in the Department of Justice who previously represented Google to investigate SESAC!

 

That’s right–companies with trillions of dollars of market capitalization have to have their cronies in the government protect them from songwriters and put SESAC under a consent decree!

Don’t forget that songwriters with Global Music Rights are attempting to withdraw from YouTube on a fractional share basis to renegotiate their YouTube deal or just leave YouTube altogether.  Those songwriters will also be affected by this new rule by the U.S. government.  If these songwriters co-write with an ASCAP or BMI writer, then the U.S. government will force ASCAP or BMI (or both if its a three-way split) to license the co-write and collect the royalties.

It should not be lost on you that Google is in a battle with songwriters over YouTube and that Google dominates the Obama Administration which explains why there’s never been an antitrust prosecution of Google.

But Google isn’t the only one.  Apple is doing it, too.  As SONGS CEO Mark Pincus said in a Billboard op-ed :

[I]n a break from industry convention, [Apple Music’s] offer called for 100 percent ­licensing. This means Apple will accept licenses from a publisher for an entire song, even if the publisher only controls a fraction of it.  Though it never has been the custom in music publishing, by copyright law publishers are allowed to issue a 100 percent license and account to the other rights holders owning shares of the work. That’s right: A competitor can license your shares to Apple whether you like it or not. Now, other DSPs are asking for 100 percent licensing as well. What will happen if DSPs accept 100 percent licenses from their largest licensees (who have shares of more songs)? More control to the bigger companies; less control to everyone else.

That’s right–by protecting its cronies in Big Tech, the government is actually destroying competition, not promoting competition.  The opposite of what the antitrust laws are supposed to do.

Fortunately, you can make your voices heard on this one.  The Department of Justice is asking for public comments on a series of trick questions they have posted on their website which you can read here.  David is going to be writing a comment which we will post on The Trichordist later today.

THE DEADLINE IS TODAY!

Write your own comment and tell the DOJ what you think about this latest change in the rules.  Here’s the notice from the DOJ website:

All comments should be submitted by electronic mail to ASCAP-BMI-decree-review@usdoj.gov  by November 20, 2015, and will be posted in their entirety for public review at http://www.justice.gov/atr/ASCAP-BMI-comments-2015. Information that parties wish to keep confidential should not be included in their comments.

We have to stop this latest end run around our rights.

November 9, 2015

The Honorable Eric T. Schneiderman

Attorney General of New York

120 Broadway

New York , New York 10271-0332

Re: Unclaimed Property/Unpaid Royalties at Spotify and YouTube

Dear Attorney General Schneiderman:

I wish to call your attention to reporting by the Wall Street Journal that digital music service Spotify routinely fails to pay songwriter royalties for songwriters who Spotify has failed to locate—but whose songs they use anyway.  (“Songwriters Lose Out on Royalties”, October 14, 2015 available at http://www.wsj.com/articles/songwriters-lose-out-on-royalties-1444864895).   Precedents established by your office over 10 years ago could go a long way to solving this problem if you enforce them against “new boss” companies failing to disclose they are holding royalties.

According to the Wall Street Journal, Spotify’s practice is to “escrow” royalties for songwriters whom Spotify has not located, and it is our understanding that YouTube also follows this practice, as may other services.  Some estimate that the total sums being held in this manner by Spotify, YouTube and Google are in the tens of millions of dollars.  I personally have estimated that Spotify is using over 150 song I wrote or co-wrote for my bands Cracker and Camper van Beethoven and am demanding an explanation from Spotify.  (“Spotify Has Apparently Failed to License, Account and Pay on More than 150 Cracker and Camper Van Beethoven Songs” available at https://thetrichordist.com/2015/10/20/spotify-has-apparently-failed-to-license-account-and-pay-on-more-than-150-cracker-and-camper-van-beethoven-songs/ )

However, because no digital service does something as simple as publishing lists of songwriters for whom it holds royalties, it not only is impossible for anyone other than the individual services to determine how much is owed, it is also impossible for the songwriters concerned to know there is money being held—ostensibly on behalf of the songwriters–by these services.  If the monies are never disclosed or paid, then how are these services not unjustly enriched?  This seems like a prime case for the imposition of a constructive trust—that “has been famously described as a remedy applicable to ‘whatever knavery human ingenuity can invent’” (In re Alpert, 9 Misc 3d at *7 [Sur Ct, New York County 2005]

Recall that a similar situation arose in 2004 when the New York Attorney General took swift action to protect creators.  According to a press release from your office (http://www.ag.ny.gov/press-release/50-million-royalties-returns-artists):

State Attorney General Spitzer today announced a deal with the nations top recording companies that returns nearly $50 million in unclaimed royalties to thousands of performers.

The agreement comes after a two-year investigation by Spitzer’s office found that many artists and writers were not being paid royalties because record companies had failed to maintain contact with the performers and had stopped making required payments. This problem affected both star entertainers with numerous hit recordings and obscure musicians who may have had only one recording.

“As a result of this agreement, new procedures will be adopted to ensure that the artists and their descendants will receive the compensation to which they are entitled,” Spitzer said.

Under the deal, the recording companies have agreed to do the following:

• List the names of artists and writers who are owed royalty payments on company websites;

• Post advertisements in leading music industry publications explaining procedures for unclaimed royalties;
• Work with music industry groups and unions to locate artists who are owed royalty payments; and
• Share artists contact information with other record companies.

In addition, each company has agreed to have the heads of the royalty, accounting and legal departments meet regularly to review the status of royalty accounts and take steps to improve royalty payment procedures.

The companies have also agreed to comply with New York State’s Abandoned Property Law, which requires that if an artist or his or her family cannot be found, unclaimed royalties be “escheated” or turned over to the state. The state then holds these monies until a claim is made.

I see no difference between the 2004 situation regarding record companies and the 2015 situation involving digital services.  I think that highly sophisticated and well-funded high-tech digital services like Spotify and Google should be held to at least the same standard as the record companies regarding unpaid royalties if not a higher standard—if licensees don’t know who to pay, then why are they using the music in the first place?

If what Spotify told the Wall Street Journal is true, then Spotify knows which songs they are “escrowing” royalties for, and Google likely has the same information. They should know the song title and the name of the artist who performed the song.  Even if Spotify doesn’t know the name of the songwriters concerned, they could at least publish the song title and artist name so that there could be a hope of the songwriter tracking down what was owed to them.  I suspect the same is true at YouTube and all the other digital services.

While the Wall Street Journal refers to the monies being held in “escrow,” I don’t know of any legal basis for a secret “escrow” with an unknown songwriter accrued at a royalty rate the songwriter did not agree to because they were not asked and for which there is no license.

This situation seems ideally suited to the kind of investigation that your office undertook in 2004.

I look forward to your reply.

Sincerely,

David Lowery