Copyright Office Regulates @MLC_US: Selected Public Comments on MLC Transparency: @KerryMuzzey

[Editor Charlie sez: The U.S. Copyright Office is proposing many different ways to regulate The MLC, which is the government approved mechanical licensing collective under MMA authorized to collect and pay out “all streaming mechanicals for every song ever written or that ever may be written by any songwriter in the world that is exploited in the United States under the blanket license.”  The Copyright Office is submitting these regulations to the public to comment on.  The way it works is that the Copyright Office publishes a notice on the copyright.gov website that describes the rule they propose making and then they ask for public comments on that proposed rule.  They then redraft that proposed rule into a final rule and tell you if they took your comments into account. They do read them all!

The Copyright Office has a boatload of new rules to make in order to regulate The MLC.  (That’s not a typo by the way, the MLC styles itself as The MLC.)  The comments are starting to be posted by the Copyright Office on the Regulations.gov website.  “Comments” in this world are just your suggestions to the Copyright Office about how to make the rule better.  We’re going to post a selection of the more interesting comments.

There is still an opportunity to comment on how the Copyright Office is to regulate The MLC’s handling of the “black box” or the “unclaimed” revenue.  You can read about it here and also the description of the Copyright Office Unclaimed Royalties Study here.  It’s a great thing that the Copyright Office is doing about the black box, but they need your participation!]

Read the comment by Kerry Muzzey

The launch of iTunes in 2001 began the democratization of music distribution: suddenly independent artists had a way to reach their fans without having to go through the traditional major label gatekeepers. Unfortunately most of those independent artists didn’t have a music business background to inform them about all of the various (and very arcane) royalty types and registrations that were required: and even if they did, Harry Fox didn’t let individual artists register for mechanicals until only recently.

The result? 19 years’ worth of unclaimed royalties by so many independent artists who have no idea how to access them.

We had hoped that the MMA would fix this, but the “black box” of unclaimed royalties is going to be distributed to the major publishers based on market share. We independent artists don’t have “market share” – but we do have sales and streams that are significant enough to make a difference to our own personal economies. A $500 unclaimed royalty check is to an independent musician what a $100,000 unclaimed royalty check is to a major publisher: it matters. Those smaller unclaimed royalty amounts are pocket change or just an inconsequential math error to the majors but they’re the world to an independent writer/publisher. And that aside, these royalties don’t belong to the majors: they belong to the creators whose work generated them.

Please, please, please: you have to make that database publicly accessible and searchable like Soundexchange does. There needs to be a destination where all of us can point our friends and social media followers to, to say “you may have unclaimed royalties here: go search your name.” They can’t remain in the black box and they can’t go to the major publishers. These royalties must remain in escrow and all means necessary should be used to contact the writers and publishers whose royalties are in that black box: absolute transparency is required here, as is a concentrated press push by the MLC to all of the music trades and music blogs (Digital Music News, Hypebot, et al) and social media platforms encouraging independent artists to go to the public-facing database and search their name, their publisher name, their band name, and by song title, for possible unclaimed royalties.

Please: the NMPA can’t be allowed to hijack royalties that do not belong to them. Publishers are fully aware of how complex royalty types and royalty collections are: they and the NMPA must make every effort here to ensure that unclaimed royalties reach their rightful legal and moral recipients.

Brewster Kahle Gets Another Tillis-Gram For Internet Archive’s National Emergency Ripoff, this Time with Added Songs and No Mechanicals — Music Technology Policy

June 10, 2020

Mr. Brewster Kahle
Founder and Digital Librarian
Internet Archive
300 Funston Avenue
San Francisco, CA 94118 Dear Mr. Kahle:

I write to you again as Chairman of the Senate Judiciary Committee Subcommittee on Intellectual Property. In my April 8, 2020 letter, I expressed my concern that the Internet

Archive’s announcement of a National Emergency ” Library” filled with 1.4 million books that had been digitized and made available to the public without restrictions and without the permission of copyright owners appeared to be a blatant infringement of thousands – if not more-of copyrights.1   Indeed, the U.S. Copyright Office analyzed  publicly available facts and concluded that though some works included in the National Emergency “Library” might be permitted under fair use, many would not be. The Copyright Office went on to say that “while the Internet Archive’s goal of making research and educational materials publicly available may be laudable, so is respect for copyright.”2

I write now after learning that the Internet Archive is engaged in other initiatives that involve the unauthorized digitization and dissemination of copyright-protected creative works- in this case sound recordings .

According to a May 15, 2020 article in the Seattle Times, the Internet Archive has purchased Bop StreetRecords full collection of 500,000 sound recordings with the “inten[t] to digitize the recordings and put them online, where they can be streamed for free.”3 It is not clear from the article, or others, if you intend to digitize all of the sound recordings acquired  from Bop Street. But it is clear that these sound recordings were very  recently  for sale in a commercial  record shop and likely contain many sound recordings that retain significant commercial value. This raises serious alarms about copyright infringement.

As I understand, Bop Street Records, which the Wall Street Journal once deemed a top-five record shopin the country, focuses on collectible-quality vinyl records across a diverse range of musical genres. According to its website, there sound recordings includes “Rock, Soul/R&B, Jazz, Blues, Classical, Country, World and many other genres from the 1920’s to 1990’s.” The overwhelming majority-if not all-of these sound recordings are protected by U.S. copyright law, and thus may not be digitized and streamed or downloaded without authorization.

In a similar vein, I am aware of the Internet Archive’s “Great 78 Project,” which has already digitized-and continues to digitize daily-a vast trove of 78 rpm recordings, many of which are also commercially valuable recordings already in the marketplace, and has made those recordings available to the public for free through unlimited streaming and download. I understand that the Internet Archive is framing this and its other sound recording projects­ which include both obscure gems for music fans and hits from the likes of Elvis Presley, Chuck Berry, and Johnny Cash-as preservation, but your current practices raise numerous potential issues of copyright infringement. The Bop Street collection is likely to add to that. Among other things, your sound recording projects do not appear to comply with the relevant provisions of the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA), which deals only with pre- 1972 sound recordings and would not allow for streaming or downloading. Moreover, there are additional copyrights, such as the musical composition and the album artwork, that are displayed on the Internet Archive website and would not be covered by an exception for preservation.

I recognize the value in preserving culture and ensuring that it is accessible by future generations, such as the Library of Congress’s Recorded Sound Collection and National Recording Registry projects. But I am concerned that the Internet Archive thinks that it-not Congress-gets to determine the scope of copyright law.  With its sound recording projects, the Internet Archive does not even pretend that a national emergency like the Covid-19 pandemic creates a special need for these sound recordings to be freely streamed or downloaded.  Rather, the Internet Archive seems to be daring copyright owners to sue to enforce their rights, or else effectively forfeit them-something many copyright owners, particularly individuals and smaller enterprises, cannot afford to do.

Our copyright system is designed with important limitations and exceptions that ensure that the public can make appropriate uses of copyrighted works even when the copyright owner seeks to prevent such uses-but those are the exception, and free use for those who disagree with the concept of exclusive rights is notone of them. Accordingly, I once again invite you to share with me the legal support, in copyright law or elsewhere, for reproducing and distributing copyrighted works that are owned by others. In particular, how do the Internet Archive’s sound recording digitization and streaming projects-in particular the Great 78 Project-fit within case law interpreting the fair use doctrine and within the relevant provisions of section 108 and the MMA?

Please respond by July 10 , 2020. If you have any quest ions, please do not hesitate to contact me.

Sincerely,

Thom Tillis
Chairman
Subcommittee  on Intellectual Property

 

1 Since then , I understand  that  major  American  book publishers-  Hachette  Book Group,  HarperCollins  Publishers, John Wiley & Sons and  Penguin  Random  House  –  filed  a  lawsuit  alleging  copyright  infringement  and  seeking  to enjoin uses of their copyrighted books in the  National  Emergency  Library  or  the  Internet  Archive’s  “Open  Library,” which had offered the same catalog of books but  with  some  limitations , such as checkout  waitlists.  SeHatchette Book Grp. v. Internet Archive, No. I :20- cv- 041 60 (S. D.N .Y . filed June I , 2020).

2   Letter from  Maria Strong, Acting  Register  of Copyrights,  U.S. Copyright  Office , to Sen. Tom  Udall , at 21  (May 15, 2020).

3 Paul de Barros , A Happy Ending for Seattle’s Bop Street Records: A Nonprofit Buys Up the Entire Collection, SEATTLE TIMES (May 15, 2020) , https://www .seattletimes.com /entertainment/music/a-happy-ending-for-seattles­ bop-street-records-a- nonprofit-buys- up -the-entire-collection/.

via Brewster Kahle Gets Another Tillis-Gram For Internet Archive’s National Emergency Ripoff, this Time with Added Songs and No Mechanicals — Music Technology Policy

Copyright Office Regulates @MLC_US: Selected Public Comments on MLC Transparency: @JonathanCoulton

[Editor Charlie sez: The U.S. Copyright Office is proposing many different ways to regulate The MLC, which is the government approved mechanical licensing collective under MMA authorized to collect and pay out “all streaming mechanicals for every song ever written or that ever may be written by any songwriter in the world that is exploited in the United States under the blanket license.”  The Copyright Office is submitting these regulations to the public to comment on.  The way it works is that the Copyright Office publishes a notice on the copyright.gov website that describes the rule they propose making and then they ask for public comments on that proposed rule.  They then redraft that proposed rule into a final rule and tell you if they took your comments into account. They do read them all!

The Copyright Office has a boatload of new rules to make in order to regulate The MLC.  (That’s not a typo by the way, the MLC styles itself as The MLC.)  The comments are starting to be posted by the Copyright Office on the Regulations.gov website.  “Comments” in this world are just your suggestions to the Copyright Office about how to make the rule better.  We’re going to post a selection of the more interesting comments.

There is still an opportunity to comment on how the Copyright Office is to regulate The MLC’s handling of the “black box” or the “unclaimed” revenue.  You can read about it here and also the description of the Copyright Office Unclaimed Royalties Study here.  It’s a great thing that the Copyright Office is doing about the black box, but they need your participation!]

Read the comment by Jonathan Coulton

I am an independent musician, and I make my living full time as such. I have spent years dealing with the wide array of entities who collect royalties on my behalf. Errors happen all the time – songs are misattributed, missing, publisher information is wrong, royalty splits are wrong. This is to be expected when the dataset is this vast and complicated, and coming from many disparate sources. This is why for me, absolute transparency is essential. I need to be able to search for my name and my song titles so that I can look for errors like these and make sure I am getting paid all the royalties I am due. As an independent, my slice of the pie is very small on the scale of the entire industry, but it is essential to me and my ability to make a living. I have nobody but myself representing me in this process. Even with the best intentions, an entity like the MLC cannot possibly look out for all of us, so I hope that this structure provides us the tools with which we can look out for ourselves.

I very strongly encourage maximum transparency, granularity, and searchability be provided to rightsholder with regards to this data.

Copyright Office Regulates @MLC_US: Selected Public Comments on MLC Transparency: @zoecello — Artist Rights Watch

[Editor Charlie sez: The U.S. Copyright Office is proposing many different ways to regulate The MLC, which is the government approved mechanical licensing collective under MMA authorized to collect and pay out “all streaming mechanicals for every song ever written or that ever may be written by any songwriter in the world that is exploited in the United States under the blanket license.”  The Copyright Office is submitting these regulations to the public to comment on.  The way it works is that the Copyright Office publishes a notice on the copyright.gov website that describes the rule they propose making and then they ask for public comments on that proposed rule.  They then redraft that proposed rule into a final rule and tell you if they took your comments into account. They do read them all!

The Copyright Office has a boatload of new rules to make in order to regulate The MLC.  (That’s not a typo by the way, the MLC styles itself as The MLC.)  The comments are starting to be posted by the Copyright Office on the Regulations.gov website.  “Comments” in this world are just your suggestions to the Copyright Office about how to make the rule better.  We’re going to post a selection of the more interesting comments.

There is still an opportunity to comment on how the Copyright Office is to regulate The MLC’s handling of the “black box” or the “unclaimed” revenue.  You can read about it here and also the description of the Copyright Office Unclaimed Royalties Study here.  It’s a great thing that the Copyright Office is doing about the black box, but they need your participation!]

Comment by Zoë Keating:

Some version of the usage data that the DSPs report to the MLC should be easily accessible to the public so that songwriters do not need to hire a legal team in order to independently verify if their statements from the MLC are correct. Major publishers can and will continue to get usage reports directly from music services. Self-published songwriters must rely on the MLC to collect and administer royalties on their behalf. Given that the major publishers of the NMPA are directing the design of the MLC, transparency of the reported data from DSPs will help eliminate any conflicts of interest.

Related to this, given the past occurrence of and future likelihood of metadata reporting errors*, usage data for compositions that are unmatched to any owner should be publicly searchable. Songwriters and other entities should be able to search for likely misspellings and errors, thereby offering crowd-sourced assistance to the persistent problem of unmatched royalties. (*Anecdotally I have heard of metadata errors preventing the collection of mechanicals and it happened to me. The mechanical royalties for my songs went unclaimed for 10 years until 2019 until I was able to raise an employee of HFA via twitter who then “found” $5000 that had been unmatched due to an unspecified metadata error.)

via Copyright Office Regulates the MLC: Selected Public Comments on MLC Transparency: @zoecello — Artist Rights Watch–News for the Artist Rights Advocacy Community

@ColinRushing of @SoundExchange: Congress Should Eliminate the Market Distortion of AM/FM Radio’s Free Ride on the Backs of Artists

[SoundExchange Chief Legal Officer Colin Rushing lays it down before Senate Judiciary]

Throughout the 80 years that the terrestrial radio performance right has been under discussion, broadcasters have argued in many ways that they are special and deserve different treatment than other business interests. Their arguments that their special status should result in them not paying performers– never valid – have now also been overtaken by events.

They say AM/FM radio is important because it is free, but they are no different than any other free ad-supported music platform available to consumers. They argue that providing public service announcements and news information is a reason to require music to subsidize their platform, and yet many music platforms provide these same services, not to mention that most digital music platforms are delivered over devices that provide local emergency notifications.

To the extent that AM/FM radio may be promotional, this is not a trait that sets them apart from other music services that compensate performers. Nor does it justify an uncompensated “taking” of musicians’ property. Rate-setting proceedings and licensing negotiations take promotional value into account as a matter of course, along with many other variables.

The potential for promotion exists in a lot of licensing arrangements. Television broadcast of a professional basketball game may promote a local team, but no one would suggest that the NBA should surrender the broadcast rights for free because of that “promotional value.” Why should music be any different?

Read his written testimony on the SoundExchange website.

Publishers Sue Internet Archive over Fake “National Emergency Library”–Artist Rights Watch

[This post first appeared in Artist Rights Watch]

As anticipated, several publishers have sued the Internet Archive run by the anti-artist technologist Brewster Kahle (a copy of the complaint is here, filed June 1 in the Southern District of New York).  The lawsuit concerns the Internet Archive’s so-called “national emergency library” which in reality is another end run around the copyright law by a rich technocrat grasping for relevance in our view.

The complaint sums up the problem for Mr. Kahle’s latest anti-artist activism:

Defendant [Internet Archive or] IA is engaged in willful mass copyright infringement. Without any license or any payment to authors or publishers, IA scans print books, uploads these illegally scanned books to its servers, and distributes verbatim digital copies of the books in whole via public-facing websites. With just a few clicks, any Internet-connected user can download complete digital copies of in-copyright books from Defendant.

The scale of IA’s scheme is astonishing: At its “Open Library,” located at http://www.openlibrary.org and http://www.archive.org (together, the “Website”), IA currently distributes digital scanned copies of over 1.3 million books. And its stated goal is to do so for millions more, essentially distributing free digital copies of every book ever written. Despite the “Open Library” moniker, IA’s actions grossly exceed legitimate library services, do violence to the Copyright Act, and constitute willful digital piracy on an industrial scale. Consistent with the deplorable nature of piracy, IA’s infringement is intentional and systematic: it produces mirror image copies of millions of unaltered in-copyright works for which it has no rights and distributes them in their entirety for reading purposes to the public for free, including voluminous numbers of books that are currently commercially available.

This is a very Googley case so expect to find the usual suspects showing up to defend the Lost Cause if they’re not too busy holding on to the elite’s other piggery, Section 230 of the Communications Decency Act.  ARW readers will remember that Spotify lawyer Christopher Sprigman and his mentor Lawrence Lessig were lead counsel on the losing side in Kahle v. Ashcroft (later v. Gonzales) which was Mr. Kahle’s unsuccessful challenge to the elimination of the renewal requirement under the 1992 Copyright Renewal Act in an attempt to revive that trap for the unwary. Professor Sprigman continued carrying Kahle’s water as a member of Pamela Samuelson’s “Copyright Principles” project and co-authored its paper that also advocated for the registration artifact (see Sec. IIIA of paper, “Reinvigorating Copyright Registration”).

Although the docket for the publishers’ case against the Internet Archive doesn’t reflect a lawyer for the Internet Archive as yet, it would not be surprising to see these names crop up, not to leave out Daralyn Durie who has repeatedly led the charge against authors, artists, and all the other creators that Google chews up and spits out.  Ms. Durie and her colleague Joseph Gratz proudly screwed over authors in the Google Books case with this kind of Orwellian logic according to Business Week:

Google attorney Daralyn Durie told Judge Denny Chin in federal court in Manhattan that authors and photographers would be better off fending for themselves because their circumstances varied widely, especially since the copyright issue for authors involves the display of small snippets of text.

Judge Chin, however, wasn’t buying this line of reasoning–which could easily have been summarized as “If it please the Court, Google would like to get away with it.”  Because after all, “nothing says freedom like getting away with it” and we know that Google is all about Internet Freedom.  We’ve never been too sure what “Internet Freedom” means, but it apparently includes attacking creator organizations (including unions).  According to Business Week, “[t]he judge agreed that Google is ‘hoping that individual authors won’t come forward.'”

This is the kind of maneuvering we can expect (and don’t forget that Ms. Durie led the charge against the Beastie Boys on behalf of one Goldieblox in its 15 minutes).

The Internet Archive attracted the attention of Senator Thom Tillis who is currently conducting a series of hearings into the continued utility of the DMCA safe harbor for the richest companies in commercial history (aka the value gap).  Senator Tillis wrote this letter to Mr. Kahle saying:

I understand that your “Library” will last until June 30, 2020 or the end of the coronavirus emergency in the United States, whichever is later, and that during this time, the Internet Archive will make 1.4 million books it has scanned available to an unlimited number of users. I am not aware of any measure under copyright law that permits a user of copyrighted works to unilaterally create an emergency copyright act. Indeed, I am deeply concerned that your “Library” is operating outside the boundaries of the copyright law that Congress has enacted and alone has jurisdiction to amend.

As I am sure you are aware, many authors and publishers are struggling during this pandemic. Just this past Monday, the president of the Authors Guild noted in the New York Times that: “Authors have been hit hard by the pandemic …. It could be a career-destroying time for some authors, many of whom are struggling to make a living.” At some point when the global pandemic is behind us, I would be happy to discuss ways to promote access to books in a manner that respects copyright law and the property interests of American authors and publishers.

Mr. Kahle, of course, responded and could not resist a snipe at the Authors Guild referencing the absurd Google Books case (although note that Internet Archive is being sued by the publishers, not the Authors Guild, so they are apparently not the “leading critic”):

The Authors Guild, the leading critic of the National Emergency Library, has been incorrect in their assessment of the scope and flexibility of the fair use doctrine in the past and this is another instance where we respectfully disagree.

 

And so, here we are.   Lessig, Sprigman, Samuelson and Durie all have some new raw meat to chew on as authors are on the menu again thanks to the Silicon Valley crowd.  It will be interesting to see who takes up Mr. Kahle’s cause this time.

For a deep dive into the issues, here’s a recent video from the Artist Rights Symposium II panel on the Internet Archive with the Anonymous Librarian, John Degen, David Lowery, Robert Levine, Jonathan Taplin, moderated by Terrica Carrington.  The Anonymous Librarian is a real librarian at a major education institution who remains anonymous due to feared retaliation from Google and the Google-backed librarian trade associations.

 

 

@TheJusticeDept: California Man Pleads Guilty to Using TikTok/Bytedance for Production of Child Pornography

According to admissions made in connection with his guilty plea, the defendant’s activities initially came to light in or about March of 2017, when the parents of a then six-year-old discovered that the minor had communicated with and created sexually explicit images at the request of another user on the social media application Musical.ly (now TikTok). Law enforcement investigators subsequently identified this user as Jacob Blanco…. In his interview with law enforcement, Blanco admitted that he communicated with at least 50 minors, an admission confirmed by the communications and images stored on his digital media.

Read the press release on Justice.gov

Guest Post: Pandemic: @Music_Canada COVID Study Sets the Gold Standard for Reopening Data-Driven Policy

By Chris Castle

[This post originally appeared on MusicTechPolicy.]

MusicCanada commissioned an outstanding survey by Abacus Data using serious data-driven methodology to credibly measure the Canadian public’s experience with the COVID shut down of live music and expectation for reopening.  Instead of glorified “Who’s Hot”-level casual polls you see cropping up here and there, The Locked-Down Blues: Canadians, Live Music and the Pandemic sets the gold standard for the kind of data-driven serious national opinion study that policy makers can actually use to plan how to get out of this corner.

The study measures many different factors, including the more intangible questions of what trust level fans will require before they come back to live music.  Regardless of what distancing or contamination standards are imposed, none of that matters much if the fans don’t trust it enough to come out to hear live music in cities like Toronto and Austin.

For example, the study found this reaction:

DESPITE WANTING TO GO, CANADIANS, EVEN THOSE WHO LOVE LIVE MUSIC, SAY THEY WILL BE RELUCTANT TO GO BACK TO LIVE MUSIC EVENTS BEFORE A VACCINE FOR COVID IS FOUND.

Even if they are permitted to go to live music events, many Canadians, including those who love live music the most, will be reluctant to return for some time.

We asked respondents how soon they will feel comfortable enough doing several activities, once physical distancing restrictions are lifted. In almost all cases, fewer than 40% said they would feel comfortable in a few months or less. For most, the time horizon was much longer with many saying they may never feel comfortable again.

For example, 43% said it would take six months or more before they would feel comfortable going to a music festival or a concert in a large venue. Another quarter said they may never feel comfortable going to those types of events again.

I find it hard to believe that there’s going to be an appreciable geographical distinction between Canada and any other country on these issues.  But this study provides a gold standard for other studies in other countries, all of which should be done and done using a robust and defendable methodology.

So let’s be clear–this study is giving you the hard truth.  It is not some Chamber of Commerce hoorah or conclusion-driven clap trap.  It also tells us that the idea that you can just turn the lights back on and people will flock to the clubs may be looking at the wrong ball.  It has serious implications for the entire music industry across all genres.

But–it especially has serious implications for cities like Austin that get significant economic benefit from music tourism.  Given that the City of Austin commissioned the Austin Music Census in 2015, another robust data-driven study that produced  unwelcome dire conclusions,  it is astonishing that the blinking red light in the Census was completely ignored.  Not only were Austin musicians poorer than the City seemed to think they were, the entire local ecosystem was essentially dependent on live music.  For example, streaming was a negligible source of revenue for Austin musicians–think maybe someone would have wanted to look into that issue as a matter of industrial strategy?  And is there anything about the “Live Music Capitol of the World” that gives you a clue that maybe you might want to start thinking about why all the eggs were in that basket?  As Mark Twain said, if you’re going put all your eggs in one basket, watch that basket.  Or at least don’t ignore it.

Since the City did such a thorough job of ignoring the Census for so long, I wonder if they’re going to be able to figure out how to solve the current crisis.  Or if maybe somebody actually would like Austin to turn into just another college town with a Google campus, self-driving cars busily scraping rider data while stacked up on I-35 and Uber Eats Your Soul.

We can be grateful to Music Canada for commissioning this study and getting it out at the perfect time for policy makers to have some meaningful data driven reality conducted in a manner that could stand up to peer review like the Austin Music Census.  And show the world the gold standard for how to develop policies that actually solve a problem because you better know what the problem is you want to solve.

Here’s the survey:

 

 

Click to access Music-Canada-National-Survey-Interview-Schedule_Release.pdf

LEADING MUSIC AND FILM ORGANIZATIONS CALL ON CONGRESS TO FIX SAFETY NET IN NEW CARES ACT

[Editor Charlie sez:  Artist Rights Watch, Music Tech Policy and The Trichordist are pleased to support this effort.  Please let your representatives in Washington know that you do, too!]

PRESS RELEASE

WASHINGTON, D.C. (May 8, 2020) – Leading music and film organizations today sent a new letter to leaders of Congress that highlights the ways implementation of the CARES Act has fallen short in assisting workers in need in the entertainment community and requests that these flaws in implementation be remedied in a new CARES Act COVID relief package.

The organizations said in a joint statement: “While we appreciate the efforts of lawmakers to meet the challenges of this pandemic, we need to ensure that our community is getting the aid they need to survive. Musicians are struggling to access the basic financial resources available due to conflicting and burdensome requirements in relief programs. Simply, there is a hole in this safety net that Congress must fix in the next version of the CARES Act.”

The letter lays out in stark terms the crisis that the live entertainment industry is facing due to the pandemic.

“We need help that only [Congress] can provide, in a way that recognizes the particulars of our industry. On behalf of the hundreds of thousands of us across the country, thank you for your understanding and your action.”

In the letter, the organizations point out the implementation of the Pandemic Unemployment Assistance program (PUA) has overlooked workers who have mixed income and report it on W-2 and 1099 forms. “In almost all cases that we see in every state, a minimum amount of W-2 income disqualifies a self-employed individual for PUA and significantly lowers the amount of assistance they receive,” the letter states. “PUA must be updated to recognize these different income streams and allow individuals to show their mixed sources of revenue for a full accounting of their annual income.”

The letter also describes concerns about the Paycheck Protection Program and the Economic Injury Disaster Loan program that were included in the first CARES Act.

The organizations who signed include the Artist Rights Alliance (ARA), American Association of Independent Music (A2IM), American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music Inc. (BMI), the Future of Music Coalition, Global Music Rights (GMR), the Music Artists Coalition (MAC), the Music Business Association, National Music Publishers’ Association (NMPA), Nashville Songwriters Association International (NSAI), the Recording Academy, the Recording Industry Association of America (RIAA), the Screen Actors Guild-the American Federation of Television and Radio Artists (SAG-AFTRA), the Society of European Stage Authors and Composers (SESAC), the Songwriters Guild of America, the Songwriters of North America (SONA), SoundExchange and many more.

 The full text of the letter follows:

Honorable Nancy Pelosi                                                     Honorable Kevin McCarthy
Speaker                                                                                  Republican Leader
U.S. House of Representatives                                          U.S. House of Representatives
Washington, DC  20515                                                      Washington, DC  20515

Honorable Mitch McConnell                                             Honorable Charles Schumer
Majority Leader                                                                   Democratic Leader
U.S. Senate                                                                             U.S. Senate
Washington, DC  20510                                                       Washington, DC  20510

Dear Speaker Pelosi, Leader McConnell, Leader McCarthy, and Leader Schumer:

The broad and diverse American entertainment community would like to thank you for your continued efforts to provide assistance to those affected by the COVID-19 pandemic.  The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and the subsequent “Paycheck Protection Program and Health Care Enhancement Act” were sincerely welcomed programs, particularly their essential coverage of independent contractors, sole proprietors, and other self-employed individuals who make up so much of the live entertainment workforce.

As you know, many of our jobs have not only vanished, they will be gone for quite some time.  From on-set production to public performance, our work in the entertainment industry naturally requires close personal interaction and public gatherings.  Even when business restrictions are eased, it will take much longer to restore the social interaction inherently necessary for the creative industries to operate.

For those of us in the creative field to survive – and recover – after this crisis, we must be able to access the full support intended by Congress.  Thus, we would like to highlight a few ways that the CARES Act has fallen short in assisting those of us most in need and hope that it will be instructive in your continued discussions on any further federal funding assistance.

First, given the unique nature of our industry, many in our profession work from project to project and gig to gig, not only in multiple jobs but in various capacities.  As a result, creators often find themselves working as employees receiving W-2 wages and as independent contractors (or otherwise self-employed) receiving 1099 income for performances, royalties, and other services.  Unfortunately, implementation of the Pandemic Unemployment Assistance program (PUA) has overlooked workers with mixed income.  In almost all cases that we see in every state, a minimum amount of W-2 income disqualifies a self-employed individual for PUA and significantly lowers the amount of assistance they receive.  PUA must be updated to recognize these different income streams and allow individuals to show their mixed sources of revenue for a full accounting of their annual income.

In addition, those who work on location or perform on tour earn freelance income in multiple states, some of which does not come with a 1099.  While some state agencies allow for this type of reporting, some do not.  Congress’s intent is that such workers should be fully eligible for at least the minimum PUA amount, but state implementation does not fully reflect this intention.  PUA must be updated to recognize these unique circumstances.

Second, the CARES Act does not recognize the full scope of small business arrangements prevalent within our industry.  As the PUA mixed income issue and the actual operation of our industry make clear, the Paycheck Protection Program (PPP) should be sure to allow payments to self-employed individuals, including independent contractors.  The workers in our industry cannot afford to be shut out of federal assistance on such a technicality and any future plan should recognize self-employed individuals as eligible payroll participants.

Third, SBA’s PPP guidelines on eligibility criteria and requirements for the self-employed are overly burdensome and restrictive.  SBA requires a 2019 Schedule C as the principal document to determine eligibility and loan size, even though the IRS delayed the 2019 tax year filing deadline to July 15, 2020.  This puts a burden on smaller, independent creators who must now scramble to secure professional accounting services so they can supply a 2019 Schedule C.  More importantly, the SBA restricts self-employed applicants to loans that are sized according solely to net business income as reflected on a Schedule C.  Net business income does not reflect the fact that professionals have significant overhead costs – mortgages, studio rentals, equipment costs, health insurance premiums, and other expenses.

The SBA should allow the use of 1099-MISC forms and consideration of health insurance costs in the calculation of loan amounts, as well as the 2018 Schedule C when a 2019 form is not readily available. SBA should calculate loans consistent with the intent of the CARES Act, which allows for consideration of any compensation to a sole proprietor or independent contractor.

Finally, the SBA has limited the Economic Injury Disaster Loan (EIDL) grant of up to $10,000 to only $1,000 per employee.  This means self-employed individuals who do not have employees are unfairly penalized, even though they need immediate relief just as much as any other small business.  Congress clearly lays out in the CARES Act that funds from the EIDL advance may be used for many purposes other than payroll.

And when it’s time to once again open the doors to live music venues and recording studios, music will continue to need help.  The government must commit to provide adequate testing, contact tracing, viral treatments and a vaccine to ensure safety and restore public trust.  We will also need clear national guidelines to facilitate touring and live performances from musicians and entertainers in venues of all sizes.

There is no sugarcoating this: the entire live entertainment industry has been decimated.  We trade in imagination, but the reality of our situation is dire.  Today, we eagerly share our craft when we can – through video streams, on social media, or from apartment balconies.  But it is not a viable “work from home” solution and it will not sustain us.  We need help that only you can provide, in a way that recognizes the particulars of our industry.  On behalf of the hundreds of thousands of us across the country, thank you for your understanding and your action.

Sincerely,

Academy of Country Music (ACM)

Actors’ Equity Association

Alliance for Recorded Music (ARM)

American Association of Independent Music (A2IM)

American Federation of Musicians (AFM)

Americana Music Association

Artist Rights Alliance (ARA)

Artist Rights Watch

ASCAP

Association of Independent Music Publishers (AIMP)

BMI

California Arts Advocates

Christian Music Trade Association (CMTA)

Church Music Publishers Association (CMPA)

Country Music Association (CMA)

CreativeFuture

Digital Media Association (DiMA)

Folk Alliance International

Future of Music Coalition

Guild of Italian American Actors

Global Music Rights (GMR)

Gospel Music Association

The Harper Agency

International Bluegrass Music Association (IBMA)

Music Artists Coalition (MAC)

MusicAnswers

Music Business Association (MusicBiz)

Music Managers Forum – US

Musicians On Call

Music Technology Policy Blog

National Independent Venue Association

National Music Publishers’ Association (NMPA)

National Songwriters Association International

On Board Experiential

Paradigm Talent Agency

Recording Academy

Recording Industry Association of America (RIAA)

Reel Muzik Werks, LLC

Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA)

SESAC

Songwriters Guild of America

Songwriters of North America (SONA)

SoundExchange

Southern Gospel Music Guild

Trichordist

Writers’ Guild of America, East

 

Is @MusicReports License Pitch for @OnePeloton the Equivalent of a Poor Person’s Class Action Settlement–Without Court Supervision?

You may have gotten a version of this letter (below) from MusicReports on behalf of their new client Peloton.  (How MRI came to be involved may have more to do with some of the unsavory aspects of the NMPA/HFA conduct alleged by Peloton than it does with the apparent fact that HFA hasn’t made arrangements to have paper NOIs and statements depending on which side of the moral hazard the issue comes up.)  As Billboard also reported:

In its April 30, 2019, counterclaim, Peloton accused the publishers of anti-competitive behavior by engaging in a “coordinated effort” to fix prices and alleged that the National Music Publishers Association had conspired to prevent it from striking deals with the individual companies. A judge though dismissed Peloton’s counterclaims in January.

Which doesn’t mean that Peloton couldn’t appeal that decision, and that also doesn’t mean that NMPA probably really didn’t want them to.  Which may explain why nobody is crowing about the money settlement.

Still, there’s a real question about how this MRI offer even came up in the first place.  Both the Peloton case and the settlement of that case involves only 14 NMPA publishers according to Billboard, but carries the usual false spin no doubt coming from NMPA:

Peloton and The National Music Publishers’ Association (NMPA), the trade association representing all American music publishers and their songwriting partners, announced today (Feb. 27) that they have reached an agreement to  “fully settled the litigation brought last year by 14 NMPA members.”

So for starters, this line is entirely false: NMPA does not represent “all American music publishers and their songwriting partners“.  No matter now much aspirational slack you’re willing to cut someone who claims to represent you when they don’t (also known as gaslighting), there’s one context where you want to be really clear about that stuff–settling lawsuits in your name.  This isn’t the first time they’ve been called on the issue–it also came up in the current appeal of the streaming mechanical rates (see George Johnson papers, “‘Copyright Owners’ [is a t]erm fashioned by NSAI and NMPA, that falsely suggests that they represent all copyright owners, rather than a significant
market share”.)  NMPA has gotten in the nasty habit of telling Congress and the Courts they represent “all American music publishers and their songwriting partners.”  So that’s bullshit for starters.  Now what’s that thing that happens when you mislead a court about standing….?  The memory will jog eventually.

But that issue is brutally relevant here because of the next question:  How did a case involving 14 individual publishers get changed into what is essentially a class action settlement without a fairness hearing or court supervision?  On whose authority?  Of course, Peloton is free to make a voluntary future-facing license offer to anyone any time, but it’s interesting timing.

We haven’t drilled down on the court filings in the case–that’s coming.  But we can only assume that MRI’s offer on behalf of Peloton is phrased the way it is because Peloton did not want NMPA or HFA to be involved in the licensing pitch or the administration of the licensing funds (you’ll see why in a minute).  We haven’t seen the actual license agreement from MRI, but based on the deal points in their pitch letter, it does not appear that (1) the license is a settlement of past claims (but check that issue closely if you decide to opt in as it may be masquerading down in the boilerplate), and (2) there is a pool of money that is to be distributed to those who opt in–and if the pool is not paid out in full, the balance of the pool will be retained by Peloton and is not going to revert to the NMPA (or its members).  In other words, it’s not an MLC-style black box.

By using this pool system, Peloton is able to cap their ultimate royalty payout for indies.  For example, if the deal you never see with the 14 NMPA publishers (or others who have a direct deal) is a pay per play structure with no cap, and MRI offers you a share of a pool, there’s no cap in the pay per click flat rate structure and there is a cap in the pool.  In fact, if you are getting a share of a pool that’s offered to tens of thousands of publishers, you may eventually start to go backwards once you hit the pool cap.  Why?  Because the more publishers that opt in, the smaller the share of the pool for any one song.  Alternatively, the more hits there are, the smaller the share of the pool for the less popular songs.  That may never happen, but it’s worth noting.  That’s why this is kind of like a poor person’s  class settlement without a fairness hearing.  (Also why we have long advocated a per-play rate with no pool.)

And of course remember that this settlement only covers songs.  Songwriter artists, ask how Peloton comes to license your sound recordings or be careful that the MRI song license isn’t masquerading as a sound recording license, too.  There’s a few possible answers to that question, but be sure to ask.

Here’s the letter, we highlighted some stuff that requires futher explanation by Peloton:

Dear Publisher,

We sincerely hope everyone is keeping safe and well in these challenging times.

We are contacting you on behalf of our client, Peloton Interactive, Inc. (“Peloton”), with a license opportunity for their streamed fitness content solution, which allows subscribers to access world class instructor-led exercise and meditation classes through Peloton hardware devices and digital platforms.

This offer is the opportunity for your catalog to be featured in a platform that is part of a growing and supportive community.  [What does “featured” mean?  Can you be non-featured?]

Founded in 2012 and headquartered in New York, Peloton is the largest interactive platform that brings the energy and benefits of studio-style workouts to the convenience and comfort of home. With hundreds of classes produced monthly across twelve fitness disciplines, and a library of thousands of on-demand classes [that include thousands of songs] taught by a roster of elite instructors, Peloton delivers real-time motivation and curated playlists from the world’s greatest artists and writers.  [This sounds like pop hits, right?]  The brand’s immersive content is accessible through the Peloton Bike, the Peloton Tread, and the Peloton App, which is available for both iOS and Android, accessible via most tablets, mobile devices and computers[How is that different than webcasting or Spotify?]

Peloton is changing the way people think about health and wellness and are motivated to work out, and music is a key component of their programming, helping the instructors deliver engaging and inspirational classes in Peloton’s home fitness ecosystem. With over 2,000,000 monthly users and a comprehensive, socially-connected experience geared towards helping members reach their personal fitness potential, each class is designed to be both efficient and irresistible.  [If music is a key component…they must be paying a lot?]

For more information, visit http://www.onepeloton.com.

The main deal points of Peloton’s license offer are as follows [what are the others?]:

Grant of Rights:  Peloton is seeking the right to create, store, transmit, and publicly perform compositions in and in connection with fitness videos on its hardware and digital platforms.  [How is this not a public facing music service?]

Royalty:  Licensor’s share of two revenue pools, one based on plays of your compositionsby users of the Peloton Bikes, Peloton Tread, and other “hardware,” and the other based on plays of your compositions by users of the Peloton App, each of which are calculated at different rates depending on currency of the territory involved (please see the license for details).  [Why do the rates depend on the currency?  How are these tracked?  Probably not very well since they got sued.]

Accounting & Payment:  60 days following the applicable calendar quarter. [60 days?  60?  Really?  And why not monthly? They left out an audit right, check the license.  We can almost guaranteed there is no audit right.]

Territory:  Worldwide [how does this work with foreign societies?]

Term:  Three years following the Effective Date with one year auto-renewals.

Takedown Rights:  As soon as possible, but in no event later than 30 days of receipt of notice or the identification of the relevant Composition; provided, that the takedown request is made on a non-discriminatory basis. [This is essentially a waiver of statutory DMCA takedown rights (if DMCA even applies to Peloton) and creates a new safe harbor for Peloton.  Bad bad bad….]

To review and consider Peloton’s license offer:

Click HERE to log into your MusicReports.com account and review the proposed license agreement. If it is acceptable to you, simply check the box to confirm you have read the agreement, then click the “I Agree” button to accept the terms. You can then download a full copy of the agreement from the “My Licenses” page in your account.

If you need help accessing your account or setting up an account for the first time, contact RoyaltyServices@MusicReports.com

If you have any questions specifically about the opt-in license offer, please send your inquiry to LicenseOffers@MusicReports.com

Best regards,
Music Reports, Inc.

What it looks like is that Peloton is making a pitch that is not approved by any court that is going out to all the publishers (and indie songwriters) that are not represented by NMPA.  Which based on the Spotify, pending and unmatched and YouTube settlements implies that there may–may–be another bucket of settlements that the NMPA did have the authority to make that were both retroactive and future licenses.  But you’ll never know that.

The fact of the Peloton offer is further confirmation of the reality that the NMPA does not “represent” (as in have the authority to speak or negotiate for)  “all” songwriters and publishers.  If they did, wouldn’t this be structured like the Spotify and pending and unmatched settlements?

The really great news is that the head of music for Peloton is going to be speaking at the AIMP webinar today and hopefully he can answer these questions.  Starting with whether Peloton infringed indie publishers copyrights.

Reality is that Peloton is trying hard to get it right, and should never have been sued in the first place, particularly when there are actual criminals like TikTok in the market that has no publishing licenses whatsoever.  There’s where your litigation budget should be getting spent, not chasing exercise bikes.