[Editor Charlie sez: Great to see Texas Music Office and SoundExchange partnering to give Texas artists and producers a chance to sit down directly with SX to get their questions answered on digital royalties and payments. And it’s not even SXSW! More of this please!]
The Financial Times reports that the parent of mass copyright infringer* TikTok plans to launch a streaming service:
The Chinese company behind the popular video app TikTok is set to go head-to-head with the likes of Spotify and Apple in the music streaming market with the launch of its own rival service.
ByteDance is in talks with the world’s largest record companies — Universal Music, Sony Music and Warner Music — for global licensing deals to include their songs on its new music subscription service, according to people familiar with the matter.
Oh really. So let me get this straight. Executives at the major music conglomerates have largely sat on their hands while TikTok/Bytedance has engaged in a pattern of willful mass copyright infringement against songwriters, and now are gonna help TikTok/Bytedance launch a streaming service? Not if I can help it.
Starting in 2021 all streaming services will get a streaming mechanical license through the Copyright Office/MLC. Regulations that govern the federal compulsory mechanical license already forbid mechanical licenses on unlicensed recordings. This was originally designed to keep old school bootleggers from taking advantage of the federal license. In my opinion, regulations should be updated to prevent mass digital infringers like TikTok from using the compulsory license. Obviously, the copyright office would have to distinguish between a company that might “incidentally” infringe on a limited number of songs and a company like TikTok that apparently has no licenses at all for compositions, knows this, and refuses to license. But it’s not impossible.
The Copyright Office should be required to conduct a review or at least hold a public hearing before they allow a company to take advantage of the federal compulsory license. Why? If the federal government is going to take away songwriters individual right to license their work, the feds should make sure they aren’t, in turn, licensing to scofflaws, scammers, and criminals. Seems sensible right? Further, I caution against farming out this process to the MLC as they have already demonstrated they are not keen on transparency or oversight. The revolving door between big publishers that dominate the MLC and digital services invites corruption and cronyism. The Copyright Office should make sure that independent writers are not forced to license to a company ripped them off in the past.
Failing to vet licensees will create an extreme moral hazard for the copyright office. Licensing willful mass infringers would effectively make the copyright office complicit in money laundering, as a company like TikTok could take dirty money from infringing activities and effectively wash it by creating a licensed service. My hope is the Copyright Office address this matter in the next few weeks.
++++++++++++++++++++++++++++++++++++++++++++++
*There is a false narrative going around the music business that TikTok only infringes because they host User Generated Content. Thus it is protected from claims of infringement by the DMCA safe harbor. This is absolutely not true. Spend some time with the app and verify this, but in short, it clearly offers “sounds” to users to use in their videos. These sounds do not come from the users’ devices. They come over the network connection via the TikTok app. (Distribution! exclusive right 3) Next It makes copies of those sounds on the users’ devices. (Copies! exclusive right 1). Users are not copying and distributing. TikTok is. Thus like Grooveshark, it does not get the benefit of the DMCA safe harbor. It has now hired some of the smartest music licensing lawyers in the world. Yet TikTok knowingly and wilfully continues to commit mass copyright infringement. WTF? If I was a lawyer working at TikTok? I would make sure I can pay my mortgage without a law license!
We are definitely not implying that anyone has done anything wrong. We just really like this picture of a document shredder.
TikTok is a Chinese state-controlled company and one of the largest music platforms in the world. Yet according to multiple sources in the music industry, most of the songs they offer to their users are not licensed. I can personally confirm that TikTok distributes at least 2 dozen of my copyrights for which they have no license.
TikTok has also found itself in a lot of hot water over accusations it illegally harvesting data from its users and is effectively a spying operation for the Chinese government. The US Army was so concerned about this possibility it recently ordered personnel to delete the app from their smartphones. The secretive Committee For Foreign Investment in the United States (CFIUS) has launched an investigation into the purchase of musical.ly by TikTok’s parent Bytedance and security researchers have exhaustively documented the TikTok app’s intrusive and bizarre behavior.
This is why it’s especially troubling that a number of major label licensing executives are now working for TikTok after negotiating very limited licenses for their old labels. This is not a great look. Artists and songwriters can honestly wonder if their works were sold on the cheap by executives looking for a better paying tech job. To be clear I’m not saying there was commercial bribery, but I wouldn’t be surprised if potential investors, bankers (WMG and UMG are promising IPOs), or even CFIUS ask for communications between former licensing executives and TikTok just to make sure there was no hanky panky. Remember we are talking about a Chinese state-directed firm engaged in ongoing theft of US intellectual property. Remember anyone can ask for an investigation. I have a feeling this will eventually get someone’s attention…
Sadly for the major labels, this comes after they fought to overcome artist suspicions that labels (and managers) traded lower royalties for Spotify equity. To counteract these suspicions labels went out of their way to distribute profits from the Spotify IPO to artists on a pro-rata per-stream basis. (Curiously managers did not-Editor.) Will these high profile executive defections to the music industry’s biggest licensing scofflaw undo the goodwill (dearly) purchased with that Spotify IPO distribution? We shall see.
Adweek reports that TikTok is celebrating Black History Month.
TikTok is marking Black History Month with special edition stickers and by showcasing videos from some of the inspiring African-American creators on its platform.
Creators can add stickers with positive affirmations to their videos, such as Black History Month, Expression Without Limits and Make Black History.
We find this to be a disgusting bit of bullshit virtue signaling. Why? With the possibly a couple rare exceptions*, TikTok is not paying writers performance or mechanical royalties despite the fact they clearly publicly perform, make available and distribute copies of songs to their billion or so users. Sure they are not only stiffing persons of color, they are stiffing white writers as well, but given the fact that Black writers and performers are generally overrepresented in the music business, one could argue this is a kind of algorithmic racism that on average and over the long term takes money from POC and gives it to the executives at TikTok.
Executives like Global General Counsel Erich Anderson (formerly of Microsoft) and…
Former Warner Music Group Executive Ole Oberman. And…
Former Rights & Repertoire chief at GEMA and ICE attorney Dr. Joern Radloff. And…
Tracy Gardner former SVP Global Business Development at Warner Music Group.
Finally, does anyone notice a pattern here? Key executives responsible for negotiating on behalf of songwriters and artists, suddenly switch sides and TikTok gets a free pass to infringe?
This will get ugly.
*Sources at one major label report that TikTok has licenses for a “very small number of recordings” with the rest of their catalog unlicensed. Sources at a large publisher report no licenses with TikTok at all.
George Johnson is not a household name but he’s one of my heroes. If you are a songwriter you probably should pay attention to what this scrappy indie songwriter is doing. He may end up being a hero to you as well. The screen capture above says it all. One lone songwriter against the US federal government, Amazon, Google, Pandora, Spotify, The National Music Publishers Association (NMPA) and Nashville Songwriters Association International (NSAI).
Wait, isn’t NMPA and NSAI on our side? I mean they represent copyright holders and songwriters? Why are they “intervening” against George and alongside the digital services? Well, that’s a damn good question. If you ask the music publishing good ole boys/girls/x in Nashville, LA, and NY, George is some kind of songwriter zealot a crank or hopeless idealist. But is he? He makes a pretty good argument that the Copyright Royalty Judges, digital services, publishers and NSAI have made an illegal (and likely unconstitutional) deal in the most recent mechanical royalty rate hearings.
George has zeroed in on something publishers, performing rights organization and (purported) songwriter associations don’t want you to know: They agreed to a $0.00 royalty rate for songwriters on free trials and “promotional” streaming, with the latter defined as an offering “for which the service receives no monetary consideration” (CFR 385.31 b). Since YouTube and other digital services are primarily in the business of amassing data on you to help them later serve you ads, that is clearly a loophole big enough to drive a Mack truck through.
Here’s where George is 100% right. The Copyright Royalty Board is required by law to set “reasonable rates.” Zero is not a reasonable rate because it’s not a rate at all. Nor is it an “equitable division of profits” as required. There is no “division of profits” if one side is getting zero. As George so eloquently notes:
In 2013, Pandora had paid 14 executives approximately a half-a- billion dollars ($500 million) in stock options and bonuses, but argued that the company was losing money, then insisted that they would go out of business, or be “disrupted” if the zero-cent royalty rate was raised. Is it an equitable division of profits between the 7,446,327 million- dollars a year Pandora CEO Tim Westergren [J.A. A604, GEO Ex. 4079] is still taking from the company compared to the $.000 cents Pandora still “pays” each songwriter — transferring the value of songwriter copyrights to him and top Pandora executives? $42,503,792 million dollars to be exact for the fiscal year 2018.
“…nor shall private property be taken for public use, without just compensation.”- Excerpt Fifth Amendment US Constitution.
Finally, it doesn’t take a genius to notice zero is clearly an unconstitutional taking. Something of value is taken by the government, given to a third party without any compensation. Zero is impossible to read as just compensation. Slam dunk.
The smartest folks in the room, are once again proven to be total fucking idiots. The NMPA and NSAI have abandoned all pretense of looking out for songwriters and publishers. But really that’s okay. They also made it incredibly easy for a handful of “cranky” songwriters to turn this into a constitutional challenge.
Read George’s Filing here.
[Welcome Senator Tillis to shining sunlight on the astroturf “Restatement of Copyright”, which in our view is a epitoma suprema of Silicon Valley shillery. The letter that Senator Tillis refers to is the December 3 letter his colleagues and he sent to the American Law Institute asking some questions about the proposed Restatement (which isn’t all that proposed anymore as the drafting is moving along briskly). I gather from Senator Tillis’s op ed that he hasn’t gotten a reply yet. Which must mean that the mumbletank in the Silicon Valley policy laundry hasn’t quite figured out how to reply. But here’s the question that no one seems to have asked yet: Who is paying for the Restatement of Copyright? I don’t mean which non-profit accountability blocker wrote the check, I mean who is the ultimate donor who is the source of donor directed funds?]
With millions of jobs and over a trillion dollars at stake, as lawmakers, we must ensure copyright laws continue to protect the livelihoods of our nation’s creators.
It is for this reason that we have sent a letter questioning the effort by a well-established legal organization to “restate” and reinterpret our copyright laws for the nation’s judicial system. Last time we checked, Article I of the Constitution specifically grants Congress the authority to make laws to allow for individuals in the creative industries to be fairly compensated – not law professors.
You might also be interested in these MTP posts from 2018:
Shocker: Is Spotify Lawyer Leading “Scholarly” Project to Create Fake Treatise?
The American Law Institute’s Restatement Scandal: The Futility of False “Unity”
A Look at Christopher Sprigman’s Recent Record
And from 2013 about the Copyright Principles Project, the precursor of the Restatement of Copyright:
[Editor Charlie sez: This is kind of like reverse MIC Coalition. Time for the Internet Association’s CEO Michael Beckerman (call sign “Big Foot”) to scramble. Remember him? Wasn’t he an extra in Zoolander?]
An unusual constellation of powerful companies and industries are fighting to weaken Big Tech by limiting the reach of one of its most sacred laws. The law, known as Section 230, makes it nearly impossible to sue platforms like Facebook or Google for the words, images and videos posted by their users.
[I]n a new filing with the [US Trade Representative] for its annual “Special 301” review of intellectual property rights protection, SoundExchange says that six countries deny full national treatment to American producers and performers, because “those countries are not paying them for the same uses that these countries are paying their own national producers and performers” — specifically, for traditional broadcasts, public performances and some digital uses.
The countries are the U.K, France, Australia, Japan, the Netherlands and Canada.
[This is a letter first posted to our sister site Artist Rights Watch that Chris Castle sent to Congress in December on the crossover between Brexit (which goes into effect today), the European Copyright Directive and the US Mexico Canada Agreements. Google is using the USMCA to grift the DMCA (and Section 230) safe harbor into US trade policy.]
Readers might be interested in this letter I sent to Congress last month regarding the European Copyright Directive/Brexit/USMCA intersection. This is real now, Brexit is happening tomorrow and the UK Government announced it will not be transposing the European Copyright Directive. The UK government will no doubt be seeking–quickly–a bilateral trade agreement with the US. Having just concluded and signed into law the United States-Mexico-Canada trade agreement (USMCA), the Trump Administration may be tempted to use certain aspects of the USMCA as the basis for a UK bilateral agreement.
While creators were able to hold the line on some important copyright issues, Google was able to get the USMCA to incorporate DMCA loopholes that are a big problem and go in the opposite direction of the progress on safe harbor loopholes gained in the European Copyright Directive. Google has built up a massive lobbying effort in the UK and you can expect it to kick into high gear on this issue. Google will try to gain in the UK what they lost in the European Parliament, and then bootstrap any gains into opposition against other EU countries adopting the Copyright Directive.
You may wish to draw on these points to send a letter of your own.
Limiting Safe Harbors in Trade Agreements
Many welcome the passing of the renegotiated North American Free Trade Agreement, known as the United States-Mexico-Canada Agreement (USMCA). However, creators in will be concerned about perpetuating in other trade agreements the harms in the USMCA’s Article 20.89 (Legal Remedies and Safe Harbors).
These concerns arise because the Article incorporates the highly controversial “DMCA safe harbor ” (17 USC Sec. 512 et seq). The Article perpetuates the DMCA’s highly controversial and debilitating “whack a mole” regime that creators have suffered for decades. Our fellow citizens simply cannot tolerate such grotesque unfairness becoming standard practice for trade agreements by the United States.
I encourage you to call on your colleagues to include in the legislative history of the USMCA language that would recognize the harms to artists and all creators of Article 20.89, disclaim the use of the Article as a model for future trade agreements and require the US Trade Representative to consult with the relevant committees of Congress before negotiating future agreements that address safe harbors. This is particularly urgent given the Copyright Office’s current review of the DMCA and legislative events in Europe moving in the opposite direction of the Article.
Piracy and the near-piracy by companies like Google and its YouTube subsidiary is most pronounced in the blatant encroachment on creator rights by the DMCA’s “whack a mole” extortion model of both online pirates and those who support them in the piracy supply chain–hosting services, search engines and advertising sellers and resellers. This illicit enterprise is clearly not in the public interest.
Internet piracy does not distinguish among “hit” records or genres, geographic areas, or creative categories. It needs to be repeated that the follow-on effects are massive for all of those in the creator’s supply chain as well as the creative economy. Two generations of clients ask us of the DMCA loophole, “How can this be legal?”
The Article effectively codifies the notification-counter-notification call and response of the so-called “DMCA safe harbor.” The infringer sending a counter-notification after receiving a takedown notice likely knows that there is no downside for challenging an independent artist if that artist cannot afford a federal lawsuit to enforce a reply to a counter-notification (17 USC Sec. 512(g)(2)(C)) much less international copyright enforcement.
For independent artists, international copyright enforcement essentially does not exist. Consequently, counter-notifications are frequently supported by the flimsiest of theories, often laughably misreading the safe harbor laws based on “Internet myths”.
Artists, however, are not in on the joke because the punchline is that the theft continues absent the court order that is financially beyond reach. Profits from the piracy supply chain continue unabated and the law—including the Article–is mocked once again.
This tragic call-and-response is particularly mismatched when challenging the Internet companies that are the biggest publicly-traded multinationals in commercial history. Challenging the safe harbor requires all creators to constantly police these platforms and sue to enforce their rights. That’s just not realistic. By adopting the DMCA in the Article, the safe harbor becomes a brutal fortification. Process becomes punishment for creators.
As you may be aware, the European Parliament recently adopted the new European Copyright Directive that sharply cut back on safe harbors like the DMCA that allow profit from piracy. The message from our trading partners is clear—no more whack-a-mole. It would send entirely the wrong signal for the United States to try to force what is essentially an economic sanction on our trading partners through the back door of a trade agreement with loopholes like Article 20.89
Dual Class Stock
I also call your attention to the dual class voting stock mechanism popularized in Silicon Valley by Google that gives Google’s founders 10 to 1 voting power over holders of the company’s publicly traded shares. This dual class system has been criticized by many, included SEC Commissioner Robert J. Jackson, Jr. out of concern that it effectively establishes “corporate royalty.” Commissioner Jackson’s concerns are prominently confirmed in the recent departure from Google’s management of Larry Page and Sergei Bryn who still control Google due to their 10:1 voting stock.
If the USMCA can require our trading partners to pay certain minimum wages, it seems that trade agreements could also address this fundamental unfairness that has most recently led to the economic debacle at WeWork.
Thank you for the opportunity to comment on USMCA.
By Chris Castle
[This post first appeared on our sister site Artist Rights Watch]
Senator Ron Wyden is up to his old tricks–he’s got a secret hold on the CASE Act and is taking his usual ridiculous positions just to see if he can get away with it. His day of reckoning has been coming for a long time and may have just arrived. We don’t come to the Congress looking for a fight, but he does. Maybe now he’ll get one. Like any other bully, there’s only one way to make it stop.
Why would Senator Wyden care about the CASE Act? Because Google does. And why does Google care? Because the CASE Act would provide meaningful relief to artists in all copyright categories caught up in DMCA hell, the ennui of learned helplessness brought on by the call and response of notice and counter notice that gives Google domain over vast numbers of copyrights from people who can’t afford to fight back in federal court. And Google cannot have that.
So what is going on that prompted a kind and reasonable fellow like Copyright Alliance chief Keith Kupferschmid to accuse Senator Wyden of bad faith negotiations in the above tweet? Quick recap: Remember there’s new legislation working its way through Congress that would establish a new “small claims court” in the US called the CASE Act. The immensely popular and bipartisan bill introduced by Rep. Hakim Jeffries, passed the House of Representatives on a 410-6 vote. Yes, that’s right–410-6 in favor of the CASE Act. (If you’re interested, you can download the CLE materials I put together for a recent bar association panel on the CASE Act. This has a detailed explanation of holds, copy of the bills, and some other public materials.)
The legislation is now in the Senate which is the land of legislative secret holds and the kind of faux collegiality based on unanimous consent voting outside of the procedures we normally think of, especially floor votes. At a high level, here’s how it works: The Senate staff essentially emails around legislation and if no Senator objects to it, it is passed by unanimous consent. Called “hotlining” this is pretty common in the Senate. It does not require scheduling floor time and gets things done.
But see what they did there? If just one–one–senator objects to the hotlined legislation, it all grinds to a halt. This is called placing a “hold” on the Senate version of a bill. Which brings us to Senator Ron Wyden.
Senator Wyden has a history of placing holds on copyright legislation. Most recently, he placed a hold on the Music Modernization Act in order to extract some further punishment for the old guys and dead cats who saw a glimmer of hope in the pre-72 part of the bill (Title II). In what has become standard practice, the banshees from the Electronic Frontier Foundation and Public Knowledge swing into action with their Fear Uncertainty and Doubt campaigns in an effort to weaken copyright in any way they can get away with.
You know, these guys:
EFF and Public Knowledge treated us to this kind of propaganda:
Both EFF and Public Knowledge used the Phone2Action tool which features this permission set for Twitter that sure looks like it’s designed to create a bot net:
So back to Senator Wyden. EFF and Public Knowledge are not the only ones with ties to Google in particular and Big Tech in general. Senator Wyden represents Oregon, but he is actually from Palo Alto in what was once called the Santa Clara Valley, but is now generally called Silicon Valley. And what does Silicon Valley need that Oregon has?
Huge honking amounts of electricity to run the massive data centers that power Big Tech and allows them to store fuflops of data about you and me. Remember–it takes about as much electricity to run YouTube as it does to light the city of Cincinnati. And unlike Teslas, etc., that run on the magical power of cherubic elves jogging on golden flywheels, Google needs the same electricity that comes out of the wall from whatever source it is derived. Here’s some data on the data centers:
Needless to say, when you are groovier than thou Googlers, this little fact is distasteful and really jacks with your self-image. Hence, Google seeks out “green” power as part of the mix–and here’s where Oregon comes in. Courtesy of the taxpayer, i.e., you and me, Oregon happens to have a bunch of hydroelectric power from the Columbia and Snake Rivers Hydroelectric Project that also extends into British Columbia.
Well, it’s not just courtesy of you and me, it’s also courtesy of the sacred lands given up by Native Americans for The Dalles Dam (Google’s main Oregon data center is located in The Dalles). The Dalles Dam has an interesting history with Oregon’s local Confederated Warm Springs Tribes and the Yakama Indians, too. Thanks to the ever efficient Army Corps of Engineers and a bunch of federal taxpayer money, the Dalles Dam hoodwinked the tribes into giving up sacred land, which is now at the bottom of the reservoir, but that’s a story for another day.
According to The Oregonian:
Data centers have become one of Oregon’s biggest industries, with Google, Apple, Facebook and Amazon spending billions of dollars to buy and equip online storage facilities in rural parts of the state. They’re lured primarily by tax savings, which can shave tens of millions of dollars from a server farm’s annual operating cost.
Earlier this week, The Dalles city council and Wasco County commissioners voted to approve a package of “enterprise zone” tax breaks that exempts Google’s buildings and computers from local property taxes. The pact could save Google tens of millions of dollars or more over the 15-year life of the deal.
In exchange, Google will make an up-front payment of $1.2 million to local governments and $800,000 annually after that.
And who was formerly the chair of the Senate Energy & Commerce Committee? You guessed it.
So back to Senator Wyden and his hold on the CASE Act (I won’t blame you if you’d prefer a shower right about now). Remember that the CASE Act is the biggest threat to Google’s DMCA-based business model to come along. So Wyden’s marching orders on the CASE Act is the same as it was on MMA and the same as it’s been for years. Slow it down, weaken it, let the process grind it to bits if possible or extract so many concessions that it’s toothless or as toothless as it can be.
And that is why a good guy like Keith Kupferschmid is calling out Ron Wyden. Because there’s #JustOne senator standing in the way of justice.
The Trichordist 
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