The Trichordist

Fact check:  As of 1:09 pm EDT PewDiePie original content is still on YouTube Red Premium subscription service.  PewDiePie show is also being promoted on the YouTube red original content home page.

If you read the headlines may think that Google has actually severed relations with their biggest video star PewDiePie for making at least 9 antisemitic videos.  Not true.  This seems to be some sort of bullshit “double secret probation” type punishment.  As the Wall Street Journal accurately reports:

YouTube hasn’t removed any of the videos because it determined they don’t violate its community guidelines, which have a higher bar for removal than its rules for advertiser-friendly content, according to a person familiar with the matter.

and…

Mr. Kjellberg will be able to post videos to his channel and earn revenue from ads sold before his videos play, but those ads will only be sold through an automated ad auction that generally fetches lower prices than the preferred program.

But as it turns out PewDiePie show is still live on the YouTube Red premium subscription channel, which must involve some sort of money (hence the term “subscription). Further YouTube appears to still slinging ads on PewDiePie’s YouTube channel.  Double Secret Probation in deed.

 

 

Disney severs ties, but YouTube continues to host support and promote PewDiePie’s Videos on YouTube and the subscription YouTube Red service. 

While much has been made of the Disney severing its relationship with YouTube star PewDiePie after his series of what most are calling anti-Semitic videos, few have said anything about the fact that YouTube seems to be  standing strong with their biggest star PewDiePie.  (Stock analysts take note,  this is why YouTube will always be an also-ran when it comes to lucrative video advertising.)

YouTube continues to promote its YouTube red original content from PewDiePie.  (UPDATE Screenshot was taken on Feb 14 2017 at  8:21 AM GMT, YouTube now claims to have “dropped” PewDiePie from YouTube, but this  is clearly not true.  This video and channel is still live, and still on YouTube Red Premium Subscription.  )  While some are characterizing PewDiePie’s videos as tasteless and hurtful trolling, clearly the videos go well beyond that.  But don’t just take my word for it, just ask Andrew Anglin at the American Nazi website The Daily Stormer. He declared the Daily Stormer  “The worlds #1 PewDiePie fansite after PewDiePie’s series of anti-semetic videos (below).

I suppose everyone makes mistakes.  But this isn’t a one time thing with YouTube. There is a pattern here.    For nearly 4 years The Trichordist has been documenting YouTube’s Hate Rock/Nazi videos advertising problem.   Imagine if VHI kept running anti-semitic and hate rock videos to sell advertising.  Who would want to do business with them?

As artists we could be excused for being somewhat ambivalent when it seemed the problem was a  “user generated hate” problem.   But PewDiePie has a deal to produce exclusive content for YouTube!  WTF?  These videos were produced with the backing of Disney and YouTube.  This is NOT UGC. At least Disney severed ties with PewDiePie.  YouTube has not. This is simply inexcusable.

So why do labels and artist continue to support the YouTube platform? Individual artists can’t take down their videos down but labels can.  Artists should tell their labels they don’t want to do business with a platform that hosts and monetizes anti-semitism and hate rock (Ed note: And ISIS recruitment videos!!).

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We’ve been on this for 4 years.  No one in the music industry has been listening.  Why?  Are labels too scared to stand up to YouTube?  Too scared to stand up to hate and anti-semitism? I urge all artists and labels to review our coverage:

November 7 2013

The Trichordist asks YouTube Music Award Guest Stars to ask YouTube to stop hosting and serving ads on hate rock videos and rape playlists.

https://thetrichordist.com/2013/11/07/ytma-artists-can-help-clean-up-youtube-an-open-letter-to-jason-schwartzman-lady-gaga-spike-jonze-m-i-a-arcade-fire-and-macklemore/

April 15 2014

In the wake of the Jewish Community Center Shootings:

https://thetrichordist.com/2014/04/15/youtube-still-serving-ads-on-hate-rock-videos/

November 14 2014

YouTube launches subscription service without dealing with Hate Rock problem.

Will The New YouTube Streaming Service Feature All the Hate Rock Currently Featured On YouTube?

November 17 2014

We made the same point to artists and labels in 2014.  They failed to act. Frankly this is when I gave up for a while cause I came to the realization that artists and labels are essentially quislings.

Do You Want Your Music Alongside Hate Rock Songs? Artist Face YouTube Music Dilemma.

July 16 2015

Much press about Reddit, racist and violent misogynist sub-reddits but the same stuff can be found on YouTube.

Advertisers: How is YouTube Any Different Than Reddit?

 

 

Incoming Trump Administration DOJ officials have to deal with the mess that revolving door Silicon Valley lawyers left over at the antitrust division:  A constitutional challenge to the 100% licensing rule forced on songwriters, and all those damn feral cats that Litigation Section III was feeding. According to career staff at DOJ ATR LIT SECT III cat nicknames (from front to back): Google, Public Knowledge, Mic-Coalition, NAB,  Spotify, Pandora, American Restaurant Association, Darth Vader, Satan, Johanna Shelton, and Snookums. 

The most important fight for songwriters is proceeding. SONA (Songwriters of North America)  has responded to the DOJ motion to dismiss, with a motion to proceed.

As reported by Billboard:

“No one knows whether the Department of Justice under the Trump administration will alter its approach to the antitrust consent decrees that essentially regulate the collection societies ASCAP and BMI, but the legal fight against the Justice Department’s June 2016 decision on “100 percent licensing” is proceeding.”

Read more here

The importance of the constitutional arguments can not be overstated. The results of this lawsuit will be very important to everyone, not just songwriters.  The lawsuit challenges the DOJ regulations specifically for violation of the 5th amendment on “takings.” But other important issues are at stake. For instance the DOJ essentially used a “time machine” to make an end run around already existing private contracts (“the consent decrees always required  100% licensing, this is just a clarification” ). This would seem to violate constitutional prohibitions against laws or rule making that makes previously legal activity illegal after the fact.  The DOJ also appears to have violated the Administrative Procedures Act when they enacted this new rule. And never mind that no one can seem to figure out when songwriters not-yet-born  (“temporary” ASCAP consent decree dates from 1941)  got their due process!

 

 

We did not photoshop any of this.  This is a real screenshot! 

A lot of people in the music community have been scratching their heads over the new NY Times subscription offer that includes Spotify Premium.  Songwriters are trying to figure out:

Exactly how it is we ended up subsidizing newspaper subscriptions?  You see the COMPULSORY (can’t say no)  federal license for songwriters gives us 10.5% of revenue generated by streaming services.  So a cut rate Spotify subscription bundled with The NY Times, is essentially a pay cut to songwriters.

 Or wait, did songwriters just get a pay boost because now we get some percentage of The NY Times subscription revenue?

More likely the former rather than the latter. But we will never know since the federal compulsory license doesn’t allow songwriters to audit!  

Meanwhile most media commentators have focused on the joint subscription as an apparent sign of weakness, or weirdness from the NY Times. Certainly the screenshot above argues for weirdness. 

On the face of it the NY Times does have something to gain.   Spotify reports it has 40 million subscribers* while NY Times has just 3 million subscribers.  Bloomberg noted that NY Times could reach Spotify’s millennial (snake people) audience,  you know, cause like Buzzfeed.

But I personally wonder if this doesn’t have  something to do with the Spotify IPO disaster. If you don’t know Spotify took $1.5 Billion in convertible debt premised on a 2016 or early 2017 IPO.  There are now only a few weeks left before the reported terms of that debt begin ratcheting up. Higher interest rates and promised stock discounts will cut deeper. There are now reports that the Spotify IPO won’t happen til 2018.   Yet every six months the interest rates on the convertible debt go up and discounts get larger.  Ouch! Could the metastasizing debt makes the young company’s IPO offering less attractive?  

But this is where it gets very weird. With  Spotify now helping improve the bottom line at The NY Times will editors at “the newspaper of record” be hesitant to  cover Spotify financials in a negative way?   Give them the  benefit of the doubt on a disputed point? Soften a headline? 

Let’s hope not. 

* it’s never clear what Spotify really  means when they report “subscribers.” Are these real full price $9.99 subscriptions or highly discounted trial subscriptions subject to massive churn? 

 

 

 

 

Now that most of the DOJ lawyers who pushed the 100% licensing rule on songwriters are gone, who’s gonna deal with all those feral cats that former Acting Assistant Attorney General Renata Hesse was feeding? 

Last year, in what can only be described as an elaborate Kabuki, a small group of DOJ lawyers led by a former Google attorney, took up a question that no one except Google was asking:  Do the DOJ consent decrees that govern songwriter public performance licenses require a songwriter to license 100% of the song or does each songwriter “fractionally” license their own share?

(How 100% licensing benefits Google)

The simple and obvious answer is, no.   For 70+ years songwriters have been governed by these same consent decrees, and during that time songwriters have licensed fractionally.   The DOJ and the federal courts that supervised this process were clearly aware that this was the practice and they didn’t object.  In fact many of the opinions from the courts and DOJ documents explicitly reference and require the practice of fractional licensing.

Yet last summer this small group of lawyers “answered” the question that no one was asking.  They in effect said “yes in fact the consent decrees have always required 100% licensing.”  Ok…then why has  the DOJ been involved in the business of fractional licensing for the last 70+ years?

There are only two conclusions:

For the last 70 years the consent decrees were improperly administered by dozens of really sharp DOJ attorneys and federal judges, but this new crew is smarter than all of them combined.

or

This was a political decision designed to benefit a favored corporation.  Or in the popular vernacular: corruption.

What do you think?

Fortunately BMI and SONA (Songwriters of North America)  separately sued the DOJ (two different and distinct legal complaints against 100% licensing).   In mid September a federal judge considered BMI’s complaint and  ruled against the DOJ.   However a few days after the presidential election the lame duck DOJ antitrust division appealed the ruling.   I suppose this was timed to come after the election when popular songwriters were no longer needed on the election trail.  Right? Perfect time to twist the knife!

The status of the SONA lawsuit is unclear, but last I heard the DOJ were on the books as still fighting it.

But honestly it’s kind of hard to tell.  If you go to the DOJ Antitrust website there are animated gifs of tumbleweeds going across the page accompanied by wind and yipping coyote sound effects. A hobo camp has been set up on the FAQ page and someone needs to deal with all those feral cats that former Assistant AG Renata Hesse was feeding.

Regardless, it’s time.   Time to shut this sucker down. Virtually all the 100% licensing lawyers are gone.  Probably off to cash in their chips in the Googley parts of the private sector.  The DOJ should drop the appeal, settle the SONA lawsuit, and give up the 100% licensing push.  Continuing this ridiculous fight only makes the DOJ look petty, corrupt and stupid.  Especially with the very real, life or death legal questions face the DOJ these days.

 

 

 

 

 

 

Stick to cars Eric Peters.  So many alternative facts in this piece.  Great to see BMI smack him down.

But I have to admit that I love the fact that the American Spectator was bamboozled into supporting a position on music licensing  that was pushed only by  radical copyleft Obama DOJ officials and Google.  Pure Li-BRAT-arian nonsense.  Can someone explain to me how collectivizing any property right (even if they belong to mostly non trump supporting songwriters)  a conservative free market position?

Read BMI’s reply to Peters here.

‘No Macarena for Trump’? A Response From Broadcast Music, Inc. (BMI)

 

 

Hypothetically, the one shirt Spotify employees and investors will have left after down round(s), debt conversion(s) and dilution(s). 

Bruce Houghton at Hypebot has a great article on Spotify’s tough financial situation, in particular the soaring interest rates and the ratcheting stock discounts attached to the convertible debt it took from private equity firms TPG and Dragoneer.   As Hypebot reports:

“Spotify pays 5% annual interest on the debt, adding 1% every six months for a total of up to 10%. Investors can convert their debt to equity at a 20% discount of Spotify’s IPO share price; and if there is no IPO within a year, the discount at which they can eventually buy stock increases 2.5% every extra six months. Additionally, these investors can sell their shares just 90 days after the IPO, well before the 180 day lockup for Spotify’s other investors and employees.”

http://www.hypebot.com/hypebot/2017/01/music-industry-has-upper-hand-as-spotify-faces-soaring-interest-rates-stock-discounts.htm

Houghton astutely points out that this gives the major labels some serious negotiating leverage as Spotify needs long term licensing deals from the majors in order to get to an IPO, and hence get out from under the metastasizing debt.

I’d just like to add something else: this looks like one of those nasty funding vehicles that are often the grist of HBO’s Silicon Valley Series.

What seems to be happening here is that Dragoneer and TPG have a radically different set of financial incentives than the current stockholders.   I haven’t seen the terms of the debt, but it appears that the longer it takes for Spotify to IPO the better it is for Dragoneer and TPG.  Why?  They have ratcheting interest rates and ratcheting discounts on the stock and the longer it takes to IPO the more money they get, and the more of the company they can buy with that convertible debt at a steeper discount.  If the IPO is late and the price is low, it’s entirely possible that the convertible debt allows Dragoneer and TPG to swallow most or even all the company.  This is especially likely if the IPO is spread over multiple offerings.   And why might the post-IPO Spotify stock price collapse?   Well, a lack of buyers will hurt a stock price.   And why might there be a lack of buyers? Perhaps the market is wary of the dilution implied by the  convertible debt held by Dragoneer and TPG?  See how that works?  This is a negative reinforcing loop.

So to all those labels, managers, Spotify employees and other sundry insiders who thought they got in on a “can’t lose” deal with that pre-IPO Spotify stock?  Check out what happened to Goolybib.

 

 

Should investors and songwriters join hands and sing a rousing chorus of #FuckTheZuck? 

Facebook appears to have no licenses for music.  No sync licenses, no mechanical licenses, not even public performance licenses.  Yes, the world’s 6th richest man apparently thinks he doesn’t need music licenses for the world’s largest media company.  The Zuck seems to be in utter denial that it hosts hundreds of thousands if not millions of music videos.  Is this dude only surrounded by sycophantic “yes” men/women?  How could he not know he needs to pay artists? (Ed. Note:  Maybe a habit he picked up from Sean Parker?)

We artists may complain about the rates we get from YouTube, but at least they admit they need licenses!   Look if small shops,  music venues and small webcasters can get licenses, why doesn’t the Zuck?  Tech firm exceptionalism? Arrogance?  Sheer ignorance?  Either way this is absolutely shameful.   How is this any different than a luxury hotel billionaire stiffing refusing to pay subcontractors?

But it’s not just artists that are screwed by The Zuck’s refusal to license music and pay royalties, investors and shareholders are likely to suffer as well.  Many investors and analysts are beginning to speculate that Facebook may have peaked or plateaued in value.   Here’s a quote from a Wall Street Journal article titled Have We Seen Peak Facebook? 

“To achieve its next leg of growth, it must win over ad dollars from TV. Facebook has been promoting its live-streaming capabilities and is testing a new video-ad format that would insert ads into the middle of live videos. The company is also developing a video-centric app for TV set-top boxes and is discussing licensing long-form TV-style programming from media companies, The Wall Street Journal reported. But Facebook faces stiff competition for content and viewing hours from traditional TV and more established video-streaming platforms.”

It’s simple,  in order for Facebook to justify it’s lofty stock price (as measured by forward P/E ratio) it needs to get its hands on some professionally produced video from real media companies.  And generally this content has music in it.  And when Facebook reproduces the video content that contains music, at the very minimum they will need a public performance license!   Unless Facebook wants to limit itself to “long form content” with low grade royalty free “library music” it will have to get music licenses.  It can’t pursue a serious video strategy that gets TV ad dollars without these licenses.

Until Facebook grows up and starts paying royalties to songwriters investors should be very careful.