How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.

This is simply a story about intent. Daniel Ek is the co-founder of Spotify, he was also the CEO of u-torrent, the worlds most successful bit-torrent client. As far we know u-torrent has never secured music licenses or paid any royalties to any artists, ever.

Spotify could have completely avoided it’s legal issues around paying songwriters.  The company could have sought to obtain the most recent information about the publishing and songwriters for every track at the service.  The record labels providing the master recordings to Spotify are required to have this information. All Spotify (and others) had to do, was ask for it.

Here’s how it works.

For decades publishers and songwriters have been paid their share of record sales (known as “mechanicals”) by the record labels in the United States. This is a system whereby the labels collect the money from retailers and pay the publishers/songwriters their share. It has worked pretty well for decades and has not required a industry wide, central master database (public or private) to administer these licenses or make the appropriate payments.

This system has worked because each label is responsible for paying the publishers and songwriters attached to the master recordings the label is monetizing. The labels are responsible for making sure all of the publishers and writers are paid. If you are a writer or publisher and you haven’t been paid, you know where the money is – it is at the record label.

Streaming services pay the “mechanicals” at source which are determined by different formulas and rules based upon the use. For example non-interactive streaming and web radio (simulcasts and Pandora) are calculated and paid via the appropriate performing rights society like ASCAP or BMI. These publishing royalties are treated more like radio royalties.

The “mechanicals” for album sales from interactive streaming services are calculated in a different way. It is the responsibility of the streaming services to pay these royalties. CDBaby explains the system here and here. Don’t mind that these explanations are an attempt to sell musicians more CDBaby services, just focus on the information provided for a better understanding of this issue.

Every physical album and transactional download (itunes and the like) pays the “mechanical” publishing to the record label directly, who then pays the publishers and writers.  This publishing information exists as labels providing the master recordings to Spotify have this information. All Spotify (and others) have to do, is ask for it.

Record labels have collectively and effectively “crowd sourced” licensing and payments to publishers and songwriters for decades. Why can’t Spotify simply require this information from labels, when the labels deliver their masters? It’s just that simple. Period.

The simple, easy, and transparent solution to Spotify’s licensing crisis is to require record labels to provide the mechanical license information on every song delivered to Spotify. The labels already have this information.

The simple solution is for Spotify to withdraw any and all songs from the service until the label who has delivered the master recording also delivers the corresponding publisher and writer information for proper licensing and payments. Problem solved!

No need for additional databases or imagined licensing problems. Every master recording on Spotify is delivered by a record label. Every record label is required by law to pay the publishers and songwriters. This is known and readily available information by the people who are delivering the recordings to Spotify!

There is no missing information, and no unknown licenses. Why is this so F’ing hard?

This system would mean that the record labels would have to provide this information. It’s also possible that some of that information is not accurate. Labels would probably fight against any mechanism that would make them have to make any claims about the accuracy of their data, which is fine. If it’s the most update information it’s a great place to start.

Of course, we know that both sides (both labels and streamers) will reject any mechanism that introduces friction into the delivery of masters. However, with the simple intent of requiring publisher and songwriter info for every song master delivered there will no longer be a problem at the scale that currently exists.

To be completely fair to Spotify they did work to make deals with the largest organizations representing publishers and songwriters (NMPA and HFA). However those two organizations leave out a lot of participants. So back to square one. If publishing information is required upon the delivery of masters, the problem is largely solved. Invoking a variation on Occam’s Razor, the best solution is usually the most simple one.

You’d think that in the times before computers this would have been harder than it is now, but like all things Spotify you have to question the motivations of a company whose founder created the most successful bittorrent client of all time, u-torrent.

Oh, and of this writing Spotify is now claiming they have no responsibility to pay any “mechanicals” at all. Can’t make this up.

 

YouTube’s Value Gap is the Record Industry’s Biggest Problem To Fix, and Here’s Why…

If the record industry is serious about growing streaming revenues (and the digital economy in general) it must address the problems with the exploitative practices of Google’s YouTube. We’ve been lucky to be supplied with Content ID data from the same source as our previous data – so we added that into the mix to see where it would rank.

These numbers are just staggering.

If you combine Content ID to the YouTube Subscription numbers you arrive at a whopping 63% of total streaming market share that only contributes  11% of revenue. Ya’ll taking notes here?

yt_istheproblem

 

Look at the combined YouTube revenues of Subscriptions and Content ID together at 11% of revenue. That puts the combined earnings at #3 in market share behind Apple Music. However, Apple Music creates more earnings than the two combined YouTube Revenue streams with less than 4% of the consumption. You’ll also notice that YouTube is the only streaming service with three zeros following the decimal point. That means YouTube is paying hundreds of dollars per million streams while the other leading streamers are paying thousands.

Apple Music generates 12% of revenue with less than 4% of streams. YouTube generates 11% of revenue with 63% of streams. Does that sound like a problem to anyone else?

As of this writing we’re not factoring in the direct channel uploads for artists to YouTube or Vevo, however we just can’t imagine that those numbers are much different in terms of plays versus revenues. We hear from a lot of label folks that they are afraid to give up their annual revenue from YouTube sources, but all we can say is that you’d be gaining more much more than you would be giving up.

We’ve heard of at least one executive who met with resistance when faced with the prospect of potentially walking away from millions of dollars a year in YouTube revenues. But, it’s not walking away from millions, it’s giving up 10’s of millions in true revenue.

Let us not forget, that this devalued revenue will prevent the overall growth of streaming as a format. With streaming revenues (largely from Spotify and Apple Music) now accounting for approximately 40% of overall digital music revenues why should YouTube be able to pay 1/10th of the other major players? Oh, that’s right because of user pirated content uploads…

It’s time for the record business to get serious about cleaning up YouTube.

 

Big Tech’s Latest Artist Relations Debacle: Mass Filings of NOIs to Avoid Paying Statutory Royalties (Part 3) — Music Tech Solutions

As we saw in parts 1 and 2 of this post, New Boss companies like Google are playing on a loophole in the Copyright Act’s compulsory license for songs to shirk responsibility for song licensing from the songwriters or other copyright owners, get out of paying royalties and stop songwriters from auditing. Not only have Google targeted long tail titles, but also new releases and songs by ex-US songwriters who are protected by international treaties. This is exactly the kind of rent seeking behavior by crony capitalists that gives Big Tech a bad name in the music community.

via Big Tech’s Latest Artist Relations Debacle: Mass Filings of NOIs to Avoid Paying Statutory Royalties (Part 3) — Music Tech Solutions

Spotify Retaliating Against Apple Music Exclusive Artists, Execs Say… | DMN

Nope… nothing to see here…

The Times dropped the bombshell after digging into the Frank Ocean situation, one that is actively causing the music industry to reinvestigate their practices around exclusives.  “Executives at two major record labels said that in recent weeks Spotify, which has resisted exclusives, had told them that it had instituted a policy that music that had benefited from such deals on other services would not receive the same level of promotion once it arrived on Spotify,” Sisario wrote.  “Such music may not be as prominently featured or included in as many playlists, said these executives…”

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/2016/08/26/apple-music-exclusive-spotify-sabotage/

Spotify Is Burying Musicians for Their Apple Deals | Bloomberg

New boss, worse than the old boss…

Spotify has been retaliating against musicians who introduce new material exclusively on rival Apple Music by making their songs harder to find, according to people familiar with the strategy. Artists who have given Apple exclusive access to new music have been told they won’t be able to get their tracks on featured playlists once the songs become available on Spotify, said the people, who declined to be identified discussing the steps. Those artists have also found their songs buried in the search rankings of Spotify, the world’s largest music-streaming service, the people said. Spotify said it doesn’t alter search rankings.

READ THE FULL STORY AT BLOOMBERG:
http://www.bloomberg.com/news/articles/2016-08-26/spotify-said-to-retaliate-against-artists-with-apple-exclusives

Windowing Works! 9 of the Top 13 UK Albums NOT on Spotify…

Windowing isn’t just for Adele and Taylor Swift anymore, Music Business Worldwide reports the following:

Four of the Top 5 current UK midweek albums aren’t on Spotify – and are, streaming wise, particularly fragmented.

A quick scan down the rankings, sent to labels today, shows that the same fact applies to five of the Top 6, six of the Top 10 and nine of the Top 13.

We started suggesting that windowing was one of several viable solutions to combat the negatives effects of streaming music ubiquity as early as 2013 when we stated “Why Spotify Is Not Netflix, But Maybe It Should Be“.

We were told we were “out of touch”, “luddites” and we “didn’t understand the new digital economy.” But we persisted on this point with additional writing in 2014, “How To Fix Music Streaming In One Word, Windows“.

Again, many resisted what is just common sense. The record industry always had utilized windows (or windowing as some prefer), but it just looked a little different than the way the film business did it. But it was there, and it always had been there.

In a December 2015 post we got more specific, suggesting that record labels experiment with more disruption and innovation following Taylor Swift and Adele successfully windowing off of Spotify during the initial release window of their latest releases. We wrote, “Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows…“.

In that post we included this:

This is not a philosophical discussion. This is financial reality. Respected stock analyst Robert Tullo who is the Director Of Research at Albert Fried & Company says this:

Longer term IP Radio and Spotify are good annuity revenue streams and great promotional tools. However, we believe the system works better for everyone when artists have the right to distribute their Intellectual property how they see fit.

Ultimately we think windows for content will form around titles that look much like the Movie Windows and that will be great for investors and the industry as soon as all these so called experts get out of the way and spot trading fashionable digital dimes for real growth and earnings.

So here we are in the spring of 2016. As simple math and economic reality effects more artists, managers and labels first hand the truth becomes self evident.

YouTube is the next windowing battle to a restoring a healthy economic ecosystem for artists. You can’t window if you can’t keep your work off of YouTube. That’s not YouTube, that’s YouLose…

Fight For The Future Of Corporate Astroturf Ripping Off Creators!

Musicians, know who your friends are and are not. Here is another example of big tech money, corporate astroturf, attempting to remove your rights. In the last hours of the submissions to the Copyright Office for comments on the DMCA a webform was introduced.

Note the fear-inducing reference to “robots”–“robots” must refer to the tools that Google itself gives to big companies to automate sending DMCA notices to Google for infringing links.  So by definition, “corporations” use Google’s own “robots” at Google’s request.  80 million infringing links this month alone!  (And remember, the Google “transparency report” does not include DMCA notices sent to YouTube, Blogger or any other Google property, it just covers Google search.)  EEP! ROBOTS!  DON’T BREAK THE INTERNET!

Google DMCA 3-31-16

This letter is exceptionally misleading because Google doesn’t allow independent artists to use these tools.  That means even the handful of artists who can monitor Google search 24/7 have to send manual notices.  So what the astroturf group is really complaining about is that EVERYONE should have to send notices manually which would increase the amount of time that Google has to profit from links to infringing content by data profiling or advertising sold on pirate sites.

This webform did not even verify if those sending the automated letter to the US Copyright Office were actually US Residents or machines…or made an intelligible comment on the questions the Copyright Office asked for public comment.  So, we had some fun with it, see bel0w.

David Newhoff at The Illusion Of More has an excellent piece looking much deeper at how these corporations and their funded organizations are working aggressively to take away the protections granted to individual creators in copyright.

Read it here, at the link below.

Astroturf Organizations Typically Hysterical on DMCA | The Illusion Of More

 

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If Streaming Is The Solution To Piracy, Why Is Piracy Still Increasing?

Music Business Worldwide is reporting that “GLOBAL MUSIC PIRACY DOWNLOADS GREW BY ALMOST A FIFTH IN 2015″.

The amount of music downloaded on illegal piracy sites grew by 16.5% in the second half of 2015 compared to the year’s opening six months.

That’s according to leading content protection and market analytics company MUSO, which tracked web activity on 576 sites which were ‘wholly dedicated to music piracy or contained significant music content’.

Across these sites, MUSO analysed over 2 billion visitor traffic hits globally.

READ THE FULL STORY AT MUSIC BUSINESS WORLDWIDE:
http://www.musicbusinessworldwide.com/global-music-piracy-downloads-grew-by-almost-a-fifth-in-2015/

An Open Response to Peter Sunde | David Newhoff @ TIOM

The Pirate Bay’s Peter Sunde has recently stated he’s given up. His interview can be read here. David Newhoff at the Illusion Of More responds to Sunde in a brilliant open letter that is required reading.

This is what comes of evangelizing the idea that it’s okay to exploit other people’s investment of real labor and real capital in goods and services that would otherwise have regenerative value. And exploiting these types of investments is precisely what you and your colleagues did with The Pirate Bay.

At least part of the Internet you don’t like is what comes of preaching to a whole generation that they can have whatever they want, free of charge, as long as it’s just a mouse click away.  And indeed, we are lately seeing the wheels come off that naive (and frankly predatory) idea. As the leaders of Pandora and Spotify begin to see that “freemium” isn’t a business model; as Facebook’s video service “freeboots” the promised ad-share value out of the pockets of YouTube creators; and as the global network of pirate sites is revealed to be a malware-infested and sophisticated black market that preys on individual consumers, you seem to have missed the point, Peter. The “fight” you lost is not with the MPAA and the principles of real capitalism—but with the unfettered greed you helped foster on the Internet you asked for.

READ THE ENTIRE POST AT THE ILLUSION OF MORE:
http://illusionofmore.com/an-open-response-to-peter-sunde/

Pirate Bay Founder: ‘I Have Given Up’ | Motherboard.Vice

This interview is fascinating on so many levels and deserving of it’s own in depth post to explore Sunde’s comments.  Here is just a teaser…

What is it exactly that you have given up?

Well, I have given up the idea that we can win this fight for the internet.

The situation is not going to be any different, because apparently that is something people are not interested in fixing. Or we can’t get people to care enough. Maybe it’s a mixture, but this is kind of the situation we are in, so its useless to do anything about it.

We have become somehow the Black Knight from Monty Python’s Holy Grail. We have maybe half of our head left and we are still fighting, we still think we have a chance of winning this battle.

So what can people do to change this?

Nothing.

PLEASE READ THE FULL POST AT VICE-MOTHERBOARD:
http://motherboard.vice.com/read/pirate-bay-founder-peter-sunde-i-have-given-up