ASCAP Thinks That Video Game Providers Should Pay Music Performance Royalties

from the just-make-the-internet-like-tv-so-we-don't-have-to-change dept

Despite claiming to represent the interests of songwriters and composers, ASCAP has consistently provided bad advice on how they should respond to digital technology and the internet. For ASCAP and many other collection societies, anything that doesn't involve royalties seems automatically bad (despite all the success from artists who've been freeing up their content), and other questionable practices raise serious doubts over how royalty money is handled once collected. Now, ASCAP wants to increase the toll on video games and is encouraging video game music composers to reserve performance rights (via Michael Scott). Typically, game developers purchase rights (including performance rights) from music composers, but ASCAP's Director of Legal Affairs, Christine Pepe, argues that the practice no longer makes sense. She suggests adopting the model that was developed for film and television, where composers and songwriters often negotiate contractual provisions for performance royalties.

Not surprisingly, there are some major problems with the article.

First of all, Pepe cites Rock Band, Guitar Hero, Dance Dance Revolution and Stubbs the Zombie to highlight the prominence of music in video games nowadays. These are all cases of popular songs being used in games, rather than music being written for games... yet she's presumably addressing people who write music for video games. Early versions of Guitar Hero used covers to make licensing easier, so composers weren't even part of the negotiation. This licensing is about synchronization or mechanical rights -- not performance rights. Labels have complained that these games aren't paying enough for the music, but it's the games that increase the value (and sales) of the music, not the other way around. These games could simply choose other good music and still be popular. ASCAP clearly doesn't understand that, while music can add value to games, games add value to music. Pepe says that older video game music is "probably difficult to imagine... in a context other than the games themselves." She isn't trying very hard to use her imagination, as there are plenty of examples of older video game music having a life outside of the games. Would anyone care about the Mario theme if it weren't part of the game? The lesson from old video game music isn't that performance royalties used to be negligible. It's that success for a video game music composer isn't just about writing good music, but about having that music associated with successful games.

Second, Pepe's argument that there's a public performance of music in video games seems like a real stretch:

Now, because video games are being delivered by entities other than developers and on transmission-based platforms such as the Internet, there is no reason that composers of music for video games should sign away their rights. Take for instance, X-Box — it is now fully integrated with the Internet and allows users to stream games (instead of just purchase the physical product in the store). Internet-based services that now offer streaming of video games are causing the music contained in such games to be publicly performed. The providers of these video game services typically have or should have a license from ASCAP (and possibly other public performance right organizations). [emphasis mine]

What does "streaming" a video game even mean? A video game is interactive; it's not a one-way broadcast, but communication over a network. Is Pepe suggesting that there's a public performance simply because software communicates over the internet? Email happens on the internet. Is that a public performance? There's such a thing as private communication over a network. Games like Gears of War, for example, allow you to play in co-op mode with another player in the same room or online. I find it hard to believe that the location of player two would determine whether or not the music is being publicly performed. What about a multiplayer game on a local area network? Why would that be any different, in terms of a public performance of music, from a multi-player game with everyone in the same room? Simply playing a game over a network doesn't make it a performance, nor does that make it public.

But maybe Pepe isn't referring to having players in remote locations, but having games in remote locations. She uses the Xbox as an example, which seems odd because, as I understand it, the Xbox Live Arcade lets you download games, but that's quite different from streaming. It's the video game equivalent of the iTunes Music Store, not an internet radio station. Digital distribution doesn't mean public performance -- the game is still played locally, just off a hard drive instead of a plastic disk.

Okay, so maybe Pepe was trying to talk about a platform that actually hosts and runs games on a remote computer. Still, it's pretty hard to believe that just because software is run remotely it's a public performance of the music, when the act of hearing the music would be indistinguishable if the software were run locally. Is it a "public" if I check my email using the Gmail web interface instead of Thunderbird? I have a music server running at home which lets me login and listen to my library from anywhere -- is using that a public performance? Do I need a license to listen to my own library because it's on a different hard drive? How does playing music in a video game become a public performance simply because of the hard drive the game resides on or the CPU that runs the process?

Furthermore, let's pretend there's actually public performance taking place. Is it even in a composer's best interest to demand these royalties? (This is not about a composers "right to get paid;" composers are getting paid -- upfront.) Making it harder for people to hear your music is rarely a good idea. Like with theme music for WKRP in Cincinnati or House in the UK, game developers may just seek other music if the licensing requirements are too burdensome. Focusing on getting every penny for every use of the music ignores the value of being included in a game, film or television show. The lesson from video game music of the past and present is that having your music included in a great game is extremely valuable. Not only are you getting paid to be promoted, but the game developers are even doing the hard work of getting fans to connect with the music! Rather than demanding compensation for every use, composers and songwriters should look at other ways to take advantage of the opportunity to make more money from the increased fan base. If ASCAP were really representing their interests, it would be helping them do this instead of pretending that the internet and video games are like television and insisting on performance royalties which will only get in the way of new business models. Of course, don't expect ASCAP to promote anything that isn't about increasing royalties. If your only tool is a hammer, everything looks like a nail...

Filed Under: licensing, music, video games
Companies: ascap

YouTube Ordered To Pay $1.6 Million To ASCAP

from the making-sausages dept

You may remember last year around this time, a district court set a totally arbitrary royalty fee that AOL, Yahoo and RealNetworks had to pay ASCAP for music streamed over their services. Reading through the details of the decision was immensely troubling, because it seemed to calculate the amounts on a somewhat meaningless formula based on taking a percentage of revenue from the companies that had absolutely nothing to do with music itself. Basically, it looked at almost any revenue that somehow sorta kinda touched on music (including search) and included that as part of the calculation process. Recently, ASCAP and Google went through a similar case in front of the same district court to determine just how much Google has to pay ASCAP for all the music streamed on YouTube. To be honest, I'm still not sure why it makes sense that Google has to pay anything for this, but that's one of the oddities of modern copyright law.

While the decision hasn't received much press attention, last week, the court ordered Google to pay $1.6 million to ASCAP (thanks to Eric Goldman for sending me the decision). The court seemed to take a "split the difference" approach, as ASCAP had asked for $12 million for all music streamed between 2005 and the end of 2008 (and another $7 million for 2009). YouTube, in response, had suggested $79,500 for 2005 through the end of 2008 and then $20,000 per quarter ongoing. The court rejected both proposals, and dinged both companies for weakly supporting their positions, or being somewhat misleading in their assertions. Google, for instance, tried to focus on the number of "music videos" as compared to the total number of videos on YouTube, though the court noted that the music videos seem to get a lot more views than many of those other videos, and it doesn't take into account the time spent viewing each video. ASCAP basically said: "just take that formula you used last year for AOL, Yahoo and Real and apply it to Google revenue."

The court, instead, went into a lengthy justification of trying to come up with a "fair" proposal, involving an awful lot of redacted information on YouTube's revenue (though... if you work through all the numbers you might be able to piece back together some revenue info) and eventually came up with $1.4 million for 2005 through 2008, and then $70,000 per month afterwards, which, when added to the additional fees this year, brought it up to $1.61 million to date (and counting). Of course, this is all supposed to be a temporary sort of thing until the two sides can work out an agreement on their own -- but given the vast differences in proposals (as the court noted, ASCAP was asking for a rate 150 times as large as YouTube's proposal), it doesn't seem like the two sides are close.

Either way, reading this ruling as well as last year's ruling shows what a total mess this process is. Basically, ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash. I know that ASCAP supporters will claim that the money is for songwriters, not the record labels, and it's important and blah blah blah. But the whole system of such collective licenses is a mess that it makes it close to impossible to do anything with music without getting yourself into a huge licensing hole. For more than a century now, Congress and the courts seem to look at every innovation and simply slap another license fee on it, and leave it to the courts to sort out any mess. All of these license fees add up to a massive tax on innovation that divert money from good business models and into the hands of collections societies, who siphon off a piece and often don't do a very good job distributing that cash. It's a massively inefficient model that's simply not needed.

Filed Under: copyright, court, rates, songwriters, streaming
Companies: ascap, google, youtube

ASCAP Continues Its Attack On Lessig; Free Culture

from the but-why? dept

We were already quite surprised when ASCAP set up a private lunch to come up with ways to "counter" the viewpoints of folks like Larry Lessig and various "free culture" supporters. After all, songwriters who have been embracing those concepts are making more money because of it. The problem, of course, is that those means often don't send that money through ASCAP. Still, as an organization that claims it represents the interests of songwriters, you would think they'd be thrilled to have songwriters make more money. Instead, it appears they would like to have songwriters make less money, and to attack Larry Lessig in the process.

Their latest move was to send out an email to members with links to various articles and commentaries that try to undermine Lessig's ideas. It's basically ASCAP propaganda. I guess they're afraid that songwriters might discover that they don't actually have to be beholden to ASCAP to make money.

Filed Under: copyright, culture, larry lessig, remix
Companies: ascap

ASCAP Working To Shut Up Free Culture Supporters

from the we-are-the-enemy,-apparently dept

Well, gosh darn it. Apparently, folks who believe that freeing up your music can help you make more money are actually the enemy of musicians everywhere. At least that appears to be the opinion of ASCAP, the group that's supposed to represent songwriters' interests -- but often does the exact opposite. The latest is that ASCAP has put together a private luncheon for February 3rd... and on the agenda: "working together to counter the growing prevalence of the 'copy left/free culture' pontificators in the public discourse about creators rights."

Wow.

Is ASCAP really so confused that they think that the rise of such "pontificators" is harming musicians and songwriters? We're seeing story after story after story of musicians who find themselves much better off after embracing new business models based on the fundamental economics of music. For ASCAP to somehow think that these alternative models represent a force that needs to be "countered" just shows how incredibly out of touch ASCAP really is. It's a shame that a group that is supposed to represent the best interests of songwriters (unlike the RIAA who has always been about representing the best interests of the big record labels) is so confused.

Filed Under: copyright, free culture, music, songwriters
Companies: ascap

How ASCAP And BMI Are Harming Up-And-Coming Singers

from the shakedown dept

When we talk about problems with copyright and royalty systems, sometimes people suggest that we should make an exception for the collections societies like ASCAP, BMI and SESAC that get performance royalties for songwriters, saying that since the money goes to the songwriters, rather than the labels, it's okay. However, ASCAP and the others cause significant problems. We've already discussed how they create problems, and how their views are outdated and damaging for songwriters.

However, it keeps getting worse, as they get more and more desperate to collect money -- and they're doing so in a way that harms songwriters much more than helps them.

ASCAP and BMI have been aggressively targeting venues that hold open mic nights, and demanding they pay huge fees. Many venues have given up and simply stopped allowing any musicians to play at all. In fact, one made every musician sign a waiver that they would only play original songs, and ASCAP told him it didn't matter because there was no way to know if the singers were really avoiding copyrighted music, so he still needed to pay up for a license. Those that pay up then often feel they need to charge a cover fee, so attendance dwindles.

It's basically making it more difficult for the next generation of musicians to get started, and ASCAP is so blind to this they don't even know what they're talking about. In response to the article, an ASCAP representative claims:

"What gives anyone the right to use someone else's property, even though they're not making money on it? I can guarantee you the phone company's going to charge you whether you're making money or not."

First off, this shows an ignorance of what is and is not "property." It also shows no concept of the larger picture of how using copyright to limit singers from appearing is harming artists. As for the non sequitur about the phone company... it's not clear what that has to do with anything.

It's time for musicians to start realizing that these societies do not have the songwriters' best interests in mind.

Filed Under: collections, new singers, open mic nights, royalties
Companies: ascap, bmi, sesac

ASCAP's Bill Of Wrongs

from the stage-and-symptom-of-the-grieving-process dept

ASCAP has published a Bill of Rights for Songwriters and Composers, which, unfortunately, seems to be more like a bill of "wrongs."

Just as citizens of a nation must be educated about their rights to ensure that they are protected and upheld, so too must those who compose words and music know the rights that support their own acts of creation. Without these rights, which directly emanate from the U.S. Constitution, many who dream of focusing their talents and energies on music creation would be economically unable to do so - an outcome that would diminish artistic expression today and for future generations.

Which U.S. Constitution is ASCAP reading? The U.S. Constitution provision says, "the Congress shall have Power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." There is nothing in the U.S. Constitution to suggest that copyright law has anything to do with protecting artists' natural rights, copyright hardly exists for a limited amount of time anymore, and Thomas Jefferson and James Madison were quite skeptical of the concept.

And the claim that such laws are required to make a living as an artist is very debatable, and I'd beg to differ. There was art before copyright law existed, and many artists are making their living today despite copyright law (rather than because of it).

At this time, when so many forces are seeking to diminish copyright protections and devalue artistic expression, this Bill of Rights for Songwriters and Composers looks to clarify the entitlements that every music creator enjoys.

Who is seeking to devalue artistic expression? Price and value are not the same thing. Just because the economics of digital goods have pushed the price of music towards zero (the marginal cost) does not mean that music no longer has value. This sort of statement needs to be substantiated.

1. We have the right to be compensated for the use of our creative works, and share in the revenues that they generate.

Why? In what other industries do creators maintain control over their creations after they reach consumers? Lenovo has no right to be compensated for the use of my laptop or to share in the revenue I generate through developing software. This is not a given.

2. We have the right to license our works and control the ways in which they are used.

Again - why? How many other industries control the way their works are used? This is not a given.

3. We have the right to withhold permission for uses of our works on artistic, economic or philosophical grounds.

This is not the purpose of copyright law at all, especially since it’s supposed to be for a limited time. This, in fact, is a restriction on artistic expression. Though it may be troubling to have a work associated with something that you don't agree with, I believe that freedom of speech is more important for artistic expression than total control.

There are defamation and libel laws for serious abuses.

4. We have the right to protect our creative works to the fullest extent of the law from all forms of piracy, theft and unauthorized use, which deprive us of our right to earn a living based on our creativity.

Theft and copyright infringement are not the same thing. And the sharing and spreading of music through digital channels is natural and, more importantly, does not deprive artists of their right ability to earn a living.

Bad, out-dated, obsolete business models based on artificial scarcity deprive artists of their right ability to earn a living.

(I'm not sure if this is a "right" because they seem to be confusing royalties and salaries.)

5. We have the right to choose when and where our creative works may be used for free.

Why? Coca-cola doesn't have the right to determine whether its products can be given away for free as part of a promotion after a pizza store purchases them. This is not a given.

6. We have the right to develop, document and distribute our works through new media channels - while retaining the right to a share in all associated profits.

Wow, that started off great, but the ending sounds like Billy Bragg's whining in the New York Times. The phrase "all associated profits" seems quite overarching. This sounds like musicians claiming that MySpace and Bebo owe them money for their success, while denying that the reverse could ever be true, that a new media company would be entitled to share in "all associated profits" of an artist it enables to succeed.

Double standard much?

7. We have the right to choose the organizations we want to represent us and to join our voices together to protect our rights and negotiate for the value of our music.

Excellent! I actually agree with this whole-heartedly. I do not want ASCAP to represent me!

8. We have the right to earn compensation from all types of "performances," including direct, live renditions as well as indirect recordings, broadcasts, digital streams and more.

This sounds like Viacom's misunderstanding of the difference between content and communication. ASCAP is treating the Internet like other forms of broadcast, but the Internet isn't a broadcast medium. It's a communications medium. When it comes to communication, the idea of using copyright to restrict content gets weird in a hurry. Royalties are not the answer for the digital age.

9. We have the right to decline participation in business models that require us to relinquish all or part of our creative rights - or which do not respect our right to be compensated for our work.

Sure you do, but that doesn't mean you'll make any money. Economics aren't about what you want to happen, or what you think should happen. Economics are about what is happening. Business models that don't make sense given the economics won't succeed. Of course you have the right to choose whatever business model you like, but that doesn't mean it will be successful or that it should be protected by copyright law.

The end of that statement sounds like another case of confusing royalties and salaries.

10. We have the right to advocate for strong laws protecting our creative works, and demand that our government vigorously uphold and protect our rights.

Of course you do, but again, I don't think it's a great idea if you subscribe to this "bill of rights." Moreover, consumers also have the right to advocate for better laws that protect their interests and vigorously uphold and protect their rights, which our current laws fail to do.

Artists can advocate whatever they want, but it's a bad idea to advocate the opposite of what your fans want.

Conclusion

This supposed bill of rights is really just an assertion of the status quo by those who depend on copyright law to protect their obsolete business models. If people in the music business could only realize that they're in the business of providing an enjoyable experience surrounding music, rather than trying to control and monetize every possible use of art, they might open up to new business models that make sense rather than whine about the fact that their current business models don't work anymore.

This isn't a bill of rights. It's a stage and symptom of the grieving process.

Signing this and, worse yet, living by it, would be an economic and ethical mistake for any songwriter or composer.

Filed Under: ascap, composers, copyright, rights, songwriters
Companies: ascap

Do Songwriters Deserve A Cut Of Yahoo Search Revenue?

from the highway-robbery dept

You may recall a couple weeks ago that a judge set new rates to be paid to ASCAP by AOL, Yahoo and RealNetworks. ASCAP represents the songwriters, and those three companies and ASCAP could not agree on licensing terms for music streamed online. While ASCAP ran around touting the (somewhat made up) $100 million owed, there was plenty more in the decision that deserved discussion. At last week's San Francisco Music Tech Summit, I got into an interesting discussion with a few folks who had read through the 153 page decision thoroughly, and noticed a variety of problems. You can read the whole decision (pdf) yourself, if you want, but there are a few key points that are extremely disturbing, and could spell a lot of trouble. Basically, there's a meaningless "formula" that's applied to a very large segment of these companies' revenue, taking a huge chunk of money that seems beyond reasonable.

The judge seems to consider what AOL and Yahoo do somewhat equivalent to the way TV stations use music, and refers back to the rate agreements set up with various TV networks, despite vast differences in the way these websites operate. It suggests a misunderstanding between the difference between broadcast and interactive content. But what's really troublesome, is when you look at the overall formula for how the royalties are set. It clearly overvalues the music, and undervalues just about every other part of these three companies' businesses. The formula is, basically, the total revenue made by any business unit (minus a few specific costs) multiplied by a bizarre fraction (called the music-adjustment fraction): total number of hours that music is streamed, divided by total number of hours used on the website. Then, you take the result of that and multiply it by the "rate fee" of 2.5%.

This formula is applied to revenue coming in from any business unit that is considered to have used music. This includes things like Yahoo's search engine. That's because Yahoo (smartly, from a consumer perspective) allowed users who searched on a musician or song to stream that song directly from the search results. But, in making that so user friendly, the company has now opened up its cash cow search revenue to this formula, despite the fact that it's incredibly difficult to think that music has anything to do with nearly all of the revenue Yahoo makes from this site. Similarly, RealNetworks has almost its entire consumer division revenue included in this formula, despite the fact that it makes a ton of revenue from its gaming business. Wondering why RealNetworks decided to spin off the gaming business a week after this decision was announced? Maybe because a rate court judge just chopped off a huge chunk of revenue from it and handed it over to songwriters who have nothing to do with these games.

As for the formula itself, it makes little sense. The "music-adjustment fraction" is a totally meaningless number. The number of hours music is streamed is hardly an indicator of how much of a site's revenue is actually music based. If I have music streaming in the background all day, but am still using the site for other purposes, it seems ridiculous to include all of that as music-based revenue. The denominator of the fraction is "total number of hours on the website" which is also a totally meaningless and unrelated number. Even worse, since the court notes that none of these sites actually track that information, the judge ruled that everyone should just use Comscore's numbers instead -- the same Comscore that most people admit is not particularly accurate. So, basically, you're dividing a meaningless number by an even more meaningless number and multiplying it by the total revenue of units who often have very little to do with music, and then taking 2.5% of that. If anything, this ruling should make any site think twice before including any streaming audio from any ASCAP-affiliated songwriters.

Filed Under: ascap, copyright, rate court, royalties, songwriters
Companies: aol, ascap, realnetworks, yahoo