Charles Caldas of MERLIN: Independent Labels’ Minus $15 Million Dollar Man

Indie Music’s Minus 15 Million Dolllar Man

 

MERLIN is theoretically an organization that looks after the rights of independent labels and independent artists. Charles Caldas is the CEO.  Last month they made a high profile deal with Pandora.   We knew what would happen at the time. We knew that Pandora would use the deal as evidence in Copyright Royalty Board hearings to lower ALL OF OUR RATES.  And yesterday they did just that.  According to the Radio and Internet News these new lower rates that Pandora has asked the Copyright Royalty Board to impose on ALL performers and labels are about half the proposed SoundExchange rates.   Thanks MERLIN!  Thanks Charles Caldas!

We conservatively estimate that  this will save Pandora approximately $150 million a year starting in 2016. And of course this is $150 million dollars out of the pockets of rightsholders.    If the 20,000 independent labels that MERLIN claims to represent are 10% of Pandora spins, this means that MERLIN just cost it’s own labels $15 million dollars a year!

Henceforth Charles Caldas will be known as “The Minus $15 Million Dollar Man”

And you have to ask why did they have to do this now?
What was the hurry?
Were labels really telling Caldas “Quick let’s cut a deal with Pandora?”

I highly doubt it.

If I were forced to bet on it, I’d say its more likely that Pandora was urging the deal.  It coincides nicely with the line they’ve been privately feeding stock analysts that they’ve “made up” with the music industry.

The only company that clearly benefitted from this deal was Pandora.  This is classic ego-driven music business nonsense. Put your name on a deal. No matter how bad.

Or is it even worse?  This deal already looks like it’s Payola.  Is money changing hands somehow?   No, that would never happen between labels and broadcasters, cause that is illegal. And no label or label group  would ever do anything illegal like that.

 

Mr. Lowery’s Speaking Tour: Interview with @davidclowery after Columbia Law School, George Mason University and CMJ Keynote

David Lowery and Chris Castle talk creators rights, copyright and the internet…

Music Technology Policy

David Lowery just concluded a whistlestop tour of academic panels at George Mason University and the Columbia Law School, finishing with a keynote at the Continuing Legal Education program at CMJ.  We caught up to him for a recap of his brush with academia:

MTP: What were these conferences about? How did you bring your academic experience to bear on your participation?

Lowery: Ha. My academic experience is relatively limited at this point. Yes this is my fourth year teaching “business fundamentals of the music business” and “publishing and licensing” at University of Georgia, but compared to many of the folks at these panels I’m a relative newcomer. Most of the folks on these panels have been teaching law for quite some time and often have extensive industry experience in entertainment and/or technology.    I think though I’m much closer to the younger students, the young and aspiring artists than…

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WIN Fair Digital Deals Declaration vs MERLIN’S “PANDOLA” Deal

If there were ever two deals and two indie music organizations to contrast and compare these would be the two. WIN and MERLIN

As A2IM reported back in July

On Wednesday, July 16th, the Worldwide Independent Network (WIN), of which A2IM is a member, issued the Fair Digital Deals Declaration, a commitment by Independent labels to support fair accounting to artists. Currently, many music licensing deals include payouts covering unshared compensation, which include equity stakes, minimum revenue guarantees not related to performance, renewing advances, etc. (aka “Breakage”) — all of which are creating issues in digital licensing between services and labels (read previous A2IM item about Breakage HERE).

Meanwhile Merlin cut a direct deal with Pandora to license songs at about 1/2 the rate proposed by Sound Exchange IF Pandora plays Merlin songs more often than everyone else.

UH….  Isn’t that called payola?  Pandora apparently owns a terrestrial radio station and is an FCC broadcaster after all!

Or should we call this deal  Pandola?

So not only  did MERLIN get expertly played by Pandora and as a result ALL performers may lose almost half their SoundExchage revenue,  MERLIN’s excellent deal for Indies artists is warmed over Payola?

That’s really farsighted (sarcasm).    What’s to stop the majors from cutting the same deal with Pandora and outbidding us for airplay?   I suggest the folks at MERLIN read  Hit Men: Power Brokers and Fast Money Inside the Music Business.  Just the first chapter.  The majors specifically used “indie promoters” and payola to lock independents out of the radio market.

So on one hand you have a deal by WIN that is farsighted, egalitarian and benefits all artists.   On the other hand you have MERLIN with their sleazy secret payola deal that could potentially screw all artists across the board.

 

Set, Match and Game to Pandora and Chris Harrison: MERLIN Gives Pandora the Rate Cut They’ve Always Wanted.

 

Harrison trounces performers and labels with MERLIN deal.  Congratulations. 

In the past I’ve had rather unkind things to say about Pandora and their chief legal strategist Chris Harrison.  But today I’d like to sincerely congratulate them on a game well played.  Pandora and Harrison have successfully outflanked performers by exploiting us where we were  weakest (and stupidest).  That weak spot?  The independent label rights licensing association known as MERLIN.

MERLIN led by Charles Caldas represents over 20,000 independent labels.  In a jaw-dropping bonehead move ,Merlin cut a direct deal with Pandora to license songs at about 1/2 the rate proposed by Sound Exchange IF Pandora plays Merlin songs more often than everyone else.  Isn’t that called payola?  Pandora is an FCC broadcaster after all!

We at the Trichordist knew what would happen next. Pandora would present this as evidence of a “willing seller” rate and then ask  the Copyright Royalty Board  to IMPOSE this rate on EVERYONE (even those of us that  never asked Charles Caldas to represent us).  Yesterday we learned that this is exactly what Pandora did.  How did we predict this?   We’re not particularly smart it’s just that  this is exactly the same move that Harrison used when he was at DMX.  You had to be pretty dim to not see this coming.  Apparently MERLIN did recently part ways with a  turnip truck.

Fool me once shame on you.

Fool me twice shame on Charles Caldas.

Congratulations Pandora!  Congratulations Chris Harrison.  Well played sirs, well played.

Record Business Geniuses: MERLIN Sells Out All Indie Labels.

MERLIN is theoretically an organization that looks after the rights of independent labels and independent artists.  Last month they made a high profile deal with Pandora.   We knew what was gonna happen at the time. We knew that Pandora would use the deal as evidence in Copyright Royalty Board hearings to lower ALL OF OUR RATES.  As RAIN reports

In a revealing document submitted to the U.S. Copyright Royalty Board (CRB), Pandora argues for lowered music licensing rates in the 2016-2020 statutory royalty period. The proposed rate range is about half the amount suggested by SoundExchange in its submission to the CRB. (See David Oxenford’s coverage here.) In its argument Pandora discloses aspects of its privately negotiated licensing agreement with indie-label coalition Merlin Network (RAIN coverage here).

Thanks Merlin. Thanks for the 50% pay cut.   With friends like you who needs enemies?  Could you be any stupider? Independent labels should hold MERLIN accountable.  50% pay cut.  They just cost you millions of dollars.  Hope someone at Merlin at least got some sort of kickback. At least then it would make sense.

And artists you know what time it is right? It’s time to break the system.

MayDay PAC: Has Lawrence Lessig Become Silicon Valley’s Karl Rove?

2012 Lawrence Lessig

Lawrence Lessig

Photo Credit: Copyleft

Since it’s election season we thought we’d take a break from artists’ rights today and see what one of the “usual suspects” is up to this elections season.  In this case we look at Lester Lawrence Lessig III the piracy-defending-party-pokering-Harvard law professor and former Anton Scalia clerk.  Looks like he has a new Silicon Valley billionaires “grassroots” PAC that is aimed at getting “big money” out of politics by injecting “big money” into politics.  No this isn’t an Onion article although it should be.  

MayDay Pac: Has Lawrence Lessig Become Silicon Valley’s Karl Rove?

Short answer:  NO.   I doubt that Rove would be foolish enough to personally and repeatedly  taunt a sitting house committee chairman from his personal twitter account.  A Chairman that may very well survive the election.  But I’ll get back to this in a minute.

Long answer?

Ever since Lester Lawrence Lessig III launched the MayDay PAC -” the PAC to end all PACs”- I’ve been watching this with some interest.  Mostly because the whole proposition itself seems pretty suspect.  In order to “reform” campaign finance, in order to get billionaires and corporate interests out of politics he went out and collected millions from billionaires  and corporate interests?  Huh?  Especially suspect since one of the biggest donors (Peter Thiel) appears to oppose all campaign finance reform.

As the Huffington Post noted:

Support from Thiel for Lessig’s campaign to reform campaign finance laws is not only eyebrow-raising because of his libertarian politics — the Libertarian Party has called for the repeal of all campaign finance laws since at least the 1970s — but also because of a political treatise he penned in 2009 declaring, “I no longer believe that freedom and democracy are compatible.”

This is classic Lessig: co-opting a seemingly populist cause like copyright reform, while faithfully carrying forward a corporate agenda. In this case  the MacGuffin is campaign finance reform but to my eye the real plot line involves a clever new way for Silicon Valley to influence (or threaten)  our elected representatives with BIG money.  Just look at the list of donors  especially the big donors.  It’s a who’s who of Silicon Valley and anti-copyright ideologues. No surprise the serial innovator of artist rip-offs, Sean Parker (Napster, Facebook, Spotify), tops the list at $500,000! But something else becomes readily apparent when you dig down deeper into the midsize donors:  there sure are a hell of a lot of Google employees who’ve donated to this PAC.  So many that one shouldn’t be faulted for questioning whether this was coordinated.  I’ve helpfully compiled all the donors listed on the FEC documents  into a single Excel file that you can search and sort on 22 fields. Don’t believe me?  Dig in and draw your own conclusions.

Excel here: MayDay PAC addresses redacted

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What is Lessig up to here?   On the surface he claims to be trying to clean up politics and get the “dark money” out of campaigns.  But is he really?   Here are some funny things I’ve noticed about the PAC.

1. Lessig promised total transparency and was supposed to  list the names of all his donors.  And then he didn’t.   Even the Sunlight Foundation (he is a board member) had to note the irony.  http://sunlightfoundation.com/blog/2014/08/06/mayday-pac-sheds-light-on-largest-donors/

2. Of the more than 65,000 donors Lessig claims, less than 10% have been disclosed. (Lessig never really disclosed many of his donors and instead left it to the FEC and the FEC doesn’t require disclosure of small donors.)  This still means there are 59,000 undisclosed donors to a PAC that said it was gonna disclose it’s donors! MayDay PAC doesn’t know who it’s donors are? Why? Either you are against “anonymous  money”  in politics or you aren’t? Isn’t this your homework Larry?

3.  I conducted an experiment with the MayDay PAC website and it’s payment processor.  As a result I believe that you can donate repeatedly to the PAC using fake names and addresses and they will not catch it.  I have concluded the name and address a donor provides to the MayDay PAC does not have to match the credit card!  Thus it seems it’s possible that a big donor could avoid disclosing by repeatedly donating $100 under different names and addresses. I’m not familiar with FEC laws but this doesn’t seem right.

4.  On at least one occasion the experiment involved donating money using  a non-U.S. address while simultaneously using a VPN to make it appear like I was in that  foreign country. Didn’t the Watergate break-in have something to do with foreign donations to the Nixon campaign?

5. Why accept BitCoin donations? The whole point of BitCoin is it’s untraceable virtual cash.   Given the fact it’s the de facto currency of the “dark web” it’s by definition “dark money.” How does this fit with the  MayDay PAC dedication to “transparency” and opposition to “dark money?”

6. With all the Silicon Valley money in this PAC we can only assume they had some very bright people build their website.  Why would they leave what appears to be a “back door” (some would say barn door)  for anonymous donations? Was this intentional?

7. This is totally subjective but it seems incredibly bizarre that they would raise more than half their 5 million in small online donations over 4th of july weekend?  Much of that during the hours most people are cooking out and watching fireworks?

8.  Why is there now a “missing” 5 million dollars in the PAC?  Were they counting donations they hadn’t received?  Did they count some of the  big matching donations as part of the original “small donors?”  Why are public statements at odds with FEC documents?  http://www.dailykos.com/story/2014/09/13/1329533/-Mayday-PAC-staffers-comment-on-missing-5-million-critics-holding-their-noses-and-more

Finally  shouldn’t a PAC that claims transparency have a transparent  process for how they decide to spend their  money? Who decides which candidates to support?   What is the process? For instance in California’s 17th district  Silicon Valley is backing the tech-buzzword-spewing Ro Khanna against the old pro labor democratic stalwart Honda.  Will MayDay PAC let their rank and file donors decide who they back?  Or will they just follow the big Silicon Valley money and back Ro Khanna?

So if this PAC isn’t really about transparency,  campaign reform or even the wishes of the  little donor what is it about?   Sadly I think this is about Lessig establishing himself as some sort of King Maker.  The guy who doles out the Silicon Valley money.   When I read Lessig or listen to him speak I don’t get the impression he is a humble guy.  This is a guy that wants to be in politics  (or on the Supreme Court like his former boss Antonin Scalia).  That is why he’s out there personally taunting candidates that he is spending against.

This is not the mark of a true behind the scenes power broker like Rove.   When an artists’ rights blogger who knows nothing about PACs and politics can find this many loose threads in an hour or two it’s definitely amateur hour.

Ultimately this whole thing is a tragedy. Thousands of small donors have been tricked into supporting a “grassroots” campaign finance reform PAC  that is not really what it seems.  I commend any real attempt to get big money out of politics and return to a government of the people, a government where the rich and powerful don’t get to choose who becomes Mayor, Governor, Congressman, Senator and President.   But MayDay PAC looks like the opposite of that.  This appears to be yet another clever way for the rich and powerful to co-opt a populist movement and use it to pick a candidate that will look after the narrow commercial interests of Silicon Valley.  Lessig should be called out for perpetrating this intellectual and political  fraud on the good people of this country.

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PS. Lessig has a new book called “Lesterland.” It’s a sort of fable written in his overly pedantic style that tells the story of “Lesterland” which is just like the United States with it’s 311 million citizens but an elite 150,000  pick the candidates.   He calls this elite “Lesters”  because there are about 150,000 people named Lester in the U.S.

Including the author Lester Lawerence Lessig III.

Does anyone else find it incredibly weird?   It’s at least confusing.  Is he calling himself an “elite” or is he manifesting some sort of weird form of self-loathing?   Maybe there’s both a “Larry” and a “Lester” inside the old noggin. “Lester” supports “Citizens United” and was a clerk for Justice Scalia.   “Larry” is a liberal law professor and has started an Anti-Citizens United PAC to contain “Lester”.   This will make a great movie one day.  Maybe as good as the  Roy Cohn movie.

Government Capture and Google’s Crony Capitalism Assault on America

Music Technology Policy

In case you haven’t noticed, Google has been conducting an all out assault on powerful positions in the U.S. Government.  Note that I say “the U.S. Government” and not “the Obama Administration” for a reason–it just happens, it is merely coincidental that President Obama is the occupant of the White House during Google’s rise to power.  Focusing on the political party of the White House misses the point–David Duke could get elected president and Google would still be playing the same game.  And it’s a game as old as mankind.  Using money to gain influence and using influence to gain power.

Because, as Erik Telford writes in Townhall, “Google [is] the Halliburton of the Obama Administration.”  Even Politico’s Google booster Tony Romm said “The Obama Administration recently plundered the search giant’s ranks.”  Andrew Orlowski wrote four years ago in the Register, “Google is Obama’s Halliburton: So Who’s…

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Blake Morgan Explains the #irespectmusic AND I VOTE! campaign and the Importance of @respectcreators at @thebitterend Show in NYC

Music Technology Policy

On October 14, Blake Morgan and a great line up of performers hosted a sold out standing room only live show for the #irespectmusic AND I VOTE! campaign at the legendary Bitter End in Greenwich Village.  In addition to stellar performances by City of the Sun, Jus Post Bellum, Coyle Girelli and Janita as well as a rousing speech supporting artist rights by Congressman Jerry Nadler that brought the house down, Blake told the story of the #irespectmusic activism and the voter registration campaign.  (See event review here at Doo Bee Doo Bee Doo.)

I highly recommend watching this video of Blake’s inspiring short speech about the evolution of his activism, the voter registration drive and the Congressional Creative Rights Caucus.

Tell your friends, sign the petition and VOTE on November 4!

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Two Sincere Questions for The Future Of Music Coalition #SFMUSICTECH

Timely questions as the FOMC Policy Summit is one again upon us…

The Trichordist

We notice that Future of Music Coalition has submitted testimony to congress asking that they “represent” artists in the Copyright Reform process begun by Congress.

So since they’ve  volunteered to represent us.  We feel it only fair that they answer these two questions:

1. Who selects your advocacy positions?  
AFM, AFTRA, NARAS, Nashville Songwriters Assn, and ASCAP all have democratically elected boards who set the organizations’ positions.  Do you have members who vote for leadership?  If not, who is making those decisions?

2. Who funds your organization?
Google is listed as your first sponsor of your primary event.
http://futureofmusic.org/events/future-music-summit-2012

How much money do you get from Google?  Do you think you should be taking funding from a source many artists believe to be opposed to their interests?

FOMC Spondors

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The Paradox of Pirate Logic : Music Versus Music Software – Full Post

By simply adding the word “Software” to the word “Music” the rationalizations around stealing labor from musicians falls apart very quickly.

The Trichordist

by Chris Whitten
(Copyright in the Author, Posted with Permission)

The bottom line for many in the often heated piracy debate is this: “Give us a good product at a fair price, make it convenient and easy to obtain and we’ll buy it”.

There is a digital product that ticks most of those boxes. So by comparing two products I wonder if we can learn anything about the chances of reducing music and movie piracy by making it better quality, more affordable and easy to download?

I’m of course talking about music production software.

About 7 years ago I was involved in creating a virtual drum instrument in collaboration with a Swedish music software producer Toontrack. Our product has been critically acclaimed, is a best seller, but is also unfortunately a favourite with software pirates. The pirate’s ‘advice’ to “adapt or die” appears then to ring hollow. As a performance…

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