Does YouTube Underpay Artists 13 Billion a Year? Understanding YouTube’s Article 13 Freakout

 

Desperate times for YouTube. CEO Susan Wojcicki is currently organizing a Childrens Crusade, against EU MEPs by urging YouTubers (mostly US teens) to “take action” to protect her $772 billion dollar company’s swollen profits. You see the EU just proposed guidelines (article 13) requiring platforms like YouTube to stop hiding behind its users and pay musicians fairly.  She thinks that is an outrage and is spreading wild disinformation.

Seems batshit crazy to enlist children in a multinational corporate lobbying effort, until you figure out just how much YouTube is cheating musicians.

A rough calculation suggests YouTube is shorting musicians at least $13 billion a year.   It’s probably way more.  We can’t know the exact amount but it’s pretty easy to figure out the lower range.   Spotify with 160 million users in 2017 paid out at least 2.225 billion in royalties to rights holders (It’s probably a little higher). That’s around $13.90 user. YouTube provides the same service (except with video) and CEO Susan Wojcicki says YouTube has 1 Billion MUSIC users a month. 

So even at Spotify’s low rates that means YouTube should pay $13.9 billion a year.  But YouTube paid less than $500 million to music rights holders last year. The entire US recorded music industry in 2017 was $8.7 billion.  That’s a lot of missing money.

This is Google: Second largest corporation on earth, manipulating children to protect one of the biggest corporate rip-offs in history. Disgusting.

 

 

 

by Dr. David C Lowery

Copyright Directive Opponents Getting Band Back Together, Announce European Tour- Guest Post by Volker Rieck

This is a guest post by Volker Rieck. The article has been translated from German and originally appeared in the Frankfurter Allgemeine Zeitung. Link here.  We took liberties by changing the title of article for the English version.  Other minor phrasing has also been americanized. – David Lowery

After the manipulation is before the manipulation

On 12 September 2018, the EU Parliament voted on the proposed Directive on Copyright in the Digital Single Market. The entire summer of 2018 was characterized by a gigantic lobbying assault as the directive’s opponents resorted to “asymmetrical” lobbying means and bombarded EU parliamentarians with avalanches of emails and floods of tweets in a manner resembling the handiwork of a grassroots movement. (ed. note:“resembling” is the key word here). In the end EU parliamentarians did not buy the notion the opposition was purely organic grassroots movement and passed the directive. In fact, the spamming of the parliament may have backfired.

Nevertheless, immediately after losing the September vote, the opponents of the directive marshaled their forces to sketch out how they could influence the trilogue process of negotiations on the legislation between the Council of the European Union (the member states), the EU Commission and the EU Parliament.

“It is coming from Google”?


On 21 September 2018, the fifth “Das ist Netzpolitik!” [“This is net politics!”] conference took place in Berlin. One of the speakers was Julia Reda, the sole representative of the Pirate Party in the EU parliament. At the conference – addressing her supporters and requesting that they write to EU parliamentarians – she said:

“They need to get a sense that this is relevant for their constituencies. Then they won’t believe it is coming from Google.”

Now, it is possible to interpret this in very different ways. None of the information we have suggests that Google bombarded parliamentarians with twitter storms and with tens of thousands of emails. The initiative #saveyourinternet was responsible for most of the lobbying. (Further information on the curious background of this hashtag campaign is given in this article.)  What is relevant here is that Julia Reda backed this initiative in a tweet sent out shortly before the conference began.

Screenshot: Tweet sent by Julia Reda on 21 September, 2018

So on the one hand, we see Julia Reda requesting that her supporters write to EU parliamentarians personally (to dispel the impression that “it is coming from Google”) and on the other hand, we see her speaking out in favor of the initiative #saveyourinternet that had, over the summer, left parliamentarians whose inboxes and twitter accounts had been flooded with messages with the impression “that this is from Google.”

So just how are Google and the #saveyourinternet campaign connected? Does Julia Reda have more information or information that differs from what is in the public sphere?

The EU Transparency Register: As opaque as milk

The EU Transparency Register contains an entry on Google which lists 24 associations Google belongs to as a member. These include CCIA, one of the main sources of funding for the Copyright for Creativity (C4C) ad-hoc coalition behind the #saveyourinternet campaign. (We have reported on them previously here).

But the transparency offered by the register is quite restricted. Organizations Google Inc. belongs to are listed, but additional subsidiaries like Google Germany GmbH are not.
As Google Germany has no entry in the EU register, the register does not contain information on organizations and associations that are supported at national level by Google subsidiaries and may thus be far more dependent on Google than if only a single Google membership existed.

Organizations falling into this category that are C4C supporters include:
CDT – Center for Democracy & Technology
IGEL – Initiative gegen ein Leistungsschutzrecht
OFE – Open Forum Europe

The organizers of #saveyourinternet – the lobbying company N-square, which organized the campaign on behalf of C4C, and N-square’s parent company KDC – are not represented transparently in the EU register, just as they were not represented transparently on their campaign website. N-square has an entry in the transparency register that specifies financing of less than EUR 9,999 with Google in 2016 and mentions that N-square is part of the KDC group. The KDC Group, which also has Google and CDT as customers is not mentioned further in the register. Ultimately, it seems highly likely that Google is far more important for KDC/N-square than the rather low financing amount the register reflects.

Screenshot: KDC Website with customers like Google and CDT

As only partial listings are available for certain relevant entities, the EU transparency register can only hint at the connections between Google and the #saveyourinternet campaign. Perhaps looking beyond the borders of the EU will shed more light on affairs.

Oh, how beautiful is Canada

As mentioned in this articlefrom 27 July 2018 and this articlefrom 3 August 2018, the Canadian enterprise OpenMedia was one of the major initiators and drivers of the #saveyourinternet campaign.

OpenMedia is now also preparing to go on the warpath once more; the “battle” over Article 13 of the directive is clearly not yet over. In the OpenMedia newsletter released shortly after the September vote, the company announced its intention to increase pressure on individual EU member states.

Illustration: Extract from the OpenMedia newsletter from 14 September, 2018

The anti-campaign is also referenced on OpenMedia’s website.

Illustration: Screenshot of the OpenMedia website on 13 October, 2018. The link shown is, however, broken.

Now, to be crystal clear about this, OpenMedia is a Canadian company. So here we have a Canadian company announcing that it will exert pressure on EU member states to get the EU to change its laws in a way that suits a Canadian company. The situation is absurd, and whether the EU and its parliamentarians will appreciate such external meddling in their policymaking seems questionable.

When “open” means anything but

Let us take a closer look at OpenMedia.

OpenMedia was founded in 2014. The former Google policy manager Jacob Glick sits on its board.

Illustration: Screenshot from the OpenMedia Website (OpenMedia’s Board).

Transparency is a core value of the enterprise.

Illustration: Screenshot from the OpenMedia Website (Transparency).
“We are constantly seeking ways to be more open…”

Nevertheless, anyone currently seeking transparent information on Open Media’s funding is in for a difficult time.
None of the financial statements for the years 2014–2016 can now be called up on the OpenMedia website.

Illustration: Error message on the OpenMedia Webseite on attempting to call up a financial statement

So much for OpenMedia’s “open approach” and emphasis on transparency.

Sponsorship magic

On its website, OpenMedia gives at least a glimpse into where some of its revenue comes from. The enterprise has sponsors. The platinum sponsorship category encompasses those sponsors contributing more than 20 000 Canadian dollars. How much more is not clear, and whether these payments are one-off or repeated is not spelled out. The annual reports could clarify this – if only they were available.

During the summer of 2018, something rather odd happened to this list of sponsors.

In July 2018, 8 enterprises or individuals were still listed as platinum sponsors. These included the Mozilla Foundation and The Office of the Privacy Commissioner of Canada, a body comparable with European data protection authorities.

Illustration: The list of platinum sponsors from July 2018

By October 2018, the number of platinum sponsors had (magically?) shrunk.

Illustration: The list of platinum sponsors in October 2018

Now only five entities are listed as platinum sponsors. In the absence of greater transparency, we can only speculate as to why: did sponsorship agreements elapse or was there another reason? The Canadian Privacy Commissioner and the Mozilla Foundation have now been removed from the list. Was being listed as sponsors unpleasant for them? It is, after all, somewhat bizarre to think of Canadian taxpayers’ money being used to influence EU policy and the work of EU parliamentarians, not least by flooding the latter with spam emails.

 

OpenMedia and New/Mode – Which came first, the chicken or the egg?

Tools from the Canadian enterprise New/Mode were – provably– used on various pages in the #saveyourinternet campaign during the summer of 2018. The use of such tools ensured that the offices of EU parliamentarians were kept busy deleting identical e-mails with the same content and dealing with Twitter accounts stuffed with messages for weeks on end.

Up to the summer of 2018, the OpenMedia website still stated that New/Mode Inc. was a subsidiary of Open Media. That information has now been removed from the website and now, in October 2018, the relationship between the two companies is now suddenly described entirely differently, with OpenMedia now appearing to be a subsidiary of New/Mode!?

Illustration:  Screenshot from New/Mode website – “About Us” section.

This change seems to have been made in a rather slipshod manner, however, with New/Mode still being described as an offshoot of Open Media elsewhere.

Illustration: Screenshot from New/Mode website. The organization is described as an “offshoot” of OpenMedia.

The OpenMedia annual report clarifies the situation somewhat. Fortunate are those who managed to download it before it disappeared from the OpenMedia website! It is clear from the 2016 financial statement that OpenMedia lent 50 000 Canadian dollars to New/Mode in 2015. This loan was to be repaid on 3 September, 2016. The repayment date was subsequently rescheduled to 30 June, 2018. But ultimately Open Media received shares in New/Mode in place of the repayment in 2015.

Illustration: Extract from the audited annual report of OpenMedia 2016, which is now no longer available on the OpenMedia website

Why is the ownership of the company not communicated clearly and plainly? What are the presumed advantages of such contradictory and opaque communication?

Conclusion

Julia Reda’s fears that suspicions that Google is behind the campaign could arise certainly do not seem entirely unfounded. Google’s membership in one of the main funding sources for the campaign’s operator, the only partially transparent relationship between Google, this lobbying agency and its parent, and finally the personal and financial ties between Google and one of the Canadian lobby groups all combine to create this impression. The picture is further rounded out by the opaque nature of the partnerships linking local Google companies to initiatives that then pool their resources in Europe in ad-hoc coalitions like C4C.

While the new EU Copyright Directive has surmounted a first hurdle with the adoption of a text in the European parliament, the legislative procedure is still wide open. Numerous groups are now attempting to influence the trilogue negotiations by lobbying individual countries on the European Council. We will soon see whether national parliamentarians will now also be subjected to email avalanches and twitter storms by opponents of the directive.Their EU colleagues can certainly tell them much about how such lobbying campaigns unfold.

Perhaps the most shocking aspect of this entire episode has, however, been the brazenness with which interest groups outside the EU and non-EU enterpriseswith opaque ownership and funding structures have mounted an assault on the legislative bodies of the EU. This is asymmetrical lobbying of a very particular kind. One can only hope that the EU analyzes the events of this summer precisely and ensures that such attempts to exert influence and manipulate voting are not repeated in the run-up to the final vote on the new directive in the European parliament. The EU is already keenly aware of this problem, and measures to avoid the manipulation of voting have already been determined.

by Dr. David C Lowery

Don’t Get Fooled Again: Piracy is still a big problem-MusicTech.Solutions

Guest post by Chris Castle (from MusicTech.Solutions)

I know it’s not very “modern,” but music piracy is still a huge problem.  As recently as yesterday I had a digital music service executive tell me that they’d never raise prices because the alternative was zero–meaning stolen.  (This demonstrates the downward effect on prices from massive piracy that David has noted many times on the Trichordist.)

Very 1999, but also oh so very modern as long as Google and their ilk cling bitterly to their legacy “safe harbors” that act like the compulsory licenses they love so much.  Except the safe harbor “license” is largely both royalty free and unlawful.  Based on recent data, it appears that streaming is not saving us from piracy after all if 12 years after Google’s acquisition of YouTube piracy still accounts for over one third of music “consumption.”  The recent victory over Google in the European Parliament indicates that it may yet be possible to change the behavior of Big Tech in a post-Cambridge Analytica world.

It’s still fair to say that piracy is the single biggest factor in the downward and sideways pressure on music prices ever since artists and record companies ceded control over retail pricing to people who have virtually no commercial incentive to pay a fair price for the music they view as a loss leader.  The current thinking seems to be that streaming will save us by having more users subscribe to music services at a price that reflects the market distortion of massive piracy.  In other words, less is more–the revenge of Chris Anderson.  Except now we are to treat the head of the tail as though it were the long tail.

On the other hand, if the Googles of this world were living up to their ethical responsibilities that should be the quid pro quo for the profits they make compared to the harms they socialize, then you wouldn’t see numbers like this chart from Statistica derived from IFPI numbers:

chartoftheday_15764_prevalence_of_music_piracy_n

The good news is that there is a solution available–or if not a solution then at least a more pronounced trend–toward making piracy much harder to accomplish.  It may be necessary to take some definitive steps toward encouraging companies like Google, Facebook, Twitch, Amazon, Vimeo and Twitter to do more to impede and interdict mass piracy in return for the safe harbor they love so much and misuse every day.

Private Contracts:  It may be possible to accomplish some of these steps through conditions in private contracts that include sufficient downside for tech companies to do the right thing.  That downside probably should include money, but everyone needs to understand that money is never enough because the money forfeitures are never enough.

The downside also needs to affect behavior.  Getting Google to change its ways is a tall order.  Witness Google’s failure to comply with their nonprosecution agreement with the Criminal Division of the Department of Justice for violations of the Controlled Substances Act.  When the United States failed to enforce the NPA against Google, Mississippi Attorney General Jim Hood sought to enforce Mississippi’s own consumer protection statutes against Google for harms deriving from that breach.  Google sued Hoodand he ended up having to fold his case, even though 40 state attorneys general backed him.

Antitrust Actions:  Just like Standard Oil, the big tech companies are on the path to government break ups as Professor Jonathan Taplin teaches us.  What would have been unthinkable a few years ago due to fake grooviness, the revolving door and massive lobbying spending all over the planet, in a post-Cambridge Analytica and Open Media world, governments are far, far more willing to go after companies like Google, Amazon and Facebook.  At least in Europe where fines against Google for competition law violations exceed $5 billion.

Racketeer Influenced and Corrupt Organizations Act Civil Prosecutions:  “Civil RICO” claims are another way of forcing Google, Facebook, Amazon & Co. to behave.  Google is fighting a civil RICO action in California state court.  Civil RICO may be a fertile solution against one or more of Google, Facebook and Amazon.

As we know, streaming royalties typically decline over time due to the fact that the revenues to be divided do not typically increase substantially (and probably because of recoupable and nonrecoupable payments to those with leverage).  At any rate, the increase in payable revenues is less than the increase in the number of streams (and recordings).

While it’s always risky to think you have the answer, one part of the answer has to be basic property rights concepts and commercial business reality–if you can’t reduce piracy to a market clearing rate, you’ll never be able to increase revenue and music will always be a loss leader for immensely profitable higher priced goods that artists, songwriters, labels and publishers don’t share be it hardware, advertising or pipes.

I strongly recommend Hernando de Soto’s Mystery of Capital for everyone interested in this problem.  The following from the dust jacket could just as easily be said of Google’s Internet:

Every developed nation in the world at one time went through the transformation from predominantly extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West we’ve forgotten that creating this system is what allowed people everywhere to leverage property into wealth.

What we have to do is encourage tech companies to stop looking for safe harbors and start using their know-how to encourage the transformation of the extralegal property arrangements they squat on and instead accept a fair rate of return.  My bet is that this is far more likely to happen in Europe–within 30 days of each other we’ve seen Europe embrace safe harbor reform in the Copyright Directive while the United States welcomed yet another safe harbor.

If we’re lucky, the European solution in the Copyright Directive may be exported from the Old World to the New.  And if Hernando de Soto could bring property rights reform to Peru in the face of entrenched extralegal methods and the FARC using distinctly American approaches to capital, surely America can do the same even with existing laws and Google.

by thetrichordist

Arithmetic on the Internet: The Ethical Pool Solution to Streaming Royalty Allocation

Guest post By Chris Castle

“Sick of my money funding crap.”
A Fan’s Tweet

Subscription services are one of the few secular trends in the current economy that is not yet reactive to trade wars or interest rates.  Subscription services are found in many areas of the economy, but music drives some of the big ones like Spotify, Amazon and especially the razor-and-razorblades plays like Apple.  But per-stream royalties do not come close to making up for the CD and download royalties they cannibalize.   Not only do subscription retail rates need to increase, but it’s also time for a major change in the way artist’s streaming royalties are calculated from what is essentially a market share approach to one that is more fair. 

Artists’ dismal streaming royalties on music subscription services are largely based on a simple calculation:  A per-stream payment derived from a share of the service’s revenue prorated by number of streams.  Artists get a portion of a service’s monthly revenue (at least the revenue the service discloses) based on a ratio of your plays to all the plays.  Your plays will always be a lot smaller than the total plays.  (This is essentially what Sharky Laguana referred to as the “Big Pool.”)

Sounds simple, but mixed with the near-payola of Spotify’s playlist culture and Pandora’s “steering” deals, it’s really not.  Negotiating leverage allows big stakeholders to tweak the basic calculation with floors, advances (aka breakage), nonrecoupable payments that help cover accounting costs, and other twists and turns to avoid a pure revenue share.

It also must be said that stock analysts and venture investors always—always—blame “high” royalties for loss-making in music services.  This misapprehension ignores high overhead such as Spotify’s 10 floors of 4 World Trade Center or high bonus payments such as Daniel Ek’s $1,000,000 bonus paid for failing to accomplish half of his incentive goals stated in the Spotify SEC documents (p. 133 “Executive Compensation Program Requirements”).

Of course all these machinations happen behind the scenes.  Fans are not aware that their subscription pays for music they don’t listen to and artists they never heard of or don’t care for.   Plus, it’s virtually impossible for any label or publisher to tell an artist or songwriter what their per-stream rate is or is going to be.

Fans Don’t Like It:  A New Wave of Cord Cutters?

So neither fans nor artists are happy with the current revenue share model. Given that the success of the subscription business model is keeping subscribers subscribing, the last thing the fledgling services need are cord cutters.

Many artists will tell you that the playlist culture and revenue share model are destructive.  Dedicated fans often don’t like it  either (after they understand it) because it gives the lie to supporting your favorite artist by streaming their music.  Artists don’t like it because unless you have a massive pop or hip hop hit, all you can aspire to is a royalty rate that starts in the third decimal place from the right if not the fourth.  This is compounded for songwriters.   (See Universal Music Publishing’s Jody Gerson on streaming royalties for songwriters.)

Simply put, if a fan pays their subscription and listens to 20 artists in a month, that fan likely believes that their subscription is shared by those 20 artists and not by 200,000 artists, 99.99% of whom that fan never listened to and probably never will, similar to Sharky’s “Subscriber Pool.”

This is why some artists like Sharky Laguana (and their managers) have begun arguing for replacing the status quo with “user-centric” royalties that more directly correlate fan listening to artist payments. I have a version of this idea I call the “Ethical Pool.”  

How Did We Get Here?

How in the world did we get to the status quo?  The revenue share concept started in the earliest days of commercial music platforms.  These services didn’t want to pay the customary “penny rate” (as is typical for compilation records, for example), because a fixed penny rate might result in the service owing more than they made–particularly if they wanted to give the music away for free to compete with massive advertising supported pirate sites.

Paying more than you make doesn’t fit very well with a pitch for a Web 2.0, advertising driven model:  All you can eat of all the world’s music for free or very little, or “Own Nothing, Have Everything,” for example.  It also works poorly if you think that artists should be grateful to make any money at all rather than be pirated.

Revenue share deals for big stakeholders have some bells and whistles that leverage can get you, like per-subscriber minimums, conversion goals, top up fees, limits on free trials, cutbacks on “off the top” revenue reductions, and the percentage of revenue in the pool (50%—60%-ish).  Even so,  the basic royalty calculation in a revenue share model is essentially this equation calculated on a monthly basis:

(Net Revenue * [Your Streams/All Streams])

Or ([Net Revenue/All Streams] * Your Streams)

In other words all the money is shared by all the artists.

Sounds fair, right?

Wrong.  First, all artists may be equal, but on streaming services, some are more equal than others.  Regardless of the downside protection like per-subscriber or per-stream minima, the revenue share model has an inherent bias for the most popular getting the most money out of the “Big Pool.”  (This is true without taking into account the unmatched.)

And of course it must be said that the more of those artists are signed to any one label, the bigger that label’s take is of the Big Pool.  So the bigger the label, the more they like streaming.

Conversely, the smaller the label the lower the take.  This is destructive for small labels or independent artists.  That’s why you see some artists complaining bitterly about a royalty rate that doesn’t have a positive integer until you get three or four decimal places to the right.  Why drive fans away from higher margin CDs, vinyl or permanent downloads to a revenue share disaster on streaming?

Yet it increasingly seems that we are all stuck with the nonsensical streaming revenue share model.

Do Fans Think It’s Wrong?

There’s nothing particularly nefarious about this—them’s the rules and rev share deals have been in place for many years, mostly because the idea got started when the main business of the recorded music business was selling high margin goods like CDs or even downloads.  Low margin streaming didn’t matter much until the last couple years.

It was only a question of time until that high margin business died due to the industry’s willingness to accept fluctuating micropennies as compensation for the low-to-no margin streaming business.  (I say “no margin business” because the costs of accounting for streaming royalties may well exceed the margin—or even the payable royalty—on a per-stream basis when all transaction costs are considered as Professor Coase might observe.)

So understand—the revenue share model is essentially a market share distribution.  Which is fine, except that in many cases, and I would argue a growing number of cases, when the fans find about about it, the fans don’t like it.  They pay their monthly subscription fee and they think their money goes to the artists they actually listen to during the month.  Which is not untrue, but it is not paid in the ratio that the fan might believe.  Fans could easily get confused about this and the Spotifys of this world are not rushing to correct that confusion.

Here’s the other fact about that rev share equation: over time, the quotient is almost certain to produce an ever-declining per-stream royalty.  Why? 

Simple.

If the month-over-month rate of change in revenue (the numerator) is less than the month-over-month rate of change in the total number of streams or sound recordings streamed on the service (the denominator), the per-stream rate will decline over those months.  This is because there will be more recordings in later months sharing a pot of money that hasn’t increased as rapidly as the number of streams.

As the number of recordings released will always increase over time for a service that licenses the total output of all major and indie labels (and independent artists), it is likely that the total number of recordings streamed will increase at a rate that exceeds the rate of change of the net revenue to be allocated.  If there are more recordings, it is also likely that there will be more streams.  (For example, see “Despite Record Revenues, Spotify’s Payouts to Artists and Labels Continue to Decline” in Digital Music News.)

So streaming royalties in the Big Pool model will likely (and some might say necessarily will) decline over time.  That’s demonstrated by declining royalties documented in The Trichordist’s “Streaming Price Bible” among other evidence.

dz34tgix0aacovv-jpg-large

Thus the fan’s dissatisfaction with the use of their money is already rising and is likely to continue to rise further over time.

User-Centric Royalties and the Ethical Pool

How to fix this?  One idea would be to give fans what they want.  A first step would be to let fans tell the platform that they want their subscription fee to go to the artists that the fan listens to and no one else.  This is sometimes called “user-centric” royalties, but I call this the “Ethical Pool”.

When the fan signs up for a service, let the fan check a box that says “Ethical Pool.”  That would inform the service that the fan wants their subscription fee to go solely to the artists they listen to.  This is a key point—allowing the fan to make the choice addresses how to comply with contracts that require “Big Pool” accountings or count Ethical Pool plays for allocation of the Big Pool. 

Artists also would be able to opt into this method by checking a corresponding box indicating that they only want their recordings made available to fans electing the Ethical Pool.  The artist gets to make that decision.   Of course, the artist would then have to give up any claim to a share of the “Big Pool.”

Existing subscribers could be informed in track metadata that an artist they wanted to listen to had elected the Ethical Pool.  A fan who is already a subscriber could have to switch to the Ethical Pool method in order to listen to the track.  That election could be postponed for a few free listens which is much less of an issue for artists who are making less than a half cent per stream.

The basic revenue share calculation still gets made in the background, but the only streams that are included in the calculation are those that the fan actually listened to.  If the fan doesn’t check the box, then their subscription payment goes into the market share distribution as is the current practice, but their musical selection is limited to “Other than Ethical Pool” artists.

That’s really all there is to it.  The Ethical Pool lives side by side with the current Big Pool market share model.  If an Ethical Pool artist is signed, the label’s royalty payments would be made in the normal course.  The main difference is that when a subscriber checks the box for the Ethical Pool, that subscriber’s monthly fee would not go into the market share calculation and would only be paid to the artists who had also checked the box on their end.

One other thing—the subscription service could also offer a “pay what you feel” element that would allow a fan to pay more than the service subscription price as, for example, an in-app purchase, or—clasping pearls—allow artists to put a Patreon-type link to their tracks that would allow fans to communicate directly with the artist since the artist drove the fan to the service in the first place.  I’ve suggested this idea to senior executives at Apple and Spotify but got no interest in trying.

The Ethical Pool is real truth in advertising to fans and at least a hope of artists reaping the benefit of the fans they drive to a service.  There are potentially some significant legal hurdles in separating the royalty payouts, but there are ways around them.

I think the Ethical Pool is an idea worth trying.

 

by Trichordist Editor

Did Google Astroturf Group Fail to Report Copyright Lobbying to Canadian Authorities?

A few weeks ago this blog on the website of Michael Geist caught my eye.  Michael Geist is an anti-copyright activist/professor at University of Ottawa and I generally try to keep up with his writings.  In this blog he claimed that lobbyist data showed groups representing artists and other copyright holders represented the vast majority of registered copyright lobbying meetings with Canadian officials.  Registered is the key word here. Bookmark that and we’ll come back to it in a minute.

While Geist might be technically right I don’t really get the point of the blog. What is so outrageous? It should be no surprise that artists and rights holders in Canada are actively lobbying their government on copyright. The 2012 Copyright Modernization Act, Notice and Notice, and lax enforcement of online piracy have been a disaster for Canada’s creators. So-called “copyright reforms” have further decreased revenues for many artists with academic authors particularly hard hit. But more importantly it’s been a disaster for Canada’s reputation for good government.  Indeed Canada recently joined China, Russia and Venezuela on the US Trade Representative’s list of piracy havens!

Canada has started smoking and hanging out with the bad kids.

Therefore Geist’s headline is plausible but largely uninteresting. Canadian creators are very concerned about inadequate copyright protections. So yes, lots of meetings. Perhaps the only interesting thing about Geist’s misleading headline is that it is the sort of soundbite that is weaponized and then used to delegitimize copyright review processes around the world. “Big media got special treatment.” Corporate disinformation, meant to hide the fact copyright is an individual right and the only thing that guarantees large corporations pay artists anything.

We see this across all western democracies. Anti-copyright activists, many with ties to Silicon Valley cyber-libertarians, hell bent on lowering trust in democratic processes and institutions. Ends justify means if they achieve their narrow anti-copyright anti-regulatory goals. The sad truth is that these propaganda campaigns add to centrifugal nationalist sentiments tearing at foundations of western liberal democracies. See here. Folks like professor Geist are unfortunately the useful idiots in Silicon Valley’s war on all government.

Meet Open Media.

Regardless, I find Geist’s numerical claims on lobbying suspect. It just doesn’t pass the smell test.

Indeed, one Canadian author joked that this seeming imbalance was probably because the anti-copyright lobbyists were simply not filing lobbying communication reports.  Even though this statement was made in jest, it struck me as something worth investigating. Because we’ve seen this type of trickery from the anti-copyright astroturfers again and again.

I decided to poke around and see if there was something to this. I decided to start with Open Media.

In the last few weeks, The Times of London, The Frankfurter Allgemeine Zeitung and this blog have written extensively about the Vancouver BC group OpenMedia.Org and it’s role in spamming the EU parliament as they voted on the EU Copyright Directive. By “spamming” I mean tweets, robo calls, fake emails and even faxes. These pre-formatted communications often contained misleading or outright false claims about the copyright directive.  Fortunately this “cyberturfing” campaign backfired. I mean really really backfired. MEP Helga Trüpel said in a teleconference right after MEPs passed the copyright directive “It is due to this message spamming campaign, I talked to my colleagues here and they are totally pissed off.”   Her words not mine.

We also caught Open Media spamming Canadian government officials on copyright review and intellectual property provisions in NAFTA negotiations.  Here’s a summary:

https://thetrichordist.com/2018/09/04/canadian-government-funded-group-spamming-canadian-negotiators-on-nafta/

So who are Open Media?

The Commissioner on Lobbying lists Open Media as an “engagement network”. Is that a thing? I don’t know what that means. Seems like double speak for something that supposed to look grassroots but is really astroturf.  I do know that this “engagement network” is at least partially funded by Google; It files lobbying reports with the Canadian Government; and has what appears to be a for profit subsidiary (New/Mode) that markets its services to other aligned groups (like SaveYourInternet.eu). One of the directors of Open Media was also Google’s former public policy chief in Canada 2007-2014. 

One bizarre fact:  the Office of the Privacy Commissioner of Canada gave Open Media $50,000 (2016-2017). I have no idea what to make of this. It appears to be one branch of the Canadian government funding spam campaigns against other parts of the Canadian government (as well as the US and EU governments). So much for “good governance!”

But I digress.

The point is this: If any anti-copyright group would be lobbying the Canadian government on copyright, this would be it. Open media conducts very public campaigns on copyright. Why wouldn’t they also be as vocal on copyright in their lobbying?

So what do the records of the Commissioner of Lobbying show?

Consumer Affairs 41, Copyright 0

Just a few of the lobbying meetings with members of Parliament during copyright review hearings.  Topics? Consumer Affairs and Telecommunications.  

As required by Canadian law Open Media filed 53 Lobbying Communication Reports but not one lists copyright (or even intellectual property) as a topic. 41 of those meetings were said to have concerned “Consumer Affairs and Telecommunications.” 14 were “Privacy and Access to Information.” And 2 were “International Affairs.” So no copyright? Not a bit of public policy on copyright was discussed?  Even when meeting a current government official that once worked for Google on copyright policy? Does this seem plausible to anyone?

The last registration form for Open Media with the Office of the Commissioner of Lobbying clearly lists copyright policy as area of interest. There is currently an active copyright review in Canada.  And Open Media have an active email spam* campaign directed at foreign minister Freeland that specifically addresses copyright and NAFTA. I quote from the auto generated email:

“Furthering my concerns about intellectual property, I implore the government to ensure we protect both Canada’s fair dealing provisions, as well as our Notice and Notice copyright warning system. As one of the key levers that controls expression online, Canadians are deeply concerned about being able to shape their own copyright policy. As we head into a mandatory 2017 copyright review, we should not accept any rules under NAFTA that would restrict us from fully evaluating and updating these policies in the best interest of Canadians.”

(Shouldn’t this by itself count as lobbying and require a disclosure?)

Again I have no idea if Open Media discussed copyright with any government officials.  Maybe they didn’t. But there are 53 lobbying communications with dozens of government officials listed. Those government officials could definitively answer the question. Of special interest should be those communications that have taken place during the copyright review.

Perhaps that Canadian instinct for good governance will kick back in and someone will investigate this. Who knows maybe even the Office of the Commissioner of Lobbying will look into it.

UPDATE:  Looks like Hugh Stephens (Vice Chair
Canadian Committee on Pacific Economic Cooperation) just posted a blog on Open Media as well.  Good companion piece. Read it here:

https://hughstephensblog.net/2018/10/01/opening-the-book-on-open-media/

*And Spam? Yes. Try it yourself. Fill in fake name, email and random postal code, keep hitting send button.  Big fan of the 1998 Truro SpamCats, myself.)

by Dr. David C Lowery

“Totally Pissed Off” By Big Tech Spam EU Gives Artists A Copyright Victory

Start at 14:45:10 

You HAVE to watch this.  When asked why EU Parliament switched from opposing the copyright directive to overwhelmingly supporting it, German MEP Helga Truepel pulls no punches:

“I think it’s due to this message spamming campaign. I talked to some of my colleagues here [and they] are totally pissed off, cause in the streets there were a maximum 500-800 people last sunday… and we were only deleting emails for weeks now.”

We told you two months ago. This was not a normal lobbying campaign. It would seem that the EU Parliament agrees that Big Tech lobbying campaign crossed the line.  For it is now clear the vote for the copyright directive was about much more than copyright.  It became a referendum on the scummy (and possibly illegal) tactics that big tech has been using for years. SOPA, SESTA, PIPA, ACTA, US Copyright Office consultations, TPP, Net Neutrality, and Canada’s NAFTA negotiations have all seen government officials targeted with massive spam and disinformation campaigns orchestrated by Big Tech and carried out by their shadowy astroturf groups.

It’s a great day when you get to watch a democracy stand up to these arrogant Big Tech assholes and say “You have to play by our rules.”  And really mean it.

Thank you MEP Truepel.  They’ve been getting away with it for too long.

by Dr. David C Lowery

Botocracy: #SaveYourInternet Tweets to EU MEPs Peak After 1:00 AM Local Time

This is a real simple story.  There are a number of tools one can use to count the frequency of hashtags on twitter.  One is Keyhole.  There are many other great services.  But they will all tell you this:  Tweets with #SaveYourInternet hashtags appear to be at highest level in days. The only problem is it’s 2:00 AM in Brussels.  Does this seem like organic traffic to you?  (Display is set to US East Coast +6 hours for Brussels).

30.43% of all traffic today came from the US.  SaveYouInternet.eu sent the most traffic.  SaveYourInternet.eu is a website managed and controlled by N-Square. They are of course Google’s lobbyists in Brussels.  This looks to be Google spamming the EU with with tweets.  Don’t you agree?

Here are the two principals at N-Square.  The EU should make them come to EU Parliament and answer questions about their activities.

And just to be safe call this guy in.  Kent Walker, Google’s Senior Counsel.  You might want to ask him if their shenanigans in the EU are really about the copyright directive or are retaliation for the big antitrust fine the EU levied on Google.  Not saying they are. But what would it hurt to ask? You know, “clear the air.”

 

 

 

 

 

by Dr. David C Lowery

Oops: Government Subsidized Satellite Broadcasting Monopoly Sirius Decries Lack of Competition Among Rightsholders

Someone somewhere at Sirius is not thinking clearly.  For some reason. We are not sure why. 

Liberty Media CEO Greg Maffei should maybe head over to the Sirius Washington DC communicastions shop and make sure they aren’t smoking weed with Joe Rogan and Elon Musk.

Chris Castle at MusicTechPolicy reports that Sirius opined in a recent op ed that regulators might want to consider existence of anti-competive monopolies in the music industry when making new policy.  We agree!

https://musictechpolicy.com/2018/09/07/using-forks-and-knives-to-eat-their-bacon-more-misdirection-and-dodgeball-from-siriusxm/

We are gonna cover this strategic blunder by Sirius in more detail later.  But for now suffice it to say, it’s pretty stupid to make the argument that there is a lack of competition among record labels when Sirius is in fact a monopoly.  Not just any monopoly but a monopoly that relies on federal compulsory licenses that demand recording owners/performers/songwriters license to Sirius at a below market rates.

Further Liberty Media seems to be angling to combine Sirius, Pandora, LiveNation-Ticketmaster and even IHeartRadio into a single company.  You sure you want to bring up the competition issue? The public outcry to AT&T – Warner tie up was huge!  Imagine the difficulty for this merger. That said I’m probably in the minority but depending on how it is done, I don’t necessarily think that a tie up of these properties is necessarily bad for artists. For one I’d like to see some real competition for Apple, YouTube and Spotify.  However in order to do this Sirius and Liberty would need to get artists (and seemingly its own radio hosts!) on board. They’d need a really compelling vision.  Nickel and diming rights holders, performers and songwriters on the MMA is absolutely counterproductive.

This is a losing strategy. Stop. Consider this an intervention. Put the pipe down.

You see the thing is Sirius has a point when it complains it is treated differently than its competitors on terrestrial radio. Terrestrial radio pays no royalties to performers.  This should be fixed. Performers and labels are allied with Sirius on this point.  Over the long term correcting this bit of unfair competition is more relevant to Sirius shareholders than trying to create single company carve outs in the proposed Music Modernization act.

Then there is the matter of what the real world looks like outside the beltway. Sirius, senators and music industry lobbying groups are not looking at the unintended consequences. As each successive special interest group adds a new carve out, support for the Music Modernization Act decreases among musicians and songwriters.  Don’t listen to inside the beltway experts. This blog has a better sense of what rank and file performers and songwriters are really thinking. The MMA seems at a tipping point with the rank and file. Something could easily tip that balance against.  Indie performers and songwriters still have options.  A single Senator could put a hold on a bill.  Already there is an ad hoc group of free market songwriters that have coalesced around Cornyn, Lee and Cruz.

It might not even be performers/songwriters that derail this bill.  This will go back to Rep Nadler in the house.  Gutting the MMA is not gonna sit well with Nadler. Especially as the pre-72 “Classics” provision was his baby. He is likely to become committeechairman in January. I’ll bet real money he drops the bill if it goes against his long held principles on Pre-1972s.

He knows what most rank and file performers know:

Performers/Songwriters don’t need the MMA. We will always have Paris.  And lawsuits. Digital services are the ones out of compliance with the law. Not rightsholders. The status quo works for rightsholders.  Further the Spotify/Sirius/XM class actions have demonstrated that there is an army of class action lawyers out there ready to take up our cause. So did we file 5 or 6 class action lawsuits? In all the excitement we lost count.

 

 

 

by theinvisiblestagehand

Guest Post @musictechpolicy: Using Forks and Knives to Eat Their Bacon: More Misdirection and Dodgeball from SiriusXM

By Chris Castle

Right on cue, SiriusXM attacks the Music Modernization Act at the 11th hour with a frothy op-ed in Billboard stringing together what I would argue are a lot of half-truths and misrepresentations in a desperate effort to fool both artists and the Congress into preserving the Sirius crony insider deal on subsidized royalty rates.

Sirius’s whingey Billboard post is a failed dezinformatsiya campaign focusing on a feigned concern for artist welfare that’s about as convincing as an ivory poacher joining PETA.  Sirius then makes mysterious assertions about how artists have given up getting a broad performance royalty for terrestrial radio which Sirius surely knows is false as negotiations continue between MusicFirst and the National Association of Broadcasters, and for a big finish adds some rhetorical bobbing and weaving that seems to boil down to kvetching about why can’t Sirius get recordings and songs for free.

Only a monopolist could pull off this kind of rhetorical thimblerig with a straight face and only a media consolidator like Sirius’s and Pandora’s owner Liberty Media could feel entitled to do so.  Sirius is getting bad advice–yet again.

The Charade of Horribles Begins Here

Sirius starts off with a blatant misdirection–somehow the monopolist satellite radio operator is oh so very concerned about how artists are paid under Sirius’s “licenses” for pre-72 works.  According to Sirius, “The Company wants to make sure that a fair share of the monies it has paid, and will pay, under these licenses gets to performers.”  Sounds good, right?

Wrong.  The statement is pure deception.  Sirius leaves important facts out of the argument: the only reason that Sirius is paying anything at all on pre-72 artists is because The Turtles and the major labels each sued Sirius in litigation that Sirius fought for years with all the wrath of big law firms trying to crush uppity artists.

The Sirius post in Billboard addresses the major label settlement of that lawsuit which itself had two components–a lump sum payment of $210 million that the labels have distributed or have committed to distributing to artists, and also a go-forward license.  (The Turtles got even more for the class action settlement–check here to see if you’re in the class.)

When Sirius refers to a “license” without also referring to the lawsuit that produced the license, it sounds like the “license” is just normal course business.  Not true–Sirius had to be dragged kicking and screaming through courts in California, Florida and New York to get to any conclusion at all.  So pretending there was a license without the lawsuits that drove Sirius to the table is quite the equivocation.

And frankly if it weren’t for The Turtles there probably would be no solution at all.  It sounds quite different to say that Sirius is so concerned about artists that they allowed themselves to be sued and are cheesed that artists still mistrust them as royalty deadbeats, right?

Not to mention–it’s unclear that there actually are any licenses to pay on in the first place if you think a license should actually have like, you know, terms and stuff.   Sirius evidently is taking extreme positions in a negotiation with the major labels that is very contentious according to the New York Times.  So the reality doesn’t exactly comport with the Sirius fantasy.   Shocking, I know.

Now Sirius wants to run to Congress at the 11th hour to use the MMA to amend a private settlement agreement because they are so concerned about payments to artists under private contracts?  Sorry, that dog won’t hunt.  If there’s a royalty dispute between artists and labels, it’s not going to get fixed by either SiriusXM or the U.S. Congress.  It will get fixed by artists, their managers and lawyers just like always.

What Sirius want to do is gin up a fake 11th hour issue to try to derail the MMA altogether.  Why?  They’re doing it partly because it looks like MMA is going to limp across the finish line in the coming weeks, but they’re doing it mostly because they think we’re all idiots.

So don’t come crying to me about how much Sirius care about artists when they would be happily stiffing artists to this day if the artists hadn’t sued them into submission.  (Safe harbor fans take note.)

My, What Big Teeth You Have 

Sirius then goes on to spread squid ink about the Congress getting out of the free market by ending the Sirius subsidized royalty rate–subsidized by the very artists who they profess to care about so much–in favor of the “willing buyer/willing seller” standard which tries to approximate a free market negotiation.   You have to love the irony in this line from the Sirius op-ed:

The willing buyer/willing seller standard functions well in competitive markets. In fact, it would work great if there were 100 labels to buy music from, but there isn’t — in an overwhelming majority of cases there are only three.

Actually–there are well over 100 labels to “buy music from”, and saying otherwise is an insult to independent labels around the country and all over the world.  But…there’s only one monopoly satellite radio carrier–SiriusXM,  which itself is a combination by takeover of Sirius’s competitor XM Radio which we remember fondly as the brainchild of one of the greats, Lee Abrams.

Sirius’s point is exceptionally ironic and some might say entirely disingenuous when you consider the company’s control over Pandora acquired as a result of corporate hard ball in its head fake merger negotiations with Pandora–which strangely enough also took the Sirius position on stiffing pre-72 artists and got sued right along side the satellite monopolist.

And of course it must be said that all of these machinations are orchestrated by media consolidator Liberty Media, the massive conglomerate whose CEO Greg Maffei “…is chairman of Sirius-XM, Pandora Media, Live Nation Entertainment (which owns Ticketmaster), Liberty TripAdvisor and Qurate Retail — the recently rebranded owner of QVC, HSN and Zulily. He’s a director of Charter Communications, the No. 2 cable operator (Liberty is the largest stockholder), and online real estate service Zillow” according to Variety.  “[Maffei] last year made $19.8 million — up 17% over 2016 and equal to 223 times the $88,786 that the average Liberty Media employee collected.”

And then there’s the persistent story about Liberty Media acquiring iHeart (see term sheet here).  So that’s all pretty cozy cronyism.

It will come as no surprise to Sirius that when you ask someone to invest in your company, that usually results in that investor getting shares of stock–like when an artist subsidizes the Sirius royalty rate.  I see no shares of Sirius on offer here, and it’s just the usual drivel that is based solely on “I don’t wanna goo goo goo.”  The free ride is over (hopefully).

IRFA Much?

As if the trip to Sirius’s alternate universe weren’t weird enough, we now have this nonsense statement that requires a trip back to messaging for the failed Internet Radio Fairness Act supported by Pandora, SiriusXM and Google Shill Listers, the Electronic Frontier Foundation:

SiriusXM is asking the simple question: “Why are we changing the rate court evidence standard for musical compositions in this legislation?” So, artists have agreed that they do not want to fight for terrestrial radio to pay sound recording royalties, SiriusXM has accepted that decision. But why is terrestrial radio given another break in rate court for the musical composition rights?

Let’s disabuse Sirius of the idea that artists have given up anything on the fight for artist pay for radio play.  Those negotiations are on-going and last time I looked the #irespectmusic campaign was alive and kicking.  It’s a marathon not a sprint.

I can understand that Sirius is envious that Big Radio has succeeded in administering an ass kicking to artists for a long time, but those days are ending.  Thanks to Ranking Member Jerry Nadler and his “Fair Play Fair Pay” bill, radio may soon be paying their fair share in the new Congress.  And remember–for quite some time, Sirius has not wanted broadcast radio to be royalty-paying like Sirius, instead Sirius wanted to be royalty-free like broadcast radio.  Sorry, the answer is artists have not given up anything on fairness.

The change to the rate court evidence standard for songs is hardly a break for terrestrial radio given the package of rate court relief in MMA–if anything, it allows songwriters a greater opportunity to argue for higher rates.  More rhetorical magic tricks at the thimblerig table.

Let’s be clear–Sirius is using rhetorical tricks and sleight of hand to draw artists’ attention away from the prize.  Whatever problems we may have in the family, we’re not going to take advice from them in their starched white shirts using forks and knives to eat their bacon.

by theinvisiblestagehand

Networked Propaganda- Guest Post by Stefan Herwig.

Networked Propaganda

Online activists and lobbyists are using digitally manipulated protests and misinformation to fight a copyright reform in Europe. They know what they are doing. Do Members of the European Parliament know what this is about? A guest commentary.

Translated from original German text:

http://www.faz.net/aktuell/feuilleton/debatten/von-lobbiysten-die-das-urheberrecht-bekaempfen-15773233.html

“History doesn’t repeat itself, it just writes the bill,” said luxembourgian musician Jerome Reuter in an interview once. On the occasion of the recent events surrounding the European Parliament’s narrow rejection of a copyright amendment in July, Reuter’s statement may be endorsed. As for the second time, Internet activists and companies have exerted considerable influence on European policy with a concerted information campaign, and once again it was about the fundamental attempts of enabling copyright protection on the Internet. Once again, the “end of the Internet as we know it” was conjured up, an enormous expansion of censorship on the Internet feared and the alleged influence of creative industry lobbyists on European politics criticised.

With false information against the ratification of the copyright amendment in the EU Parliament

The first time was the winter of 2012 when one hundred and fifty thousand demonstrators across Europe took to the streets, wearing Guy Fawkes masks, protesting against an international trade agreement called ACTA. They were motivated by a visualised summary of the supposedly frightening effects of the trade agreement, the Youtube video “What is ACTA?” which can still be seen today and which issued the trade agreement as a pact towards a dystopian surveillance state on the internet. It struck a chord with Internet users, the media and some politicians alike.

Only days after the ratification of ACTA had been rejected by several state parliaments and the storm of indignation had died down, did the public and the media realise that the trade agreement had only a marginal connection with law enforcement on the Internet. Rather, it was intended to ensure better international cooperation against trademark piracy. “Does anyone out there still read primary sources?” asked IT specialist lawyer Nina Diercks in her blog. She was surprised at the hysterical discussion and reporting. It also suddenly became apparent that the Youtube shock video in 2012 had not only been based on the ACTA negotiations status  of 2009, but had also interpreted them in the most negative way. The agreement that was to be decided had nothing more to do with the video. It fell victim to a propaganda trick. It became, the European Ground Zero of what we now call “Fake News”. A public reappraisal of the ACTA disinformation campaign never took place, and therefore this propaganda coup could not only be repeated in matters of consecutive trade agreements (TTIP, Ceta). Now an amendment to copyright law in the European Parliament was overturned with similar false information. History does not repeat itself, it just writes the bill.

Propaganda instead of factual facts

More than six million e-mails reached the European Parliament in the days before the vote. The rapporteur of the amendment, Axel Voss (CDU), received sixty thousand e-mails asking him not to approve the amendment. SPD member of parliament Udo Bullmann even reported death threats against various parliamentarians by e-mail. In hacker circles such a mail flood is called DDOS (Distributed Denial Of Service) attack, websites are paralyzed by a bombardment of user requests. Tim Allan, press spokesman for the Socialist Group in the European Parliament, spoke of the most extreme lobbying impact on a parliamentary legislative process since its inception.

In addition to powerful tools that activists can use to automatically send emails, Twitter messages or make free international calls to MEPs’ offices, the “Saveyourinternet.eu” page contains (as this newspaper reports on 18th, 27 August and 5 September) simplifications such as “Article 13 threatens your ability to link content” (wrong), “Article 13 threatens blog pages” (wrong) or “Article 13 threatens sharing parodies” (wrong). Concerned Internet users are incited with disinformation. There is a specific term for such strategic action: It is propaganda.

In the case of the copyright amendment, the fears of the opponents of the amendment, led by Julia Reda, the last remaining MEP of the Pirate Party, seem strangely constructed: Upload filters would prevent copyrighted content from being uploaded and shared by users who have acquired no rights to it. Reda fears that these filters would block more content than just the works to be protected and that satire or quotes would certainly be included. This would lead to a censorship of the Internet, there would be deep cuts in freedom of expression through excessive overblocking to fear.

Internet platforms to be forced to license

Anyone who reads the original text of the copyright amendment will be surprised at this apocalyptic interpretation, because the installation of upload filters is not a mandatory measure mentioned within the draft. Rather, the amendment attempts to persuade large Internet platforms, streaming sites or social media services, which primarily offer content uploaded by users, to license the content commercially by changing the liability rules. For decades, copyright law has provided for licenses for all other commercial users of protected content. In particular, major commercial platforms should pay fees for the use of music, films and texts like any other commercial licensee who uses works protected by copyright. After all, the platforms earn money from the content via advertising and data analysis. The amendment is intended to eliminate a legislative imbalance that has hitherto enabled commercial Internet platforms to make profit from the content uploaded by their users, even if neither users nor platform have acquired any rights for it.

In an unusual unanimity 73 creative industry associations, such as the associations of the music industry, musicians’ and authors’ associations, actors, collecting societies or the umbrella organisation of the German film industry, voted together for the amendment in order to eliminate the market distortion caused by the lack of liability rules. After an intensive debate and various amendments to the amendment, the Legal Affairs Committee of the European Parliament followed the argumentation at the end of May and voted with fifteen to ten in favour of the controversial Article 13. Non-profit platforms such as Wikipedia, smaller platforms, blogs or even open source and science platforms were expressly excluded from the amended liability rules, which did not prevent organisations such as Wikimedia Deutschland, the operator organisation of the German Wikipedia, from continuing to claim that their existence was threatened by the amendment.

“Censorship” is interpreted very creatively

The accusations that the amendment leads to censorship, as Sascha Lobo claimed in his “Spiegel” column or Youtube star LeFloyd claims in a clip clicked over 550,000 times, are not covered by the primary text in any way. Stylizing uploading filters to “censorship machines” (Lobo) or distorting the novella into a “censorship law” (LeFloyd) is based on a rather creative interpretation of the term “censorship”. Censorship is based on a state content definition and an absolute scope. The voluntary use of an upload filter by a platform to save licence fees and counteract copyright infringements by its users is therefor not a form of censorship. In addition, the amendment provides for possibilities for users to defend themselves against possible false blocking. Uploaders whose content would be blocked as allegedly unlawful would also be entitled to a statutory complaint procedure on the platforms, which needs to be carried out in a timely manner.

The further the reporting on the copyright amendment moves away from the primary source, the less factual and one-sided the submissions become. As with ACTA, the primary source – the actual text of the law – is largely ignored, as it also includes sensible rules on orphan works, fair participation by authors, the right of associations to sue, and access to culture and information for the disabled.

Qui bono?

What does it mean for our society if deliberate disinformation on the Internet overlaps not only politics but also the media to such an extent that democratic processes and the free formation of opinion are sabotaged?

First of all, this means that we should question the ideal of the “free flow of information”, the inherent belief of net political activists. This narrative of an unregulated network that promises us an open, intelligent, participatory society is increasingly being disenchanted since whistleblower Edward Snowden revealed in 2013 that the network’s data-centric infrastructure has a dark side that has lead us to the edge of a global surveillance society. Other initially acclaimed manifestations of radical transparency and participation also proved flawed: Wikileaks, Anonymous, swarm intelligence – all of these began idealistically, but soon revealed their deficits. Swarm intelligence turned into swarm stupidity, participation into hate speech, the free flow of information into algorithmically supported disinformation, leading to events as relevant as the potential manipulation of the last American presidential election or a Brexit referencum overshadowed by disinformation. However, this does not prevent the net activists from adhering to their ideology. In order to assert them, they make use of simplification, disinformation and manipulation, as can be seen from the example of the copyright amendment.

When apologists of a free flow of information resort to populist distortions, as has happened here, they betray their own fundamental ideals. This is called a life lie.

The syntax of the internet is detrimental to democracy

We urgently need a new Internet narrative that recognizes that access to information is only apparently free and socially useful while algorithms pre-sort our information horizon, equating popularity with relevance. The master algorithm popularity = relevance is deeply inscribed in the infrastructural DNA of the internet, steadily reprogramming our society. With the infiltration of such information services, that are targeted towards steadily confirming our opinions, serving our interests and networking us predominantly with like-minded people, we constantly lessen our societal abilities to differentiate and hold constructive discourses and heat up the growing disenchantment with politics and media. Facebook’s “Social Graph”, the semantic facebook algorithm programmed for the preferences of our content, threatens our freedom of expression more than any copyright uploadfilter in the amendment ever could. Part of this is that we have as complete an information horizon as possible, through which we can get to know different opinions and conduct discourses in order to negotiate democratic processes. It is not for nothing that the German Constitution adds to its understanding of freedom of expression the need to be able to obtain unhindered information from public sources. Our online horizon is curbed, defined by platforms which, because of their inherent hunger for data, tempt us to stay within their platforms as long and as much as possible: Just don’t switch off, just don’t click away. What we don’t like, what does not support one’s own opinion, is imperceptibly pushed into the background. The AfD voter is hardly shown any content that makes foreigners look good; instead, there is a double dose of migrant fake news. The feminist only gets to see feminist-friendly content. The shared media public that unites us all, the search for consensus, recedes and is overshadowed by an individualized information offer that constantly confirms us: “You’re correct, almost everyone else thinks the same way you do.”

The rise of populists in England, Italy, North America, Germany, Hungary and Austria is strikingly synchronized with the increasing reach of our social media platforms. Populism sets the tone. Those who use the new information channels more effectively, more consistently for their own purposes gain the power. The National Socialists knew this when they offered the radio “Volksempfänger” for 35 Reichsmark in order to extend their reach. The new right-wing populists know the same.

Their rise also shows the far-reaching failure of the agenda-setting of German and European network politics: the hope for desirable technologies and competitive future scenarios while at the same time ignoring the most pressing economic, social, media and informational problems of today. If these are ignored, the immune systems of functioning societies are weakened and democracies become vulnerable at their core. There is therefore no more important digitization problem than the syntactic reformatting of our digital information horizon by the algorithms of the major platforms.

And while the large Internet platforms are becoming more and more powerful, the side of those who produce content is bleeding out economically. As a society, we deprive content makers of their financial basis through piracy and insistence on a free culture; this applies to both culture and the media. In regulatory terms, those online corporations that are economically unchallenged at the top of the food chain are even supported by politicians. Google, Facebook, Amazon, Baidu and Tencent are the largest, most successful and most valuable companies in the world. Content brands such as the New York Times, Reuters and MTV have disappeared from the top 100 brand rankings. But politics is even subsidizing the mega-companies by tolerating tax loopholes and missing liability rules. The infrastructure eats up the content.

The European copyright amendment wants to reverse this trend. It has been temporarily stopped by Internet activists, some of whom are involuntary but always useful assistants to technology and platform companies.

On September 12, the European Parliament will once again vote on the new Copyright Directive. In the days before – now – the digital siege of MEPs could continue. The outcome of the second vote is open, as is whether there will be another disinformation attack on parliamentarians and their staff. Will this kind of propaganda determine the decision-making process in Parliament? One thing is clear: History is in the making.

Stefan Herwig runs the Internet thinktank “Mindbase” and advises politics and business on network policy issues. He is a former owner of an independent music label.

by Dr. David C Lowery