Despite the singular lack of successful legislation in the U.S. Congress (or much of anywhere else for that matter), the news was not all bad this year. Not by a long shot. The good news has a common theme for the most part: Artists, a taste making radio programmer and in one case a publisher breaking away from the pack and standing up for their rights and their human dignity. For the most part, artists said there’s something bigger than just my rights or my income at stake and we will be silenced no longer. These were superstars and middle class artists alike, sometimes singly and sometimes in the movement (#irespectmusic), but always with a unique voice.
Because the legislative route is blocked off by the likes of Google, Pandora and the MIC Coalition, and because the Federal Trade Commission (that shining bureaucracy on a hill and a beacon of…
Vocal artist rights advocate David Lowery brings a massive action against the largest streaming service.
Camper Van Beethoven and Cracker frontman David Lowery, retaining the law firm of Michelman & Robinson, LLP, has filed a class action lawsuit seeking at least $150 million in damages against Spotify, alleging it knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.
Donna: What’s take out the trash day? Josh: Friday. Donna: I mean, what is it? Josh: Any stories we have to give the press that we’re not wild about, we give all in a lump on Friday.
From West Wing episode “Take out the Trash Day.”
According to Taegan Goddard’s Political Dictionary a “Friday News Dump” is the practice of “releasing bad news or documents on a Friday afternoon in an attempt to avoid media scrutiny.” And this is exactly what we are seeing from Spotify this week. Last night Ed Christman reported in Billboard that Spotify has announced plans to develop a database to “properly manage royalties.” Properly? Uh oh! Technically Billboards editors are going a little soft on Spotify here as the real problem is that Spotify apparently never licensed many of the songs in their catalogue in the first place. Which implies copyright infringement on a massive scale.
But wait this is not Friday? Exactly but the week before Christmas is a week of Fridays. And the evening of the 23rd is the mother of all Fridays. It’s the last day you can get anyone to report on a news story before the holidays. And you get 7-10 days of Saturdays for the story to dissipate.
Got to hand it to Spotify’s new global head of communications & public policy Jonathan Prince. He is really bringing skills mastered during his time in the Obama/Clinton administrations to bear on the problem. This news release wasn’t just a Friday news dump it appears timed with the announcement of a Obama/Biden Spotify playlist (announced on the official White House website, a taxpayer funded government website I might add). Given that Spotify appears to be illegally hosting a significant amount of unlicensed songs wouldn’t this be the equivalent of George W appearing on the Enron Christmas card after they admitted to fraud?
Merry Christmas Silicon Valley Billionaires! And fuck you artists. – Your friends at Spotify (and The White House.)
This post is the second of a two part interview with Blake Morgan and David Lowery about the newly announced webcasting rates as determined by the Copyright Royalty Board.
MTP: How do you feel about the CRB decision in general as far as rates go?
Well it’s a mixed bag. Leans bad. The rates went up marginally for Pandora, and that seems to be the lead in the press. But it looks like rates went down for other webcasters. You saw Pandora stock popped on the CRB news? Sometimes markets tell you what no one dares say. The markets are saying that this is good for webcasters and bad for artists. Of course you won’t see that in the tech or music business press. [Billboard posted one story on the wave of negative reactions at press time after David’s interview.]
“The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.'”
Ronald Reagan
This week we all got a glimpse of what the government thinks we’re all worth compared to Silicon Valley: Not much. Run along little artists and be glad that Washington allows you to keep any of the value of your work.
How do we know this? The Copyright Royalty Board handed down its decision on what music is worth for a variety of the compulsory license rates that benefit Pandora, Clear Channel (iHeart), the National Association of Broadcasters, and other multinational corporate members of the trillion dollar lobbying group known as the MIC Coalition. The rates only apply to services that are not “interactive” like Pandora and iHeart most prominently.
The rates were set in some relationship to Pandora’s direct deal with Merlin and iHeart’s deal with Warner Music–that’s the main reason the 2016 rates are so low. Of course Merlin and Warner Music got other goodies like steering payola that nobody else gets (in fact, we’d be very surprised if any Merlin or Warner artist has any idea what the royalty rate is under either of these deals).
That must be why the CRB asked the Register of Copyright if the CRB could set two different rates, one for the indies that were part of Merlin and who got the non-cash goodies and steering payola and the other for everyone else. It would be entirely logical that the Merlin and Warner rates would be lower and maybe a lot lower than the rate the CRB set for everyone else (because Merlin and Warner artists will still get paid under the direct steering payola deals but using those rates as a benchmark dragged down everyone else in the world).
Since the Register of Copyrights ruled that two rates are not permitted the CRB had a choice–refer the direct deals with Pandora and iHeart to the FCC for a ruling on whether steering payola is illegal, ignore the direct deals with Merlin and iHeart (which may be illegal contracts based on the steering payola pending a determination by the FCC in the payola waiver petition filed by members of the MIC Coalition) because the rates are not good benchmarks and set their own rates, or pretend that the steering payola rates should be applied to everyone else. (Note that A2IM, AFM and SAG-AFTRA had a heart attack objecting to indie rates compared to other label rates, with at least A2IM probably knowing all along that this would drag everyone down toward the Merlin rates to which many of their members were parties.)
This is what’s become known as the “Chris Harrison special” (named for the former lawyer for DMX and Pandora, now at SiriusXM, who makes a career out of screwing artists and songwriters). The trick is that the company does a deal for a low royalty rate plus non-cash goodies with big companies and then shoves the low royalty with NO non-cash goodies on everyone else. We know he did this. Billboard reported that he did this and that the same dance could happen with Web IV. With all the brain power at Merlin and Warner, don’t you think that they could have seen this coming? They got theirs and left us to fight over the scraps.
It’s actually pretty fair to say that these two deals totally screwed the entire music business. Thanks Merlin and Warner. Merry fucking dumbass Christmas to you, too.
We’ll have more to say about this, but let’s talk about the other bunch of fools, the Copyright Royalty Board. Not only did they buy into the Chris Harrison bullshit, they also added some of their own–they indexed the royalty rate so that it only increases based on what is essentially increases in the rate of inflation applied to the Chris Harrison-era 2016 rate.
FOR FIVE YEARS!
Think about that–what that means is that the 2016 rate essentially stays the same for the full five years of the CRB decision. This is called “wage stagnation”–a classic case of it in fact. It’s one thing when wage stagnation happens in the market place. This isn’t that. This is government mandated wage stagnation for the benefit of Pandora, Clear Channel/iHeart, Google and the rest of the MIC Coalition.
Maybe the bully boys from Washington thought we should be happy that inflation doesn’t eat into our measly royalty rate? Did they think there would be dancing in the streets that the government only put their boot on our necks and didn’t cut our guts out, too?
Or maybe they thought we’d be too dumb to notice that they are giving us a flat rate for five years regardless of the value of music. It’s not implausible to believe that it was their intention to devalue music–at least if you’re not getting the non-cash goodies given to Merlin and Warner.
(c) Annual royalty fee adjustment. The Copyright Royalty Judges shall adjust the royalty fees each year to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index (for all consumers and for all items) (CPI-U) published by the Secretary of Labor before December 1 of the preceding year. The adjusted rate shall be rounded to the nearest fourth decimal place. The Judges shall publish notice of the adjusted fees in the Federal Register at least 25 days before January 1. The adjusted fees shall be effective on January 1.
This is just ridiculous. Let’s leave aside whether the CPI arithmetic mean formula (the “Laspeyres formula”) used by the Bureau of Labor Statistics even makes sense applied to music, let’s leave aside the fact that the entire federal government starting with the Federal Reserve is doing everything humanly possible to keep inflation as low as possible for largely political reasons, and let’s leave aside the fact that the Federal Reserve (and other central banks) has been in lala land with quantitative easing and other indirect forms of printing money to keep the 99% economy from collapsing since 2008.
Let’s also leave aside that the “CPI-U” rate that the CRB chose for us is for urban consumers only and neverhas included an “expenditure category” for music, entertainment or even “leisure” activities. (Neither has the producer price index.) The only connection between CPI-U and artists is what it costs everyone in the economy to live, not to produce music–and will necessarily underweight certain costs to artists like oh, say, GASOLINE. Everyone uses gasoline, but artists probably use a lot more of it because we have to tour because record sales are in the toilet right next to webcasting rates thanks to the little intellectual elite in a far-away Eastern city. We use gasoline to produce a product–music–not to drive to work like judges at the CRB.
Out of touch and mean-spirited.
And by the way–indexing everyone’s royalty rate to the CPI-U means that artists who live outside the U.S. will have their U.S. royalty rates pegged to U.S. inflation. Can we expect to get the same treatment for royalties earned by U.S. artists overseas that SoundExchange collects?
This whole indexing idea is just stupid and it’s insulting. Not only does it freeze our royalty rates for five years, it also guarantees that any increase in the value of music through the government licenses goes 100% to the services. It is not shared by the services with featured artists, labels, musicians and vocalists. The CRB just rewarded what economists call “rent seeking behavior” and what we call being a scumbag.
The geniuses in Washington just told us that they’re going to freeze our royalties and that they think we’re too stupid to know the difference.
Remember–the federal government froze the mechanical royalty rate paid to songwriters at two cents from 1909-1977. Sixty eight years baby.
If you adjusted for inflation that two cents would be worth over 50¢ today–but it still would have the same buying power as two cents in 1909. If they did it to the songwriters, they’ll do it to the artists, too.
If we don’t stop the runaway CRB, we may have to live with the consequences for a long time to come. If you think this is wrong, let the Copyright Office know. You can write to the Register of Copyrights directly at their public communication page:
A Virginia jury today handed down a $25 million judgement in favor of BMG for willful contributory copyright infringement by Cox Communications following what was apparently a very brief deliberation. There will be much written about the case, but let’s think for a moment about what it means for the Copyright Alert System.
The judge in the case ruled earlier in pre-trial motions that Cox had failed to maintain an effective repeat infringer policy and procedure. What seems to have been most compelling to the judge was that Cox didn’t do enough in terminating repeat infringers although the company did temporarily suspend access to a users Internet connection.
That is interesting because the Copyright Alert System (which involves the largest US ISPs) is essentially a system of notices and alerts that never results in what seemed to be important to the court in Cox–termination. Which is actually just…
Details are still slim, but it looks like a victory for artists and rightsholders. Court agrees ISPs are supposed to have real policy for disconnecting repeat infringers. Cox basically had a “fake” cutoff policy and lost DMCA protections. Fox is now liable for user’s infringement.
Law360, Washington (December 17, 2015, 12:38 PM ET) — Internet service provider Cox Communications must pay music publisher BMG Rights Management $25 million for turning a blind eye to illegal music downloads by its subscribers, a Virginia federal jury found in a verdict Thursday, holding the ISP guilty of willful contributory copyright infringement.
Remember that Pandora is buying some assets from the Rdio bankruptcy with the intention to expand its webcasting service into a windowing service like Spotify? How can they do that you may ask? Don’t the licenses for those recordings and songs terminate in a bankruptcy?
Check your email–you may have received this notice from Pandora with the misleading subject line (with our emphasis):
We’re writing in regard to Pandora’s recent announcement that it plans to acquire certain assets from Rdio. We’re currently working to finalize the transaction and are extremely excited about the opportunities this acquisition will bring not only to Pandora, but to the music industry as a whole. With that in mind, we wanted to reach out regarding your company’s musical compositions embodied in sound recordings (the “Content”) stored on Rdio’s servers. As part of our acquisition of Rdio’s assets, we would like to retain the Content contained on these servers for possible inclusion in expanded Pandora service offerings in the future.
To be clear, Pandora will not launch expanded service offerings without acquiring the appropriate licenses. In addition, we will access the Content for possible ingestion into our Music Genome Project. We believe that retaining this Content is the surest way for Pandora to include your compositions upon the launch of any expanded service. However, if you would prefer that your musical compositions not be included at this time, please follow the link below and indicate your intent to opt-out.
Pandora Media, Inc. 2101 Webster St., Suite 1650 Oakland, CA 94610
Why are they sending this email around? If Pandora wants to launch an on-demand service, they’re very likely going to need negotiated licenses or licenses like the ones Rdio already holds. This is all new to Pandora–Pandora executives are to hiding behind the federal government to protect their business and guarantee them a multimillion dollar payday for that 14 bathroom vacation house they’ve always wanted.
If Rdio has a license from you for your songs, Pandora may recognize that those licenses cannot be transferred from Rdio to Pandora in the Rdio bankruptcy. Why else would they be asking you to opt in to a new license in this misleading email? But wait…they never say they’re asking you to opt in, they’re offering you a chance to opt out.
And wait and see–if you don’t respond, they will say that they offered you a chance to opt out, so by not opting out they will deem you to have opted in. Pretty scummy, right? And how do we know this? Because it’s what a scumbag would do. Then naturally its what Pandora would do. Very predictable.
The problem is that you have no idea what the business model will be of whatever new service it is that Pandora may launch, so why in the world would anyone ever agree to a license for a business before you even know what the business is? How would you ever know what’s fair?
It seems like the only smart thing to do if you’ve gotten this email is to opt out immediately. If you decide to opt out, it would probably be a good idea to follow up with a letter telling Pandora that you want no part of it.
Here’s an interesting side note. Check out this sentence:
In addition, we will access the Content for possible ingestion into our Music Genome Project.
That sounds like Music Genome rights would be included in whatever license Pandora wants, and if you opt out, Pandora would not have the rights to “ingest” (lovely) your songs. It sounds like Pandora might think they need a license to map your song into Pandora’s “Music Genome”. That’s interesting because we do, too.
We’ve thought for a long time that Pandora needed a license for each song in the Music Genome and that the use of an artist’s name to create channels also needed a separate license for the use of the artist’s name.
Unless you’re in the habit of buying pigs in pokes, you could do worse than to opt out of any license you ever granted to Rdio and tell your publisher to do the same. Once Pandora can tell you exactly what they want to do with your song, you can always change your mind.
After what they’ve done to artists and songwriters, who would ever trust these corrupt guys if the government didn’t force you to?
“Total Revenue” of $1,100,000,000. Because as Sean Parker will tell you, you know what’s really cool? A billion dollars.
“Total Cash” of $363,600,000.
And at least at the moment, zero debt.
So stop right there–what do you think the response would be if you walked into any business school in the world (and not just the good ones) and asked the first MBA you met this question: How would you like a case study of a public company that has a $2.69 billion market cap, and that has government mandated vendors (that’s the artists and songwriters) whose selling price (aka royalties) is set below market by the government, and that has a billion…
[Editor Charlie sez: It’s the end of 2015 and it’s time to look over the good news that came during the year. For those MTP readers who missed the interview with Karoline Kramer-Gould, the heroic Music Director at tastemaker college radio station WJCU, here’s the reprint from Chris’s blog on Huffington Post. If you already saw it, it’s well worth a re-read to remind you that we do have friends–a lot of friends–in radio who support treating artists fairly and who have devoted their lives to music every bit as much as artists and musicians have. What makes Karoline so special is that she was willing to stand up for what she believes in and speak truth to the MIC Coalition.]
The United States is the only democracy in the world that does not pay recording artists for radio airplay. Artists and record labels have been fighting a legislative battle…
The Trichordist 
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