Is American Law Institute President David F Levi the New Artist Enemy #1?

 


Move over Chris Harrison, looks like The American Law Institute President David F Levi may be 2018’s Artist Enemy #1. Don’t fret Chris, it’s only January you still have 11 months to make a comeback. (Photo hosted and served from Duke University Law School website.) 

Artist Enemy #1 title is only given when an individual or group is engaged in activity that will do irreparable harm to the rights of artists. In this case it is David F Levi President of the American Law Institute that has captured my attention.  Under the leadership of David F Levi the American Law Institute is engaged in a dubious “restatement”project to create what the US Register of Copyrights calls a “pseudo version of the copyright act.”

In all seriousness, this is very hard for me to write. David F Levi is a widely regarded former federal jurist. He is also the highly respected dean of the Duke University School of Law. It saddens me to have to point out he bears ultimate responsibility for what appears to be a full blown academic scandal at the American Law Institute. A scandal that may forever damage the ALI (and Levi’s) reputation for impartiality.

My father was a career NCO in the US Air Force.  I grew up on military bases all over the world. If there is one thing that those experiences (and my father) taught me is that real leadership demands one accept responsibility for failures that occur on one’s watch. In my experience most Americans also feel the same. For intuitively it makes sense: You don’t get the perks of leadership without accepting the responsibilities and downsides as well. I’ll admit in my own life I have often failed to live up to the demands of this credo. It is extraordinarily difficult. That’s why I hate to point a finger. But it is also because of my own experience with my own failures I feel like I have some insight here.  And I’m not optimistic that the ALI’s Levi will show true leadership and accept the responsibility that comes with leadership. Why? I see all the telltale signs of the covering up a problem rather than fully addressing it.  At the time of publication, the only action from ALI  is a vague statement about reorganization of the project at the heart of the scandal.  Further as far as I can tell, it was only posted on a page buried deep in ALI website. This is not how anyone with half a brain (or heart) does damage control.  This is the kind of thing that otherwise good people do because they think no one has really noticed yet, and maybe, just maybe, they can avoid the difficult process of taking responsibility.

The Trichordist has convened a group of artists for “The Honest Restatement of American Law Institute Principles Project.”  Above are some suggested amendments to current principles.

So what is the scandal?

If you really want to understand just how crazy this scandal is, you should read one or more of the following:

US Copyright Office original objection to project: http://c.ymcdn.com/sites/www.csusa.org/resource/resmgr/AM16/Course_Materials_/USCO_Letter_–_ALI_Prelimina.pdf

Above the Lawhttps://abovethelaw.com/2018/01/alis-great-copyright-caper-has-the-american-law-institute-been-hijacked-by-big-tech/

Billboard Magazine: https://www.billboard.com/articles/business/8094962/register-copyrights-karyn-temple-claggett-letter-american-law-institute

David Newhoffhttp://illusionofmore.com/ideologues-seek-revision-of-copyright-law-without-legislative-process/

Jane C. Ginsburg Columbia University Law School: http://www.law.columbia.edu/sites/default/files/microsites/kernochan/Jane-Ginsburg-Comment-on-ALI-Restatement.pdf

NYC Bar:  http://www.nycbar.org/member-and-career-services/committees/reports-listing/reports/detail/recommendation-to-reject-the-american-law-institutes-proposal-to-create-a-restatement-of-law-copyright

Music Tech Policy :https://musictechpolicy.com/2018/01/18/shocker-is-spotify-lawyer-leading-scholarly-project-to-create-fake-treatise/

These documents go back almost 3 years.  Many of these complaints were made directly to the ALI.  It is unfathomable that Levi would not be aware of these complaints. This is why I feel Levi  bears full responsibility for this dubious project. And it is a dubious project, with more than a whiff of corruption surrounding it.

If you don’t want to read these documents, I’ll do my best to explain it here. However I am not a lawyer.

The scandal concerns the ALI’s so-called Restatement of Copyright Project. This project has a multitude of problems.  But basically early reports show it is an attempt to stand up a tech industry friendly extra-legal alternative to the copyright act. Pardon the use of this term, but frankly, it is an exercise in “fake lawmaking.”

Further it is a bizarre and puzzling project for the staid ALI, as it goes against their very principles.  It attempts to “restate” and reinterpret statutory law something it has generally sought to avoid. Why? Well as most law students know this is something only the congress and (sometimes) the courts have power to do. It goes against ALI principles because instead of clarifying matters the ALI seems to want to muddy the waters by presenting a competing version of the copyright act.

Yes, in the past the ALI has issued “Restatements” but these genuinely clarify matters.  As a result Judges routinely consult these restatements for help. (Many judges are political appointees and not really…er…uh.. well versed in the law). But there is a crucial difference between those “restatements” and this one. Until now, the restatements have concerned non-statutory “common law,” conflicting state laws, international law, treaties etc. My understanding is that past projects were well intentioned attempts to clarify “effective” existing law from a number of widely dispersed sources.  Not law contained in a single statute with a couple of minor amendments.  The ALI has never before offered what is essentially alternate reality legal fiction that (according to early reports) will contradict existing law and federal jurisprudence.

Okay.  That’s the gist of the scandal.  Well except for the next part…

The biggest (and completely avoidable) problem is that the restatement project leader is Christopher J. Sprigman. This is where Levi has really failed as a leader of the ALI.  One would be hard pressed to find a less impartial choice to mediate between big tech and artists.  Sprigman is Spotify’s lawyer in the Bluewater v Spotify case. Does Levi not know this?  But hang on cause it gets worse.  In documents filed with the court in the Bluewater case Sprigman argues that Spotify is not copying and distributing songs and thus doesn’t owe a mechanical royalty.  This is far outside the mainstream of legal thought, and is at odds with the facts. Sprigman is either completely unaware of the nature of the services Spotify provides or he is going beyond advocating for his client and purposely misleading the court. Either way this is troubling.

Let’s look at the undisputed facts:

1) Until late 2014 Spotify operated using P2P technology which necessitates the copying and distributing of millions of music files.  Files downloaded onto users computers were cached and subsequently  “streamed” to other devices and user accounts. They admit it. They were proud of it as it saved them server costs.

https://techcrunch.com/2014/04/17/spotify-removes-peer-to-peer-technology-from-its-desktop-client/

https://www.npr.org/sections/therecord/2011/11/09/141594727/how-spotify-works-pay-the-majors-use-p2p-technology

2)  Spotify allows users to make playlists available offline.  This necessitates distributing and copying works. This sort of use is no different than the “limited download” described in federal copyright regulations and according to same regulations require a mechanical licenses. Spotify calls it a download on their own website seemingly contradicting Sprigman statements to the court suggesting Spotify doesn’t allow users to download music.

https://support.spotify.com/us/using_spotify/the_basics/listen-offline/

3) The federal government sets a rate for streaming mechanical royalties via the Copyright Royalty Board.  A Jan 26th 2018 ruling just set a new rate for this streaming mechanical royalty. Why on earth would the Copyright Royalty Board set a royalty for something that need not be paid according to Sprigman? Clearly he’s outside the mainstream.

https://www.tennessean.com/story/money/2018/01/27/songwriters-score-massive-win-rate-dispute-streaming-companies/1072166001/

4) Spotify has been paying streaming mechanicals to songwriters and publishers since they entered the US market.

https://artists.spotify.com/blog/spotify-songwriters-and-publishers-administration-system

5) Spotify and its agents have sent songwriters (like myself) thousands if not millions of “notices of intent” to obtain a compulsory mechanical licenses for use of songs on its service.  Was the intention expressed in these notices (sent through the US mail) not accurate? Is Sprigman not aware of this practice?

http://www.hypebot.com/hypebot/2016/03/harry-fox-agency-scrambles-to-fix-spotify-streaming-licencing-mess.html

6) Spotify has filed millions of “address unknown” notices of intent to obtain a compulsory mechanical license to the US Copyright office.   Why would it make such statements to a federal agency if it did not believe it needed a compulsory mechanical  license? Again is Sprigman not aware of this practice?

https://musictech.solutions/2017/04/27/five-things-congress-can-do-to-stop-tens-of-millions-of-address-unknown-nois/

Finally Sprigman started the ALI project by declaring:

“Yet, by most accounts, copyright law is in a bad state, and has been for some time now. Among the public at large, and especially among young people, the law is widely disliked”

WTF? It’s a statute.  If it’s so unpopular then get Congress to change the law. No one voted for the ALI.  The ALI has no power to make law.  The current statute is what is.  It is an limited exclusive right given to individuals. We don’t do twitter polls on individual rights. It is also quite confounding to have to remind the ALI that individual rights are always unpopular with the public and “young people.” At least until their rights are violated. Then they are enormously popular.  Most of the public and especially “young people” would prefer beer be free. At least until it’s their beer that gets given away for free. Does “unpopularity” of rights of individuals in certain quarters seem like a starting point from which an honest legal scholar would start?  No it doesn’t and David F Levi (if he’s paying attention) should know this.  Read the letter Sprigman wrote to the ALI to launch the project.  It is appalling. In it he admits to launching this project because he thinks congress is not going to make the changes he and his cronies think should be made to copyright law.  He freely admits it is an end run around the legislative process and courts.  I quote from the letter:

“In sum, Congress is unlikely to proceed any time soon with copyright reform. As a consequence, it falls to the federal courts to attempt to improve the fit between a mid-20th century copyright law and 21st century digital technologies. Fortunately, the current copyright law is open-texted enough that its coherence and effectiveness could be advanced significantly via common law development. Unfortunately, however, aside from a few notable exceptions, there is a relatively low level of interest or expertise in copyright law among federal judges.

In light of these facts, I think it’s plain that a Restatement of Copyright Law – at least if undertaken with the object of assisting the courts and mindful always of copyright’s constitutional mandate to promote progress – could be enormously influential, both in shaping the law that we have, and, perhaps, the reformed law that in the long term we will almost certainly need.”

This is not a guy that intends to faithfully interpret the statute and recent jurisprudence. No way.

Sprigman and Google. 

Let’s go back to Sprigman’s statement about the law being unpopular with certain demographics.   If you replace the phrase “public and young people” with “internet companies” I think we get much closer to the truth. IMHO Sprigman wants to make copyright law more friendly for his benefactors. Hear me out.

Sprigman appears in the Google Academics Inc database. According to this report he received money from Google to write/cowrite five  papers that (lo and behold) mostly supported positions favorable to Google. It is not illegal for him (or anyone else) to take money from Google  (or any other company) for academic work. It should be disclosed. But it’s not illegal. The problem is that he appears to have taken some of that funding after he started this project. As far as I can tell the ALI does not disclose this important fact anywhere. I highly doubt they disclosed this to their membership.  The only reason anyone knows about this is the Above The Law article referenced above.

It’s worth noting that the dude is seriously defensive about Google funding. Like numbered-tweet-storm defensive about this fact.  When I mentioned the Google connection in a tweet last week he launched a numbered-tweet-storm at me, which ended hilariously with him demanding his money back on a show I performed in 1987.  Something I did in 2018 requires me to reverse a transaction in 1987 that somehow retroactively became unsatisfactory?  He’s a time traveller. His DJ name should be DJ Ex Post Facto. We should jam.  We’ll get that guy who rapped the middle part of the big Soup Dragons hit.

What are the odds he performs the same sort of time traveling while restating/remixing copyright?

I would assume Sprigman is particularly sensitive about the Google thing because it makes him appear less than impartial. But this is a problem of his own making.  I’m not impartial on copyright. And I don’t pretend to be. I also don’t try to anoint myself as the final arbiter on copyright in the US. Sprigman seems to lack basic common sense, that little voice that says “don’t pretend to be impartial on issue when you are not.” Most lawyers have enough common sense to not try to lead an ALI “restatement” of copyright when there is even a hint of impropriety.  For it tends to ruin careers. This lack of common sense alone should disqualify him to lead this project.

RIP American Law Institute 1923-2018

But what really saddens me is that I have to report to artists once again: another prestigious American institution appears to have taken the side of powerful Silicon Valley monopolists against artists. The fix is in.  The current oligarchy at ALI, a clique of lawyers from a handful of elite academic institutions seem to be living in a bubble in which sycophants from those same academic institutions, sing their praises assuring the they are building a gleaming city on a hill, a beacon of hope and fairness for all. What a joke. In fact they are helping prop up a powerful and decadent group of crony capitalists, the likes of which we have not seen since the robber barons. This sounds like a joke, but it’s an open question whether our republic will even survive the predations of these powerful billionaires as many are openly hostile to the notion of democracy and the nation state. 

This is the side the ALI willingly chose to take. Shameful.

The question now: Are there any decent and conscientious men or women in positions of power in business, government or academia that will ever stand up for the little guy again?  Who in position of power or authority has the guts to argue for the middle class songwriter, performer, photographer, filmmaker or author against the billionaires of Silicon Valley and their legal enablers? Does anyone even have the minimal amount of backbone required to go against the grain and oppose their old law school chums. Isn’t there at least one decent lawyer out there tired of the current climate of law douchebaggery? Legal scholarship which seems to exist only to celebrate the successful exploiting of loopholes and generally helping the parasitic class get away with crap?

Where is our Joseph Welch?  The Defense Department lawyer who finally stood up to the bully McCarthy?  Where is that lawyer who will finally ask on behalf of artists “Have you no sense of decency sir, at long last? Have you left no sense of decency?”

Maybe David F Levi is simply unaware of the scandal that has occurred on his watch and maybe he will turn out to be our Joseph Welch.  But I’m not holding my breath.

************************************************

FURTHER NOTES ON CHRISTOPHER J SPRIGMAN

*************************************************

To support my contention that Sprigman came to this study with an agenda and thus should not be leading this project, I’ve provided a further reading list:

Professor Sprigman has a long history of attacking creators and copyright in general before he represented Spotify.  His academic writings can be found on SSRN author profile: https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=370802 At least five papers that are known were co-funded by Google http://www.googletransparencyproject.org/articles/google-academics-inc

–Wrote “The Mouse the Ate the Public Domain” in 2002 supporting Lessig’s Eldred v. Ashcroft attack on the Copyright Term Extension Act http://supreme.findlaw.com/legal-commentary/the-mouse-that-ate-the-public-domain.html

–Lessig became his mentor and supporter (Sprigman had 2003 fellowship at Stanford’s Google-funded Center for Internet and Society).

–Stanford fellowship produced 2004 article “(Re)Formalizing Copyright” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=578502 published by Stanford advocating a requirement of registration (which is core concept of Sensenbrenner HR 3350 database bill).  This is also a core Lessig concept that he pushed during orphan works bills of 2006-2008 period (see “Little Orphan Artworks” http://www.nytimes.com/2008/05/20/opinion/20lessig.html?_r=1&oref=slogin)

–co-author with Lessig and Creative Commons of Creative Commons filing to “save” “Jewish cultural music” in 2005 orphan works consultation by Copyright Office https://www.copyright.gov/orphan/comments/reply/OWR0114-STM-CreativeCommons.pdf

—was lead counsel with Lessig in Kahle v. Ashcroft (later v. Gonzales) in 2006 https://en.wikisource.org/wiki/Kahle_v._Gonzales which unsuccessfully  challenged the “opt out” provisions of eliminating the renewal requirement under the 1992 Copyright Renewal Act.

–Wrote “The 99 Cent Question” in 2006 attacking iTunes pricing https://papers.ssrn.com/sol3/papers.cfm?abstract_id=952019

–Member of Pamela Samuelson’s “Copyright Principles” project and co-authored its paper that also advocated registration (see Sec. IIIA of paper, “Reinvigorating Copyright Registration”)

http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1562&context=facpubs

There were no creator members of the Copyright Principles Project, and Samuelson was questioned sharply about this by the House Judiciary Committee, which appears to have lead to Samuelson founding the “Authors Alliance” https://www.publishersweekly.com/pw/by-topic/industry-news/publisher-news/article/62270-founder-of-just-launched-authors-alliance-talks-to-pw.html

–Founder of “IP without IP” movement (and co-author of “The Knockoff Economy: How Imitation Sparks Innovation” (2012) https://www.amazon.com/Knockoff-Economy-Imitation-Sparks-Innovation/dp/0195399781/ref=sr_1_1?ie=UTF8&qid=1504971824&sr=8-1&keywords=sprigman

See also pro-piracy article Let Them Eat Fake Cake: The Rational Weakness of China’s Anti-Counterfeiting Policy: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2412037

–Represented sculptor against Katy Perry in “Left Shark” case http://politicalsculptor.blogspot.com/2015/02/politicalsculptor-retains-legal.html

–Frequently writes on pro-piracy topics with Professor Kal Raustiala of the UCLA School of Law https://www.law.ucla.edu/faculty/faculty-profiles/kal-raustiala/

–Has written five academic papers funded by Google on copyright issues, including three against moral rights attribution.  In addition, he filed comments in Copyright Office moral rights study that incorporated concepts in Google-funded papers and cited to one of them without disclosing Google’s funding in his Copyright Office filing. (https://www.regulations.gov/document?D=COLC-2017-0003-0019)

Valuing Publication And Attribution In Intellectual Property: Sprigman, Christopher, Christopher Buccafusco, and Zachary Burns. “Valuing Publication and Attribution in Intellectual Property.” (2012)

What’s A Name Worth?: Experimental Tests Of The Value Of Attribution In Intellectual Property:  Sprigman, Christopher Jon, Christopher Buccafusco, and Zachary C. Burns. “What’s a name worth?: Experimental tests of the value of attribution in Intellectual Property.” (2013)

What’s In, And What’S Out: How IP’s Boundary Rules Shape Innovation:  McKenna, Mark P., and Christopher Jon Sprigman. “What’s In, and What’s Out: How IP’s Boundary Rules Shape Innovation.” (2016)

Experimental Tests Of Intellectual Property Laws’ Creativity Thresholds, Buccafusco, Christopher, Zachary C. Burns, Jeanne C. Fromer, and Christopher Jon Sprigman. “Experimental tests of Intellectual Property laws‰Ûª creativity thresholds.” (2014)

************************************
Even Further Reading

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Supreme Court Justices Scalia and Thomas on the ALI and Restatements

http://joshblackman.com/blog/2015/02/24/scalia-ali-restatements-of-questionable-value-and-must-be-used-with-caution/

SoundExchange Launches Mass NOI Lookup

Hypebot is reporting an important story you might have missed:  SoundExchange/SXWorks has launched a tool for songwriters to begin unraveling the mess that Digital Media Association companies created at the Copyright Office over mass NOIs.

You’ve heard about the loophole that the Digital Media Association companies like Spotify, Amazon, Google  (YouTube) and Pandora (but not Apple) are leveraging to conjure up one of their beloved fake safe harbors?  Yes, rather than actually get a license and pay royalties, these DiMA companies in the business of search want us to believe they can’t find songwriters or copyright owners in order to send the notice of intent that qualifies them for a compulsory license.

The loophole is that they only have to look for the copyright owner in the Copyright Office records that are notoriously incomplete because the Copyright Office tells us all that we don’t have to register with them in order to own copyright and get benefits like getting paid when DiMA companies use our songs.  Plus even if you do register, it takes the Copyright Office a year to approve or deny your registration.

But–but–if the DiMA company claims they can’t find you in the Copyright Office records, they can file that NOI with the Copyright Office.  Then they claim they have a compulsory license except for one tiny detail–they don’t have to pay you!  So even if you have taken the time to file your song with YouTube’s CMS and Content ID so they actually know who you are, if you haven’t registered with the Copyright Office it doesn’t matter.

Insult to injury, the Copyright Office has allowed Big Tech to post these notices in hundreds of gigantic and weirdly compressed Excel files with no simple way to search for your song.  Plus the Copyright Office doesn’t bother checking to see if Big Tech has filed the NOI properly while they give your copyright registration the third degree.  The Copyright Office then creates their own fake safe harbor to self-insulate themselves from failing to check NOIs.  Are we ever in the wrong business.

The millions upon millions of NOIs started getting posted in April 2016–now there are 60 million and counting songs that the DiMA companies are not paying and no real way to search the mass NOI filings to know if your songs are implicated.

Thankfully, SoundExchange/SXWorks is on our side.  They came up with a free searchable database of all of these NOI filings so you can look up your song. This is the first step toward songwriters getting justice and it’s an important one.  If you don’t know you’re getting screwed how can you do anything about it?

Hypebot carried an explanation from Mike Huppe:

“Music publishers and songwriters finally have a way to gain visibility into address unknown filings made by some service providers using their songs,” said Michael Huppe, Chairman of the Board of SXWorks. “Publishers and songwriters can search the NOI submissions via a simple web-based interface. The service makes a complex process much more transparent, supporting our goal of trying to improve how the music industry operates.”

You want to do this so you can know if you should register your song for copyright or better yet if your song is already registered and the Copyright Office has made a mistake in allowing the NOI to be filed.  (If you find mistakes, call the Copyright Office at Tel: (202) 707-8150  Fax: (202) 707-0905 or Email: licensing@loc.gov)

This SXWorks NOI Lookup will be a hugely important tool for songwriters trying to unravel the bureaucratic barf that DiMA created (and it’s a nice touch that it was SoundExchange that stepped up to solve a publishing problem created by DiMA after fighting DiMA for years on behalf of artists and labels).

You can access the “SXWorks NOI Lookup” database at this link.  (FAQ is at this link)  You’ll need to do a free registration to get access so you can use the account features, this video explains:

Censored Spotify Article Update: HuffPo CEO is Former Spotify GC, Possible Shareholder


Huffington post CEO seems stoked about Spotify subscriber metrics. Why is that?  

Digital Music News is reporting:

“Huffington Post CEO Jared Grusd was General Counsel and Global Head of Corporate Development at Spotify for 4 years.  Which means there’s probably a strong connection, and even financial strings like stock options.”

Please read full article here

The bad odor emanating from HuffPo keeps getting stronger.  For background, artists rights advocate Blake Morgan posted this mildly critical piece about Spotify on his HuffPo contributor account.  Just as it was beginning to go viral HuffPo took the article down.  The justification was… shall we say less than convincing? And in the words of Digital Music News “the internet called bullshit.”

Digital Music News hints at another issue by noting that HuffPo CEO Jared Grusd may have  “financial strings like stock options.”  This is interesting for several reasons.

First Spotify appears to be in its “quiet period” for it’s IPO.  Second Spotify is going public through an unusual direct listing.  This means that current stock and options holders are essentially making the public offering.  Rather than underwriters and banks. I am not a securities law expert, but wouldn’t this make current shareholders selling stock in the direct listing, the parties making “the offering” of stock as defined in SEC regulations?  Wouldn’t these parties then be subject to the SEC rules governing what can be said by the parties making the public offering?  Further the SEC guidance on public statements during quiet periods (here) has pages of rules on what “related media” can or can’t do when providing information to the public (start on page 133).  The question I can’t answer is whether a shareholder “offering stock” actively suppressing information that would otherwise be public violates the letter or spirit of these rules.   That’s above my pay grade.  But someone out there knows the answer.

 

2017 Streaming Price Bible! Spotify per Stream Rates Drop 9%, Apple Music Gains Marketshare of Both Plays and Overall Revenue

We first did this back in 2014, and then again last year, so here we are again.

As we predicted as streaming consumption grows, the per stream rate will continue to drop, every year, year to year.

This data set is isolated to the calendar year 2017 and represents a mid-sized indie label with an approximately 200+ album catalog now generating over 200m+ streams annually. That’s a pretty good sample size. All rates are gross before distribution fees.

Spotify was paying .00521 back in 2014, two years later the aggregate net average per play rate dropped to .00437 in 2016, a reduction of 16%.

The current effective per stream rate at Spotify has now dropped to 0.00397, a reduction of 9% since last year. This a cumulative reduction of 24% since 2014, which is an average decrease of 8% a year of the per stream rate.

If the music business could set a per stream rate that allowed revenue growth, proportionate to consumption growth that would be a much better model. Looking at the stats below we can actually see that working for Apple Music!

An interesting change from last year is that Pandora replaces YouTube with the greatest value gap of streams at 21.56% volume with only 7.86% of revenue. YouTube drops to 8.38% of volume with only 1.70% of revenue. Again, this is just music delivered to YouTube via the distributor for the automated song generation and it does not include Content ID or Artist Channel revenues.

For the second year in a row Apple Music Streaming sits in the sweet spot generating the second largest amount of streaming revenue.  The current per stream rate seems to have actually modestly increased from .00735 last year to .0783 this year. A nominal increase but worth noting. Apple’s current effective rate of .00783 is pretty close to double the Spotify effective rate of .00397.

There’s more good news for Apple as their market share has risen from 7.18% last year to almost 11% this year. But the bigger story is that Apple Music is now accounting for over 22%+ of music streaming revenues up nearly 11% from last year. This is good news and shows the power of both Apple’s commitment to streaming, and the value of a paid only platform. Apple Music is actively taking marketshare away from Spotify.

To put this list in the context of our previous reports and numbers we’re adding the chart below with the data sorted by the quantity of streaming plays required to match the revenue of a single song or album download. This is important as we work towards defining and setting a fair per stream rate and also setting an accurate economic equivalent of streams to songs and albums for the purposes of charting.

Billboard currently calculates 1,500 streams to one album for the purposes of charting, which at current streaming rates (at Spotify) actually sorta matches an economic equivalent. But that’s just backing out of an arbitrary rate set by Spotify, it doesn’t actually define what the cost of a stream should be.

Keep in mind every streaming service has a key piece of data that would allow artists and labels to set a fair per stream rate. Every on demand streaming service, Apple, Spotify, Tidal, Google Play all know how many times a song is played (per person) on average over time. This is the data that is key to setting fair streaming rates. Who will share this information? Apple, Jimmy Iovine, we’re looking at you.

 

These numbers are from one set of confidentially supplied data. If you have access to other data sources that you can share, we’d love to see it.

  • HOW WE CALCULATED THE STREAMS PER SONG / ALBUM RATE:
  • As streaming services only pay master royalties (to labels) and not publishing, the publishing has to be deducted from the master share to arrive at the comparable cost per song/album.
  • $.99 Song is $.70 wholesale after 30% fee. Deduct 1 full stat mechanical at $.091 = $.609 per song.
  • Multiply the above by 10x’s and you get the album equivalent of $6.09 per album
[EDITORS NOTE: All of the data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $5,210 / 1,000,000 = .00521 per stream). In cases where there are multiple tiers and pricing structures (like Spotify), these are all summed together and divided to create an averaged, single rate per play.]

[royalties][streaming royalties][music royalties][royalty rates]

 

The Slippery Slope of Censorship: @HuffPost Pulls Story Critical of @Spotify Ahead of IPO

Artists Rights advocate Blake Morgan (#IRespectMusic) published a story in the Huffington Post this morning critical of Spotify. The story was rapidly gaining traction when it was suddenly deleted and Morgan received this email from the Huffington Post:

From: Bryan Maygers <>
Subject: Spotify’s Fatal Flaw Exposed
Date: January 8, 2018 at 11:43:41 AM EST
To: Blake Morgan <>
Hi Blake,

I’m writing to let you know that we’ve unpublished your recent post. We’re not making any judgment about the accuracy of the claims made in the piece, but the contributors platform is intended as a place for commentary based on the established factual record, not original reporting. If anyone were to dispute your account of the meeting in question, we wouldn’t be able to verify or stand behind the quotes.
If you want to reframe the piece with the same basic argument — that Spotify sees their service and not the music as the product — without relying on retelling the conversation after the meeting, we’d be happy to reconsider.
Thanks,
Bryan

I’m not a journalism expert but the author is the source.  What’s the problem?  You have to wonder if HuffPo got a phone call from Spotify on this one.

Here’s Blake’s piece in its entirety.

Spotify’s Fatal Flaw Exposed: How My Closed-Door Meeting with Execs Ended in a Shouting Match

I love streaming.

I love making playlists, I love being able to download streamed music so I can listen when I’m offline, and I love being able to bring that music with me. In short, I think it’s a great distribution method.

What I don’t love is how little musicians get paid for all that streaming. It’s not fair––not even close. What’s more, middle-class music makers are the ones who are hit hardest, whose businesses are threatened, and whose families are put at risk. So how can I be against the way streaming companies treat musicians but not be against streaming itself?

The same way I’m against the electric chair, but not against electricity.

Spotify, the current Goliath of streaming services, had a rocky year and it’s come at a bad time for them. The public’s perception of the once can-do-no-wrong streaming giant is evolving, and for the first time it’s not improving. This was the year people watched as multiple, massive class-action lawsuits were filed against the company for widespread copyright infringement. This was the year people learned that even while Spotify added millions of new subscribers, their per-stream rate to musicians actually fell. This was the year people started to understand how it all works: that while it takes a music maker 380,000 streams on Spotify just to make minimum wage, the average Spotify employee earns $14,000 a month.

Then there was the biggest revelation. This was the year people started to connect the dots about how Spotify’s founder, Daniel Ek, made his initial fortune. At 23, he was the CEO of uTorrent, a pirate platform that became BitTorrent (arguably the largest rights-infringing platform in the world). He and their developers then used identical rights-infringing software in order to build his new golden goose: Spotify. His personal worth is now estimated at around $800 million.

If all this wasn’t enough to corrode the company’s shiny image, people also noticed that Spotify doesn’t make anything. They’ve noticed that the television and film industries aren’t up in arms over Netflix the way music makers are up in arms about Spotify, for good reason. It’s because Netflix makes stuff. Great stuff in fact, like Stranger Things, The Crown, Orange is the New Black––great shows that employ great artists and craftspeople at every level, not just superstars. Gaffers, grips, carpenters, writers, make-up artists, and so on. Meanwhile, Spotify pockets 30% of all the revenue they collect––and they don’t make anything.

Instead, they’ve become single-minded in their pursuit of Wall Street, aiming for a public offering that now looks likely in the weeks or months ahead. Spotify’s ambition to become a stock market titan––a strategy music insiders continue to scratch their heads at––will put the company in the untenable position of pleading poverty to Congress and pushing for even lower rates to music makers (“We can’t make any money, you have to save us!”), while simultaneously having to brag about how successful they are to their shareholders and the rest of Wall Street (“We’re making so much money! You have to buy our stock!”). All you have to do is ask Pandora, internet-radio’s once but now fallen Goliath, how that untenable position worked out for them. (Spoiler alert: it didn’t.)

Spotify has a public relations problem because they have an actual problem, and for all the problems listed above, the greatest one they face is this: Spotify’s in trouble because Spotify doesn’t know what their product is.

It’s astonishing. But it’s absolutely true. I know, because they told me so.

I was invited to a closed-door “artists-only” meeting with executives from Spotify. I’d been invited because of I Respect Music, a campaign I started and launched from my laptop which, improbably and surprisingly, has since become the largest grassroots campaign in American music history. The meeting was a loud and pointed one––something Spotify executives hadn’t anticipated––and the 40 or so of us music makers present were openly incensed.

 I was a vocal participant in the meeting, and when it was over I found myself surrounded by several Spotify executives. One said, “Blake, I just don’t think you understand, our users love our product because it’s such an amazing one.” Another added, “You have to look past just numbers, our product is so great it’s actually turning the industry around.” This went on for a while, until I finally said to one of the executives, “You keep using that word, ‘product.’ I’m not trying to be difficult, I’m really asking you: what do you think your product is?”

The executive was surprised. He stared at me blankly and said, “What do you mean? Our product is Spotify.”

There it was. It was a shocking admission to me, in earshot of everyone, and one he obviously didn’t think was an admission at all.

“No no…sorry,” I said, shaking my head in disbelief. “Your product isn’t ‘Spotify.’” He continued to stare at me. I said, “Sir, your product is music.” The emboldened musicians standing around us started laughing. The exec smiled and backed away, “Well okay, if you’re going to be like that.”

“Wait,” I said, “Listen, it’s music. Your product is music. The reason I know that is because if we went out into the street right now and asked a thousand people what Starbucks’ ‘product’ is, they’d all say coffee. Not a single person would say ‘Starbucks’ product is Starbucks.’ Right?”

His smile faded.

“And by the way,” I added, “Stop calling your subscribers ‘users.’ They’re not ‘users,’ they’re listeners––our listeners in fact. You’re the ‘user.’ You’re using our music to monetize our listeners for your profit.”

He looked at me as if I’d just shot Santa Claus in the face.

“No, man! You’re wrong!” He was sweating now, and the dozen or so musicians who’d gathered around us began heckling him. He shouted, “Spotify is our product! You don’t get it at all!” He stormed off.

I called after him, “You shouldn’t be fighting the people who make your only product. That’s an expensive and stupid fight you’re gonna lose.” I left the meeting. I was still in disbelief.

I feel like this is a good time to remind you that I actually love streaming.

Webster’s English Dictionary defines the term “golden goose” as a continuing source of wealth or profit that may be exhausted if it’s misused. Sadly, Spotify’s ongoing crisis of misuse begins and ends with the fact that they don’t know their only product is music. They think it’s themselves, which explains each and all of their stunning mistakes and missteps. They’d be well-served to ask any first-semester business student what the difference is between a “brand” and a “product.” But I don’t think they will, and I don’t think it’d help them at this point. I think their goose is cooked.

Mark Twain wrote, “It’s not what you don’t know that gets you into trouble. It’s what you think you know for sure that just ain’t so.” Spotify’s in serious trouble because they’re powerfully sure of something that just ain’t so. They think this is all about them. It’s not.

It’s about music. It’s about the people who love to listen to it, and the people who love to make it. That connection between music lover and music maker is primal and unbreakable. Take all the music off Spotify and no one will show brand-loyalty by sitting and staring at their silent logo.

There’s a bleak future waiting for Spotify if they continue to behave their way into situations like the one they’re in now. Wall Street won’t be able to save them. And music makers won’t be interested in even trying. Ask MySpace.

I really do love streaming. It’s not the future as many say, it’s the present. It’s here now, and it’s here to stay. It can provide enormous energy to our musical landscape––lighting the way for music lovers and music makers alike––and it can and should drive great, productive, and healthy growth for all. I hope it does.

Remember…musicians love electricity. It’s the electric chair we hate.

 

 

 

Universal Leads Royalty Deadbeat Facebook Out of the Cold With Precedent Setting Licensing Deal

Praise where praise due. Earlier this year we said UMG’s effort to bring Facebook into line on music licenses should end up benefitting all songwriters. Facebook is a massive platform and the revenues to songwriters could be substantial. Watch this developing story. More likely to come.

Music Technology Policy

This is what happens when you stick to your property rights–Bloomberg reports that Facebook, aka royalty deadbeat, has signed a multiyear licensing deal with Universal Music Group:

Facebook Inc. signed a multiyear licensing deal that lets the social network carry songs and artists from the world’s biggest record label, Universal Music Group, across its platforms.

The deal announced Thursday solves a long-running dispute, with Facebook agreeing to compensate the company and artists including Taylor Swift when users post videos that include copyrighted material. The accord includes Facebook, Instagram and Oculus virtual-reality technology, with Universal saying the company would become a “significant contributor” to the industry.

The deal sets Facebook up as a more direct competitor to Google’s YouTube, the most popular destination online for listening to music. Both technology giants are battling for a bigger share of people’s time, and music rights could help Facebook give users new…

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@SGAwrites Statement Opposing Music Modernization Act of 2017

The Songwriters Guild of America makes a great point on equal governance by songwriters.

Artist Rights Watch--News for the Artist Rights Advocacy Community

[Editor Charlie sez:  Here’s a copy of the Music Modernization Act of 2017]

December 21, 2017

Dear Representative Collins:

I write as president of The Songwriters Guild of America, Inc., the nation’s longest established music creator organization run solely by and for music creators, representing thousands of professional music creators and their heirs.

Thank you for forwarding a copy of the draft Music Modernization Act of 2017 yesterday for our review prior to its introduction, which was much appreciated. We continue to believe that reform of the music licensing process is and must continue to be an exceptionally high legislative priority – second only to the need to raise music royalty rates to equitable levels that will sustain our community. We applaud your sincere efforts and the efforts of the many members of Congress who have been hard at work trying to fashion solutions to these challenges over the…

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Joint statement on Music Modernization Act of 2017 from NMPA President & CEO David Israelite, ASCAP CEO Elizabeth Matthews, BMI President & CEO Mike O’Neill, NSAI President Steve Bogard and SONA Executive Directors Michelle Lewis and Kay Hanley

We should thank Rep Collins and his staff for working tirelessly the last three years to make digital music ecosystem fairer for songwriters and performers. We have not yet had a chance to review the 100+ pages of this bill but we look forward to reading it.

Artist Rights Watch--News for the Artist Rights Advocacy Community

We strongly support the introduction of the Music Modernization Act which represents months of collaboration and compromise between the songwriting and tech industries. This legislation enables digital music companies to find the owners of the music they use and reforms the rate setting process for performing rights, ensuring that songwriters and music publishers are paid faster and more fairly than ever before.

“For too long, digital music services have taken advantage of the ‘bulk NOI’ process and often failed to find the correct creators to pay, and now – by working together – this bill ends this practice by creating a private-sector system where money will no longer be lost to inefficiencies and lack of information. The bill also improves how mechanical royalty rates are calculated by introducing a willing-seller/willing-buyer standard.

“On the performance rights side, the bill also replaces the current rate court system with the random assignment of judges used in most federal court cases, and allows…

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Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters — Music Technology Policy

Great news today that the appeals court upheld BMI’s ruling by the BMI rate court judge that there is no such thing as 100% licensing under the consent decrees. Although it’s like winning an appeal that the Sun really does rise in the East (attention Cal students), it’s good to put that issue to one side and to poke a stick in Google’s eye.

via Major Defeat For Google-Era Justice Department, Huge Victory for Sanity and Songwriters — Music Technology Policy