Video from the Radio Active panel discussion of the Internet Radio (un)Fairness Act. Most of the fireworks are towards the end between Michael Petricone of the Consumer Electronics Association (Why are they here?) and myself.
Of key importance is the slide I am showing on my computer
In case you missed it: yesterday, the Future of Music Coalition held its annual summit, a full day’s worth of varied speakers and varied topics. The primary topic was the Internet Radio Fairness Act (IRFA) — Pandora’s Tim Westergren led off the summit with a “conversation panel” designed to drum up support for the bill. Senator Ron Wyden, sponsor of the Senate’s version of the bill, had the honor of keynoting the event, and his remarks centered around the legislation.
The Trichordist’s own David Lowery participated on a panel in between the two devoted to the bill. He was joined by General Counsel of the American Federation of Musicians Patricia Polach, SoundExchange General Counsel Colin Rushing, Consumer Electronics Association lobbyist Michael Petricone, and AccuRadio founder Kurt Hanson.
Lowery had earlier challenged Westergren on the free speech implications of Section 5 of IRFA. Westergren deflected: “I’m not going to get into a back and forth over legislative language.”
During the panel discussion, Lowery focused again on the chilling effect that Section 5 would pose to artists and artist organizations. The AFM’s Polach echoed his concerns.
When Senator Wyden took the podium, he attempted to address these concerns. With his voice raised, he conceded that “If the consensus in the legal community is that this restricts the First Amendment, it will be a very short-lived provision.” Techdirt’s Mike Masnick jumped to Wyden’s defense:
As we noted in our prior post, IRFA’s chilling effect on free speech is not a bizarre interpretation.
Satellite radio provider Sirius XM is currently suing SoundExchange and the American Association of Independent Music (A2IM) primarily because of blog posts expressing their opinion on direct licenses pursued by Sirius. It is seeking monetary damages, a permanent injunction, the dissolution of SoundExchange, and the invalidation of all copyrights licensed by SoundExchange — copyrights involving over 70,000 performers — because these organizations representing artists engaged in speech that Sirius disagrees with.
These groups have explicitly raised the First Amendment in defense. As A2IM argues in its memorandum supporting its motion to dismiss, filed last June, “a trade association’s mere recitation of facts and its opinion on an issue or standard cannot constitute an antitrust violation.”
Instead, such a recitation is protected free speech. … Sirius pleads nothing more than just such protected expressions of A2IM opinion.
Artists and artist advocates should not need to run things by their lawyer whenever they want to communicate to other artists their thoughts and opinions on deals offered by Sirius, Clear Channel, or any other business that relies on their music.
We don’t have to wonder if there is a free speech concern with Section 5 of IRFA — there is. We don’t have to guess if corporations will sue artist organizations for speaking up — they already are.
Section 5 would only codify and set in stone this suppresion of dissent.
That IRFA’s own authors, self-described defenders of the First Amendment, weren’t aware of the definite chilling effect of the bill until yesterday only reinforces the idea that Congressional tampering with artists’ royalties is not yet ready for prime time.
Back in August Google announce it would push down search rankings for pirate sites. This was greeted with a lot of hoopla by both opponents and proponents of illegal piracy. But it now appears that this announcement was just newspeak from the GOOrwell Ministry of Truth.
Graham Henderson at Music Canada has just posted an article that puts Google’s claims into question. In the article Still Searching for Results in Google’s Wasteland of Illegal Sites and Takedown Notices Henderson details the emptiness of Google’s claims. A search for Carly Rae Jespersen’s Call Me Maybe results in zero legitimate music sites on the first page. The lone exception is the Google owned YouTube. It’s not till the second page of results that the 800lb gorilla of the digital retail, iTunes shows up! Not only does this illustrate the difficulties facing artists it illustrates how tough it is for the legitimate music tech companies to reach their customers. It’s odd that the myopic music tech companies like Pandora still seem to think it’s the artists that are the enemy. They refuse to acknowledge that Google is eating their lunch.
It get’s even worse. We looked at every single link on the first page of search results for “Call Me Maybe Download”. Google has no incentive to push these infringing links down. Every link except one apparently generates revenue for Google!! How? either directly through Youtube, by (illegally?) selling advertising on the site hosting the infringing links, or using one of googles many other tools to generate revenue. We give you the evidence here:
Here is the first page of search results.
Clicking through to the links reveals Google’s DoubleClick serving advertising directly on each these sites or evidence that they have in the past. 5 of these links definitely generate revenue for Google. Two other links resulted in queries to Google for ads but in this case didn’t directly receive ads. The last two use other google tools to generate revenue Just like the online pharmacy case Google is complicit in what appears to be illegal activity. Maybe now the election is over the Obama administration will pursue this.
BeeMP3’s ad traffic has been decimated of late, but google is still selling their android app.
Note that David will be speaking on this panel on Tuesday November 13.
12:50 PM – 1:30 PM
Radio-active: Internet Broadcasting and Artist CompensationLearn more about Artists and Creators Rights:
“People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Adam Smith, An Inquiry Into the Nature and Causes of The Wealth of Nations
The Future of Music Policy Summit will convene for the 12th year on November 13. The Internet Radio Fairness Act will be front and center–both Pandora Founder Tim Westergren and Senator Ron Wyden have been added in the last few days and they are not there to talk about the weather. Or stock options.
When FOMC first started, it was viewed as a grass roots organization and the policy summit was a new idea–bring current issues in the music industry before the Washington, DC policy environment. New faces appeared on the panels as well as familiar ones. A mix of Members of Congress and bureaucrats showed up as well…
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Grab the coffee!
Recent Posts:
* Madison Avenue and Media Piracy, Are Online Ad Networks the Birth of SkyNet?
* Bad News, Good News, Bad News. Internet Radio “Fairness” Act Sponsor and Conservative UT Congressman Chaffetz Taunts Musicians; Admits to Belief in Evolution; Urges Government Interference In Markets.
* Muzzling Free Speech By Artists: IRFA Section 5 Analysis
* Lobbyist For CCIA Makes All Kinds of Wild Claims About Copyright Management Organizations. BMI ASCAP SOCAN SAMI Included in Charges of Corruption.
From Around The Web:
Copyhype:
– Friday’s End Notes 11/09/12 (Essential Weekly Reading)
Dan Ariely
– How to Stop Illegal Downloads
“Before it was my book being illegally downloaded, I was more on the “Information wants to be free” end of the spectrum. The sudden, though predictable, shift in my feelings when I found my own work being downloaded for free was a jarring experience.”
Digital Music News
– Goldman Sachs Is About to Invest $100 Million In Spotify…
– Dear Pandora, You Totally Suck. Signed, Songwriters…
– Pandora Is Now Suing ASCAP to Lower Songwriter Royalties…
TechCrunch:
– Spotify Is Having A Good 2012: Revenues Could Reach $500M As It Expands The Digital Music Market
Billboard:
– Songwriters Are Left Out of Pandora’s Royalty Plan: Guest Post by Downtown Music’s Justin Kalifowitz
The Hill:
– NAACP blasts Pandora-backed Internet royalty bill
The New York Times:
– A Clash Across Europe Over the Value of a Click
The Precursor Blog:
– Google’s Top Ten Anti-Privacy Quotes — Part 3 In Google’s Own Words Series
“We know where you are. We know where you’ve been. We can more or less know what you’re thinking about” – Google Chairman Eric Schmidt 10-1-10 per the Atlantic
Torrent Freak:
– Supreme Court Rejects Hearing For Pirate Bay’s Peter Sunde
– RapidShare Limits Public Download Traffic to Drive Away Pirates
– “Six-Strikes” BitTorrent Crackdown May Target Private Trackers
Columbia Journalism Review:
– Audit Notes: digital ads, margins of error, freehadists – French publishing’s online revenues make the Americans look good
Music Tech Policy:
– IRFA and the Future of Music Policy Summit: Why Would FOMC Miss An Opportunity to Defend Artist Rights?
– Stretching the Possibilities of Offensiveness, Pandora Demonstrates How to be Ugly at Scale
The Washington Examiner:
– Report: Google and Facebook competing for an Obama cabinet slot
Digital Trends:
– Sorry, Internet, SOPA had zero effect on election day results
“Of the 24 House Members up for reelection who co-sponsored or otherwise supported the highly contentious anti-piracy legislation, all but three won reelection on Tuesday. This includes Republican Rep. Lamar Smith, of Texas, SOPA’s author and chief co-sponsor who became the Internet’s Enemy No. 1”
ChinaDaily:
– Free Online Music in China Coming to An End?
I don’t even know what to say about these statements by Jonathan Band, one of the long-time lobbyists for the Computer & Communications Industry (read Google). The whole thing just seemed kind of crazy to me. To be clear I don’t have a dog in this fight. Just curious where these allegations come from. Cause I researched a bit and I don’t really see anything to justify most of these charges.
Perhaps our readers can help?
But otherwise he does do a good job of answering a question that has always been of interest to me: Google’s acquisition of Rightsflow.
Listen for yourself.
Memo (2) Jonathan Band at Michigan State University Law School.
The “Internet Radio Fairness Act” has a lot to concern artists. Today, we’re continuing our section-by-section analysis of the proposed legislation because knowing is half the battle. We’ve been looking at how the bill would affect current law: strikethrough text shows what the bill would remove, while underlined text shows what it would add.
SEC. 5. PROMOTION OF A COMPETITIVE MARKETPLACE.
17 USC § 112 – Limitations on exclusive rights: Ephemeral recordings
(e) Statutory License.—
(2) Notwithstanding any provision of the antitrust laws, any copyright owners of sound recordings and any transmitting organizations entitled to a statutory license under this subsection may negotiate and agree upon royalty rates and license terms and conditions for making phonorecords of such sound recordings under this section and the proportionate division of fees paid among copyright owners, and may designate common agents, on a nonexclusive basis, to negotiate, agree to, pay, or receive such royalty payments. Nothing in this paragraph shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).
17 USC § 114 – Scope of exclusive rights in sound recordings
(e) Authority for Negotiations.—
(1) Notwithstanding any provision of the antitrust laws, in negotiating statutory licenses in accordance with subsection (f), any copyright owners of sound recordings and any entities performing sound recordings affected by this section may negotiate and agree upon the royalty rates and license terms and conditions for the performance of such sound recordings and the proportionate division of fees paid among copyright owners, and may designate common agents on a nonexclusive basis to negotiate, agree to, pay, or receive payments.
(2) For licenses granted under section 106 (6), other than statutory licenses, such as for performances by interactive services or performances that exceed the sound recording performance complement—
(A) copyright owners of sound recordings affected by this section may designate common agents to act on their behalf to grant licenses and receive and remit royalty payments: Provided, That each copyright owner shall establish the royalty rates and material license terms and conditions unilaterally, that is, not in agreement, combination, or concert with other copyright owners of sound recordings; and
(B) entities performing sound recordings affected by this section may designate common agents to act on their behalf to obtain licenses and collect and pay royalty fees: Provided, That each entity performing sound recordings shall determine the royalty rates and material license terms and conditions unilaterally, that is, not in agreement, combination, or concert with other entities performing sound recordings.
(3) Nothing in this subsection shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).
(4) In order to obtain the benefits of paragraph (1), a common agent or collective representing copyright owners of sound recordings must make available at no charge through publicly accessible computer access through the Internet the most current available list of sound recording copyright owners represented by the organization and the most current list of sound recordings licensed by the organization.
This section is far more troubling than it first appears.
The effect of IRFA as a whole would be to reduce the amount of royalties that companies like Clear Channel, Sirius XM Radio, and Pandora have to pay to recording artists.
For most companies, arrangements between buyers and sellers are negotiated on the open market. But for a number of reasons, the Copyright Act establishes a compulsory license for certain uses of digital sound recordings with the license terms and rates set by the Copyright Royalty Board.
So companies like Sirius XM and Pandora already have an advantage that many businesses don’t have: government-guaranteed access to the content that drives their business at a rate set by law. Compulsory licensing is compulsory: there is no opting in or opting out for artists.
But compulsory licensing doesn’t preclude direct licensing under the current law — that is, without IRFA. Copyright owners are — and always have been — free to negotiate privately with copyright users. Sirius XM has been particularly aggressive in recent years in pursuing such direct licensing, and Clear Channel is right behind Sirius with their own direct deals.
What does this mean for artists? First of all, in practice, this means that the rates set by the Copyright Royalty Board act as a ceiling — no licensee is going to pay more than the compulsory rate. They are guaranteed access to every sound recording on the market at the CRB’s rates.
So why would recording artists or sound recording owners want to accept a deal that gives, say, Sirius XM more rights for less money? (Bearing in mind that many artists own their sound recordings.)
Here’s one reason. During recent proceedings, Sirius XM Executive VP David Frear testified that “Among other things, [record companies] recognized that by entering into direct licenses with Sirius XM, they gained the potential for enhanced airplay and greater exposure for their recording artists.” Left unsaid was the corollary to this: refusing to enter into a direct license could mean less (or no) airplay.
Direct licensing, in conjunction with a compulsory licensing scheme, thus gives licensees all stick and no carrot. And when you’re terrestrial radio giant Clear Channel, or the only satellite radio provider, or Pandora — which accounts for 37% of all digital sound recording royalties — that’s a pretty big stick. (Pandora and Sirius XM together account for 90%.)
Section 5 of IRFA is perhaps the most pernicious part of the bill, for it would make it illegal for anyone to criticize digital sound recording licensees. If IRFA becomes law, artists and artist organizations will need to watch what they say in public in opposition to Sirius and Clear Channel’s direct licensing efforts.
This is not an exaggeration or hyperbole — it is already happening. The provisions of Section 5 seem to be a direct response to groups like American Association of Independent Music (A2IM), SoundExchange, and major record labels cautioning recording artists about the drawbacks to a push by Sirius XM to license recordings directly following the latest rate-setting proceedings.
In March 2012, Sirius XM filed a lawsuit against SoundExchange and A2IM alleging anti-trust violations for their efforts to resist what SoundExchange and A2IM saw as a raw deal from Sirius XM’s direct licensing push. Now, for starters, it might seem odd that a company with an effective monopoly on satellite radio is complaining that a non-profit nonexclusive collecting agency and a trade association representing hundreds of small companies are violating anti-trust laws.
But the allegations that Sirius made in the lawsuit should concern any artist. Sirius XM essentially argues that various public communications concerning its direct license program amount to anti-competitive behavior — not anti-competitive conduct, just speech.
One such communication identified in Sirius XM’s anti-trust suit includes this August 2011 blog post by A2IM. In its lawsuit, Sirius XM points specifically to a paragraph that states:
In general statutory licenses have been good for the independent music label community as statutory licenses insure that all music label copyrights, whether those of the major labels or those of independent labels or artists, are treated equally and paid the same rate amount for each stream (play) of that music. Under direct licenses there are cases where independents have received less than equitable rates.
And lest you think only industry groups would be caught in the crosshairs, it’s not unlikely that artist advocacy organizations could face legal liability. Sirius XM also refers to a statement made by the Future of Music Coalition, in its November 2011 newsletter:
Here at FMC, we want artists to get the money they’re owed for the use of their music on any platform. The statutory rate for digital performance plus direct payment via SoundExchange is an important piece of the compensation puzzle for creators. Bypassing it might benefit the bottom lines of major corporations in the short run, but it’s a dangerous thing for performing artists.
This is the type of explanatory speech — not conduct — that Sirius XM thinks is illegal and IRFA definitely would outlaw. Again, it would make it a violation of the Sherman Act for “any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing.” Whenever two or more artists are gathered, Sirius XM (and Clear Channel, and Google) will be there.
The statements above are already alleged by Sirius XM to violate existing anti-trust laws. To be clear, the allegations are absurd — these statements are clearly not urging an unlawful “boycott” against Sirius XM’s direct licensing, and even if they were, Sirius doesn’t lose out since it already has access to every sound recording on the market under the compulsory license. There’s also a much simpler and way less conspiratorial explanation to the public response that Sirius complains of: maybe the labels who spurned Sirius XM’s proposal just didn’t like the deal. But Section 5 of IRFA would ensure that the law explicitly prohibits any criticism of direct licensing deals.
So if IRFA becomes law, if you don’t like the deal, you better keep it to yourself.
Rep Jason Chaffetz R-UT “conservative” Republican from Utah and sponsor of the ironically named “Internet Radio Fairness Act” shocked his constituents by accidentally admitting to his belief in dinosaurs and evolution while attempting to taunt musicians and urging government interference in markets. In response to musicians opposition to his bill he told The New York Times.
“The old-school dinosaurs are trying to help, but they’re stuck in the tar,” he said. “They can go talk to the pterodactyls.”
Never mind the taunt doesn’t make any sense. It brings up some intriguing questions:
Old school dinosaurs? Are there new school dinosaurs? Who are the dinosaurs trying to help? Musicians? Or Pandora? Or are the Musicians the dinosaurs? Wouldn’t the pterodactyls be flying around and not stuck in the tar pits? And who’s supposed to talk to the pterodactyls ? the other dinosaurs? Or the musicians? Do the pterodactyls represent internet radio? Are pterodactyls the implied “new school” dinosaurs? And I’m not trying to be purposely obtuse but I’ve been to the LaBrea tar pits and it was mammals like mastodons and sabre toothed tigers that got stuck in the tar pits. Not dinosaurs. Is this part of the metaphor I don’t understand? Is this a zen koan? Is the Congressman operating on a higher level of consciousness?
All kidding aside, should we really be surprised that Chaffetz could be so ideologically flexible? And to be clear there is nothing wrong with being ideologically flexible to a certain extent. According to Wikipedia the anti-gay marriage conservative Utah legislator is half brother of actor John Dukakis the adopted son of Governor Dukakis. Chaffetz was originally a democrat. Indeed he was the chair of the Dukakis For President campaign in Utah. Later in life he switched party affiliations to the Republican party. With strong support for gay rights and democratic policies coming from his father and extended family thanksgiving dinners must be pretty complicated affairs at the Chaffetz house!
So it should be no surprise that this supposed free market advocate could be “ideologically flexible” enough to sponsor a bill that asks the government to set prices; to pick winners and losers; and force musicians through government mandate to bail out a private company that continues to stick with a bad business model (one minute of ads an hour). Oh and this private company happens to be a campaign donor.
What happened to the free market ideals? I guess that’s for dinosaurs.
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