We have a chance to make history today––the American Music Fairness Act, our bi-partisan congressional bill, is on the runway to pass but we need the support of just one Senator who is holding it up:
Call @SenatorLeahy and tell him to support The American Music Fairness Act: (202) 224-4242
We don’t ask you to take time out of your day to support legislation very often, but this is one of those times and YOUR CALL MATTERS!
We have all worked together on the #IRespectMusic campaign towards this moment for years, and our moment has finally arrived. Make your voices heard, please call @SenatorLeahy and urge him not to turn his back on American artists in our hour of need!
DID YOU KNOW the USA is the only democratic country in the world where artists don’t get paid for radio airplay? DID YOU KNOW only Iran & North Korea share the USA’s position on this issue? Tell Senator Leahy that it is time to get America off this list!
Starting with Frank Sinatra on December 12, 1988–nearly 34 years ago to the day–artists have campaigned for fair treatment in line with the rest of the world and get a performance royalty for broadcast radio. The House Judiciary Committee led by the stalwart Rep. Jerry Nadler moved that goal a little closer this week by passing HR 4130, the American Music Fairness Act, out of committee.
Almost as significant as the vote was the comments by Rep. Jim Jordan and Rep. Darrell Issa (the remaining author of the bill after the wonderful Rep. Ted Deutch announced he would not run for reelection). Given the party change in the House next session, Rep. Jordan is the front runner for Chair of the House Judiciary Committee. He was very clear that the committee will be taking up the bill if it doesn’t pass in the lame duck, because it is time to resave this unfairness. Rep. Darrell Issa summed it up: It is time for bipartisan compromise so that America is not in the same category as North Korea, Cuba and Iran, and whatever the right number is it is not zero.
This is not where we needed up before on prior versions of the legislation. We are in a much, much better place than before. I would say that’s for two reasons. First, because the legislation itself addresses radio’s objections and makes the NAB’s mean-spirited lobbying tactics ring hollow and cheap. That dog just won’t hunt anymore.
The other reason is because of a superb messaging effort by the MusicFirst Coalition under new management. MusicFirst under Joe Crowley took their job seriously and understood their job to be very simple: We win, they lose. Too often, lobbyists view their job as perpetuating the conflict so the money keeps flowing. You can tell when you are in one of those because the organization doesn’t seem to quite get it that when you have fewer points when the clock runs out, we call that losing. Even in Washington.
Turning this beast around was a tough job and the entire MusicFirst team deserves recognition and appreciation. We’re not done–there may still be some magic tricks left in this session. But as Congressmen Jordan and Issa said, if the bill doesn’t pass this session, they are committed to taking it up early next session and getting it passed in the House.
Godspeed to everyone who has worked so hard for so long to make this a reality for all of our artists and musicians who need it. It’s what Frank would do.
We’re back! David Lowery hosted the third annual Artist Rights Symposium at the University of Georgia’s Terry College in Athens on November 15 as an in-person event. The Symposium is an all-day event that allows students in the Music Business program to participate and interact with panelists as part of the music business program.
Our keynote speaker was the inspiring Merck Mercuriadis, long time songwriter advocate, manager and music industry veteran who founded and runs the Hipgnosis Songs Fund. Merck is an active songwriter advocate around the world, particularly with the recent inquiry into the music streaming economy by the UK Parliament’s Digital Culture Media & Sport Committee and the UK Competition and Markets Authority. As Kristin Robinson reported on Billboard
Merck explained why he feels the industry is in the “age of the songwriter.” “There has been a massive paradigm shift,” he said. “Forty years ago, the power was in the artist brand,” but now, most songs that top the Billboard charts are written by a larger number of songwriters than ever, meaning the demand has never been higher for good hitmakers. “But songwriters have to have a place at the negotiating table now,” he said, citing that in the United States, rates for mechanicals are set by the government’s Copyright Royalty Board, barring “free market” negotiations. “Let’s face it, [the government controlling rates] is insulting to songwriters.”
This year’s symposium topic was “The Future of Authorship and the US Copyright Office” and Merck and the stellar panelists had a lot to say about the many advocacy issues facing contemporary songwriters.
Fortunately, thanks to Terry College the symposium is available on YouTube at no charge and you can watch it in its entirety.
Welcome/Opening remarks
9:00 AM -9:10 AM David Barbe, Director, Terry College Music Business Program
Georgia Legislative Overview and Agenda 9:10 AM- 9:30 AM
Panel 1: Libraries vs Authors: The Internet Archive’s “Controlled Digital Lending” and Fair Renumeration for Authors. 9:35 AM- 10:50 AM
Readers will recall that the Mechanical Licensing Collective, Inc. aka the MLC, is sitting on a pile of other peoples money (remember that the Mechanical Licensing Collective is the digital music services’ one-of-a-kind joint venture quango mandated by the good folks from Washington who are here to help). We estimate that the MLC has got at least $500 million socked away at City National Bank in Nashville collecting dust–or interest. More on that later. This would include current black box accruing since January 1, 2021 plus $424 million or so in historical black box that was voluntarily paid to the MLC by the DSPs in February 2021–an inexplicably large sum given all the DSP audits over the years.
And the clock is ticking, tick tock, tick tock.
Readers will also recall that the U.S. Copyright Office is responsible for the operations of the MLC, or as they say in Washington where all the children are above average and no one is responsible for anything, “has oversight” which usually means “gets to blame somebody else” when the fan takes over. And of course the Congress has oversight of the Copyright Office. Every so often, the head of the Copyright Office gets the rare joy of attending an oversight hearing at the Congress which happened recently and resulted in certain follow up “questions for the record” that get answered in writing.
The MLC and its employees should get one thing straight–they are about to be blamed for some grubby practices when Congress wants you to show them the money. And you will be thrown under the bus, count on it. Just think–you could have stolen the money the old fashioned way. In the dark. But no, you wanted the government to force songwriters to deal with you and you could not stop congratulating yourselves about how smart you were. Well, you wanted it, and now you’ve gotten it.
Senator Patrick Leahy, Chair of the Senate Judiciary Committee, submitted some rather pointed questions about the MLC black box which drew a rather pointed response:
Question: The Mechanical Licensing Collective (MLC), the organization created under the Music Modernization Act to collect mechanical royalties for songwriters and publishers, also has an obligation to identify the owners of musical works that have accrued royalties when the owners are not known. The major publishers who largely control the MLC keep the royalties from unidentified works if the owners cannot be found. Over the past year, the MLC has identified only a tiny fraction of the rightful owners. [You were warned.] The major publishers stand to gain hundreds of millions of dollars from that failure to find rightful owners. We did not intend to create a disincentive for the MLC and major publishers to find the rightful owners of music works.
What can the Copyright Office do to help ensure that the MLC is working to make sure that rightful owners of music works are identified and paid?
Response: The Mechanical Licensing Collective (“MLC”) should make every reasonable effort to ensure that royalties are paid to the rightful owners of musical works. According to the MLC’s first annual report, it has distributed over $420 million under the new blanket license for uses reported in 2021, with a steadily improving match rate reported to be approximately 88% of all royalties. With respect to the historical, pre-2021, unmatched royalties, which were reported to be about $426 million, the annual report says that the MLC recently started distributing those that it has been able to match. It also says that the MLC has begun making associated usage data for historical unmatched royalties available to copyright owners, which will facilitate further claiming and matching. Notably, the MLC plans to wait to process historical unmatched royalties from the Phonorecords III rate period until the Copyright Royalty Judges finalize those rates in the ongoing remand proceeding and digital music providers provide adjusted reports of usage and royalty payments. It is the Office’s understanding that the bulk of historical unmatched royalties come from that period. [More on this PR III issue below]
The Copyright Office has been active on the issue of matching musical works to accurately pay copyright owners. Last year, we issued a report recommending best practices for the MLC to consider to reduce the incidence of unclaimed royalties. The report’s comprehensive recommendations ranged from high-level concepts to detailed suggestions across seven areas: (1) education and outreach; (2) usability of the MLC’s systems, including the public musical works database and claiming portal; (3) data quality; (4) matching practices; (5) holding and distributing unclaimed accrued royalties; (6) measuring success; and (7) transparency. One of the report’s most significant recommendations was that the MLC should hold unclaimed royalties for longer than the statutory minimum period, to maximize its matching efforts and the ability of copyright owners to make claims before any market-share-based distributions are made. We recommended that the MLC should wait to make such distributions of unclaimed royalties based on the evaluation of various objective criteria, like match rates and engagement metrics.
Additionally, the Office and the MLC are each involved in substantial education and outreach efforts to help ensure that publishers and songwriters, especially self-published songwriters, are aware of the Music Modernization Act (“MMA”), understand their rights under the new system, know that they can register their works with the MLC and claim royalties, and know that royalties for unclaimed works will be equitably distributed to known copyright owners.
[Here comes the bus.]. The Office is continuing to engage with the MLC and other industry stakeholders, including digital services and songwriters, to monitor the MLC’s progress as it continues to ramp up operations. While the MLC has not indicated that it plans to make a distribution of unclaimed royalties anytime soon, the Office possesses broad regulatory authority to act if necessary to prevent a premature distribution. The statute requires the MLC to give ninety days’ notice before any distribution. We have previously cautioned that making a premature distribution of unclaimed royalties could jeopardize the continuation of the MLC’s designation. 84 Fed. Reg. 32,274, 32,283 (July 8, 2019) (“[I]f the designated entity were to make unreasonable distributions of unclaimed royalties, that could be grounds for concern and may call into question whether the entity has the ‘administrative and technological capabilities to perform the required functions of the [MLC].’”) (quoting 17 U.S.C. § 115(d)(3)(A)(iii)).
One issue that is not discussed in the QFR or anywhere else for that matter is what is happening to the hundreds of millions that the MLC is sitting on. Remember that the MLC is required to pay a government interest rate on black box, and that interest rate has been steadily increasing this year thanks to the Federal Reserve. That interest payment is presumably covered under the MLC’s administrative assessment and government fees charged to music users for the privilege of using the compulsory blanket license.
But wait–there’s more. According to the MLC’s annual report (at p. 4), the MLC invests the black box according to its internal “Investment Policy” established by its board of directors.
Investment Policy: This policy covers the investment of royalty and assessmentfunds, respectively, and sets forth The MLC’s goals and objectives in establishing policies to implement The MLC’s investment strategy. The anti-comingling policy required by 17 U.S.C. § 115(d)(3)(D)(ix)(I)(cc) is contained in The MLC’s Investment Policy. The Investment Policy was approved by the Board in January 2021.
This raises some interesting points. First and foremost, it is unclear where any trading profits reside. Realize that every CMO is confronted with the decision about what to do with the royalty float and black box, but not every CMO decides to invest these funds in the market. If they do invest the funds, it is generally the case that any trading profits, dividends or interest goes to offset the CMO’s administrative costs that otherwise would be deducted from collected royalties.
However, the MLC’s administrative costs are paid by the users of the blanket license (making the United States, I believe, the only country in history or the world that charges for the use of a statutory license). Therefore, the return on the MLC’s investment of the songwriters’ money would not be used for the same purpose as all the world’s CMOs that follow a similar practice.
Whether the ROI is returned to songwriters or to the users or retained by the MLC is unclear to me from the MLC’s annual report. It is also unclear as to the authority that the MLC’s board (or the Copyright Office for that matter) would have to put the songwriters’ money at risk in the market, what record keeping is made or required of the investments and ROI, or really much of anything at all, aside from the quoted statement above.
It is also unclear how, if at all, the MLC distinguishes between ROI on royalty or the administrative assessment. It would make sense for trading profits on received but unspent administrative assessment funds to offset current or future assessments, but it’s not clear if that is done.
Assuming there are any. Profits, that is.
I was hoping that this topic would be addressed in the oversight hearing, but maybe next time.
You may have noticed that a cost of living adjustment for statutory royalties was front and center in the recent (and still ongoing) physical mechanicals rate setting. Unfortunately, the idea of a COLA seems to have disappeared in the streaming mechanicals proceeding.
Note that it’s different music users on the physical mechanicals than on streaming. The physical mechanicals are paid by record companies and streaming mechanicals are paid by some of the biggest corporations in history, namely Amazon, Apple and Google and other wealthy public companies like Spotify and Pandora/SiriusXM. All these companies have market capitalizations greater than the gross national product of some countries.
You may have also noticed that after years of frozen subscription rates, Apple is the first of the streaming subscription services to raise rates by $1 on several of its services including Apple Music. Tim Ingham is asking if Spotify will follow (you know, one of those price fixing agreements inferred from conduct). Who knows, but what’s interesting about this is the effect it will have on streaming mechanical rates, or more pointedly the effect that the Big Tech cartel would like you to think it will have.
The calculation for streaming mechanicals is absurdly complicated. You do have to wonder which of the genii came up with that one. About the only thing that is certain is that the negotiation of that rate every five years (and judicial appeals occasionally) guarantees employment for lots of lawyers and lobbyists on both sides, although definitely skewed toward Big Tech’s share of the 46 lawyers on the docket.
The streaming rates are so bizarre that the Copyright Royalty Judges seem to have lost trust in the process and have issued two separate orders instructing the participants in the streaming mechanical proceedings to either disclose or “certify” that they have come clean with the Judges as to any side deals that may have artificially lowered the rates–the second order makes for interesting reading.
Unlike the physical mechanical, the settling parties rejected a cost of living adjustment in these historically inflationary times. Why they rejected a COLA is hard to understand aside from the fact that they thought they could get away with it.
One thing that is clear, however, is that any argument that a COLA is not necessary with streaming mechanicals because the rate is theoretically based on increases or decreases in revenue is a particularly insulting form of trickle down gaslighting.
It must be said that the record company group of music users that pays the physical mechanical rate voluntarily agreed a COLA on their rates that is currently pending approval by the Judges. There really is no excuse for the streaming services to rely on the discredited trickle down theory to pawn off their Rube Goldberg royalty structure on songwriters for streaming mechanicals.
We’ve all been predicting that Google will get broken up by government for any one of a host of reasons. It’s not just songwriters watching the overlawyered lawfare in the Copyright Royalty Board that produces the insulting trickledown royalty structure that you need a team of accountants to understand. Big Tech lawfare is everywhere and it’s even more insidious than you might think. Big Tech spreads their gold around the world to control politicians and conflict lobbyists and lawyers so their combined headlock on laws and markets is hard to comprehend. And then there’s the academics. We’ve been screaming from the rooftops about the censorious Google for years and Google still leads the charge against creators in particular and human decency in general.
Lots of politicians will tell you they want to break up Google and Facebook but will Google and Facebook tell them “I”m sorry Dave, I’m afraid I can’t do that.”
Yes, that’s right: Shady Uncle Sugar is back in the news, this time with added corruption and even less transparency than a Google royalty audit. Mr. Javers reports that the crux of Uncle Sugar’s latest grift is that he was appointed by former House Armed Services Committee Chair and Club Raytheon plankowner Mac Thornberry to something called the National Security Commission on Artificial Intelligence. This “commission” is one of those “independent commission” thingys, but this one on AI didn’t exist before Uncle Sugar arrived.
Where the hell did that commission come from? Smells like astroturf to us. A complete fabrication Truman Show-style designed to push Eric Schmidt and Google even deeper into the AI business and the Washington swamp. Remember, Google acknowledges it ran AI research in cooperation with the Chinese government–in China–for years under the leadership of Stanford/Google University Professor Fei Fei Li. Keep an eye on that one.
Section 1051 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (P.L. 115-232) established the National Security Commission on Artificial Intelligence as an independent Commission “to consider the methods and means necessary to advance the development of artificial intelligence, machine learning, and associated technologies to comprehensively address the national security and defense needs of the United States.
And of course, you won’t be surprised to know that China has taken the lead on developing model AI regulations and business practices. Which brings us to Mr. Javers reporting and the National Security Commission on Artificial Intelligence.
We’ll keep poking around on this “commission”, but this entire commission thing smells like a Washington lobbyist (perhaps Shady Uncle Sugar himself) got the government to pay for a study and put the US government’s stamp of approval on its work product. With Sugar running the whole show. Full on astroturf. And remember–the very best astroturf constructs an alternate reality that is controlled by the special interests. Interests don’t get more special than Shady Uncle Sugar who is too special for his shirt and is so special it hurts.
Curiously, right about the time that Uncle Sugar started touting the Commission’s work product, China has some work product of its own along similar lines:
The Shenzhen AI Regulation aims to promote the AI industry by encouraging governmental organizations to be the forerunners in utilizing related technology and increasing financial support for AI research in the city. It also establishes guidelines for public data sharing to organizations and businesses involved in the sector.
But of course the kicker with the ex-Googler Schmidt brought his own Sugar to the party as Javers tells us:
In short, the commission, which Schmidt soon took charge of as chairman, was tasked with coming up with recommendations for almost every aspect of a vital and emerging [AI] industry. The panel did far more under his leadership. It wrote proposed legislation that later became law and steered billions of dollars of taxpayer funds to industry he helped build — and that he was actively investing in while running the group.
That’s right–if you think the government is going to break up Google, just realize that Google doesn’t want to get broken up because it is all working so well with zero oversight whether they are bamboozling government oversight in Congress or ravaging songwriters at the Copyright Royalty Board. It’s hard to get them out of the government when they are the government. If the Oracle case showed us anything, it showed us that Google’s reach is far and wide. Their special brand of evil knows no boundaries. And we never have gotten an explanation for why Eric Schmidt suddenly left Google.
“Open the pod bay doors” is not going to get it done. We must have an answer when they say “I’m sorry, Dave, I’m afraid I can’t do that.”
[Well, here it is. Two years ago we warned everyone who would listen that TikTok were apparatchiks for the Chinese Communist Party–by law in China because of the CCP’s civil-military fusion–“If Google is the Joe Camel of data, then TikTok is the Joe Camel of intelligence.” We did panels warning about TikTok including the CEO’s struggle session and the CCP constitution–facts, you know. Tim Ingham warned that on top of everything else, the deals suck. And then there’s Twinkletoes, who is in our view a walking, talking Foreign Agent Registration Act violation.
Emily Baker White warns of the harms from TIkTok we identified 2 years ago coming home to roost.
[According to Emily Baker White writing in Forbes:]
China-based team at TikTok’s parent company, ByteDance, planned to use the TikTok app to monitor the personal location of some specific American citizens, according to materials reviewed by Forbes.
The team behind the monitoring project — ByteDance’s Internal Audit and Risk Control department — is led by Beijing-based executive Song Ye, who reports to ByteDance cofounder and CEO Rubo Liang.
The team primarily conducts investigations into potential misconduct by current and former ByteDance employees. But in at least two cases, the Internal Audit team also planned to collect TikTok data about the location of a U.S. citizen who had never had an employment relationship with the company, the materials show. It is unclear from the materials whether data about these Americans was actually collected; however, the plan was for a Beijing-based ByteDance team to obtain location data from U.S. users’ devices.
Look at Spotify’s “Global Top 50” playlist on any day and the world’s biggest music service will show all or nearly all English language songs. With few exceptions these songs are performed by Anglo-American artists released by major record companies.
These “enterprise” playlists largely take the place of broadcast radio for many users where Spotify operates and Spotify competes with local radio for advertising revenue on the free version of Spotify.
However, Spotify has not been subject to any local content protections that would be in place for local radio broadcasters. Enterprise playlists that exclude local music contributes to the destruction of music economies, including performers. Local performers struggle even more to compete with Anglo-American repertoire, even in their own countries.
Due to this phenomenon, local artists are forced to compete for “shelf space” with everyone in their local language and then the Anglo-American artists and their record companies. This also means that local artists compete for a diminishing share of the payable royalties. The “big pool” revenue share method of royalty compensation is designed to overcompensate the English-language big names and reduce payments to artists performing in other languages in their own country.
Local Content Rules
Many countries implement local content broadcast rules that require broadcasters to play a certain number of recordings performed by local artists or indigenous people, songs written by local songwriters in local languages, or recordings that are released by locally-owned record companies.
Because streaming playlists, especially Spotify enterprise playlists or algorithmically selected recordings, are an equivalent to broadcast radio, there is a question as to whether national governments should regulate streaming services operating in their countries to require local content rules. Implementing such rules could benefit local performers and songwriters in an otherwise unsustainable enviornment.
The Fallacy of Infinite Shelf Space
Because Spotify adds recordings at a rate of 60,000 tracks daily (now reports of 100,000 tracks daily) and never deletes recordings, there is a marked competitive difference between a record store and Spotify. In the record store model, artists had to compete with recordings that were in current release; in the Spotify model, artists have to compete will all recordings ever released.
Adding the dominant influence of Anglo-American recordings on Spotify, the “infinite shelf space” simply compounds the competitive problems for non-English recordings.
Streaming RemunerationHelps Solve the Sustainability Crisis
The streaming remuneration model requires streaming services—not record companies—to pay additional compensation to nonfeatured and featured performers. Streaming remuneration would be created under national law and is compensatory in nature, not monies in exchange for a license. Existing licenses (statutory or contractual) would not be affected and remuneration payments could not be offset by streamers against label payments or by labels against artist payments.
Each country would determine the amount to be paid to performers by streaming services and the payment periods. Payments would be made to local CMOs or the equivalent depending on the infrastructure in the particular country.
European Corporate Dominance
It must also be said that the two founders of Spotify hold a 10:1 voting control over the company through special stock issued only to them. This means that these two Caucasian Europeans control 100% of the dominant music streaming company in the world. For comparison, Google and Facebook have a similar model, while Apple has a 1 share 1 vote structure as does Amazon (although Jeff Bezos owns a controlling interest in Amazon).
The net effect is that the entire global streaming music industry is controlled by six Caucasian males of European descent. This demography also argues for local content rules to protect local performers from these influences that have produced an English-only Global Top 50 playlist.
Local governments could consider whether companies with the 10:1 voting stock (so-called “dual class” or “supervoting” shares) should be allowed to operate locally.
Countries Can Respond to Streaming’s Homogenized Algorithmic Playlist Culture
Many national cultural protection laws have a history of sustaining local culture and musicians in the face of the Anglo-American Top 40 juggernaut. There is no reason to think that these agencies are not up for the task of protecting their citizens in the face of algorithms and neuromarketing.
The Trichordist 
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