Guest Post: @musictechsolve: Betting on the House: Issues that House Judiciary Should Investigate Against Google–End Supervoting Shares for Publicly Traded Companies

by Chris Castle

The House Judiciary Committee announced recently that it was opening an antitrust investigation into “tech giants” including Google.  Chairman Jerry Nadler said:

[T]here is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content, and communications…Given the growing tide of concentration and consolidation across our economy, it is vital that we investigate the current state of competition in digital markets and the health of the antitrust laws.

We’re going to do a series of posts about some issues Chairman Nadler should consider in the Judiciary Committee’s review of Big Tech business practices.  These posts will cover issues that relate both to Google as well as Facebook, Spotify and some others.  Let’s start with reforming corporate governance and bring eyesight to the willfully blind.

1.   One Share, One Vote, Not Ten Votes for the Special People:  Anyone in the music business has had just about enough of government oversight from the consent decrees to rate setting to the Music Modernization Act, so I don’t recommend it as a solution in general.  But–in the absence of marketplace transparency, the government is about the only place to go to bring reforms to well-heeled corporations.  So rather than ask the government to fix specific problems on an ad hoc basis, the government would do well to ask what causes the market to fail as it clearly has with Google.  Then rip out that problem root and branch.

The first question to ask when confronted with all of Google’s overreach is where was the board?  That’s an easy question to answer in Google’s case–they were in the pockets of the insiders as you will see.  But we ask that question because corporate boards of directors are supposed to be the first line of oversight to keep companies, especially publicly traded companies, from running off of the rails.

In Google’s case, the core problem is both easy to find and (I hope) easy to fix.  It lies in the voting structure of the shareholders.  Shareholder rights and corporate charters are state law matters and don’t relate to the federal government, but–the federal government does have a say about who gets to sell shares to the public. (For those reading along at home, I’m thinking of the Securities Act of 1933 and the Securities Exchange Act of 1934 under the jurisdiction of the Securities and Exchange Commission.)

The federal government also has an interest in protecting those who purchase the shares of publicly traded corporations.  It is this nexus that gives the House Judiciary Committee clear oversight authority over the corporate structure of at least publicly traded corporations.  Once a start up decides to feed from the trough of the public’s money, they should expect to answer to their public shareholders.

While anti-coup d’etat provisions might make sense for private companies whose investors are sophisticated financiers, or newspapers seeking to retain editorial independence, once that company is publicly traded a bald discrepancy that simply mandates voting power to the insiders forever seems like it has to go.  And as we have seen with Google, the lack of corporate oversight has resulted in unbelievable arrogance and a complete failure of corporate responsibility.  And worse yet, because Google got away with it, lots of other tech companies follow essentially the same model (including Facebook, Spotify and Linkedin).

Take stock buy backs for example, such as the $1 billion stock buy back announced by Spotify.  It must also be said that stock buybacks approved by a board where insiders who benefit from the buyback have supervoting shares and control the board is a practice that reeks to high heaven.  Buybacks and dual class supervoting shares have been widely criticized including by Securities and Exchange Commission Commissioner Robert Jackson who is also a critic of supervoting shares.

So how did Google come to give control to its insiders, essentially forever?  Google’s supervoting structure started when Google was a private company as a way for the founders to preserve control and avoid venture capital investors pushing them around.

OK, fine, I understand that. But once Google went public with their IPO that made those same insiders billionaires several times over, why should the insiders keep that level of control?

You may ask how that supervoting stock works?

Google (which is really its parent company, Alphabet) trades under two ticker symbols on the  NASDAQ: GOOGL Class A and GOOG Class C.

Oops.  What happened to Class B?  Ay, there’s the rub.

Class B shares are not publicly traded and are held by insiders only.  But as you will see, they control every aspect of the company.  So how do Google’s insiders get this share structure?  There’s actually a simple answer.  Class A shares (GOOGL) get one vote per share, Class B shares get 10 votes per share and Class C shares (GOOG) get no votes.

That’s right–Class B shares cannot be purchased and their holders get 10 times the voting power of the Class A holders, often called “supervoting” shares, because their super power is…well…voting.  (When sold, Class B shares convert to Class A shares.)

The Class C shares were created as part of a 1:1 stock split that doubled the number of shares, halfed the price per share, but resulted in no change of the voting power of the Class A and C shareholders.  Class A holders got double the shares but half the voting power post-split.

When the dust settled, the Google/Alphabet voting capitalization table looked something like this:

Class A: 298 million shares and 298 million votes, or roughly 40% of the voting power with votes counting 1:1.

Class B: 47 million shares and 470 million votes, or roughly 60% of the voting power with votes counting 10:1.

What this also means is that the holders of Class B shares voting as a bloc will never–and I mean never–be outvoted at a shareholder meeting, their board of directors will never be challenged much less replaced and shareholder meetings are a one way communication event where the insiders tell the stockholders how the insiders will spend their money.

Who controls the Class B shares?  I culled out some numbers for individual holders which may not be entirely accurate, but the individual holders are who you would expect.  These numbers shift around a bit depending on whose sold what (if you want to drill down, you can check the SEC’s Form 4 filings, such as this one for Sergey Brin).  These are the people that Commissioner Jackson might call the “corporate royalty“:

Larry Page: 20 million shares (as of 2017)

Sergey Brin: 35,300 Class B shares plus 35,300 Class A shares (as of 2018)

Eric Schmidt: 1.19 million Class B shares, 40,934 Class A shares, and 10,983 Class A Google shares, plus 2.91 million Class B shares through family trusts.

Sundar Pichai: 6,317 Class A shares and no Class B shares.

The House Judiciary Committee has a chance to correct the supervoting system as bad policy and implement a long-term fix across the board for all dual-class companies that want to trade on the public exchanges.

This means that the “corporate royalty” at Google, Facebook and Spotify would be much more accountable to shareholders which would help keep the company on the rails. I think that the Judiciary Committee might find that they are pushing on an open door at the SEC, especially with Commissioner Jackson.

The essential proposal is a simple tradeoff–if you want to keep supervoting stock, sell your shares privately to sophisticated investors under a registration exemption and don’t sell shares to the general public.  But if you want to sell shares to the public, keep your corporate governance at least arguably transparent and fair by sticking to one share one vote.

[A version of this post first appeared in Chris Castle’s MusicTech.Solutions blog]

 

Guest Post by Hattie Webb: The day I broke into the PledgeMusic office (@hrdwebb) — Artist Rights Watch

via Guest Post by Hattie Webb: The day I broke into the PledgeMusic office (@hrdwebb) — Artist Rights Watch

I did something relatively gutsy and not entirely unprovoked, I broke into the offices of PledgeMusic.

On the evening of Friday 1st February 2019 I saw artists posting online that PledgeMusic was in financial trouble. A shock of adrenaline surged through me. For 20 months PledgeMusic had been stalling paying me £5.4K, the final instalment of the money I had raised on the PledgeMusic site to pay for the making and release of my first solo album ‘To The Bone’. PledgeMusic received 3.1K in commission of the total 17.3K of income of pre-orders. (The campaign commenced in December 2015.)

On Monday 4th of February, with a fire in my belly and after no response from the phone lines at PledgeMusic, I looked up their office address, took the train to central London and went for the first time to the PledgeMusic offices in Soho (a very beautiful office I might add). When I was told by reception that the office would not receive anyone, I asked where the toilets were. I then walked past the toilets, hiked up the stairs, opened the office door and plonked myself down on the communal sofa.

A PledgeMusic associate approached me and I said I would not leave until I could speak with the director.

I waited. Malcolm Dunbar was on the phone in the main boardroom, I could see him through the glass wall. There were about ten people working at their computers across the office space. The environment looked buoyant. I had a moment thinking, “maybe this crisis is not as bad as we thought?”. My hopes were short lived. Malcolm signed off on his phone call and ushered me in.

I said because no one will reply to me, I have had to come to them. I demanded they transfer payment or I would not leave the premises.

After 20 months of having faith in their explanations, after my many phone calls and zillions of emails sent since my campaign completed in June 2017, I needed to see action.

One might ask why I had not seen the red flags sooner. I’m a little ashamed to admit, it was mainly because of the calibre of the other artists that chose to work with PledgeMusic, artists I admired immensely. These artists had chosen this new creative home, leaving their previous old music business model abodes, to great success. How current it is in todays climate, that credibility can be so blinding it shrouds the real truth. I was gullible as to what the real reasons were for these extensive delays.

These are some of the many explanations I had previously received:

“at the moment finance are going through some procedural changes and they’ve got a slight backlog in payments”…”we’ve been experiencing delays due to PayPal terminating us using them as our payment provider” …”a backlog exists, and the process is manual because it’s been forced that way by the hand we’ve been dealt” …“we now work with a far inferior back up payment provider” …”it’s where we’re at and we’re doing our very best to catch up” …”the knock on effect has been more impactful than we ever imagined it would be” …”I’m very very sorry to hear you’ve still not received this payment. I did request it back when we last spoke and am trying to find out why that wasn’t paid” … “I understand this is in no way helpful to you right now, but it’s where we’re at and we’re doing our very best to catch up.” …”I’m planning another payment this week against the balance owed and we’ll get the full balance up to date in early Jan 2019.”

The list goes on.

I said, I feel like an idiot for believing it all. Not once were the real reasons mentioned.

I spoke with Malcolm for over an hour and part way through, Paul Barton joined. They said that there was no way they can pay me until new potential partners come on board as New York has stopped all accounting.

I asked to speak with New York.

Malcolm called the new financial director Jim on his mobile phone in New York (who had apparently been with Pledge for a month) and passed on the phone to me. I asked for an explanation as to why we all haven’t been paid. Jim suggested that I get a lawyer to write to PledgeMusic to ‘stake my claim’. I said, I may have been previously naive, but spending another few hundred pounds to pay a lawyer to send a letter to sit at the bottom of an ever increasing pile was not something I intended to do.

I said I have actually been an ally and champion of PledgeMusic because of what they previously stood for. Their mission statement being that “PledgeMusic is dedicated to bringing innovative artists and passionate fans closer together than anywhere else…by giving artists a platform.” I know many extraordinary artists who haven’t had support from labels, who have taken the bull by the horns and with their bare hands, created, funded and released incredible albums with the support and platform of PledgeMusic.

I told them that eventually I had to get a loan for the amount of money owed to me by PledgeMusic to pay my team, print my cds, merch and to post them all out. I said that I only hope that this can be brought to a righteous place. That we all receive our rightful payments, raised with blood sweat and tears (truly) and to restore the belief that bands and fans had in them. That the level of transparency in their communications, particularly now in a challenging time, will shape how each of them individually and as a team are seen in this industry and in the world. How important is your word and code of honourability in life? To me, it is everything.

Paul said that the reason they have stopped answering my messages is that they had run out of things to say. I said there’s always something to say, even if it is to take responsibility for their current position and reiterate their intentions. I also said that when the public statement was sent out to press on Friday, how much it would have meant to all who had signed up with them, to have received an email illuminating us about the situation, versus us randomly reading about it online. I think we deserved that level of consideration. Surely there was one person in that office that could have been allocated that essential task? Or were the artists still a thing very low on the list of importance when it came to their music business model? This certainly didn’t fit their mission statement.

Malcolm and Paul said that it has been horrendous for them too, they looked deeply disheartened that so many artists are going through this and said that they personally have received a lot of abuse. I am sorry for this, no one should have to put up with abuse, but I truly believe that with more transparency, it could have been avoided.

They told me about their plans to have new investors and pay everyone by April. I asked directly…at this point, why would anyone have faith in their company name even if they do get bailed out? They said it would be the same platform with a complete rebrand. Plus that the artist’s money would never actually go to the PledgeMusic bank account, only the commission.

But it wasn’t enough for me without an explanation. I asked them how long the financial crisis has been going on at PledgeMusic? They said over a year. I asked them why they have prime real estate in the center of Covent Garden London as their offices (next to the very elegant private members club, ‘The Hospital Club’), particularly throughout the time they’ve been in financial trouble and whilst they are avoiding paying artists? I said this is not a good use of the money! I asked if there were some offices in Croydon or Staines, out in the suburbs they could have moved to? I didn’t mean to be condescending. We as artists had not been part of the conversation with how our money was spent. They both agreed and said those decisions came from New York.

They also said that the whole finance team had been fired due to disastrous and disorganised accounting.

Shockingly, they said that many of the PledgeMusic employees had been asked to max out their personal credit cards to help the cash flow.

They said that they had been financially sunk by the USA division of the company. Wrecked by the rebranding costs and an outrageous ambitiousness to compete with Spotify. Who really knows where the money went, but the money was gone.

I asked why someone hadn’t flagged this up sooner and reigned in spending money on fluff? Was this a trailblazing music industry model or just the same scenario swaddled up in community soaked language?

For someone like me who has also been through the sometimes deeply disheartening sausage factory of being signed to a major label, someone who has been financially and emotionally rogered by both major artist management and my own personal management, I’m sorry to say, I believed it. (I say all of this knowing I have been very lucky with the chances I have been given too, believe me.)

I laid it out that if they don’t reply to emails and now that their phone line is down, how can I trust their word that they will communicate with us moving forward? I have had the wool pulled for too long. What will happen if I walk out of this office, will I ever hear back from them again? They gave me both of their private mobile phone numbers.

When I left that day, I noticed their plastic ‘PledgeMusic heart-logo placard’ on the side table in their office. As I stepped outside onto the Soho street, there was a dark shadow where it had once been positioned on the outside main wall. It was an odd feeling, as if they didn’t want it to be known they were still there in residence.

(Side note: that night, I went to see Steve Ferrone play at the 606 with Hamish Stuart, it seriously kicked butt and was a welcome and joyful distraction.)

(Second side note: In December 2018 I did receive 1.5K of the amount owed, perhaps after my increasingly pressurising emails.)

Mostly, after the initial shock, at this point I feel sad to think of all the music, of the artists and their lives that have been detrimentally affected by PledgeMusic’s actions or lack there of. I know business is not a straight line, but for many, this situation is hugely more difficult than the shabby hand I have been served. Because my release was back in 2017, I was able to honour every one of the 524 orders of my album and merchandise that friends and followers had purchased, pre-investing in my album, before this shutdown.

Not everyone has had the chance for their work to see the light of day because PledgeMusic has a claim on it. There are also many people who have made purchases directly with PledgeMusic and haven’t received any merch. Most have had no response from PledgeMusic about the return of their money.

I am eternally gratefulfor those that invested and travelled with me on the journey of creating and releasing my record and for the extraordinary team of sound engineers, artists and collaborators I worked with. I had the time of my life making it.

I do feel heavy hearted that many artists with so much to contribute to this crazy world, have had a previously effective grass roots route destroyed. The connective tissue between creating and having the support to send that out into the world is an essential part of being an artist, there is a circular nature to it. The ability and freedom to fund and create has been savagely shredded by big business greed and a continuing lack of respect for the very artists that make it possible for the business side to exist. Not a new music business model as advertised.

Since all of this has happened, a community has been forming of artists affected in the fallout. For this I am also grateful.

At the heart of the matter, the passion at the core of creativity shall never be diminished! We are immensely blessed to have the freedom to express our truth in whatever form we feel, that is ever powerful.

As my friend Francesco Mastromatteo said “We work with something we can not see and we can never possess. Sound is simply always free and has an endless value”.

On Friday, I read that the sale had fallen through and that bankruptcy was inevitable for PledgeMusic. I read ‘the sale of which would be used to pay artists’. I immediately texted Paul and Malcolm to find out how these so called ‘remaining assets’ will be divided. Is it not the righteous decision at this final stage, to communicate directly with the artists with what will happen moving forward?

I have not heard back since.

[We’re honored that Hattie gave us permission to post her account of her personal experience with PledgeMusic.  You can find Hattie at HattieWebbMusic.com and her Twitter is @hrdwebb. Reading Hattie’s account is enough to make you stand up and salute as she banishes the ennui of learned helplessness to the dustbin of history.  I recall a Leonard Cohen lyric from “Everybody Knows” that could apply to the music business as a whole, more so with each passing day:

“Everybody knows that that boat is leaking, everybody knows that the captain lied….”]

Pledge Music Fiasco is Weirder than You Think: Part I

“Success has many fathers, failure is an orphan” -Generally attributed to Roman Senator Tacitus approximately 98 AD

To Gursh: To overstate one’s role in the success of a record or artist; or conversely, to understate one’s role in the failure of a record or artist- NY music industry slang dating from at least the early 1980s.

In the offices and boardrooms of any corporation it is not uncommon to find executives wildly overstating their role in the success of some corporate initiative, or conversely radically understating their role in a spectacular failure.  It is just in the nature of homo corporaticus.  It is an evolutionary tool designed to insure survival of the species.

Music industry professionals are no different.  But since this is the music business we created a word for it: Gurshing. And we perfected it as an art. This is largely because the music business is built on the illusion of success. Most songs are failures. Most albums are failures. Most artists are failures.  Even if you are an extremely talented producer or A&R executive your raw track record is going to suggest a success rate in the low double digits.  14% of the albums you record as a producer actually make any money? 8% of the acts you sign make money for the record label?  All guesses but probably not far off. But because successful songs, artists, records make so much money the high failure rate doesn’t actual matter in the long term to producers, managers, songwriters, publishers and labels.

However, no aspiring artist or songwriter wants to be confronted with the terrible odds and sheer capriciousness of success in music industry. They don’t want to sign with an entity or individual that has a 12% success ratio.  Thus the high failure rates are rarely discussed and instead we create little stories that make ourselves and our companies seem reliably successful. If you want to sign, produce or co-write with other writers you have to distort your track record. The easiest way to do that is through gurshing.  If you do this artfully enough you create the appearance of continual success.  Then through the magic of something called The Matthew Effect you gain access to a more talented pool of artists thus increasing the odds of your success.  Eventually this virtuous cycle turns perceived success into real success. You just have to be willing to gursh like a con-artist in the beginning and then stick it out.

On the other hand, one thing you absolutely never do in the music business is purposely associate yourself with failure.  This is not Silicon Valley.  Failure is not fetishized.  Getting tarred with a big failure can undo years of careful gurshing and reputation management.

l bring all this up because I find it fascinating to watch Benji Rogers co-founder and former president of Pledge Music rushing into the burning building that is Pledge Music. A company he left and would seem to have no apparent obligation to save. In the music business this is the type of thing you normally want to gursh away from. Benji genuinely qualifies as child of music industry royalty. His parents and stepfather were successful managers and publishers. So gurshing should be like a pavlovian reflex to him. So his behavior is not what I would have expected from some one who grew up in the music industry.  Nobody in the music business steps back in to help when this kind of failure occurs.

It’s admirable in many ways.  An expression of loyalty to former company, partners, employees, customers and artists. A sign of a stand up guy.

It is also totally understandable. Of all his many companies (Benji lists 8 on his LinkedIn Profile) Pledge Music is obviously the only real “hit.” He made his name with Pledge Music. It’s part of who he is.

However, I just have to say,  it’s really not helpful to anyone. Not to partners, employees, customers, artists and even Benji Rogers himself. Yes, it’s complicated  It always is.  But let’s start with the most obvious reason it’s unhelpful.  It muddies the story.  It seems to be a distraction, unintentional, but still a distraction from the fact Pledge Music’s  purported majority shareholder Joshua Sason, is the guy named first in the SEC complaint below.

 

(The other defendants Sharma and Salviola have an interesting history See here, here,  here and  here. Also named is the fabulously named Zirk de Maison. He is also an interesting person: see here.)

Now this complaint doesn’t directly have anything to do with Pledge Music, but it is certainly part of the story.  The majority shareholder of a company running out of money gets an SEC complaint for what appears to be a fraud perpetrated by his other company? C’mon!  Anyone associated with Pledge pretending like it’s not part of the story? Well, that makes it part of the story.

If you read the complaint it alleges pretty crazy stuff. From the SEC press release that goes with the complaint:

“According to the SEC’s complaint, from approximately December 2012 to June 2013, microcap stock financier Magna Group, which was founded and owned by Joshua Sason, engaged in a scheme to acquire fake convertible promissory notes supposedly issued by penny stock issuer Lustros Inc. and then to convert those notes into shares of Lustros common stock. The defendants then sold the shares to unsuspecting retail investors, who did not know that the shares were fraudulently acquired and were being sold illegally. The defendants’ sales of the Lustros shares also had the effect of destroying the value of the Lustros shares held by the public.”

So this guy didn’t get charged because he forgot to file a form, or checked the wrong box. According to the SEC he is charged with violations usually associated with con men.  And according to the SEC he didn’t do it just once:

“The complaint also alleges that in November 2013, Magna Equities II, which was also wholly-owned by Sason, and Manuel, purchased another fake promissory note from Pallas Holdings. Magna Equities II and the note’s issuer, NewLead Holdings, Ltd., later agreed to retire the fake debt in exchange for shares of the issuer through a court-approved settlement agreement. To obtain approval of the settlement, Sason and Magna Equities II falsely swore to the court that the fake promissory note was a bona fide debt of NewLead. Kautilya “Tony” Sharma and Perian Salviola, who controlled Pallas Holdings, are alleged to also have participated in the scheme.”

 

It was shortly after this Sason reportedly invested 3 million in Pledge Music. And that’s another reason why this should be part of the story.  If true did some of that 3 million come from the alleged fraud? According to Billboard

“Sason, 31, has been member of the PledgeMusic board of directors since 2014. That same year, Magna reportedly invested $3 million into PledgeMusic and Magna Entertainment vice president Russell Rieger — a former exec with Maverick Records and London Records, who is not being charged by the SEC — was also appointed as a director to PledgeMusic’s board.”

The weird thing about this investment is I can’t seem to find it reflected in the share tables or other documents.  I could be a total idiot. But it’s not under Sason’s name or even any of his known companies (more on “known” part later). Perhaps it was a loan? Or maybe the Billboard’s source was wrong?

Similarly, according to  Billboard in 2016 Sason becomes majority shareholder in Pledge Music.  From Billboard Feb 19 2019: 

In 2016, it was reported Magna Entertainment acquired a major position in PledgeMusic, but deal terms were not publicly announced. Sason is currently the only director listed as a person with significant control in PledgeMusic, according to the U.K.’s Company’s House.

But again, I don’t see shares going to Sason or one of his known companies. If you want to check, look here. Maybe Billboard source is wrong.   Or I’m a total idiot. (Leave comment if you find something i missed).

It does seem that UK corporate authority (Companies House) has flagged Pledge Music for missing documents and accounts. See screenshot above. Perhaps that’s where one will find the transfer of shares?

Around this time Sason’s Vice President at Magna Entertainment (a different company than the one named in the SEC case, but still owned by Sason) becomes GM of Pledge Music.

This last bit is fairly normal stuff. New owners new people in.   Until you step back and look at the big picture.  Digital Music news, Bloomberg and other publications have noted Sason made his fortune lending money to failing companies and then obtaining big discounts on shares. There is no evidence Sason did this with Pledge. And there is nothing necessarily illegal even if he did (as long as board approved). The 2016 deal terms that gave Sason control of company were not announced, there are no clues in available company documents but something like this could have happened.

Also phrasing in the Billboard story is curious: “acquired a major position.” Not “purchased a majority share.” Then again it could mean absolutely nothing. No one knows or will know until a creditors list is released in bankruptcy proceedings.

So who might those creditors be?

Well there is one clue listed in company documents.  In Feb 2019 after the company was clearly in deep financial trouble this loan facility was activated.  (Agreement originally entered into Sept 2015 about the time Sason reportedly took control of the company, but loan was not activated.)

So who are the lenders?

PledgeMusic.com is borrower, but another arm of the company a “Special Purpose Vehicle” PledgeMusic SPV is the lender.  As well as a Panamanian Company called Beacon Assets Holdings Limited BVP I LLC. Another board member David Rowe through his bank (Sword and Rowe) is the Collateral Agent.  Collateral Agent is generally a neutral party. But does not have to be. In this case it is not.

As our sister publication Artist Rights Watch reports:

“So I found that reference to be a little odd for a company that was scraping by on 15% of artist campaigns.  What was even stranger was the date of the loan:  February 12, 2019.

What was PledgeMusic doing borrowing money in February, mere weeks before it went into ‘administration’ in the UK–roughly the equivalent of bankruptcy?  Who–besides the shylocks–would loan them money?”

So a subsidiary of Pledge Music is loaning money to itself.  Right before bankruptcy. And collateral agent is one of the board members. This just all seems so odd. It’s a very complicated way to do business.

Further it appears the document allows the creditors PledgeMusic SPV and Beacon Assets Holdings to effectively take control of the checking accounts which may or may not hold artists’ co-mingled funds. As Artists Rights Watch reports:

“This may be important if, as has been reported, Pledge failed to maintain a separate escrow account for the artists’ pledges and simply co-mingled all of Pledge’s money with the artists’ money.

But follow the next step: By using the SPV method, it is possible that Pledge might try to extract the money from its own accounts to repay the loan that it made to itself (along with the other lenders in the syndicate) by foreclosing its security interest on its own bank accounts in which it co-mingled funds.”

The Artists Rights Watch article goes into great detail and anyone interested should read the whole thing. It’s a remarkable piece of detective work. But there’s more.

I also want to note that there is another unusual thing here.  I am not an expert, and I may be reading this wrong but it looks like in the same document the loan syndicate (Pledge SPV and Beacon Assets Holdings) also effectively takes control of insurance payouts. See above. Or here.  I don’t know if the company has liability insurance for it’s directors in the case of say a class action lawsuit.  But this document looks like this would give the loan syndicate first dibs on the payout.  So is it possible the board members will have to personally pay out of pocket in the event they have some liability?  If my reading is correct this is really weird. Is this like a poison pill to discourage a class action? Does this arrangement leave someone else holding the bag in the event there is some liability to directors? I caution, I could also be reading this wrong.  It’s a very long and complicated document.

Regardless, if I were Don Ienner and David Walsh I would be getting very very nervous right now. I’d wanna make sure I was covered by some sort of insurance.  Everyone else on board looks like they already have bigger problems or are on other side of the loan.

And what about this other company Beacon Assets Holdings?

Beacon Assets Holdings appears in the ICIJ so called “Panama Papers” database.  It’s essentially an offshore shell company of some kind.  There is nothing necessarily illegal about this. There are plenty of non-illegal reasons for investors to protect their assets (and privacy) in this manner. In fact let me just reprint the ICIJ disclaimer here:

“There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly. Many people and entities have the same or similar names. We suggest you confirm the identities of any individuals or entities located in the database based on addresses or other identifiable information. If you find an error in the database please get in touch with us.”

I reiterate.  Just because a company is in this database doesn’t mean they are doing something illegal.

However,  Beacon Assets Holding appears to have a single shareholder, Covent Business Limited of British Virgin Islands.

This company (Covent Business LTD) was incorporated July 26th 2012 and then  became inactive less than 18 months later. The British Virgin Islands appears to have “struck off” the company in 2015.  Basically this company has been dissolved. Could mean nothing at all.  Perhaps the owner decided they didn’t need this company for a host of reasons.

So this looks to be a timeless story.  An idealistic entrepreneur starts a company to help musicians and artists.   The company has to borrow money along the way.  The creditors eventually take control of the company and either through incompetence or in an attempt to make a fast buck run it into the ground.  I really don’t know what happened.  All I’m saying is this story is much weirder and more complex than it seemed at first.

But there is more to tell.  I’ll explore this further in part II.

 

 

 

 

 

UPDATE: Panel on The Pledge Music Crowdfunding Debacle

You’ve probably heard the news that PledgeMusic is fast approaching some kind of end.  You may have read Iain Baker of Jesus Jones story of the band’s encounter with Pledge here and hear.

Digital Music News reports giving a chronology of the events leading up to what seemed the inevitable fire sale result of “new boss” syndrome:

Now, a leaked e-mail has revealed how bad things truly are for Rogers’ company, and for artists who depended on the platform.

“Please, please, please buy PledgeMusic!  But, don’t worry.  You don’t have to pay back artists.”

Earlier this morning, Digital Music News received an interesting e-mail from an anonymous source.

FRP Advisory LLP, a UK business advisory firm, has been named the proposed administrator of PledgeMusic.com Limited and its subsidiaries (dubbed ‘The Group’).

With a pre-liquidation fire sale set to take place, FRP Assistant Manager Robbie Wirdnam has now sought “expressions of interest in the business and assets of the Group’ – i.e., PledgeMusic.

By way of introduction, I’m part of the corporate finance team at FRP and assisting my colleagues in the restructuring team, as the proposed administrators of PledgeMusic, in the marketing of the Group’s business and assets.  As you have previously looked at the opportunity on a solvent basis, I’m circling back to determine whether you have an interest in the business and assets for sale, ahead of an administration process.” [“Administration” in the UK is sort of like bankruptcy.“]

Wirdnam explains that the British crowdfunding platform faced two ‘pressures’ which ultimately lead to its demise – working capital pressures and a lack of ongoing funding.

This is serious stuff.  There’s potentially millions at stake and thousands of people worldwide who will be harmed, not only the artists but also fans and vendors, producers and songwriters.

UPDATE: As Jem Aswad in Variety notes in “PledgeMusic Nearing Bankruptcy, Although Sale Talks Continue“:

It should be noted that a buyer of PledgeMusic would be taking on the debts owed creditors, which include artists who launched programs with the company and owed money, which is estimated to be as much as $3 million total (here’s a small list of how much certain artists were owed, as of February). As the company has demonstrated in the past, tends to go to the most prominent, or at least the loudest, artists affected.

Hypebot also has a story on the FRP situation “Pledge enters pre-administration as buyer deliberates”:

UK based corporate advisory FRP has been named to contact potential buyers and value the company’s assets in pre-administration; while in parallel, the interested buyer finishes due diligence.

If no buyer steps forward within the week, PledgeMusic will likely enter Administration with FRP as the proposed administrator.

If you’re in Austin, Chris Castle is moderating a panel about Pledge with Jesse Moore and Peter Ruggero, two bankruptcy law experts.  The panel is co-hosted by the Austin Bar Association Entertainment & Sports Law and Bankruptcy sections  and titled “The Pledge Music Crowdfunding Debacle” on May 22.  Here’s the event description:

The panel will review the reported facts on the decline of PledgeMusic.com, a crowdfunding platform directed at independent artists, established artists with significant fan bases and labels.  PledgeMusic has taken in contributions from fans but has not paid out all or a significant portion of those funds to the artists for over a year. Many Texas consumers, artists and vendors have been affected by the company’s collapse.

The panelists will analyze the effects of this collapse on artists, the rights of consumers and vendors and the potential future outcomes if the company does not solve its financial crisis and seeks protection of the insolvency and bankruptcy laws.

As far as we know, this is the only response from the legal community so far.  Chris tells us that it is directed at artists, fans and vendors as well as lawyers.  $5 covers pizza and parking.

Deets are:

Wed, May 22, 2019
12:00 PM – 1:00 PM CDT

Austin Bar Association
816 Congress Avenue, Room # 700
Austin, TX 78701

Sign up with Eventbrite

 

 

Right On Cue, YouTube CEO Unveils Google’s Lobbying Plans Against Copyright Directive Implementation–the fight is just beginning

The European Copyright Directive was a great victory for artists, right?  The Silicon Valley multinationals were sent packing, yes?

True as far as it goes, but it does not go all the way.  Now each of the 28 member states of the European Union are to adopt implementing legislation at the national level to put the Directive into legal effect and they have two years to do it.  Google calls this an opportunity to continue the meddling and interference lobbying campaign.

How do we know?  Because YouTube’s CEO told us so in a fine specimen of oligarchical collectivism.

In a post on the oxymoronic YouTube “creators blog” (aka Pravda Chrome), YouTube CEO Susan Wojcicki tells us about the only thing that she really could say after Google’s massive dezinformatsiya campaign, but yet clearly outlines Google’s next steps during that two year implementation period:

While the Directive has passed, there is still time to affect the final implementation to avoid some of the worst unintended consequences. Each E.U. member state now has two years to introduce national laws that are in line with the new rules, which means that the powerful collective voice of creators can still make a major impact.

Especially the ones Google pays.

Google really only has a limited number of messages when it comes to copyright.  Like George Orwell’s Ministry of Truth, we have Google’s own variation on WAR IS PEACE–that being COPYRIGHT IS CENSORSHIP.  Given that Google doesn’t seem to have a Plan B when it comes to interference lobbying, we can bet that what Ms. Wojcicki means is that Google is going to commence the same kind of fake petitions, bot farming and paid messaging from YouTubers that were the embarrassing (and potentially illegal) hallmarks of Google’s strategy against the Copyright Directive.  The only difference is that this time it will be against the national legislatures (such as the House of Commons in the UK or the National Assembly in France) instead of the European Parliament.

It’s not really the only difference, though.  The other difference is that we are ready for them and we know what to watch for as do the members of the 28 national parliaments.

Americans should also realize that if you thought Google’s disinformation campaign against the Copyright Directive was bad, just wait and see what happens if the Congress should take up the DMCA safe harbor.  That party is just getting started.  And the party–so to speak–is all happening in Room 101–how many fingers, Winston?

 

 

Save the Date: The Pledge Music Crowdfunding Debacle, May 22 Austin Bar Association

Music attorney Chris Castle will moderate a panel on “The Pledge Music Crowdfunding Debacle” at noon on May 22 at the Austin Bar Association, 816 Congress Avenue, Suite 700, Austin, Texas 78701.  Details to follow.  Read about the Pledge Music crisis in Billboard by Colin Stutz.

 

 

SOUTH AFRICA PETITION AGAINST THE SIGNING INTO LAW, THE CURRENT AMENDMENTS TO THE COPYRIGHT ACT No. 98 of 1978 BY HONORABLE PRESIDENT RAMAPHOSA

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More skullduggery afoot from Google, this time in South Africa–and that’s the fact.  Minister Rob Davies and the Chair of the Portfolio Committee of the National Assembly’s Department of Trade & Industry both need to be called out on exactly how this legislation came to so closely resemble Google’s marching orders on safe harbors and pirate utopias.  As we’ve seen in Europe, Google has no respect for the nation state or local creators.

Sign the petition here and stand shoulder to shoulder with artists in South Africa against Big Tech’s lobbying onslaught.

Save the Date: @miramulholland Speaking at the World Intellectual Property Organization in Geneva April 5

Miranda Mulholland is a wonderfully articulate speaker and advocate for artist rights!  We’re pleased to let readers know that she’ll be on this panel at the World Intellectual Property Organization in Geneva and will be performing with Andrew Penner in their band Harrow Fair.  More info here.

Harrow Fair WIPO

An industry transformed: securing sustainable growth for today’s digital music industry

Friday, 5th April 2019

1pm – 3pm

Geneva, Switzerland

The global music industry has transformed itself through investment and innovation over the past two decades. The recording industry has licensed hundreds of digital music services around the world, driving innovation and providing consumers with access to some 50 million tracks. Meanwhile, artists have gained more choice than ever before in how to reach fans with their music. At the heart of this success are the partnerships between artists and record labels.

Delegates will be presented with key global and regional data from the IFPI Global Music Report (which will be published globally during the week of the SCCR), insights into the partnerships between record companies and artists, and some key challenges to ensuring the sustainable and balanced development of digital music markets around the world.

Next, Graham Henderson will share highlights from Music Canada’s upcoming report on the discrepancy between the value of music accessed by consumers and the revenues returned to the artists and businesses who create it. The report outlines how Canada’s music community has overcome initial skepticism regarding the existence of this discrepancy, known as the Value Gap, and its causes. It examines the key arguments and evidence that have led to widespread acknowledgement of the discrepancy in Canada, and presents a road map to help build a stronger music ecosystem for artists and labels around the world.

The final speaker, Miranda Mulholland, a Canadian musician who runs her own boutique record label, will explain how weak copyright legislation has impaired her career. She will also reflect on the value of record labels in the modern music marketplace, and will demonstrate how artists can help establish a sustainable and functioning marketplace, outlining her own journey as an artist advocate.

Following the discussion, Mulholland will take the stage with Andrew Penner, her musical partner in the band Harrow Fair, to perform their unique blend of folk, country and garage rock music.

Speakers:

Larry S. Miller – Clinical Associate Professor and Director, Music Business Program, NYU Steinhardt School of Culture, Education, and Human Development

Graham Henderson – President and CEO, Music Canada

Miranda Mulholland – Musician, President of Roaring Girl Records, and Music Festival Founder

Performance: Harrow Fair

Grassroots or US Cyberturf? Who Tweets on EU Copyright

Editors Note: In light of the very recent article by Frankfurter Allgemeine Zeitung on efforts by cyberturfers Create.Refresh to pay YouTubers to influence debate on the EU Copyright Directive, this analysis of influencers on Twitter is extraordinarily important.  Please note, this article was reworked from earlier version, omitting location data that proved to be unreliable).

Who tweets on EU copyright?

The debate on the reform of EU copyright law has many facets and a considerable part of the discussion takes place on Twitter.
The power of hashtags

On the one hand, hashtags are used to search for key words in discussions particularly quickly and effectively. On the other hand, it is very easy to find out which topics receive special attention on Twitter by analyzing which terms are often hashed and how often and dynamically they are shared. These terms are then displayed as so-called “trending topics” on the Twitter home page. The so-called “retweeting”, i.e. the unchanged forwarding of a tweet along with hashtags to one’s own followers, is an important factor here.

The frequency of use and distribution of hashtags is therefore often seen as an indicator of the public relevance of certain topics. If, for example, the #saveyourinternet hash tag appears regularly in the trending topics, the impression is created that more and more people are rejecting the copyright reform.

The importance of influencers

Now that the final decision on the reform is about to be taken, it makes sense to take a closer look at the Twitter campaign against the EU copyright reform using aggregated data. The data is based on data from the Talkwalker service, which we have compared with alternative services such as Keyhole. Here we use only the global data without geolocation, i.e. the worldwide number of uses of certain hashtags in a certain period of time, were examined. (the geolocation data proved to be faulty).

Using data from the Hashtagify service, the largest influencers were measured in terms of range.
This makes it easy to see who gave a hash tag the most momentum.The so-called “mentions”, i.e. the mention of a hash tag in a tweet, are decisive for the spread of a hash tag. The more mentions a hashtag experiences, the more it is perceived as relevant for a topic.

The following analysis focuses on the mentions of the hashtags, which play a major role in the campaign against the EU directive from a German perspective, because they are the framing of the anti-reform movement.

#saveyourinternet

#Artikel 13

#upload filter

#linktax

#censorshipmachines

The temporal development of mentions

Most noticeable is the increase in mentions of #saveyourinternet after Google/Youtube started its active campaign around this hashtag in autumn 2018.  The numbers doubled.

Picture1.png
Illustration: worldwide cumulative representation of the development of the hashtag #saveyourinternet. Source: Talkwalker

The  graph illustrates very well the influence that Google has on the debate.

The timing  of the votes in the parliament created short peaks peaks in the change (or delta) in number mentions of  #saveyourinternetcampaign.  These boosts helped prolong and expand the reach of the campaign.

Picture2

Illustration: Overall development of the hashtag #saveyourinternet 01.2018- 02.2019 on a weekly basis, source: Talkwalker

One can see very well in this weekly development the impact that Google had through its own Twitter channels Youtube and Youtube Creators.

The campaign with the Hashtag #saveyourinternetwas mainly determined by Google and Youtube from the end of October and was much broader in November/December than in the summer of 2018. There were, however, also peaks that could be explained by the two voting dates.

This is confirmed by the reach measured by the Hashtagify service. It is referred to there as Influence, which we refer to in the following charts and in the text as reach.

In this analysis, the top 10 influencers for different hashtags were examined, but this also means that there were of course far more influencers involved.

The top 10 influencers at Hashtag #saveyourinternettherefore had a reach of 1.5 billion

However Youtube and YoutubeCreators constitute 1,3 billion at the reach.

That corresponds to 85% of the Top 10 Influencer.

7 further of the Top 10 Influencer are Youtuber. It should be noted that Twitter accounts from Youtubers sometimes have a slightly different name than the Youtube channels. There are also Youtubers who have several Twitter accounts.

The only outlier is the Pirate Party, with a very small percentage.

Picture3.png

The second largest reach in this study was hashtag #Artikel13.

However, it was only 9% of the range of #saveyourinternetwith 135 million reach (Top 10 Influencer number)

6 of the top 10 influencers are Youtuber. Other media also play a role here, as the shares of the Heuteshow, Extra3 and the SZ illustrate.

Picture4

With a reach of 111 million for the top 10 influencers according to Hashtagify, the hashtag #Uploadfilter comes in 3rd in this review. 5 of the Top 10 are Youtuber.
Other media like Heuteshow, ZDFheute and SZ are also among the Top 10.

Picture5

The Hashtag #linktaxcomes to a reach of 24 million.

So it seems to have captured less attention.
There is a somewhat different picture.
The US organizations Creative Commons and EFF apparently managed to best spread this hashtag in the debate about an EU legislation.

Picture6The Hashtag #censorshipmachinesachieved the lowest reach with 8.4 million related to the Top 10. Nevertheless it is remarkable that a US organization (Creative Commons) with almost 70% share within the top 10 dominates the debate in a European legislative process with an anti-reform hashtag.

Picture7

Conclusion:

There are two inescapable lessons:
1.  fear sells
2.  YouTube and Google can effectively use their platforms to capture the attention of their users and to directly affect perceptions on matters relevant to their operations. This capacity can be used to distort debates and create an appearance of movements, or can actually create movements based on the presentation of one-sided information that distorts what is actually a far more nuanced truth.

YouTube intentionally created panic about its future that rather predictably resulted in an outpouring of expression of concern, reflected in the data presented here. A cynical campaign that itself illustrates the dangers to society presented by monopoly/monopsony platforms.

 

EU and Article 13: The Dystopia That Never Was and Never Will Be

Authors: Stefan Herwig and Lukas Schneider. This  article originally appeared as Upload Filters: The Dystopia Has Been Canceled on the Frankfurter Allgemeine Zeitung here.  German language version here. Translated from German to English by Sarah Swift.
© Frankfurter Allgemeine Zeitung GmbH 2001 – 2019 All Rights Reserved. Reprinted with permission. 

The “Declaration of the Independence of Cyberspace“ published in 1996 by John Perry Barlow begins with the words “Governments of the Industrial World I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone.” One reading of this text entirely rejects the possibility that processes of making and enforcing collectively binding decisions – political processes – apply on the Internet. Another possible reading sees the Internet as a public space governed by rules that must be established through democratic process while also holding that certain sub-spaces belong to the private rather than the public sphere. The distinction between public and private affairs, res publicae und res privata, is essential for the functioning of social spaces. The concept of the “res publicae” as “space concerning us all”  led – and not only etymologically – to the idea of the republic as a form of statehood and, later, as a legitimate space for democratic policymaking.

On the Internet, this essential separation of private and public space has been utterly undermined, and the dividing lines between public and private spaces are becoming ever more blurred. We now have public spaces lacking in enforcement mechanisms and transparency and private spaces inadequately protected from surveillance and the misuse of data. Data protection is one obvious field this conflict is playing out on, and copyright is another.

The new EU Directive on Copyright seeks to establish democratic rules governing the public dissemination of works. Its detractors have not only been vociferous – they have also resorted to misleading forms of framing. The concepts of upload filters, censorship machines and link taxes have been injected into the discussion. They are based on false premises.

Upload filters as cogs in a censorship machine

What campaigners against copyright reform term “upload filters” are not invariably filters with a blocking function; they can be simple identification systems. Content can be scanned at the time of uploading to compare it to patterns from other known content. Such a system could, for example, recognize Aloe Blacc’s retro-soul hit “I need a Dollar.” Such software systems can be compared to dictation software capable of identifying the spoken words in audio files. At this point in time, systems that can identify music tracks on the basis of moderately noisy audio signals can be programed as coursework projects by fourth-semester students drawing on open-source code libraries. Stylizing such systems as prohibitively expensive or as a kind of “alien technology” underestimates both the dystopian potential of advanced pattern recognition systems (in common parlance: artificial intelligence) in surveillance software and similar use cases while also underestimating the feasibility of programming legitimate and helpful systems. The music discovery app “Shazam,” to take a specific example, was created by a startup with only a handful of developers and a modest budget and is now available on millions of smartphones and tablets – for free. The myth that only tech giants can afford such systems is false, as the example of Shazam or of enterprises like Audible Magic shows. Identifying works is a basic prerequisite for a reformed copyright regime, and large platforms will not be able to avoid doing so. Without an identification process in place, the use of licensed works cannot be matched to license holders. Such systems are, however, not filters.

How do upload filters work?

The principal argument of critics intent on frustrating digital copyright reforms that had already appeared to be on the home stretch is their charge that the disproportionate blocking of uploads would represent a wholesale assault on freedom of speech or, indeed, a form of censorship. Here, too, it is necessary to look more closely at the feasibility and potential of available options for monitoring uploads – and especially to consider the degree of efficiency that can be achieved by linking human and automated monitoring. In a first step, identification systems could automatically block secure matches or allow them to pass by comparing them against data supplied by collecting societies. Licensed content could readily be uploaded and its use would be electronically registered. Collecting societies would distribute license revenue raised to originators and artists. Non-licensed uses could automatically be blocked. In a second step, errors could be caught through a complaints handling system making decisions on whether complaints are justified on the basis of human analysis – this would represent a clear improvement on the current procedures used by YouTube and Facebook. What automated pattern recognition systems cannot do is determine the meaning of content items at the semantic level. This means that they cannot identify legitimate uses of protected works – in the context of parodies or mash-ups, say, or when an image is reproduced online in a piece of art criticism. In such cases, the identification system would report a “fuzzy”  match, stating for example that 40% of a given upload corresponded to a copyrighted file known from the database. To achieve a legally watertight result here, human judgment would be required. Humans can recognize parodies or incidental uses such as purely decorative uses of works in ways that that do not constitute breaches of copyright.

The process of analysis could be simplified further by uploaders stating the context of use at the time works are uploaded. Notes such as “This video contains a parody and/or uses a copyrighted work for decorative purposes” could be helpful to analysts. The Network Enforcement Act (NetzDG) in Germany provides a good example of how automatic recognition and human analysis can work in tandem to analyze vast volumes of information. A few hundred people in Germany are currently tasked with deciding whether statements made on Facebook constitute incitement to hatred and violence against certain groups or are otherwise in breach of community rules. These judgments are significantly more complex than detecting impermissible uses of copyrighted works.

Being obliged to implement human monitoring will, of course, impose certain demands on platforms. But those most affected will be the platforms with the largest number of uploads. These major platforms will have the highest personnel requirements because they can host content of almost every kind: music, texts, video etc. Protecting sites like a small photo forum will be much simpler. If only a modest number of uploads is involved, the forum operator can easily check them personally at the end of the working day. In that case, uploaders will simply have to wait for a brief period for their content to appear online. Or operators can opt to engage a service center like Acamar instead of adding these checks to their own workloads. Efficient monitoring is possible.

An additional misinterpretation propagated by campaigners against copyright reform is that platforms will have to take out licenses for all the content in the world from a near-infinite number of licensing partners. This, too, is inaccurate, since the transfer of liability to platforms only arises in cases in which rightsholders have specifically prohibited the unlicensed use of their works and had the works in question added to a database made available to platform operators through collecting societies. Visions of upload filters leading to dystopian censorship are, it follows, unfounded. This should be clear to anybody who has read the text of the directive and has even a basic working knowledge of informatics.

For a free Internet, we need copyright reform

The reform provides a basis for ensuring artists are fairly remunerated for their work and forces rightsholders to assist in the identification of works by registering their content in databases. Both effects are highly advantageous for users. Under the proposed regime, somebody who wants to use the Rage Against The Machines track “Killing In The Name Of”  on the soundtrack of a protest video will no longer have to worry about copyright and can simply upload the video to a platform. Works used will be identified, and the relevant collecting societies will distribute the licensing revenue they receive from the platform. If Rage Against The Machine has objections to the transformative use of their work, they can communicate them to the database. Once the directive has been transposed into national law, this procedure will become standard practice.

It will become possible to publish more content and easier to comply with the law. All of this will contribute to more freedom on the Internet – the kind of freedom that stems from having democratic rules rather than allowing tech giants with their community rules and automated decision-making processes to determine what content is permitted on their platforms and what they are prepared to pay for it.

Barlow overlooked what the author William Gibson had already recognized – that enterprises, when they make the rules, can become more powerful than states. The rejection of state-guaranteed democratic rules creates the power vacuum required for this to happen. This is the wider context that explains why copyright reform is but one battlefield in the struggle for political power on the Internet. YouTube should not be allowed to become the Internet for videos just as Google has practically already become the only filter for web searches. Amazon should not be allowed to evolve from a vendor in the market to the provider of the market and to dictate the earnings of parcel couriers. Rules in digital space must be created and weighed against each other by democratic means and not in an arbitrary fashion dependent solely on who wields the most market power. Artists and net activists should fight this battle together, because the Internet is not some abstract parallel dimension: its data flows determine our creditworthiness just as they supply us with holiday pictures and pervade every aspect of modern life. If we relinquish democratic control over this public space, we will become subject to the despotic rule of neoliberal tech giants, and not merely on the Internet.

Barlow’s manifesto ends with the words: “We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.” Copyright reform will take our society one step closer to this aim. The quasi-governments that must now be opposed are called Google, facebook und Amazon. Those who take the side of these giants in this controversy are opposed to the free Internet in the true meaning of the word.

Translation from German by Sarah Swift.

Authors

Stefan Herwig and Lukas Schneider jointly run a think tank, Mindbase, that tackles questions of Internet policy with academic rigor. Stefan Herwig works in the music industry and advises politicians and enterprises on digital policy issues. Lukas Schneider is an information science expert and a musician and is active in Germany’s Green party (Alliance ’90/The Greens).