FINALLY, A SMALL CLAIMS SOLUTION THAT WOULD PROVIDE SONGWRITERS AND COMPOSERS A REAL REMEDY FOR OUR RIGHTS!

Guest post from Rick Carnes, President, Songwriters Guild of America. 

How many times in a dispute have you heard someone say, “Let’s not a make a Federal case out of this.” Everyone knows that the enormous cost and energy it takes to prosecute a case in Federal Court is beyond the means of most citizens, and rarely makes financial sense, except as to those rare claims for damages in the millions of dollars. But “making a Federal case of it” is exactly what an individual songwriter must currently do under the law if his or her song is used without permission and infringed.

I recall with great dismay the day that I first saw my songs being streamed on YouTube without my consent, and realized the futility of sending a take down notice to protect my rights. When I sent the notice, another unlicensed copy appeared within minutes of the first one being taken down. And then another. And another.

Faced with playing an unwinnable game of ‘Whack-a-mole’ with infringers, I realized that my only other recourse was to file an infringement case in Federal Court against the unauthorized up-loaders which would, ages later, likely end up costing massively more than I could ever collect in damages. The average cost to bring a single, full-blown copyright infringement claim today is estimated to approach $350,000 in legal fees. At the same time, statutory damages for such infringements are currently capped under the US Copyright Act at less than half that amount per title!

The Copyright law is useless to songwriters when the cost of enforcement of our rights far exceeds the compensatory damages able to be recovered against infringers. In response to this conundrum, The Songwriters Guild of America several years ago began promoting the idea of a Copyright Small Claims Court, and we are happy to say that the US Copyright office heard us and recently issued a detailed report in support of the idea.

http://www.copyright.gov/docs/smallclaims/usco-smallcopyrightclaims.pdf

Today, I am even happier to report that Congressmen Hakeem Jeffries and Tom Marino have responded with the newly introduced the “Copyright Alternative in Small Claims Enforcement (CASE) Act of 2016”.

We believe that this Bill strikes the right balance between consumers and creators, establishing an alternative, opt-in arbitration system to resolve copyright infringement cases without necessitating the time and expense of filing and defending a “Federal Case.”

Every American should have the right to protect his or her property, whether a lawnmower, a bicycle, or a song. It is long past time for Congress to give music creators a viable way to seek fair remedies when our rights are violated, and we thank both the Copyright Office and the Congressional sponsors for standing up in this regard for the smallest of small business people: American Songwriters.

@austinmonitor: Music Commission recommends new policies to rescue Austin’s music industry — Artist Rights Watch

Following the path set by recommendations in the ground-breaking Austin Music Census created by Titan Music Group and commissioned by the Austin Music Office, the City of Austin now sets about implementation.

via @austinmonitor: Music Commission recommends new policies to rescue Austin’s music industry — Artist Rights Watch

6 Real Problems in Music Business the DOJ Should be Investigating

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Department of Songwriter Injustice

Songwriters are perplexed by the attention that the Department of Justice Antitrust Division has given to a rather obscure facet of the public performance licensing of songs.  97% of the market is already completely regulated by the ancient (1941) and outdated DOJ consent decrees that govern BMI and ASCAP.   Specifically the DOJ antitrust division process sets the public performance royalties for 97% of the songs in existence. There is no legislative basis for this regulation.  Most living songwriters were not born when the consent decrees were enacted and thus never gave their consent to have their rights limited.  Nor has their ever been any proper due process.  This is simply the executive branch gone wild.

Regardless a relatively small amount of songwriters have managed to escape this unconstitutional and overbearing regulation by joining small performing rights organizations like SESAC and GMR not subject to consent decrees.  Unfortunately the DOJ’s novel “reinterpretation” of the 70 year old consent decree brings the last of the free songwriters under their control by mandating that any prices for songs co-written with BMI and ASCAP songwriters should be 100% priced by consent decrees and not fractionally priced as is often mandated by existing private contracts and international treaties.   This creates absolute chaos in the music licensing system by introducing a host of administrative and payment issues; additional constitutional rights violations; the specter of wholesale withdrawal of publishers/songwriters from the songwriter performing rights organizations; and appearance of impropriety by a former Google lawyer now working in the DOJ as the one entity it clearly benefits is YouTube/Google.

See https://thetrichordist.com/2016/07/05/1-billion-reasons-the-doj-wants-to-force-100-licensing/

And you might also wonder “how is this even an antitrust issue?”   We are wondering that as well.  The DOJ has indicated that it views the fact that a tiny percentage of songwriters can refuse to license their songs to monopoly digital services as an existential threat to competition in the digital music marketplace.

Huh??!!

This is some spectacular through-the-looking-glass thinking right there.  The kind of mass-hysteria-groupthink you can only get  when the entire government is run by lawyers that all went to one of four elite copyleft law schools. It takes a special kind of arrogance that only a Harvard, Stanford, Yale or Berkeley law degree gives you to not ask: Aren’t the monopoly digital services actually the real threats to competition?   And hasn’t the DOJ by forcing virtually all songwriters to license their songs to these services at below market rates created monopsonies that are driving consolidation among music publishers?  Aren’t the actions of DOJ antitrust lawyers killing competition rather than enhancing it?

But that all presupposes that the Department of Justice is in the business of meting out justice  and protecting the little guy rather than protecting a few politically favored corporations.   To illustrate I’ve come up with 6 real pressing problems that a Department of Justice that was interested in justice would pursue.

Online advertising fraud.  The online advertising industry is riddled with fraud. Bots and related fraud ensure that advertisers are paying for ads that no one sees.  Ad Week estimates it is costing advertisers 7 Billion dollars a year.  Where is the DOJ investigation?  Do you think the fact that Google/Facebook control 70% of the online ad market has anything to do with the DOJ’s blind eye? After all these two companies are some of the biggest campaign contributors to Obama/Clinton campaign coffers. The executive branch is lousy with former Google lawyers including Renata Hesse in the antitrust division who appears to be pushing the 100% licensing rule.   So how exactly does ad fraud impact musicians?  Most digital music services rely on ad revenue. Ad revenue per spin, per click and per view has been falling rapidly because  advertisers have lost faith in the entire online advertising system.   Hence revenue per spin is rapidly falling.  Midia consulting reports YouTube’s per spin rate has been halved in the last year.

Ticket Master/Live Nation/Secondary ticket markets.   When most people focus on Live Nation invariably their concern is Live Nation’s share of concert promotion business.  This is a misplaced concern.  The real problem is that Live Nation owns Ticketmaster which has a near monopoly on ticket sales. This allows Live Nation to extract a “vig” on concerts it doesn’t even promote.  It also raises concerns of a data monopoly, whereby Ticketmaster has the biggest and best pool of data on who is likely to buy a Luke Bryan ticket in Buffalo New York.  This makes it extremely hard for an upstart to compete against TicketMaster.   But the most pressing issue is that billions of dollars of live music revenue is not going to artists.  Instead it is going to “scalpers” and ticket resellers.  A cursory and unscientific review of the StubHub indicates that most of these tickets are coming from Live Nation/Ticketmaster events.  Granted Live Nation/Ticketmaster has a dominant market share, but I find it curious that there are so few tickets sold through TicketFly finding their way to StubHub.

Unlicensed songs on streaming services.   What if 25 percent of the CDs in the biggest music chain store were bootleg and no royalties were being paid to songwriters?  You would think the DOJ would investigate. Right?  Yet Billboard reports that as much as 25% of the royalties payable to publishers/songwriters are not being paid.  Meanwhile Senator Warren (hmm another Harvard professor) is urging the antitrust division to investigate alleged anti-competitive practices by Apple on behalf of Spotify. You would think smart Harvard professors would realize not paying 25% of your songwriters gives Spotify an unfair competitive advantage.

Abuse of the DMCA Safe Harbor by YouTube.   YouTube is clearly abusing the DMCA safe harbor to extract the most favorable royalty rate from rights holders.   It is essentially using piracy by its users as the “broken window” in a protection racket shakedown.  How is it that the antitrust division manages to ignore this anticompetitive practice?  Fuck that, how is this not a RICO violation?   This is why it’s so important that we remove former Google lawyers like Renata Hesse from the antitrust division.  This sort of illegal and anti-competitive behavior will never be investigated while Google exercises influence at the DOJ.

Harry Fox Agency/Spotify mail fraud.    As I have detailed here,  The Harry Fox Agency on behalf of Spotify has been sending many songwriters fraudulent “Notices of Intent” to obtain a compulsory license.  Since these notices are not in fact valid compulsory licenses (they have clearly been backdated) they are misleading songwriters into thinking they no longer have a right to negotiate a potentially more beneficial direct license.  That is a kind of fraud. I’m not a attorney but the fact these are sent through the US mail this seems to meet the criteria for mail fraud, which is a RICO predicate.   Where is that investigation?

The DOJ Antitrust Division Litigation Section III   The Office of the Inspector General of the Justice Department should investigate whether the Renata Hess violated ethics rules by not disclosing work for Google in her official DOJ bio.  and pushing through an “interpretation” of the consent decree that clearly benefits her former client.    More on how she violated ethics rules right here.

But more important is the big picture on the DOJ Antitrust Litigation Section III.  As evidenced by this very article, Litigation Section III which oversees the entertainment industry has not just failed to do its job, its actions have dramatically decreased competition.  The entire section is corrupt or incompetent.  It should be disbanded or at the very least reorganized.

Spotify NMPA Settlement Finished: Let The Securities Fraud Begin!

Anonymous Spotify sources have been pitching the NMPA publisher settlement as a silver bullet that will “crush” the songwriter class action lawsuits. Here is the latest such headline…

How Spotify Crushed a $200 Million Songwriter Lawsuit…

In this Digital Music News article David Israelite from the National Music Publishers Association seems to go out of his way to come up with a highly qualified 96% figure.  That of course makes it seem like there are just a few songwriters left in the spotify class action lawsuit.

Wrong.

This doesn’t do anything to the class action. The class action is about UNLICENSED SONGS not UNMATCHED ROYALTIES. Further songs represented by NMPA publishers were never really the main issue here. Why? In most cases the NMPA publishers were licensed via modified compulsory by NMPA owned Harry Fox Agency.

The unlicensed songs most likely belong to publishers and songwriters outside the NMPA umbrella.

However if you are Spotify or Goldman Sachs and you need to convince investors that the problem is cleared up before an IPO?  This headline works! 

Let the securities fraud begin!

Time and time again the NMPA has helped Spotify by creating the false impression that the putative class has been gutted and that Spotify’s long term infringement problems have been fixed. This in no way helps the NMPA or its publishers. Further it tells digital services that NMPA will save their asses even if they stiff songwriters. 

With friends like these who needs enemies. 

 

Duck of the Day: @repdougcollins Gives Attorney General the 911 on 100% Licensing — Artist Rights Watch

Rep. Doug Collins (author of Songwriter Equity Act) gives Attorney General Loretta Lynch a chance to answer on 100% licensing. In the duck of the day, Lynch mealy mouths her way around answering the question.

via Duck of the Day: @repdougcollins Gives Attorney General the 911 on 100% Licensing — Artist Rights Watch

Canadian Music Publishers, Indie Labels and US Indie Publishers Reject Obama Administration Position on 100% Licensing — Artist Rights Watch

In what may be a foreshadowing of the WTO arbitration yet to come, the Canadian Music Publishers Association joined A2IM and AIMP in condemning the Obama Administration’s position on 100% licensing to protect the largest corporations in the world from collective action by songwriters.

via Canadian Music Publishers, Indie Labels and US Indie Publishers Reject Obama Administration Position on 100% Licensing — Artist Rights Watch

Science Fiction: DOJ Antitrust Division Goes Back In Time To Change Consent Decrees

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DOJ antitrust division under former Google lawyer  Renata Hesse goes back in time and changes consent decrees to avoid constitutional challenge. 

You can’t make this shit up.

According to multiple sources David Kullly Chief of Litigation Section III in the Antitrust Division of the DOJ told songwriters on a conference call last week that the 100% licensing rule is not a rule change at all.  The rule was always there. He claims the DOJ analysis concludes it is “implied” in the original ASCAP consent decree.   Thus the DOJ is not changing a rule it is simply clarifying existing rule.

This makes no fucking sense:

  1. If 100% licensing already existed why did the DOJ spend the last year asking for comments from songwriters, publishers and music services on whether to make this change or not? What was the point of the consultation?
  2. If 100% licensing always existed how does the DOJ explain that no one has ever done this in the past?  Why did the DOJ wait until 1 year after the GMR/YouTube dispute erupted to tell everyone that 100% licensing is already a rule?

Bullshit. This is a completely new story that we are hearing from the DOJ antitrust division.  At no point in the last year of discussions did the DOJ ever indicate that this was their view.  Our hunch is that the DOJ has very recently come up with this novel interpretation once it appeared that a rule change (as opposed to a clarification) was likely to meet constitutional challenges from songwriters.  Kully admitted on the call that he did not come up with the analysis.  When pressed by one of the songwriter groups to divulge who did this analysis that supported this interpretation he refused to disclose.

So we’re gonna just go ahead and assume it came from his boss and former Google counsel Renata Hesse.

This is some tricky ass lawyering.   You see the Obama DOJ  has invented a time machine. One that conveniently supports one of the administrations favorite corporate sponsors.   They’ve effectively gone back in time and changed the original consent decrees.  For instance they can now claim GMR writers didn’t lose any rights and thus can’t make a constitutional claim.  Those rights were missing when they formed GMR.  And oh yeah all those private co-administration contracts were unlawful before they were signed.  Voila! No more ex postfacto.  

Fucking brilliant and oh so fucking Googley.

Remember if they can do this shit to songwriters the DOJ can (and will) do shit like this to you too. 

 

 

This Chart Makes Mockery of DOJ Lawyers’ Claim Consent Decrees Don’t Lower Songwriter Pay

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This week DOJ lawyers arranged conference calls and fielded questions from Songwriters over the 100% licensing rules.  Multiple sources are reporting that when songwriters complained about their pay under the consent decrees the staff lawyers claimed that the consent decrees had nothing to do with it.

I call bullshit.  And I’ve got the data to prove it.  In fact I explained this to the DOJ lawyers in a letter when they asked for comments earlier this year.

Generally when you hear a recording of a song on the radio, you are listening to separate and distinct copyrights.  There is a copyright for the recording and one for the underlying composition (or song).   Often times these two copyrights have different owners.

For instance when a film maker decides that they want to use a recording of a song in a film they must obtain  licenses.  A “master use” license for the recording.  And a “sync” license for the underlying composition.   There are no DOJ rules or federal compulsory licenses for this kind of use.  Each license is negotiated in the free market.  My long experience with my own catalogue shows that generally the fee for master use license (recording) is about the same as the fee for the sync license (underlying composition).   Sometimes the sync license is a little higher as it is always possible to re-record the song.  For my catalogue 2011-2014 it’s about  48% for recording and 52% for the composition.

Now contrast that to the non-interactive streaming (think Pandora not Spotify).  Here the consent decree governs the licensing process for the composition.   In this case the recordings get about 92% of the revenue and the composition receives about 8%.     The only difference is the consent decree!

The consent decrees amount to a federally mandated subsidy from songwriters to monopoly digital services.  They are further entrenching and enriching “trusts” at the expense of songwriters.  Does that sound like a properly functioning antitrust division?

 

 

 

Songwriters: If You Feel You Must Submit Comments to DOJ Share Them with Us

We have reports from songwriters who have been on the DOJ conference calls that they are still asking songwriters comments.  We don’t think anyone would should participate in this. But for some odd reason the DOJ is not going to publish them.   Why?   We urge anyone submitting comments to also publish them on their personal blogs and send us the links.  We will publicize.  If you don’t have a blog send them to us and we will publish them.

This is a democracy not a police state.   The DOJ is one of the most powerful departments in the executive branch, they shouldn’t be allowed to operate in secrecy on commercial issues like music licensing.

(and with all the security challenges facing the US explain to me why is the DOJ wasting time and money making it easier for 1/2 trillion dollar companies like Google, Apple and Amazon to license songs?)