HITPIECE NFT RIPOFF: What you need to know and what can you do about it.

By now you’ve probably heard of the website HitPiece.com and their outrageous scheme to mint “NFTs” of virtually every song and album in existence. If you have not I suggest you read a pair of excellent articles by Kristin Robinson at Billboard Pro. Here and here.

“Founded by serial entrepreneur Rory Felton and investor Jeff Burningham, Hitpiece’s intent was to create NFTs of “every song,” according to the company’s pitch deck. Using Spotify’s API to gather information on artists of all sizes – from developing acts to Beatles members – HitPiece uploaded listings of NFTs from musicians it had never spoken to or partnered with, stating these non-fungible tokens were “available for auction” or “live” auctions. According to HitPiece’s FAQ section, the NFTs were said to operate on HitChain, a private Ethereum side chain which does not provide proof of work.”

If you are not even sure what an NFT is think of it as a sort of cryptocurrency like Bitcoin. But there is only one unique token. And this token can be associated with another digital asset, like a digital drawing, photograph, song or tweet. The issue is anyone can do this. Whether they have the rights to the associated file or piece of intellectual property. And that’s exactly where the problem starts.

On Feb 1st my twitter feed began to fill with outraged artists reporting that a website HitPiece.com was offering “NFTs” of their songs. I went and checked and sure enough the website was offering NFTs of virtually every one of my songs and recordings. Now I hadn’t authorized anyone to make NFTs of my songs and recordings and offer them to the public. Nor had I licensed anyone to use my album artwork, trademark, name, likeness or image to use on any products and especially not NFTs. I checked with my former labels on the outside chance they had licensed something but as I suspected they had not. And indeed even recordings which I exclusively hold the rights were on HitPiece.com.

I dug around on the site to see if I could figure out what was going on. Here I found the above paragraph. “Each HitPiece NFT is a One for One NFT for each unique song sound recording.” That sounds like they had minted or intended to mint a NFT of each one of my songs/sound recordings. Without any sort of authorization.

I even found a live auction of one of our tracks. Curiously it is an unreleased/unlicensed live radio broadcast that recently showed up on Spotify. From this I could confirm what I suspected: HitPiece was “scraping” Spotify to auto generate NFTs for every song on the platform. In addition they were sucking in promo photos and album art.

It appeared as if there were hundreds if not thousands of similarly situated artists, as when I went back on social media every artist I follow was posting screenshots of HitPiece NFTs. All of the artists noted (often in profane terms) that they had not authorized HitPiece to offer NFTs to the public. It became a true twitter shitstorm. By the end even civilians on LinkedIn were getting into the act (see above.)

Late that evening the operators of the website, took the website down, or it crashed under the crush of traffic. They later put the website back up with the above note (minus the NFT offerings).

By Friday numerous artists had sent “cease and desist” letters, others were promising lawsuits and even the RIAA announced they were taking action on behalf of their artists. The RIAA letter asks HitPiece to preserve all relevant emails and documents, which is usually a prelude to legal action. And indeed the letter makes reference to a number of violations.

“…copyright infringement (17 U.S.C. § 101), trademark infringement (15 U.S.C. § 1114), federal unfair competition and false representation of affiliation (15 U.S.C. § 1125(a)), violations of state and common law rights of publicity, and unfair competition under applicable state law…”

The RIAA also asked HitPiece to permanently close their website and business.

So case closed let’s move on ,right? The big companies with the big lawyers are on the case. No one will ever try this again. Right?

I wouldn’t be so sure. Remember YouTube started out as (and still is) a massive infringer of copyrights. Sure they pay some royalties on some tracks, but at a rate 1/8 to 1/20th that of Apple Music. And now It’s just too big to do anything about it. Do we want the same thing to happen with something like NFTs? The audacity of HitPiece scam is that by promising to mint an NFT of every song they intended to corner the entire market for song NFTs. What if it had worked? We’d have no leverage. We’d be coming hat in hand to them begging for a few pennies like we do with YouTube.

No, the best thing to do is to make an example out of these folks. Bankrupt them. These are not poor hackers living in their parents’ basements. Two are former major label record executives and the other two are wealthy private equity executives (here and here). These folks have A LOT to lose. We should make it so no one ever does business with these folks again. And the best way to do this is not by banding together through the usual copyright class action (although we can do that too), the best way to make their lives miserable is to bury them under a blizzard of individual complaints. Who knows maybe you’ll find a state prosecutor that wants to charge them with a crime. (doesn’t this seem like a criminal fraud?).

Although there is likely a copyright claim if you have registered your artwork, copyright infringement must be adjudicated in federal court. Similarly with Trademark infringement. And over the last two decades congress and the courts have made life pretty easy for anyone infringing copyright and trademark via the internet. The deck is stacked against us. What we really want to do is rely on laws that we can pursue easily in our own states. The RIAA letter helpfully suggests a number of tactics at the state level.

I’m not an attorney and I certainly don’t know the laws in all 50 states, this is just one musician talking about the tactics I intend to investigate and pursue:

Fraud. By any common definition of the term, what HitPiece did was conduct a fraud. The website clearly misleads the public. I didn’t offer my songs up as an NFT for sale. Yet my picture and name is right there. They “palmed off” something as a genuine product that was not. Legally is this fraud? It sure feels like it but I’m not an expert. I intend to complain in person at the local state district attorney’s office.

Rights of publicity. Many states either have a law that recognizes a kind of property right in my own persona. Companies can’t make products or provide a service with my name, likeness or image. If your state doesn’t explicitly provide a statute, it’s likely a state court has recognized a “common law” right. I intend to mention this at the local state district attorney’s office cause it’s a key element of how HitPiece executed their apparent fraud. I may file a separate civil claim against them.

Implied Endorsement. My state may also have a specific law that doesn’t allow others to imply that I endorse their product. Again this is something I will mention at the local state attorney’s office as it’s key to their scheme. I may also file a separate civil claim against them.

Unfair Competition/Deceptive Practices: Most states have these laws. What’s more deceptive and unfair than using my own copyrights,trademarks, name image and likeness to sell a product I didn’t endorse. The principals at HitPiece knew they didn’t have licenses with me. Two had deep experience in the music business managing intellectual property rights They knew what they were doing. Talk to your local state district attorney about this as well.

If hundreds of artists did something similar in dozens of states, we could really make these folks lmiserable.

Now that ‘s just my take as an artist.

Here are some similar suggestions from real attorneys…


More on this later. This is still developing.

by Dr. David C Lowery

@SoundExchange CEO @mikehuppe Nails NAB Hypocrisy on Artist Pay for Radio Play–#IRespectMusic — Artist Rights Watch

The hearing on Groundhog Day (Feb. 2) for the American Music Fairness Act (or “AMFA”) was a fantastic opportunity for artists to be heard on the 100 year free ride the government has given broadcast radio. We know it went well because the National Association of Broadcasters sputtered like they do when they’ve got nothing to say.

But what’s really hysterical was how they talked out of both sides of their mouths in two different hearings–which makes you think that NAB president Curtis LeGeyt was doing his impression of Punxsutawney Phil. Yes, when it came to broadcasters getting paid by Big Tech, the broadcasters wanted their rights respected and to be paid fairly. But when the shoe was on the other foot, not so much. In the Senate, the NAB asked for more money for broadcasters in a hearing for the Journalism Competition and Preservation Act–to protect the mega radio broadcasters from the mega tech oligarchs. And if broadcasters don’t get more money, they want to be exempt from the antitrust laws so they can pull their content. Just like artists do to them…NOT.

Then the NAB comes over to the House Judiciary Committee–on the same day being Groundhog Day–and asks the government to continue their 100 year free ride. We call bullshit.

SoundExchange CEO Mike Huppe nailed this in his Billboard post:

The AMFA witnesses didn’t ask for an antitrust exemption, like the broadcasters did. They simply asked that recording artists be granted similar copyrights as others.

They didn’t ask for more money, like the broadcasters did. They simply asked for at least some payment, since they now receive none when broadcast radio stations air their music.

They didn’t ask for special treatment, like the broadcasters did. Rather they asked that they be treated the same as all other artists around the world, and even the same as artists on virtually all other media platforms in the U.S.

And they didn’t ask for rigts to negotiate and withhold content, like the broadcasters did. Under AMFA, radio stations would still be allowed to play music as they please. Artist advocates simply asked that the biggest-of-the-big stations pay a modest royalty set according to market rates. Stations making less than $1.5 million per year would pay a flat, annual royalty of $500 (less than $1.40 per day) for as much music as they choose to air. And the smallest stations’ payments would drop all the way down to $10.

No station is going to go bankrupt over these royalties.

Huppe has a very strong point here. This legislation has been picked over for years. AMFA bends over backwards to protect community radio and small broadcasters and repects everyone’s contribution to radio’s success.

But that’s the point–it respects everyone‘s contribution.

You can watch the hearing here:

by Trichordist

Frozen Mechanicals Crisis: Twelve Songwriter Groups Reject Majors Position that Copyright Royalty Board MUST Ignore Songwriter Objections

Second Comments Submitted by the Songwriters Guild of America, Inc.,  the Society of Composers & Lyricists, Music Creators North America, and the individual music creators Rick Carnes and Ashley Irwin

These Comments Are Endorsed by the Following Music Creator Organizations:

Alliance for Women Film Composers (AWFC). https://theawfc.com

Alliance of Latin American Composers & Authors (AlcaMusica) https://www.alcamusica.org

Asia-Pacific Music Creators Alliance (APMA), https://musiccreatorsap.org/

European Composers and Songwriters Alliance (ECSA), https://composeralliance.org

The Ivors Academy (IVORS), https://ivorsacademy.com

Music Answers (M.A.), https://www.musicanswers.org

Pan-African Composers and Songwriters Alliance (PACSA), http://www.pacsa.org

Screen Composers Guild of Canada (SCGC), https://screencomposers.ca

Songwriters Association of Canada (SAC), http://www.songwriters.ca


Discussion

  1.  The Statutory Importance of Interested, Non-Participant Comments to CRB Decision Making

While Congress may have expressed enthusiasm for joint rate setting proposals being developed through arms-length, independent negotiations among the parties to a CRB rate-setting proceeding (which clearly may not have been what transpired in the present case among vertically integrated parties),[1] Congress was also crystal clear in another of its related statutory directives.  Namely, that the CRB also has a duty to ensure that interested, non-participating parties who would be bound by the terms of the negotiated agreement are given the full opportunity to comment upon the proposal as part of the record of the proceeding prior to the proposal’s adoption or rejection by the CRB. 

Section 801(b)(7)(a)(i) of the US Copyright Act stipulates that:

[T]he Copyright Royalty Judges shall [1] provide to those that would be bound by the terms, rates, or other determination set by any agreement in a proceeding to determine royalty rates an opportunity to comment on the agreement and shall [2] provide to participants in the proceeding under § 803(b)(2) that would be bound by the terms, rates, or other determination set by the agreement an opportunity to comment on the agreement and object to its adoption as a basis for statutory terms and rates.  (Bracketed numbers added for clarity)

More importantly for the purposes of these Comments, Section 801(b)(7)(a)(ii) explicitly sets forth the authority of the CRB to accept or reject the proposed agreements of parties to a proceeding based upon the combination of comments and objections filed both by participants in the proceeding and outside, interested party commenters:

[T]he Copyright Royalty Judges may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement, if any participant described in clause (i) objects to the agreement and the Copyright Royalty Judges conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates. (emphasis added)

In the present case, the Major Music Conglomerates (once again counterintuitively joined by NSAI) have chosen to simply ignore the statutory requirements, set forth above, and focus solely on issuing a blanket rejection of the comments of pro se participant George Johnson (who formally objected to the proposed agreement).  In fact, in their submission to the CRB of August 10, 2021,[2] the Major Music Conglomerates did not even bother to mention the detailed comments of those many individuals and groups who, on behalf of their constituents comprising a large percentage of the US’ and the world’s music creators, filed detailed comments with the CRB objecting to the proposed frozen mechanical rate deal as unreasonable.  

Rather, the Conglomerates opted instead to stand solely on the following, naked assertion:

Mr. Johnson provides no basis for the Judges to reject the Settlement. Mr. Johnson makes unfounded accusations of fraud and inaccurate statements concerning the corporate structure of record companies, but provides no economic reason to believe that the rates in the Settlement are outside the “zone of reasonableness.” This is nothing more than a rehash of arguments he made and the Judges rejected when a similar settlement was presented in Phonorecords III….

Objections to a settlement that is substantially the same as the one adopted in Phonorecords III, absent a showing of changed market conditions that would support a change in the rates and terms for Subpart B configurations at this time, do not permit the Judges to “conclude that the agreement reached voluntarily between the Settling Parties does not provide a reasonable basis for setting statutory terms and rates.” (citation omitted). Thus, as in Phonorecords III, “the Judges must adopt the proposed regulations that codify the partial settlement.”[3] (emphasis added).

This evasive and misleading statement is counter-productive to upholding the Congressional mandate that all interested parties be heard –even those unable to afford the hundreds of thousands of dollars required to participate effectively in the formal rate-setting proceedings. 

To repeat the obvious, when they filed the above comments, the Major Music Conglomerates were fully aware that Mr. Johnson was by far not the only person or entity to have filed detailed objections with the CRB to the frozen mechanical proposal, including the extensive comments of the Independent Music Creator groups who are the signatories hereto that had been submitted some two weeks prior to the filing of the Major Music Conglomerates’ comments on August 10, 2021 and reported on and published in the press.[4] 

Specifically, some two dozen other organizations and individuals filed or endorsed comments[5] detailing with great specificity the unreasonable nature of the frozen royalty rate proposal made by the Major Music Conglomerates, owing to drastically changed market conditions that include the damage of long-term and now accelerating inflation, the growing length in time of the current freeze, and the demonstrably re-emerging physical phonorecord, download/Non-Fungible Token (NFT) markets amounting to tens of millions of dollars in annual royalty revenue for music creators.  Those issues were spelled out extensively in our own Comments of July 26, 2021, and later updated in our Letter of October 20, 2021. 

There is little mystery why the Major Music Conglomerates would choose not to acknowledge the existence of these many music creator dissenters, or to comment on what those dissenters had to say.  As the CRB itself noted presciently in its Phonorecords III determination, “NMPA and NSAI represent individual songwriters and publishers.”  For them to “engage in anti-competitive price-fixing at below-market rates,” would be against the interests of their potential constituents, who would likely “seek representation elsewhere” if they were so concerned.[6]  

In the current instance, the Major Music Conglomerates seem to be actively seeking to obfuscate the fact that this result, for whatever reason, is exactly what has transpired.  The multiple sets of comments received by the CRB from US and global music creator advocacy groups bluntly criticizing the frozen royalty rate proposal signify the raising of voices of those representing a vast portion of the world’s music creators against the proposal’s obvious inadvisability and irrationality.  The isolated support for the proposal by NSAI, an organization that represents only a tiny sliver of US songwriters and composers principally from a single genre and local geographic area (and whose underwritten presence in the proceeding raises significant questions about whether it can truly represent any collection of songwriters and composers – let alone the actual, diverse universe whose rights and livelihoods are presently at stake), has been drowned out by hundreds of thousands of other music creators arguing substantively through their organizational representatives against the thoroughly unreasonable nature of extending frozen rates for another five-year period. 

Thus is the specious nature of the Major Music Conglomerates’ central claim –that the CRB has neither the authority nor sufficient reason to reject the proposed mechanical rate freeze as unreasonable– demonstrated.  Fulfilling all statutory requirements, a participant in the proceedings (George Johnson) has objected to the privately negotiated deal concocted by the vertically integrated Conglomerates.  Further, numerous interested commentators who “would be bound by the terms, rates, or other determination set by the agreement” have joined with Johnson in providing to the CRB amply detailed comments demonstrating significant, multiple changes in circumstances that make the proposed agreement unreasonable and irrationally flawed in 2021. 

Under such circumstances, the CRB would be well within the scope of its statutory authority to either “decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,” or to reject it altogether.  We prefer the latter, but respectfully suggest that it should most certainly do one or the other.

Moreover, the assertion by the Major Music Conglomerates that the CRB lacks sufficient reason or authority to review the Memorandum of Understanding (“MOU”)[7] negotiated and agreed upon concurrently with the Frozen Rate Proposal for its effect on that rate proposal, is equally without merit.  In their submission of August 10, 2021, the Conglomerates go so far as to claim that they “did not present the MOU to the Judges because they viewed it as routine, and irrelevant to the Judges’ decision-making concerning the Settlement.”  To put it mildly, the Songwriter and Composer community views this statement with uneasiness as it pertains to the general issues of fairness and transparency in the Phonorecord IV proceeding, and hopes the CRB shares our concerns.

It suffices to say that two agreements –negotiated side by side with one another at the same time by the same parties regarding details of the same general matter—inarguably stand a substantial chance of being inter-related through both their content and potential quid pro quos.   We therefore believe it obvious that in evaluating the fairness and reasonableness of one, the terms and scope of the other should be considered as a matter of course for reasons of both best practices and common sense. 

[1] As stated in our Comments of July 26, 2021, it is by no means clear that the “negotiations” which took place among the vertically integrated participants in developing the frozen mechanical royalty rate proposal were at arm’s length.  “The circumstances under which the settlement negotiations were conducted that produced the proposed royalty rate freeze set forth in the May 25 Motion to Adopt can be fairly characterized  –under the above standards– as being exactly the opposite of what both Congress and the Executive Branch have in mind in defining “reasonability” under the “willing seller-willing buyer” formula.  Rather than arm’s length negotiations between parties on opposites sides of the table, the referenced discussions that produced the settlement agreement instead seem to have taken place solely among vertically integrated parties and their trade association agents, apparently with little or no input from independent music creators and copyright owners[1] upon whom “those rates and terms [will be] binding.”  See, Comments of July 26, 2021 at 8-9.  

[2]  https://app.crb.gov/document/download/25577

[3] https://app.crb.gov/document/download/25577 at 4-5.

[4] See, e.g., https://thetrichordist.com/2021/07/27/frozen-mechanicals-crisis-davidpoemusics-comment-to-the-copyright-royalty-board/ and https://thetrichordist.com/category/frozen-mechanicals/.

[5] See, https://app.crb.gov/case/detail/21-CRB-0001-PR%20%282023-2027%29 for comments filed between dates July 19 and August 2, 2021.

[6] Phonorecords III at 15298.

[7] According to the Major Music Conglomerates: “Specifically, this memorandum of understanding (“MOU”) provides for (1) participating record companies and music publishers to work collaboratively on licensing processes to improve clearance of new releases, (2) a procedure for bulk distribution of mechanical royalties accrued by participating record companies that are not otherwise payable, and (3) late fee waivers when participating record companies follow specified clearance procedures for new releases.” See, https://app.crb.gov/document/download/25577 at 6.

[Read the entire comment here]

by Trichordist Editor

Save the Date: Feb 2, 10am ET: Artist Pay for Radio Play Gets a Hearing in the House Judiciary Committee #IRespectMusic

We want Trichordist readers to now how much we appreciate your commitment to artist rights and especially your long-term support for the #IRespectMusic campaign. You were there early and your support has never wavered. But it’s time to step up once again!

It’s time to tell Congress we are still here and we still want them to make this happen. It’s fair and it’s the right thing to do. As Blake Morgan asked in a viral blog post in The Hill:

We musicians are used to fighting. For our livelihoods, our families, our dreams. In recent years we’ve fought battles we’ve neither sought nor provoked, against powerful corporate forces devaluing music’s worth. Streaming companies, music pirates, and AM/FM radio broadcasters who, in the United States, pay nothing––zero––to artists for radio airplay.

It’s shocking, but true: The United States is the only democratic country in the world where artists don’t get paid for radio airplay. Only Iran, North Korea, and China stand with the United States in this regard.

Broadcasters make billions of dollars each year off our music, and artists don’t earn a penny. This impacts not only the artist, but session musicians, recording engineers, songwriters. Virtually everyone in music’s economy. 

Isn’t being paid fairly for one’s work a bedrock American value?

The super-consolidated U.S. broadcast radio monopolies represented by the National Association of Broadcasters shillery has fought fair treatment for all recording artists since the dawn of radio. Thanks to the voices of fans and artists from around the United States, fair pay for radio play has become a local issue, and Congress is responding.

Tune in on February 2nd at 10 am ET for the House Judiciary Hearing, “Respecting Artists with the American Music Fairness Act” thanks to Rep. Ted Deutch and Rep. Darrell Issa, the bi-partisan co-sponsors of the historic legislation.

Rep. Ted Deutch and Blake Morgan

In the mean time, please sign the petition at #IRespectMusic and let your Member of Congress know you support the bill and want to bend the arc of the moral universe to fight artist exploitation. Please tell your friends, share on your socials and with your fans!

You can read the bill here, and if you want to drill down, you can watch this in-depth video on the issues sponsored by Texas Accountants and Lawyers for the Arts, I Respect Music Austin, Austin Music Foundation, SoundExchange, Austin Texas Musicians and Artist Rights Watch.

by Trichordist

Frozen Mechanicals Crisis: 2nd Comment of @helienne @davidclowery @theblakemorgan Opposing Conflict of Interest in Frozen Mechanicals–‘Let the future have a vote’

SECOND REOPENING PERIOD COMMENTS OF HELIENNE LINDVALL, DAVID LOWERY AND BLAKE MORGAN 

            Helienne Lindvall, David Lowery and Blake Morgan (collectively, the “Writers”) thank the Judges for the opportunity and respectfully submit the following comments responding to the Copyright Royalty Judges’ notice (“Second Notice”) soliciting comments on additional materials (“Reply”) received by the Judges[1] from the National Music Publishers Association, Nashville Songwriters Association International, Sony Music Entertainment, UMG Recordings, Inc. and Warner Music Group Corp. (collectively, the “Majors”)[2] regarding the so-called [frozen] “Subpart B” statutory rates and terms[3] relating to the making and distribution of physical or digital phonorecords of nondramatic musical works in the docket referenced above (“Proceeding”). 

The Writers previously submitted comments[4] (“Prior Comment”) responding to the Judges’ notice[5] (“First Notice”) soliciting comments on the Major’s proposed purported settlement (the “Proposed Settlement”)[6] of the Subpart B rates.  The Writers along with attorney Gwendolyn Seale[7] attempted to submit additional comments in response to the Majors’ filing but were not able to timely file that response.[8]  The Writers appreciate the Judges’ decision to reopen the comment period in order to afford the public, and those that would be bound by the rates and terms set by the Proposed Settlement,[9] an opportunity to comment on those additional materials filed by the Majors and to further participate in the rulemaking.[10]

I.  SUMMARY
            As a general comment on the record to date in Phonorecords IV, the Writers are mystified by the histrionics that have become associated with this Proceeding both on the record and in the press. A voluntary negotiation is just a deal, often made by people who are paid to always be closing. The Writers believe that Congress intended that voluntary negotiation produce a fair result on a reasonable timetable.  

 While not directly at issue in the reopened comment period, what is clearly the case is that the settlement of the Subpart B rates has unnecessarily become a major gating item for the streaming side of this Proceeding, geese and ganders being what they are.  Despite the extensive voluntary negotiation period for the Subpart B rates by the Majors, the Judges—and, frankly, songwriters around the world–are presented instead with a cornucopia of chaos across the board; the cherry on top is the frozen mechanicals crisis.  However, in this season of hope the Writers are confident that the Judges will lead us all out of this daunting situation.

The Writers are not interested in the personalities, the arm-waving or the finger-pointing.  They are interested in the results, particularly because neither they nor anyone they authorized had input into the negotiation that produced either the Proposed Settlement or the impasse.

There is at least one easy way to fix this and recognize the intrinsic value of songs:  Raise the statutory rate proposal for Subpart B configurations in at least some relation to the streaming rate increase.  A song is no less valuable because of the medium in which it is exploited.[11] 

As the Writers will argue, just like the voluntary agreement on Subpart B that led to this impasse was reached by the Majors, those same parties can go back to the drawing board to reach an appropriate conclusion with a higher Subpart B rate.  

Neither the public nor the songwriters are well served (and frankly neither are the Judges) by thrashing about and waiving arms. This may serve well the people who are paid by the hour but it hasn’t served people who are paid by the song.  At all.  “Victory” without winning may pass for success in Washington, but it does not in the writer room or at a songwriter’s kitchen table.

            The Proposed Settlement is a crystallization of everything that is wrong with the licensing and payment practices that have arisen under the compulsory license regime where no is yes, more is less and the Kool-Aid whispers “Drink Me.”  

While the Writers will focus in this comment on the frozen mechanicals issue that has become emblematic of the current crisis, it must be said that the decade-plus MOU [black box] agreements are a backward looking and inequitable insider arrangement that permits a mindset of sloppiness and a “kick the can down the road” mentality that debilitates the entire music publishing business.[12]  It’s no accident that the Mechanical Licensing Collective—run by largely the same cast of characters under a jaw-dropping Congressional governance mandate—has been sitting on $424,000,000 of other peoples’ money for nine months during a pandemic with no visible compliance with another Congressional mandate of paying songwriters correctly in Title I of the Music Modernization Act.[13]  

            The MLC and the sequence of MOUs are both descended from the same ancestors a generation ago.  Each have essentially the same business model and each are somehow inexplicably viewed as a “win” for the songwriters.  The irony of splicing the genetic code of the ancien régime MOU [black box insider settlements] to the future is not lost on anyone.  If the failure to match money and songs in the MOU process is still a problem after fifteen years as well as the much-trumpeted Title I of the Music Modernization Act, it’s not the horse’s fault.  It’s the rider’s.

            It would be a real pity for the CRB to perpetuate this unfairness by adopting the Proposed Settlement.  With respect, it is bad law, bad policy, and a failure to even try to bend the arc of the moral universe.  Conversely, rejecting the Proposed Settlement would provide the kind of steely oversight tragically lacking in the current regime.  Please let the future have a vote, just once.

            The Writers object to the Proposed Settlement for the following reasons and respectfully suggest constructive alternatives.  The gravamen of our objection is that (1) the Subpart B rates have already been frozen since 2006 and extending the freeze another five years is unjust; (2) no evidence has been publicly produced in the Proceeding that justifies or even explains extending the proposed freeze aside from the connection to the memorandum of understanding in the MOU4 late fee waiver (“MOU”), a document that the Majors only recently disclosed in their Reply; (3) very large numbers of songwriters and copyright owners of various domiciles around the world and national origins are unlikely to even know this Proceeding is happening and there still is no evidence that the unrepresented have appointed any of the participants to act on their behalf or were asked to consent to the purported settlement before the fact even if they were members of these organizations aside from the respective board of directors; (4) physical sales are still a vital part of songwriter revenue (which the Writers documented in the Prior Comment[14]); and (5) there are many just alternatives available to the Judges without applying an unjust settlement to the world’s songwriters who are strangers to the Proposed Settlement and in particular the MOU component (as the MOU will likely require membership in the NMPA to benefit consistent with prior MOUs).

[Read the full-length original filing here.]

[1] 86 FR 58626.

            [2] NMPA, NSAI, Sony Music Entertainment, UMG Recordings, Inc. and Warner Music Group Comments in Further Support of the Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV), Copyright Royalty Board (Aug. 10, 2021).

            [3] 37 C.F.R. §385.11(a).

            [4] Comments of Helienne Lindvall, David Lowery and Blake Morgan, Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV) (July 26, 2021) available at https://app.crb.gov/document/download/25533.

[5] 86 FR 33601.

            [6] Motion To Adopt Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Docket No. 21-CRB-0001-PR (2023-2027).

            [7]  Ms. Seale does not otherwise join in this comment.  We understand she is filing a separate comment regarding the additional materials.

            [8] The Writers’ reply was posted on The Trichordist website available at https://thetrichordist.com/2021/08/16/frozenmechanicals-crisis-unfiled-supplemental-comments-of-helienne-lindvall-davidclowery-theblakemorgan-and-sealeinthedeal/.  Parts of that unfiled comment are included in this comment.

[9] See 17 USC 801(b)(7)(a)(i).

                  [10]  As with the Writers prior submission in response to the First Notice, the Writers focus in this comment almost entirely on the Subpart B rates applicable to physical carriers under 37 C.F.R. §385.11(a).  

            [11] The Judges no doubt will be told many stories about how Subpart B configurations are not meaningful sales compared to streaming so rates deserve to be frozen.  This is a novel copyright argument without a statutory basis.  The theory is also not based on accurate facts as the Writers discuss extensively in the Prior Comment at paragraph 5 and will not repeat here.

            [12] There is a growing backlash to decades of delaying definitive action on song metadata and songwriter payments such as Credits Due campaign of the Ivors Academy and Abba’s Björn Ulvaeus.  See generally Chris Cooke, PPL Backs Björn Ulvaeus’s Credits Due Campaign, Complete Music Update (Oct. 4, 2021) available at https://completemusicupdate.com/article/ppl-backs-bjorn-ulvaeuss-credits-due-campaign/

            [13] See, e.g., H. Rep. 115-651 (115th Cong. 2nd Sess. April 25, 2018) at 5; S. Rep. 115-339 (115th Cong. 2nd Sess. Sept. 17, 2018) at 5 (“The Committee welcomes the creation of a new musical works database that is mandated by the legislation….Music metadata has more often been seen as a competitive advantage for the party that controls the database, rather than as a resource for building an industry on.” (emphasis added)).

            [14] See Prior Comment at 16.

by Trichordist Editor

Frozen Mechanicals Crisis: Monica Corton Tells Copyright Royalty Board that Without Parity, the Music Ecosystem Will Fail

Honorable Judges:

My name is Monica Corton, and I am the CEO and Founder of Go to ElevenEntertainment, a newly formed independent music publishing company that is funded. I have been in the music publishing business for over thirty years, twenty- seven of which were spent as the Senior Executive Vice President of Creative Affairs & Licensing at Next Decade Entertainment. My experience is in all areas of music licensing, registrations, and royalty payments, and my former clients included the catalogs of the band Boston, Harry Belafonte, Vic Mizzy (the “Addams Family Theme” and “Green Acres Theme”), Sammy Hagar, and many more.

It is my understanding that the CRB judges are being asked to accept a Motion to Adopt a freeze or a non-rate increase for all mechanical licensing uses for physical phonorecords, i.e., CDs and vinyl, permanent digital downloads, ringtones and music bundles (whenmultiple songs are downloaded in groups) for the Rate Period of 2023 to 2027. The rates for these types of uses have been frozen and have not increased for any music publisher or songwriter since 2006. In the past, the National Music Publishers Association (“NMPA”) has explained these freezes as a necessary component to their negotiation for an increase in the digital streaming rates for mechanical licenses. For many years (2006-2021), I have gone along with this explanation, but after fifteen (“15”) years of having noincrease on any physical product or digital downloads, I now believe it is completely unfair and no longer justifiable for music publishers and songwriters, particularly the

independents and DIY creators (do-it-yourself), to have been denied an increase in these rates after fifteen (15) years of allowing record labels to get away without paying any increase whatsoever, and now face being blocked from a raise for another five (“5”) years.

I originally wrote comments to you on July 26, 2021, and I have included thosecomments below. As there was an extension provided, I felt I should augment my former submission to you with a practical reason for why I believe that physical and digital download mechanical royalty rates should increase, at least by a cost of living, forsongwriters and publishers for the Rate Period 2023-2027.

The one format in physical product that seems to be surging now is vinyl. If one visitsthe Amazon.com shop, new releases of vinyl are selling anywhere from

$24.98 to $49.99 at retail. Generally, the wholesale selling price for a label is half of the retail selling price. Therefore, in this scenario, the labels are making anywhere from $12.49 to $24.99 per unit. Under the current physical mechanical rate which would stay the same if you decide not to increase the royalty rate for physical copies and digital downloads, a publisher would be paid $.91 per record with a ten (10) song cap (standard practice) for the right to use all the songs on that release. However, most singer/songwriters have what is called a controlled composition clause in their recording agreement which requires that they agree to a reduced rate of 75% of the statutory rate with a cap of ten (10) songs. This means that the real rate for most singer/songwriters onan album is $.6825 for all the songs on any given album.

Therefore, the label is making anywhere from $11.8075 to $24.3075 of which a small portion will be paid to the artist for artist royalties and some portion will be paid for the expense of making the record and distributing it. The songwriter and the publisher will thereafter, divide the $.6825 in half so that the songwriter will eventually receive $.3412 for the ENTIRE ALBUM of songs, often recording and releasing more than ten songs because creatives tend to release 12-14 songs on any given album which further reducesthe mechanical rate per song.

I ask you, does it seem fare to you that the record label should make $11.875 to

$24.3075 per record and the singer/songwriter who wrote EVERY SONG ON THE ALBUM will make $.3412?

Songwriters rarely get a say in any of these hearings. Digital rates have devastated whole swaths of our creative songwriter community. Please consider that after fifteen (15) years,it’s time to increase the physical mechanical rate and the digital

download rate for songwriters and publishers. We must create some kind of parity for songwriters in the sale of physical product and digital downloads, or our musicecosystem will begin to fail.

Best wishes, 

Monica Corton CEO & Founder

Go to Eleven Entertainment

[Read the original comment here]

by thetrichordist

Frozen Mechanicals Crisis: Independent Publisher Lynn Robin Green Tells Copyright Royalty Judges how they threaten Survival

President Lynn Robin Green
LANSDOWNE MUSIC-WINSTON MUSIC PUBLISHERS
BLOOR MUSIC-HOFFMAN HOUSE MUSIC

PO BOX 1415 BURBANK, CA 91507

I have been a Music Publisher 45 years and the FREEZING of the statutory mechanical rate which hasn’t been raised in many many years CAUSES us undue continual financial hardship.

The low streaming rates have decimated our earnings for my Writers and Administrated Publisher Clients for the last six years and have have forced us into a corner financially to try to make up for this deep loss of revenue. I administrate also 39 Publishing firms here and these streaming losses are continual.

The Mechanical sales and Sync licensing fees are our only solid source of revenue to try to compensate for these deep losses. Its imperative that THE MECHANICAL RATES BE unfrozen asap and REMADE for REALISTIC FACTUAL inflation considerations of 2021 and for a willing seller/buyer in todays actual market.

We can’t survive if this RATE of 9.1 cts IS NOT raised and adjusted FAIRLY by the CRB for these very urgently important considerations. The Parties who are trying to freeze the rates here are highly conflicted and their sole interests are purely as Parties to Technology deals- and are self projected- and they SIMPLY violate any FAIRNESS OF MECH RATES FOR ALL PUBLISHERS AND SONGWRITERS concerned.

Please listen, please consider the Creators and the Independent Music Publishers who would suffer undue catastrophe level FURTHER financial loss if that RATE is DEEMED frozen for any more additional years whatsoever. WE absolutely URGENTLY need this rate increase NOW, its beyond crucial to our way of business and I implore the CRB to listen to the Independents and Creators and KNOW the truth and hard reality of what THIS important decision represents for our future. 

WE MUST RAISE the mechanical rates, and help save this business of publishing from being plundered for large Corporate interests, WITHOUT FAIR or competitive compensation for small independent businesses.

Sincerely 

LR Green

[Read original comment as filed]

by Trichordist Editor