@SGAWrites Suggestions to @CopyrightOffice on MLC Operations Part 2

The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective.  Those first round of those comments (called “initial comments”) were due in November and the second round of those comments (which are called “reply comments” because they essentially comment on the initial comments) were due December 20.

The Songwriters Guild of America filed initial comments and also filed reply comments.  We’re going to post SGA’s reply comments in three parts and then we’ll post other commenters who we think made really good points (like CISAC and BIEM among others).  This is Part 2 and you can read Part 1 here.  Note that SGA’s comment includes a post by Chris Castle, but we are going to link to that post rather than reproduce it as you may have already read it.

All the comments focus on some central themes that seem to be on everyone’s mind which can be boiled down to oversight, oversight and more oversight.  While the DLC controls the MLC’s purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.  SGA’s comment can be boiled down to its motto:  Protect Songwriters.

Reply Comments of the Songwriters Guild of America, Inc.
Re: Notice of Inquiry Issued by the United States Copyright Office Concerning the Orrin
G. Hatch-Bob Goodlatte Music Modernization Act of 2018 Titled “Blanket License
Implementation Regulations”

B. Copyright Office Review and Oversight of Controversial Activities By the MLC As
Denoted By David Lowery and Others

It is well beyond the scope of these comments to delve into the details and individual
administrative issues with which the MLC must deal, such as formulating contractual
arrangements with outside vendors in order to effectively accomplish its statutory duties.

Nevertheless, as noted above, according to independent press reports recently published by sources including former MLC Committee Member David Lowery (“MLC Selects As Digital Services Provider the Company That Sent Fraudulent License Notices to Songwriters”), certain activities of the MLC have aroused legitimate concerns in the independent music creator community that conflicts of interest are already influencing MLC decision-making (see article citations below). As SGA has urged in prior submissions, the USCO and the Librarian of Congress have been empowered under the MMA to monitor, oversee and review MLC activities, and should utilize such authority at the very least to question on an ongoing basis whether the MLC is being managed by its board members in ways consistent with such members’ fiduciary and other duties and responsibilities.

In that regard, SGA believes it is imperative to include for the record citations to three such recent publications concerning MLC activities, in order to call specific attention to the need for robust USCO oversight of issues that rise to the level of potential conflicts of interest such as self-dealing. It is, of course, up to the USCO and the Librarian of Congress to determine the criteria for its active intervention in such potentially problematic MLC matters, consistent with the statutory authority assigned to them under the law. Again, however, SGA urges that strict scrutiny of such issues, once brought to their attention by interested and informed members of the press and public, should at the very least be carefully reviewed and if necessary, investigated and acted upon. Moreover, as some commentators have suggested, the mandating of adoption by the MLC of conflict of interest policies in coordination with the USCO and the Librarian of Congress would likewise be a wise and welcome development.

The three recent, independent articles electronically appended to these Reply Comments for the review and records of the USCO and the Librarian of Congress are as follows (see Attachments C-E):

https://thetrichordist.com/2019/11/27/mlc-selects-as-digital-services-provider-thecompany-that-sent-fraudulent-license-notices-to-songwriters/

https://www.digitalmusicnews.com/2019/11/27/hfa-mechanical-licensing-collectivecontract/

https://www.hypebot.com/hypebot/2019/12/copyright-office-should-establishconflict-
of-interest-policy-for-the-mma-musical-works-database-op-ed.html

C. Failure to Disclose Amounts of Unmatched Royalties Being Held By Digital Distributors

On December 6, 2019, the USCO held a full day MMA symposium in Washington, DC billed as the “Unclaimed Royalties Study Kickoff.” The event was attended by several dozen copyright experts and other interested parties, some of whom represented the MLC and the DLC, and many of whom participated on one or more of several organized discussion panels. At the end of the event, a representative of SGA took the opportunity to note from the podium that in the approximately seven hours of discussion, not one panelist or participant had raised a single question concerning the aggregate size of the unmatched royalty pool being held by the major digital distributors of music (the very subject of the event). The answer to that question, SGA noted, is certainly a key factor in determining the best practices for scoping the size of the problem, and for identifying and distributing such monies to their proper owners. Or it is concerning why this question was not proactively addressed during any of the day’s panels, otherwise asked, SGA asserted, let alone not answered.

SGA has time and again over the past several years posed this same question to representatives of both digital distributors and music publishers (including in private discussions that took place at the Kickoff event), and even to the USCO. Not once has the question of aggregate unmatched amounts been answered, generally because the information appears to be either willfully undetermined or is purposely being withheld by the digital distributors. Estimates have ranged from several hundred million dollars (based upon extrapolations derived from the past experiences of organizations such as SoundExchange) to a high of $1.6 billion discussed at an Austin, Texas SXSW panel in 2017 that featured representatives of NMPA and a legal representative of one of its affiliated creator groups, who appeared to quote that number.

As the MLC and DLC are well aware, the MMA requires demonstrative actions by each that will “ensure that the policies and practices of the collective are transparent and accountable.” See, Section 102(d)(3)(D)(ix)(I)(aa). SGA suggests that consistent with this requirement, the time has come to at last address the issue of how much money in unmatched royalties is being held by the digital distributors, so that the scope of this daunting problem is publicly disclosed and can be fully and effectively addressed. The community of songwriters and composers has the right to know this information, and a USCO regulation requiring its public disclosure by a date certain in the very near future is clearly warranted. SGA respectfully requests that the USCO issue such a regulation as soon as possible concerning this most basic issue of transparency and accountability as required under the MMA, regarding disclosure of unmatched withholdings both now and in the future.

D. Budgetary Earmarks in Support of Bona Fide Efforts to Identify Unmatched Royalties by the MLC

In its Initial Comments, SGA described in some detail its experience as a participant before the United States Copyright Royalty Judges of the Library of Congress’ Copyright Royalty Board (“CRB”) regarding the Determination and Allocation of Initial Administrative Assessment to Fund Mechanical Licensing Collective, CRB Docket No. 19-CRB-0009–AA. Following both SGA’s withdrawal as a participant in those proceedings, and its subsequent submission of its Initial Comments to the USCO, on December 12, 2019 the CRB issued an order (“Order”) approving the settlement negotiated between the MLC and the DLC concerning the issue of Administrative Assessments.

In that Order, the CRB judges interestingly took note of their receipt and rejection of several comments concerning the proceedings submitted by non-parties:

The Judges have been advised by their staff that some members of the public sent emails to the Copyright Royalty Board seeking to comment on the proposed settlement agreement. Neither the Copyright Act, nor the regulations adopted thereunder, provide for submission or consideration of comments on a proposed settlement by nonparticipants in an administrative assessment proceeding. Consequently, as a matter of law, the Judges could not, and did not, consider these ex parte communications in deciding whether to approve the proposed settlement. Additionally, the Judges’ non-consideration of these exparte communications does not: (i) imply any opinion by the Judges as to the substantive merits of any statements contained in such communications; or (ii) reflect any inability of the Judges to question, sua sponte, whether good cause exists to adopt a settlement and to then utilize all express or reasonably implied statutory authority granted to them to make a determination as to the existence, vel non, of good cause.

The above CRB statement omits, quite unfortunately, the fact that while still a participant in the proceeding, SGA (despite its withdrawal) did indeed file a motion with the CRB that included specific comments applicable to any proposed settlement negotiated between the MLC and the DLC. The September 12, 2019, SGA filing included the following clear statement by SGA on behalf of US and global independent music creators, concerning their desire to ensure justice in the eventual distribution of currently unmatched royalties:

[E]ven as it seeks to withdraw its Petition to Participate in this Proceeding, SGA respectfully implores the Judges…to make the proper funding for MLC activities specifically designed to identify the proper owners of unmatched musical compositions [and royalties] wherever they may reside in the world… one of the highest priorities of these Proceedings…. It further, respectfully requests that the Judges undertake whenever appropriate, to emphasize their intention and expectation that certain resources have been specifically provided for and must therefore be devoted to use in identifying the proper owners of such unmatched compositions and royalties by the MLC…. The clear articulation of such judicial intent, if the Judges deem it appropriate, will be enormously helpful in ensuring transparency, fairness and hopefully success in the carrying out by the MLC of its duties, a result that will be appreciated by every music creator not only in the United States, but throughout the world.” Motion to Withdraw Petition to Participate filed by SGA with CRB, September 12, 2019, Docket No. 19-CRB-0009–AA.

The decision by the CRB judges to put aside SGA’s requests, presumably on the grounds that SGA’s withdrawal (the reasons for which are explained in SGA’s Initial Comments) negated the ability of the CRB to consider such comments, is disappointing at best. SGA, however, is appreciative for being enabled to make the same requests of the USCO, for the same reasons articulated in its motion to the CRB and in its Initial Comments. As SGA stated:

[I]n a situation in which those who control the MLC will likely benefit from not identifying the proper owners of unmatched works (by reason of the fact that potentially hundreds of millions of dollars in royalties pertaining to ‘permanently’ unmatched works will eventually be distributed on a market share basis), every effort must be made to ensure that the search process for those rightful owners be a bona fide and sufficiently financed global effort. (emphasis added)…. Moreover, despite contrary assertions by the MLC, SGA remains unconvinced that the presence on the MLC board of a small minority of music creators (no matter how diligent and well-meaning they may be) will be able to prevent the major music publishing corporations from attempting to successfully exert undue influence. SGA is highly concerned that such multi-national conglomerates may already be seeking to diminish the MLC’s ability to secure proper financing specifically earmarked for designing and carrying out a global program to identify the proper owners of the musical compositions connected to the huge, above-referenced cache of unmatched royalties. SGA similarly doubts that the independent music publishers on the MLC board, many of whom are contractually and/or commercially tied to the major music publishers, will be sufficiently motivated to join with those few MLC songwriter board members to ensure that the rights and interests of such yet-to-be identified music creators and small publishers are properly respected.

In consideration of the foregoing, SGA once again respectfully requests that the USCO and the Librarian of Congress promulgate regulations that make clear to the MLC the expectation that a certain, adequate percentage of the MLC’s Administrative Assessment shall be devoted to undertaking a bona fide and reasonably exhaustive, global search for the rightful owners of currently unmatched royalties, as explicitly intended by Congress under the MMA.

To be continued in Part 3.

@SGAWrites Suggestions to @CopyrightOffice on MLC Operations Part 1

The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective.  Those first round of those comments (called “initial comments”) were due in November and the second round of those comments (which are called “reply comments” because they essentially comment on the initial comments) were due December 20.

The Songwriters Guild of America filed initial comments and also filed reply comments.  We’re going to post SGA’s reply comments in three parts and then we’ll post other commenters who we think made really good points (like CISAC and BIEM among others).  Note that SGA’s comment includes a post by Chris Castle, but we are going to link to that post rather than reproduce it as you may have already read it.

All the comments focus on some central themes that seem to be on everyone’s mind which can be boiled down to oversight, oversight and more oversight.  While the DLC controls the MLC’s purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.  SGA’s comment can be boiled down to its motto:  Protect Songwriters.

Reply Comments of the Songwriters Guild of America, Inc.
Re: Notice of Inquiry Issued by the United States Copyright Office Concerning the Orrin
G. Hatch-Bob Goodlatte Music Modernization Act of 2018 Titled “Blanket License
Implementation Regulations”

I. Introduction and Statement of Interest

These Reply Comments are respectfully submitted by the Songwriters Guild of America, Inc. (“SGA”), the longest established and largest music creator advocacy and copyright
administrative organization in the United States run solely by and for songwriters, composers, and their heirs. Its positions are reasoned and formulated solely in the interests of music creators, without financial influence or other undue interference from parties whose interests vary from or are in conflict with those of songwriters, composers, and other authors of creative works.

Established in 1931, SGA has for 88 years successfully operated with a two-word
mission statement: “Protect Songwriters,” and continues to do so throughout the United States and the world.

SGA’s organizational membership stands at approximately 4500 members, and through its affiliations with both Music Creators North America, Inc. (MCNA) (of which it is a founding member) and the International Council of Music Creators (CIAM) (of which MCNA is a key Continental Alliance Member), SGA is part of a global coalition of music creators and heirs numbering in the millions. Of particular relevance to these comments, SGA is also a founding member of the international organization Fair Trade Music, which is the leading US and international advocacy group for the principles of transparency, equitable treatment, and financial sustainability for all songwriters and composers.

These Reply Comments are meant to supplement the initial comments (“Initial Comments”) filed by SGA in its submission dated November 8, 2019 (see Attachment A), the full content of which is hereby repeated and reconfirmed.

The two most important points stressed by SGA in those Initial Comments were as follows:

1. The obvious and overwhelming necessity for inclusion of music creator information in
the Mechanical Licensing Collective’s (“MLC”) musical works database; and,

2. The equally imperative necessity for robust US Copyright Office oversight of the MLC’s
carrying out of its statutory duties, commitments and activities, especially regarding the
identification of unmatched works and royalties.

It was originally anticipated that SGA’s Reply Comments would focus chiefly on the recommendations submitted by other individuals and organizations as part of the initial round of inquiry. Intervening events concerning the activities of the Mechanical Licensing Collective (MLC) since SGA’s initial submission, however, have caused SGA to recalibrate its focus. Due to the importance of conveying to the US Copyright Office (“USCO”) and the Librarian of Congress some of the very concerning information that has come to light over the past several weeks, SGA believes its Reply Comments must now of necessity deal principally and forthrightly with those issues rather than with the critiquing of submissions filed by its colleagues.

II. Additional, Recent Developments Illustrating the Necessity for Close Scrutiny and Oversight of the MLC by the USCO and the Library of Congress

A. The Resignation of Recording Artist/Songwriter/Music Creator Activist David Lowery from the MLC, and the Process of Replacing Music Creator Members on the MLC Board and Committees Prior to its designation by the USCO and the Librarian of Congress as the organization that would serve as the MLC, the entity established principally by the major music publishing conglomerates and known as the NMPA/MLC conducted an extensive campaign aimed at gaining industry support for its MLC candidacy.

As part of that campaign, it and its affiliated music creator and publisher organizations frequently raised the participation of recording artist/songwriter/music creator activist David Lowery on the Unclaimed Royalties Oversight Committee (“URO Committee”) as potentially the most compelling proof of the entity’s commitment to ensuring that the voice of the independent music creator would always be heard.

Throughout his career, Mr. Lowery has been an outspoken advocate for the rights and interests of musical artists and creators. His mere presence within the NMPA/MLC’s proposed Committee structure legitimized for many the group’s candidacy among independent songwriter and composer groups. Those organizations might otherwise have objected more strenuously to an entity controlled in large part by the multi-national music publishing conglomerates being designated to serve as the MLC.

On July 5, 2019, the NMPA/MLC was indeed selected as the official MLC, and Mr. Lowery was simultaneously approved to serve on its URO Committee. Within a few short weeks after that announcement, however, Mr. Lowery resigned from the URO Committee and disassociated himself from the MLC with the statement that he “lacked the bandwidth” to carry out the watchdog role he had hoped to fill. Shortly thereafter, Mr. Lowery began to publish commentaries highly critical of certain decisions and activities being carried out by the MLC (and highly revealing of his apparent reasons for resigning), the gravity of which issues will be discussed further, below.

Mr. Lowery’s sudden and unexpected departure from the MLC and the URO Committee,
however, has raised even more immediate concerns within the independent music creator community, not only as to the reasons why he might have resigned, but also over the process by which he will be replaced. It is the position of SGA that a system which would allow the MLC board of directors (consisting of ten music publisher representatives and just four music creators) to select and/or approve replacement directors and committee members on behalf of the creative community, without meaningful input from creators or approval by the Librarian of Congress and the Register of Copyrights, is an absurdity. Such an unbalanced, unchecked process would virtually guarantee the removal of what little influence actual music creators have over future MLC activities and decision-making—a result wholly inconsistent with Congressional and Executive intent (especially as regards the crucial work of the URO Committee).

As SGA pointed out in its comments to the US Copyright Office dated April 22, 2019 concerning the original designation of the MLC (see Attachment B):
With the knowledge that ‘permanently’ unmatched royalties will eventually be
distributed on a market share basis to them, [the] largest music publishers will almost certainly do all they can to influence, hamstring and obscure the search process…. It will take highly experienced, non-conflicted and strongly independent-minded board members of the Mechanical [Licensing] Collective to resist this pressure, and to act in ways that fulfill their duties up to the mandated standards of fairness, transparency and accountability set forth in the Act.

The necessity for those characteristics in board members is amplified by the fact that the Mechanical Collective board may even override the recommendations of its own, statutorily established Unclaimed Royalties Oversight Committee if it sees fit to do so. It thus falls to the Register of Copyrights to serve as investigator, analyst and arbiter concerning this crucial, threshold issue of appropriate board and committee member selection as part of its evaluation of the competing candidates for designation as Mechanical Collective.

In honing in on its concerns regarding that specialized duty of the Register, members of Congress took the opportunity in both the Senate and House Reports to elaborate on their expectations regarding the qualifications of board and committee members proposed for service by any Mechanical Collective candidate, and the obligation of the Copyright Office under the direction of the Register to use its own, appropriate judgement in independently evaluating and verifying the credentials of those directors and committee members proposed. That Congressional posture was undoubtedly taken to ensure that all board and committee members of the Mechanical Collective possess the proper background and abilities to execute their duties to protect the rights of creators and other interested parties without conflict, pursuant to the terms of the Act.

Specifically, the applicable section of the Senate Report reads:

The Board of Directors of the new collective is required to be composed of individuals matching specific criteria. The detailed requirements concerning the overall framework of the Board of Directors of the collective and its three committees, the criteria used to select individuals to serve on them, and the advance publication of their names and affiliations all highlight the importance of selecting the appropriate individuals. Service on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated. With the advance notification requirement, the Register is expected to allow the public to submit comments on whether the individuals and their affiliations meet the criteria specified in the legislation; make some effort of its own as it deems appropriate to verify that the individuals and their affiliations actually meet the criteria specified in the legislation; and allow the public to submit comments on whether they support such individuals being appointed for these positions. It has been agreed to by all parties that songwriters should be responsible for identifying and choosing representatives that faithfully reflect the entire songwriting community on the Board.” (emphasis added) S. Rept. 115-339 at 4-5.

The otherwise identical section of the House Report concludes on the following note:

During the entire discussion of the legislation, it has been agreed to by all parties that songwriters should be responsible for identifying and choosing the songwriter representatives on the Board. The Committee strongly agrees with such an approach. (emphasis added) H. Rept 115-651 at 5.

Further, it seems of particular importance that the Executive Branch also regards the careful, post-designation oversight of the Mechanical Collective board and committee members by the Librarian of Congress and the Register as a crucial prerequisite to ensuring that conflicts of interest and bias among such members not poison the ability of the Collective to fulfill its statutory obligations for fairness, transparency and accountability. The Presidential Signing Statement, in fact, asserts unequivocally that ‘I expect that the Register of Copyrights will work with the collective, once it has been designated, to ensure that the Librarian retains the ultimate authority, as required by the Constitution, to appoint and remove all directors.’ (emphasis added)

Pursuant to such clear guidance from both Congress and the White House concerning the selection and replacement of music creator board and committee members, SGA urges the adoption by the USCO of regulations mandating inclusion in the MLC by-laws of a process that includes meaningful music creator participation in the selection process without music publisher interference, with further review and approval by the USCO and the Librarian of Congress of all music creator candidates for MLC board and committee service. To do otherwise would be akin to empowering the wolves to select the watchdogs that purportedly guard the sheep. And that is a result that is not only emphatically in conflict with Congressional intent, but one that is also guaranteed to produce exactly the opposite, long-term results Congress and the Executive Branchwere seeking by passage of the Music Modernization Act (“MMA”): remunerative fairness and justice for creators consistent with the principles set down in Article I, Section 8 of the US Constitution.

To be continued in Part 2.

Press Release: Songwriters Guild Of America Files Reply Comments With Us Copyright Office Again Urging Stringent Oversight Of Music Licensing Collective

We wanted to post this press release from the Songwriters Guild regarding its reply comments to the Copyright Office public consultation on regulating the Mechanical Licensing Collective.

The Guild generously raises some very helpful issues and also is concerned about David’s departure from the MLC.  Unfortunately, the Guild’s comment is still not available on the Regulations.gov website, so Artist Rights Watch linked to a copy of it.  We’re not quite sure why the Copyright Office hasn’t gotten around to posting the Guild’s comment (or David’s yet for that matter) along with the 32 others they have posted before the Christmas break, but we’ll keep you informed on their progress.  Hopefully that’s just an oversight that we noticed because we’re back to work now.

Here’s the press release.

New York, December 20, 2019–  The Songwriters Guild of America (SGA), the longest established and largest music creator advocacy and copyright administrative organization in the United States run solely by and for songwriters, composers and their heirs, has submitted a series of comments and requests to the US Copyright Office regarding oversight of the newly-formed Mechanical Licensing Collective (MLC).  Its comments were filed on December 20, 2019 at the invitation of the Register of Copyrights, pursuant to the duties assigned to the Librarian of Congress and the Copyright Office under the Music Modernization Act of 2018 (MMA).  SGA’s comment is here.

“Due to the inherent and sometimes unavoidable conflicts of interest surrounding the formation and activities of the MLC under the law,” states SGA president and songwriter Rick Carnes, “the music creator community believes that the highest degree of scrutiny must be applied by the US Government in overseeing MLC activities.  Hundreds of millions of dollars in songwriter and composer royalties will be at stake on an annual basis, and to protect us from conflicts of interest within the MLC in regard to such issues as matching currently unclaimed royalties to their proper owners, Congress wisely placed the responsibility of evaluating MLC  activities for fairness, transparency and accuracy to the US Copyright Office.  SGA fully supports the efforts of the Register of Copyrights to formulate regulations that protect the rights of music creators as Congress intends, and will work with the Office to help ensure it is enabled to vigorously and effectively perform its oversight functions.”

Specifically, the comments filed by SGA include requests for regulations governing the MLC that mandate:

  1. Recognition of the obvious and overwhelming necessity for inclusion of songwriter and composer information in the MLC Musical Works Database;
  2. Adoption of internal MLC rules requiring adherence by board and committee members to strict conflict of interest policies;
  3. Inclusion in the MLC by-laws of a process for replacing music creator board and committee members that includes meaningful music creator community participation in the selection process without music publisher interference, and review and approval by the USCO and the Librarian of Congress of all such music creator candidates and appointees. (“To do otherwise,” states Carnes, “would be akin to empowering the wolves to select the watchdogs that purportedly guard the sheep”);
  4. The immediate compilation, calculation and publication of the aggregate amounts of unmatched royalties being held or already transferred to the MLC by digital music distributors, and to update such information on an ongoing basis;
  5. The allocation of sufficient funds specifically enumerated in the MLC budget to be utilized solely for mounting a bona fide, global effort to identify unmatched royalties.

SGA also applauded the recent appointment of Maria Strong to serve as Acting US Register of Copyrights, and urged the Librarian of Congress to select as permanent Register a person  especially knowledgeable about and sympathetic to the rights and needs of the creator and author community, and without conflicts of interest in regard to prior affiliation with digital distributors, big tech, and/or corporate copyright owners (and their respective trade associations).

Finally, SGA suggested that the Copyright Office exercise diligent oversight in reviewing certain recent MLC initiatives, including the awarding of contracts to potentially controversial third parties such as The Harry Fox Agency and ConsenSys, and in investigating the sudden withdrawal from participation on the MLC  Unclaimed Royalties Oversight Committee of songwriter, recording artist and music creator rights activist David Lowery.

“SGA’s intended role in this process,” concludes Carnes “is to serve as an independent monitor of MLC activities, working with the US Copyright Office and other US Government agencies in ensuring that the rights and interests of music creators under the MMA are fully observed.  We have operated as an organization for over 85 years with a two-word mission statement: Protect Songwriters. And that is exactly what we intend to do in this case.”

 

 

Happy Holidays and David’s Copyright Office Comments

We wanted to wish all our readers happy holidays and thank you again for supporting the Trichordist!

As some of you may know, the Copyright Office comment period for MLC regulations just closed.  We will be posting David’s comments and selected other commenters here for some holiday reading starting tomorrow.

We want to thank the Society of Composers and Lyricists for mentioning David in their comments.

SLC NOI Reply Comments

 

RIP Scott Timberg and GoFundMe Page

We were devastated to hear of the death of Scott Timberg, a good friend of the artist rights movement and gifted writer.  His most recent work the definitive Culture Crash: The Killing of the Creative Class will be a vital resource for advocates for many years to come.

A GoFundMe memorial and college fund page was set up by David Dailey for Scott’s wife and son.  We urge everyone to contribute something however small.

RIP Scott Timberg and GoFundMe Page

(cross-post from Artists Rights Watch).

We were devastated to hear of the death of Scott Timberg, a good friend of the artist rights movement and gifted writer.  His most recent work the definitive Culture Crash: The Killing of the Creative Class will be a vital resource for advocates for many years to come.

A GoFundMe memorial and college fund page was set up by David Dailey for Scott’s wife and son.  We urge everyone to contribute something however small.

As if it weren’t hard enough: @TheFOWShow Covers the Direct Shot Supply Chain Debacle–MusicTechPolicy

by Chris Castle

If you are lucky enough to have an independent record store in your community today (mine is the fabulous Waterloo Records), you may not realize just how lucky you really are.  For an independent record store to have survived the last 20 years is something of a modern miracle.  (I think the Waterloo story should be a Harvard Business School case study, frankly.)

It’s also important to realize that physical configurations contributed to 25% of global recorded music revenues in 2018.  Vinyl alone accounts for 3.6% of global revenue.  But–all the majors have outsourced their U.S. physical distribution to a company called “Direct Shot” and the result is a disaster for this delicate ecosystem.  I find it hard to believe that any sales guys had much to do with that decision–it has that extra special Boston Consulting Group stench to it.

The point is that the one way that it could be harder for retailers than it already is due to contractions in the market and streaming cannibalization is if the labels also contracted their stock, shorted them, or just simply didn’t timely deliver the records the stores ordered.  It’s also a silly move for the labels–that’s a nice 25% of revenue you got there, be a shame if something happened to it.

This episode of the first-rate Future of What podcast hosted by the brilliant Portia Sabin is one of the first in depth public conversations on this vital topic we’ve seen.  You may also want to read the open letter from retailers to the major labels that appeared earlier this year, as well as an in depth post about the Direct Shot debacle in the MusicBiz blog.

Stay tuned.

Questions for MLC on Streaming Mechanicals and Asteroid Mining Colonies.

We noted with some excitement last week that the new federal Music Licensing Collective has hired ConsenSys an Ethereum blockchain based ecosystem that also owns an asteroid mining subsidiary.

This is surely a sign the MLC is finally making plans for collecting streaming mechanicals from streaming services that serve extra-planetary mining colonies.

However there are many questions that remain unanswered. For instance while rules and laws that apply to US flagged aircraft and ocean vessels could be a guide, copyright laws that govern interactive streaming have never been tested in space beyond Earth orbit.

While it is likely that the MLC would have authority to license and collect streaming mechanical royalties on US flagged spaceships it’s not clear that privately owned mining facilities in the asteroid belt would be subject to US copyright law. Especially if the asteroid based mining facilities are owned by corporations headquartered in nations other than the US.

Then there is the matter of location of servers. Spotify, Apple Music and Tidal would be unlikely to stream songs from earth as wireless signals would take more than 30 minutes each way. While pause and rewind would not be problematic for the user, switching to an entirely different playlist or new album would require a long wait because of the hour plus round trip to Earth.

So clearly streaming services would require servers be located at the off-world mining facilities.

If the mining company is owned by a US headquartered company then one could reasonably argue US Copyright law applies. Relatively simple.

However, one must also consider the cost of shipping a single server into space. Extrapolating from cost of putting the slimmest 8 pound server into LEO (low earth orbit) it would cost approximately 170 million dollars to put a single server into an asteroid mining colony in the asteroid belt between Mars and Jupiter. Most off-world mining would be highly automated so mining colonies would have relatively low human populations. Thus yearly subscription fees for users would be in the $400,000 – $600,000 range. A family plan would be in the $600,000-$900,000 range.

It’s unlikely asteroid mining colonies could offer an ad supported tier as mining colony dining facilities or escort services would have no need to advertise as they would have no competition. Similar to military bases remote private mining companies typically grant monopolies in each service category.

There is however a silver lining: with only two streaming tiers, the All-in Pool and Total Payable Pool would be easier to calculate.

What about deductions from the All-In Pool for PRO payments in off world mining colonies?

This brings up an interesting side question. Is there a public performance royalty due on performances of music in a private asteroid mining camp? Are these facilities public or private? ASCAP, BMI and SESAC should start to think about this if they want to keep ahead of GMR as there are rumors GMR is already working on an off-world unitary direct license.

Of course everything becomes infinitely more complex if for instance miners in a US headquartered private mining camp subscribe to a streaming service based at a Shanghai headquartered private mining camp on an nearby asteroid. This is not improbable. As long as the orbits of the two asteroids were sufficiently stable this could be accomplished with a commercial grade WiFi router or a long CAT 5 cable.

In this situation it’s impossible to say if the MLC would have any authority to administer mechanical royalties. It’s likely an international agreement would need to be negotiated.

Or ConsenSys’ blockchain platform Ethereum could fix all this. And then we don’t have to worry about anything. Cause that’s what we’ve heard it does. It’s a solution for a lot of things. It’s just no one can really explain how it solves problems that you can already solve with an Excel spreadsheet and a few macros.

But it is a shiny new technology and a lot of money launderers and international criminal gangs prefer the technology so it has a sort of “cultural fit” with many of the music executives, personal managers and self appointed representatives of songwriters.

So how would we implement access to a blockchain distributed global music rights database in a remote asteroid mining facility? It is not clear but we do know that the current global Ethereum blockchain network can process 2400 transactions a minute, a node in a remote asteroid mining camp using only 50% of all available earthbound satellite bandwidth could probably process one database change a week. That’s assuming 40% of the robot labor could be diverted to process the transaction. Also some of the mining colony’s life support systems would need to be temporarily suspended using a “rolling blackout” system, but loss of life is expected to be minimal.

UPDATED: WTF? Digital Media Association and MLC Vendor ConsenSys Share DC Address

UPDATE!!!! I’ve indirectly heard from DiMA and I am embarrassed to admit that they share the same space cause this is a We-Work co-working space! There are dozens of businesses at this address. DiMA flat out deny they had anything to do with the selection of ConsenSys. Apparently they had no idea ConsenSys shares their address. I take them at their word, so should you.

Frankly I’m kind of impressed DiMA isn’t wasting money on fancy offices. They are down in the trenches rubbing elbows with farm co-op lobbyists and CBD-blockchain-startups. Good for them.

Now if we could only find a co-working space with marble parking garages we might be able to get the MLC to consider a co-working space and save all songwriters a little money.

Sadly, now we are left with the fact it was our side that picked ConsenSys.

Keep this correction in mind as you read the original article. The point of the article is that there appears to have been little due diligence on ConsenSys by MLC.

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Honest.  I’m not making this up. Look at screenshots above.

The Digital Media Association (DiMA) represents digital services. You know Google, Spotify, Youtube, Pandora etc. DiMA are on THE OTHER SIDE.  I’m sure some of these folks are good people. At least a couple. Or at least one.  But these are the people the Music Licensing Collective are supposed to be negotiating against on behalf of songwriters. Why did the MLC hire as a vendor a company that apparently is in the same building as the Digital Media Association?

Even if there is no actual funny business, it looks extraordinarily bad. It makes it look like DiMA is picking the MLC vendors. Surely that’s not what this tweet really means!

Lets review.  It’s been less than a week since the MLC announced ConsenSys and HFA as vendors. What we know so far about ConsenSys:

National Security Investigation

The owner Joseph Lubin is one of the co-founders of the Ethereum Foundation a sort of governing body for the cryptocurrency Ethereum.  The chief researcher for the Ethereum foundation was just arrested for allegedly conspiring with North Korea to launder money using cryptocurrency.  Some might say that the Ethereum Foundation and ConsenSys are separate companies.  Sure they are separate companies in the same way the Genco Pura Olive Oil Company was separate from Vito Corleone’s other businesses.  And yes I know I’m implying there is a whiff of organized crime around all of this. Ethereum Foundation also shares a Zug Switzerland address with ConsenSys. Let’s see… crime? Check. Closely related entities working in concert? Check.

Asteroid Mining

ConsenSys counts an Asteroid Mining company as one of its subsidiaries, or “spokes” as ConsenSys prefers to call them. That’s probably because many of these “spokes” do not appear to be legally registered companies of any kind (LLC, INC, S-Corp, LLP, GP etc).

Employee Shares

ConsenSys seems to be having some trouble paying out promised shares to employees. Can an(other) SEC investigation be far off?

Planetary Ore Network Zenith Inc

Forbes came about as close as they could to calling ConsenSys a Ponzi scheme without actually using the word. Regardless of whether it is or not, without any real money-making businesses among its “spokes”, it’s possible it will collapse before it ever does the job the MLC hired it to do.

Songwriters should be alarmed. I mean like the-fucking-house-is-on-fire alarmed. Especially those independent songwriters that rely on mechanical royalties rather than performance royalties. The two vendors the MLC have hired HFA and ConsenSys are deeply troubling choices. When Jan 2021 rolls around I’m skeptical there will be a functioning MLC to pay out the mechanicals. If you are an independent writer and you have a mortgage? I’d be very concerned.

 

RICO SUAVE: A Layman’s Argument For A Law Enforcement Investigation of TikTok

Maybe I shouldn’t say this is an “argument.” This is a plea. A rant. A tirade. A demand that our government enforce the rules and laws enacted by our elected representatives.

The last twenty years has been one venture-funded digital music “service” asshole after another ripping off songwriters and musicians with the same bullshit promise of “empowering” artists. It was bullshit before there was an “@” or “.com” attached to the swindle.  And it still is a swindle. I’m pleading for someone in law enforcement to actually do their job. I’m not an attorney but when I read the applicable state and federal laws it is profoundly clear that most of these mass copyright infringing “services” are engaged in organized criminal activity. Yet rarely is anything done. And by letting them get away with it, time after time, year after year, law enforcement has essentially given the green light to the operators of these services to rip us off. Our only recourse is to resort to civil actions. These take years to complete. When these cases are settled the “services” and executives end up paying out a pittance, a small sliver of the profits they pocketed. Then they do it all over again. The same fucking scumbags. Aided by the exact same attorneys, VCs, investment bankers, bought off academics, fake NGOs and (worst of all) artist managers and former label executives now on the payroll of Swindle-dot-com. It is a racket in both the common and legal sense of the word. And the facts are staring everyone in the face.

I swear give artists one good solid investigation and everything will change. Put one of these digital music fucks in jail. Clawback a single VC’s profits. Disbar a single attorney. Suspend a single SEC license. Revoke the tax-exempt status of a single fake NGO and i promise artists can finally stop clogging up the courts with endless civil copyright proceedings.

And may I humbly suggest we start with the TikTok?

TikTok is probably one of the most popular apps in the world.  The music-oriented short video app has been reportedly downloaded over a billion times.  If you’ve never heard of TikTok just ask your kids. TikTok is owned by an opaque Chinese company privately valued at $73 billion dollars. TikTok was recently embarrassed when a memo leaked that appeared to instruct moderators to censor content sensitive to the Chinese Government.  You know Tibet, Tiananmen Square, Uighur re-education camps you get the idea. The Washington Post also reports that Hong Kong protests are being censored on the platform.

Cute little TikTok app an instrument of Chinese state influence? Yeah all fun, games and Taylor Swift lip syncs until someone gets put in a re-education camp. Sorry to spoil the fun folks.

The Committee on Foreign Investment in the UNited States has finally started an investigation of the company for its handling of US citizens private data and the suppression of facts that are inconvenient to the Chinese Government. You know facts like Uighur concentration camps and the mere existence of Tibet.

But as bad as they are with suppressing inconvenient facts and privacy violations, they actually profit from IP theft.

What most people don’t realize is that TikTok lacks the most basic licenses for most of its content.  I’ve spent the last few weeks researching this.  Many of you know that I’ve been all over this on twitter with friends and strangers often pointing to new evidence or web documents that support my assertions. I could be wrong. But I don’t think so.  73 billion-dollar Chinese company with a stunning lack of licenses.  Mind-boggling. US creators are clearly being ripped off.

ARGUMENT THAT THE DMCA “SAFE HARBOR” DOES NOT APPLY

TikTok’s need for licenses and massive copyright infringement is clear.  And it is also clear they can not hide behind the DMCA.  I quote from my original post:

After a couple of hours playing around with app it appears:

1.TikTok makes available my work and then provides the copy to the user before the user makes any content.

2. The copy would seem to be more than “ephemeral” (an important copyright act legal distinction) as at certain stages I repeatedly accessed the content even when my device lacked internet connectivity.

3. TikTok app “marries” or “syncs” the music to audiovisual content provided by their service or uploaded by the user. Note this is after the recording and composition have apparently been copied and distributed to the user’s device. In other words, the infringement occurs before the user supposedly “publishes” content.

4. Before the “marrying” or “syncing” of the music to audiovisual content if I cut off internet connectivity. The process of marrying the video to music seems to fail. This suggests TikTok service requires sync license, not the user.

5. Only after all sync has occurred does the user have the option to “publish” the work. This is long after TikTok carried out many infringing activities.

As the conversation spilled over onto social media “new shit, came to light.” And perhaps the single most compelling new fact is that Distrokid, an indie distributor popular with DIY artists has a deal with TikTok so “Independent artists can now use DistroKid to get their music into TikTok.”  Good for them.  Distrokid is (of course) partially owned by Spotify.

What is important about this little fact, is it seems to confirm that there exist servers that belong to TikTok (or a contracting party); these servers store copies of recordings and songs on behalf of TikTok; and these recordings and songs are provided under a license to TikTok. Distrokid’s official statement (from the Founder/CEO nonetheless) is clear: “into TikTok.” Thus there is no UGC and DMCA “safe harbor” does not apply. Further, the existence of this license indicates that TikTok is aware they need licenses. As one attorney on twitter noted a license from Distrokid would help prove willful infringement. Also apparently implicated is Engel v Wild Oats.

(Distrokid may want to clarify this is actually the case as certain alternatives could… well let’s just say there might be a lifeboat for one situation).

“Defendants have engaged in a pattern of racketeering activity, as defined in 18 U.S.C. § 1961(5), through the repeated, relentless, and purposeful theft of the IP of others”

The Racketeering Influenced and Corrupt Organizations Act doesn’t just apply to mafia-type organizations. And you don’t have to be a mobster to be charged with racketeering. Any company can get charged if greedy and stupid enough to engage in  (for instance) the repeated, relentless and purposeful theft of the IP of others. In fact, it would seem to be easier to prosecute a corporation, than say someone in the mob, because everyone involved in the corporation has helpfully identified themselves publicly as a member of the organization on LinkedIn. Proving membership is usually the hardest part. Not in this case.

Pattern of racketeering activity?  Two acts of infringement within 10 years of passage of the act? I’d guess we have millions here. Maybe in a single week. And as I demonstrated earlier it’s not like TikTok doesn’t know they need licenses. They’ve entered into licenses with some creators. Wilful infringement.

DECEPTION AT THE HIGHEST LEVELS?

I’d argue at the highest levels of the company executives are engaged in an elaborate ruse to mislead rightsholders about the nature of the infringement.

The TikTok website refers copyright complaints to a process that looks exactly like the DMCA notice and takedown process. But according to US law that process is reserved only for user-uploaded content. It is not for copyrighted work that TikTok is distributing themselves.

I found a few high level executives at TikTok on LinkedIn.  I sent a similar message to several executives. The message read in part:

I am the artist’s rights advocate David Lowery. I’m the songwriter that originally launched the successful class-action lawsuit against Spotify in the US. Any idea how music I control ends up on TikTok? I can’t seem to track down the licenses. Further, if my analysis is correct the way your app appears to work, it looks like your company makes infringing copies before the user adds content. This would mean TikTok can’t claim DMCA safe harbor…

I explain in this article the actions that should be taken going forward:

See here: https://thetrichordist.com/2019/10/18/tiktok-nothing-says-chinese-state-influence-like-censorship-and-mass-copyright-infringement/

But my question is this? If you folks are making so much money now. Why not be a decent human being and license the music?

I received this response from

Thanks for reaching out. TikTok is an exciting way for songs and emerging artists to gain exposure and breakthrough with a wide and varied audience. As a platform for unique and original creative content, TikTok places high value and respect upon intellectual property rights. I would recommend to use the usual channels as this is the fastest way for you to get support. TikTok has copyright policies in place (see the respective website in your location) and copyright infringement notice procedures available to assist. The email address is copyright@tiktok.com. Please note that this is a private message and not a public statement. All the best, Joern

This may seem like a small thing. It isn’t.  It’s major misdirection. The high level executive is directing me towards the DMCA process. This financially benefits TikTok (the hypothetical RICO organization) Because most artists know this is a pointless whac-a-mole™️ routine. A game the artist knows they will never win. So they usually don’t even bother. So it’s material that the company points artists at this process. It gives the impression the users are responsible for the infringing copies. Yet TikTok is clearly making the infringing copies. If this isn’t fraud it should be.

Maybe legal staff and IP counsel at TikTok do not know how their service works. Exactly how the copying and distributing of music files occur on their service. But I don’t think so. The guy who sent me the email response was once the head of licensing for ICE. What is ICE? From the UK PRS for music website:

ICE is the result of a joint venture between PRS for Music, STIM and GEMA with the collective aim of developing the world’s first integrated music copyright, licensing and processing hub, encouraging copyright data accuracy, aggregation of repertoires for multi-territory licences and the elimination of parallel processing against incompatible worksdatabases.

So to consider this the head of content licensing at TikTok who is the former licensing chief for ICE doesn’t know the kind of licenses TikTok requires? Doesn’t know the service can’t rely on DMCA safe harbor process? I call bullshit. Further I suspect this executives knew he was misdirecting me.

I’d start by naming this guy as one of the conspirators and let him roll on everyone else.

Anyone else out there want to join me in a complaint to a US Attorney?

This is unacceptable and criminal behavior. It should not be tolerated from an American company much less a “sharp power” arm of a authoritarian foreign government.