The Trichordist

Is Assistant Attorney General Antitrust Makan Delrahim songwriters’ new best friend? 

Other than Chris Castle at MusicTechPolicy no one in music business seems to have noticed that the Makan Delrahim the new DOJ antitrust chief is suggesting ending many (if not all) so-called “consent decrees.”  Consent decrees are a kind of regulatory supervision imposed by the DOJ in lieu of prosecuting firms for anti-competitive behavior.  These decrees were originally intended to be temporary. The ASCAP decree was “temporarily” put into effect in 1941.  Over the years many have evolved into  permanent regulatory structures that are likely unconstitutional (they are in effect pseudo legislation).

I have spent considerable time in the last two weeks reading Delrahim’s comments and writings on anti-competition law.  I think the odds are better than even that Delrahim will end the songwriter consent decrees.  I say this because he has long held views against the “regulatory” consent decree approach and prefers “structural remedies” to anticompetitive practices. Second Delrahim specifically cited the ASCAP consent decree as an example of “bad” anti-competition regulation and noted how much the music licensing landscape has changed.  Third, Delrahim seems to have quietly let the 100% licensing requirement for PROs die. Finally, my understanding is he could end the consent decrees with a stroke of his pen.   Odds look good, but I could be wrong.

How badly do the Consent Decrees Distort Income? 

Your average workaday songwriter is usually unaware that these consent decrees negatively impact the rates for public performance royalties (BMI and ASCAP royalties).  The royalty rates imposed by the consent decrees push down royalties across the board.  The ultimate absurdity is the resultant performance rates we songwriters receive from YouTube.

As an example, second quarter June 2017 my 40% ownership in the song “Low” earned me performance royalties of  $30.78 cents for 589,553 YouTube streams.  For a 4:36 second song that is over 5 years of music.  So if you listened to music for 5 years straight 24 hours a day on YouTube the performance royalty to all songwriters would be $76.95.  Since no one listens to music 24 hours a day this is clearly decades of music. YouTube is able to exact this usurious royalty rate, because they can simply threaten to not pay it and tie songwriters up (no pay) for years in the DOJ “consent decree” regulatory process. This is essentially what Pandora did a number of years ago.  Surprise surprise, this tends to depress the market value of songs.

What happens without the Consent Decrees?

It is not entirely predictable.  But if you look at the current rates imposed by BMI/ASCAP antitrust rate courts for digital services it is hard to imagine that they would stay this low.  The current system effectively acts as a cap on songwriter pay.  More importantly without the consent decrees BMI and ASCAP would be allowed to  offer additional services.  For instance they could offer not just performance licenses but also “streaming mechanical” licenses. Right now they can not.  While independent songwriters and publishers have had no problem getting paid their performance royalties from streaming services via BMI and ASCAP virtually every independent has had problems collecting the streaming mechanical.  (Hence the class action lawsuits.)

SESAC, the one songwriter PRO not subject to the consent decrees, is able to offer streaming mechanical licenses as well, via its subsidiary HFA.   While HFA has had its share of problems, this approach ultimately could be a much more efficient solution for digital services as well as songwriters.

Is Ending the Consent Decrees for Songwriter Organizations a Radical Proposal?

No. Nothing like the consent decrees for songwriters exist in the rest of the world. In fact the opposite is the norm. Generally songwriters are usually granted exceptions from anti-competition laws.  Many countries allow for performing rights organizations to license streaming mechanicals thus making licensing easier for digital services, songwriters and publishers alike.  Here in the US the Nashville Songwriters Association International and PROs themselves have argued for ending or at least modifying the consent decrees in the manner described.

From the US Copyright Office Music Licensing Report (2015):

And in 2014 comment to the Copyright Office Spotify itself entertained the idea of PROs issuing mechanical licenses:

Ending the Consent Decrees Would be Pro-competitive.

A rational phase out of the consent decrees would  be pro-competitive. There are already four PROs in the US.  The only thing that has kept them from competing more effectively on price and services, is that every time the two PROs not under consent decrees (SESAC and GMR)  try to innovate licenses or get higher rates for songwriters they are invariably threatened with consent decrees. Think about it: every time there is a pro-competitive variation in prices or licenses the threat of consent decrees tamps down competition and aligns prices and license terms.  The consent decrees are objectively perverse incentives that limit competition. Also it should be kept in mind that, major music publishers and large independents already license both performance rights and mechanical royalty rights.  There is no lack of competition on the songwriter/rights holder side. Other than a bogus “pre-crime” rationale there is no need for consent decrees to ensure competition.

PROs are Efficient Because they License Repertoires not Individual Songs

Often missed in the debate over mechanical streaming rights and PROS, is that fundamentally performing rights organizations have an efficiency built in. They provide music users and digital services with access to every song in a songwriter’s catalogue.  Old songs, brand new songs and the songs yet to be written.  There is not a need for a service to update their licenses for each new song.  For instance a BMI licenses give a service access to all BMI writers songs (and fractional songs) past, present and future.

What Does this Have to do with the Music Modernization Act?

The main rationale of the MMA is that songwriters “trade” with digital services some future (possible but not guaranteed) improvements in how performance rights are calculated, and in exchange songwriters grant  immunity from lawsuits to streaming services. Now,if the consent decrees go away, there is no “trade” here.  Songwriters get nothing. Publishers do however still get access to the inevitable “blackbox” created in the time between passage of the law and launch of the collective to distribute mechanicals.  Sadly, this I suspect is a motivation for some publishers.

Second the MMA has been “shopped” by publishing and songwriter elites under what now appears to be a false pretense: that the consent decrees will never go away.  This is probably not true.  It strikes me that songwriter organizations, publishers and PROs failed to do their homework on Delrahim.  If you eliminate the consent decrees why would ASCAP or BMI need the MMA?  Especially if you consider that there is nothing stopping the MMA’s proposed  “Mechanical Licensing Collective” could just as easily issue performance licenses.  That is the proposed mechanical licensing collective could swallow ASCAP and BMI.  Also what’s the point in SESAC having the Harry Fox Agency?  How does that compete with the new quango created by the MMA?  Beware of any claim from the PROs that on balance the consent decrees help songwriters.  They do not. They are a net negative and the fiduciary responsibility of the PROs require them to communicate this accurately to their songwriters. (And yes we will be watching.)

Third the MMA proposes a vast new bureaucracy that would less efficiently (song by song not by repertoires) duplicate what ASCAP and BMI already do.  How is it possibly more efficient to do anything twice and the second time less efficiently?  One set of licenses for the performance rights by repertoire and then song by song licenses for the mechanical licenses.  I’d love to see an economist look at the MMA/consent decree interaction.  Perhaps we can borrow one of Delrahim’s economists? After all he has explicitly stated that economic analyses will influence his consent decree decisions going forward.

Simplify the Music Modernization Act

With this in mind I suggest that the way forward is to simplify the Music Modernization Act.  The most contentious, expensive  (and longest) part of the Music Modernization Act is the proposed Mechanical Licensing Collective and associated database.  I have long contended you can’t create an accurate ownership database of all songs. A list of “all songs” is a dynamic list with thousands of songs being added every day.  Publishing catalogue ownership also often changes hands. However it is possible to make a list of “exceptions.”

Instead of a list of “everything” the logical approach is to make a much much smaller list of songwriters/publishers that wish to withhold streaming mechanicals from the PROs.   The Music Modernization Act could be simplified to this:

1.  Explicitly end the consent decrees for publishers
2. Allow PROs to issue mechanical licenses
3. If a songwriter or publisher does not wish the PRO to administer the mechanical right they must explicitly make this known by joining the “opt out” list.  This would be machine readable. It would include information on how to license the song.
4. If a songwriter or publisher fails to join the opt out list, the digital services and music users may then fall back on the PRO license to pay mechanicals. This guarantees responsible services immunity from lawsuits.

You can see my original compromise proposal here:

https://thetrichordist.com/2017/06/27/a-compromise-proposal-to-fix-streaming-royaltieslicensing-and-notification/

Yesterday I published an article detailing the Human Rights complaint against Canada by David Kaye a so-called “UN Rapporteur for Freedom of expression.”  While citizens of authoritarian governments worldwide are subject to restraints on freedom of expression, Professor David Kaye decided the four alarm fire for freedom of expression is a rather modest proposal to block pirate websites under Canadian national law.  This is similar to laws that are in place in at least 20 other (democratic) countries.

The important of my article is that I noticed that the UN Human Rights Special Rapporteur had engaged in a deceptive sleight of hand.  He claimed his analysis was based on existing international, national, and regional law.  But upon drilling down we noticed he was actually referencing aspirational agreements by mostly technology company funded astroturf groups.  Of particular concern was his reliance on The Right To Share and The Manila principles.  These two documents do not hold the force of law and the Rapporteurs reliance on these documents for his complaint against Canada is dishonest, deceptive and possibly illegal.  These documents are the international treaty equivalents of “Fake News.” Hence “bogus.”

Read more here: https://thetrichordist.com/2018/04/01/gone-phishing-un-official-uses-lookalike-website-in-attempt-to-block-anti-piracy-law/

Today while perusing comments I discovered that the (federally funded) Canadian Research Chair Michael Geist, may be in on the whole deception.  Look at this curious comment in Geist’s submission to the CRTC on the website blocking proposal:

Spooky. It’s almost as if Geist knew the UN Special Rapporteur was gonna file a complaint.  A complaint that also happens to cite aspirational non-legally binding documents that appear to be co-authored by Geist.

Academic freedom is one thing. Participating in a conspiracy to mislead the CRTC is another. I suggest that those investigating this manner,  use freedom of information laws to look for communications between Geist and the the UN Rapporteur.

David Kaye’s Fancy stationery.

David Kaye is a professor of law at University of California Irvine. He is also some sort of low grade UN Human rights official. He has fancy stationery with an address in Switzerland that says so. Isn’t that precious.

This UN title and fancy stationery apparently allows him to treat our closest ally and neighbor to north like they have some kind of hick country bumpkin government. You see, he sent a letter (on behalf of the UN?) which accuses Canada (of all countries) violating human rights by simply considering an anti-piracy law!  Of course our fearless low grade UN official has probably sent many many sternly worded letters to real authoritarians as well. I just can’t seem to find them.
The law in question is a rather non-controversial law. The proposed statute is very similar to those that have  been successfully applied in at least half a dozen vibrant European democracies.  Did Kaye send Germany or UK similar letters? No. I wonder why that is? MaybeBecause those countries copyright authorities aren’t gonna put up with nonsense like this from freelancing low grade UN official that is 4 years into a 3 year term?  Looks like Kaye just thought he could get away with it with Canada.  Get away with it?  Yes.  All dishonesty explicitly intended. Essentially the letter by David Kaye is just a phishing scam that relies on the Canadian Government mistaking a bootleg UN lookalike website for the real thing. Because Kaye thinks Canada is stupid? Because Kaye’s buddy, Micheal Geist, Canada’s great petty copyright “expert” put him up to it?  It should be noted that Geist has demonstrated a penchant for ghost writing. But I digress.

Follow along closely. This story will blow your mind.

The letter starts out nice.

He notes that he will apply an analysis based on international, national and regional law.  As well as jurisprudence (judicial opinions). Sounds great! Can’t wait!

Mr Kaye then references UN article 19 which concerns freedom of expression. This is the covenant with which Canada must comply. But I’m not familiar with this second part. Hmm.  Oh! I see,  if you follow the  footnote that second part is simply another paper by Mr Kayes.  So that would be his opinion. It’s not actually in article 19. But that’s maybe okay. Maybe Canada should comply because Mr Kaye does have UN stationery! Even though at the outset he declared his analysis was gonna stick to law and jurisprudence.  Seems interesting, let’s give him the benefit of the doubt.  So please Professor Kaye, tell us more!

Mr Kaye returns to quoting from the actual UN document (article 19) since this is the rationale for his intervention into Canadian copyright policy.  But  three paragraphs later he wanders away from article 19 again.

Manila Principles?  Oh, so this must be a related international treaty to which Canada is a signatory.  Hmm can’t find Canada listed as a signatory.  And It doesn’t seem to have anything to do with the UN. As far as I can tell the Philippines isn’t even a signatory?  NO COUNTRY IS A SIGNATORY! This is just a document written by the Google funded astroturf group EFF.  A significant portion of the mostly obscure signatories have ties to Open Society, Google, are just fake or no longer in existence (see screenshot below).

“Cosby Sweater EU Bahn Mi.” The Heliopolis Institute is one of the signatories to the Manila Principles. This is their “about” page. And yes that is a stock photo!

But again I digress. Where were we…

The point is, this analysis  is no longer based on international, national, or regional law.  Nor is it based on actual jurisprudence.  So what is this?

Okay, phew! Now we are back to Article 19. Look at the footnote! Yay!  For a minute there I thought David Kaye was committing an academic sleight of hand.  This is the real UN document.

Wow.  So it really looks like Canada’s proposed law violates Article 19, specifically The Right to Share Principle 9.  And what does principle 9 of Article 19, The Right To Share say:

Website blocking on grounds of copyright protection should be considered a disproportionate restriction on freedom of expression because of associated risks of over-blocking and the general lack of effectiveness of this measure.

Wow Canada really screwed up here. They can’t enact these restriction on piracy websites or they violate the UN covenant.

JUST KIDDING!

David Kaye must think all Canadians are idiots. That last reference (Article 19 The Right to Share) is to a website that from start-to -finish is designed to make you think it has something to do with the UN article 19, but is completely unrelated. In this sense it is a fraud.  A UN article 19 lookalike. Look at the document.  You could be forgiven if you thought this was a real subsection of the UN article 19.  But fortunately the “Right to Share” nor it’s principles are endorsed by the UN.   Because basically we artists would have no copyright protections, and that would actually for real violate UN Human Rights covenants.

So how did we get here?  This doesn’t seem to be an accident.  Someone went to a lot of trouble to create the fake Manila Principles treaty and the Right to Share document on the Article 19 dot org website.

It is ridiculous to think a UN Human Rights Rapporteur and an esteemed UC Professor doesn’t realize that this website and document is likely to be confused with a real UN document.  And why shouldn’t they be confused? He is a UN official (however low grade) citing a document that has an URL, title and design that would make it seem like it is a UN document. Of course your average person is likely to be confused by this.

This kind of deception has  got to be illegal. If not in the US. Then in Canada where the document is filed. For he tells an untruth when he says he’s sticking to international, national and regional law. I would argue he has attempted to “phish” the Canadian government with misleading documents.  If this were anything else it would be wire/mail fraud. I suggest at the very least the Canadian government make a complaint to the UN Human Rights Council, his academic institution (UC Irvine and throw in the California State Bar as well (ethics).

Or better yet, just call him to testify in Canada. Ask him about the misleading little footnote to the fake article 19. Also FOIA his UCI communications with Geist. See if there is anything there. That would be interesting.

Michael Geist being awarded The Order of Ontario for “Most Petty Copyright Expert” after he petulantly had his university library cancel subscription to a publication with which he took offense. 
Photo via Official twitter account of the Ontario Ministry of Citizenship & Immigration focused on Citizenship.

Closer to home/Ottawa.  Canada’s “Most Petty Copyright Expert” Michael Geist appears to be in on the whole racket.  He appears to be co-author of the fake Article 19 The Right to Share which is the at the heart of the fraud.  And he seems to be lending the disgraceful David Kaye support on this issue (twitter and elsewhere).

Nice to see US and Canada working together again, even if the main result is negative for both country’s artists and creators.  Whatever is good for Google and Silicon Valley must be good for the rest of us. Right?

++++++++++++++++++++++++++++++++++++++++++++++

(Editor note: standard footnote formatting rules give away the fact that someone somewhere wanted the public to be confused by the title. Someone choose to list  Article 19 the organization, as the Author and didn’t italicize. This is permissible.  But this ends up giving it the same formatting it would have if it were law or treaty and The Right To Share a article or subsection of the treaty.)

Bono, you know the singer in U2.  Also a venture capitalist.

Anyway this is a joke that has been floating around the music business since probably the early 1990s.   There are a dozens of versions of it.  I have no idea who originally came up with the joke. But here’s the version told to me by the late Don Smith:

An old 60’s hippy bass player is performing his usual Sunday afternoon gig at the local hippy coffee house outside of Santa Rosa in Mendocino County.  They are right in the middle of “Going Up Country”  in the style of Canned Heat when he collapses from a heart attack and dies.  The bass player having lived a good life wakes up at Heaven’s gate and is greeted by St. Peter.  As St. Peter is giving him a sort of orientation walk around, the bass player notices that there is a band playing somewhere.  The bass player interrupts St Peter and asks “is that a live band playing.”   St. Peter says “I was about to get to that”  St Peter motions the bass player to follow him. He leads him down a narrow gap between two clouds into what is apparently Heaven’s night club.   On stage he sees Jimmy Hendrix plugging in his guitar and Keith Moon tuning up a drumset.  St. Peter motions the bass player towards the bass rig.  The bass player can hardly believe his eyes. He gets onstage picks up what appears to be his 1972 P-bass and plugs it into his mint condition Acoustic 360A with a reverse 18″ cab.   Hendrix launches into Purple Haze and the bass player, now ecstatic, joins in.  After a few more songs George Harrison comes up on stage and they play “My Sweet Lord” and “While My Guitar Gently Weeps.”  Janis Joplin jumps up and for a final song  they all break into a blistering rendition of “Piece of my Heart.”  The band is about to leave, when Bono suddenly rushes up on stage  Even though the musicians were all clearly about to take a break he cajoles everyone into staying.  Bono and the band proceed to limp their way through “Beautiful Day” and “Vertigo,”  Hendrix and Moon seem to have never even heard the songs and the whole thing ends with an embarassing smattering of polite applause.   The bass player while casing his bass and putting his cords away notices St. Peter standing next to him.  “What did you think?” St. Peter asks.  The bass player says “It was great…but”  pauses and after looking carefully around turns back to St Peter,  “What’s up with Bono?  I didn’t even know he was dead?”  St. Peter laughs and says “That’s not Bono!  That’s God.  He just thinks he’s Bono.”

Here’s some screenshots that seem to tell a little story about Taylor Swift, Bono, Spotify and extremely powerful Wall Street private equity firms.

2014

2014

2014

2015

2016

Jan 2018

Feb 2018

Feb 2018

Spotify is stalking you (advertising campaign image by Spotify)

The public has woken up to the fact that Facebook is a spying and privacy violating machine.   Governments in half a dozen countries have announced some sort of investigation into the company.  What most people don’t realize is that Facebook is not unique.  Virtually every free digital app is spying on you and sharing that data with 3rd parties.  This includes the music streaming service Spotify.

However Spotify is unique.  More than most other services Spotify and the Facebook platform are heavily integrated. When you sign up for Spotify from a web browser, you are encouraged to sign up using your Facebook login so they can associate your account with your profile.  To illustrate just how integrated the companies are when I was offered a free premium account by Spotify (a sort of peace offering) somehow linking it to my email address reactivated my deleted Facebook account! I am not kidding.

And over the years many other people have complained about the tight integration between Facebook and Spotify. Particularly bothersome to many folks is that they often ended up sharing playlists, or songs they didn’t really intend to share.

There are probably two reasons for this.  The first is probably relatively harmless.  Major Facebook and Spotify shareholders overlap. Most notable are funds connected to Sean Parker (of Napster fame) and U2’s Bono (Elevation Partners and TPG). But less famous names and funds share investments in the company.

Screenshot from Facebook Open Music Graph Developers Page. 

But the more important reason they are so tightly integrated is to harvest data.  Folks who think Spotify is just a music platform are mistaken.  The overwhelming number of streams on Spotify are on the ad supported tier.  It is here that Spotify trades OUR songs for YOUR Data. And much of this data goes straight into the Facebook data mining machine. As far as I can tell this has been going since Spotify first launched in the US.

Most people are sophisticated enough to understand the difference between a public and private post.  We live in a relatively free country where political dissent is tolerated; religious persecution is largely unknown and people do not need to hide their sexual preferences from  the police.  But in some countries if certain private information becomes public you could die.

That is why I don’t understand why Spotify for Brands  would brag about data harvesting of this kind:

Paging Chairman Xi, you’ve got some “cultists.” 

Or perhaps worse? What about countries that punish/criminalize anything but super normative heterosexuality?

(From advertising campaign image by Spotify)

Who you Gonna Call? Law Enforcement and Artists’ Rights

Amanda Williams, Songwriter, Songwriter Advocate
Detective Superintendent Peter Ratcliffe, Police IP Crime Unit City of London Police
Carlos Linares, VP Anti-Piracy Legal Affairs RIAA
Ellen Seidler, Filmmaker, Writer, Producer, Digital Citizens Alliance
Kevin Phelan,  Senior Supervisory Agent, FBI Palo Alto CA

1:15- 2:15 PM

Chris Castle of MusicTech Policy once remarked, “If someone is stealing your musical gear, it’s clear you call the police. If someone is stealing your musical catalogue, who do you call?” Most of the time the answer is “call a lawyer and file a federal copyright infringement lawsuit.” However, this presents several problems. An artist would have to track down the culprit, not an easy task when operators of website may be located in foreign countries or ownership masked by shell registrations. Second, a plaintiff must have hundreds of thousands of dollars to proceed in federal court. This is not a practical solution for most independent songwriters and musicians.

There are however other actions that artists may initiate. The federal government has several units that deal with criminal intellectual property theft that can often help. In addition, it’s entirely possible that these websites may be committing other crimes such as fraud, tax evasion and/or money laundering. Other federal units may be activated to investigate these suspicions. Similarly, these crimes may also violate state laws. Many states also have their own copyright laws, rights of publicity, false advertising and consumer protection statutes that may come into play. Some of the most surprising and effective anti-piracy law enforcement operations in recent years have come from the City of London’s Police Intellectual Property Crime Unit. Is it possible an artist in the US could one day call the local police?

The UGA Terry College Music Business Certificate Program hosted an Artists’ Rights Symposium Jan 22-23 2018.  Over 250 people attended the symposium. Above is the video of the Grassroots Artists Advocacy Panel.

An Overview of the State of Grassroots Artists’ Rights Advocacy

Mala Sharma, Georgia Music Partners
Blake Morgan, Performer, #IRespectMusic
Miranda Mullholland, Performer, Advocate, Roaring Girl Records
Doria Roberts, Performer, Activist
Rick Carnes, Songwriter, Songwriters Guild
2:30-3:30 PM

In addition to the organization of the grass roots advocacy groups, the panelists discuss; messaging; effective use of social media; consumer education; constructively interacting with federal, state and local government representatives; lobbying for legislation; and discouraging companies from doing business with royalty deadbeats.  Panelists also discuss lessons learned from these successful campaigns and map them onto current problems.