Legacy Recording Industry To Trump: Please Tell Tech Companies To Nerd Harder To Censor The Internet

from the feeding-right-into-the-program dept

Last week, we wrote about the ridiculous suggestion from the former Newspaper Association of America (now called the News Media Alliance) that President Donald Trump should scale back fair use because newspapers still don't like Google. As we noted, at a time when Trump has been strongly endorsing censoring newspapers, for those very newspapers to tell Trump to undermine a key cog in protecting free speech was absolutely ridiculous.

And, of course, now we can add the legacy recording industry to this same "shoot foot" brigade. Upon hearing about Trump's meeting with the heads of a bunch of top tech companies, the RIAA and a bunch of related recording industry associations (including ASCAP, BMI, A2IM, NMPA, SoundExchange and more... ) have sent a letter to Trump (found via Variety), asking him to force the internet companies to nerd harder to find better ways to censor the internet. This is fairly incredible, seeing as the traditional recording industry wasn't exactly a major Trump supporter. For them to now reach out to Trump and urge him to increase censorship of the internet is fairly astounding and sickening. Basically, to the RIAA and friends, hatred of Google and the internet is more important than concepts like free expression or holding our elected officials accountable.

Of course, the legacy recording industry doesn't come out and directly say "censor the internet," but that's exactly what they're asking for here (though watch the blog posts from defenders of the industry howl about me making this intent obvious):

Surely the world’s most sophisticated technology corporations can do better – by helping to prevent illegal access and paying fair market value for music with prices set by or based on the free market.

Strong protection for intellectual property rights will assure growth in both creativity and technology, benefiting the American economy as a whole.

We hope you will lead the effort to assure American creativity is encouraged, invested in, protected and fairly compensated in a manner that carries out the exclusive rights guaranteed in the Constitution to those who, with the genius of their mind, form the cultural identity of our great nation.

The call for censorship is in "preventing access" which means blocking what you can do online. The hilarious part is the "prices set based on the free market" because that's exactly what the industry is protesting. The whole "value gap" bullshit is basically the industry saying "we do not like what price the free market is setting, and therefore we need the government to artificially inflate prices through monopolies.

Just to be clear, if you're whining about not getting "fair compensation" you're clearly saying "I'm upset about the price the free market has set."

But the bigger issue here is the censorship piece. I shouldn't have to detail here how many times we've shown that copyright is abused for censorship purposes (including by governments). The call to hold platforms more accountable and putting the onus on them to "nerd harder" is a call to ramp up tools for censorship-via-copyright. This is pretty ridiculous -- and one hopes that musicians who have spoken out against Trump will also speak out against this demand to give him and his friends more power to censor parts of the internet.

Filed Under: copyright, donald trump, nerd harder, recording industry, value gap
Companies: a2im, ascap, bmi, google, nmpa, riaa, soundexchange

DOJ Makes Smart Decision On Music Licensing... Music Publishers Completely Lose Their Shit

from the calm-down-people dept

For the past couple of years now, the Justice Department has been exploring the so-called "consent decree" around music publishing. This was an agreement, first made in 1941, and then reviewed in 2001, on how music performing rights organizations (mainly ASCAP and BMI) could operate without violating antitrust rules. Without such consent decrees, there was a quite reasonable fear that the performing rights organizations (PROs) would abuse their monopoly positions. This is not a theoretical argument. If you look around the globe, there are many, many, many, many, many stories of these organizations behaving badly.

In this case, ASCAP and BMI had been whining that because of those darn internet companies not paying enough, they need to get rid of the consent decree, mainly so that they can do more to jack up rates (there's more to it, but the end result is they want to be able to withhold rights to force rates up). Of course, in opening up this can of worms, they also got the DOJ to start looking more closely at other practices, including an exploration into so-called split works or "fractional licensing." The details here can get confusing, but in short: when a work has multiple copyright holders, many have argued that you need to get a license and/or approval from every copyright holder. But if you look at the legislative history of the 1976 Copyright Act, legislators made it clear that under the act, they intended to make it clear that any copyright holder in a work with multiple authors had the right to license the whole work.

And now... the DOJ has agreed. It issued an announcement with two key points: it would not take away the consent decree and it said that the law requires "full work" licenses, meaning a single copyright holder can grant a license for the entire work. This is a good thing. It's a very good thing. The DOJ's explanation for this is pretty straightforward:

In the end, the Division concluded that only full-work licenses could fulfill the purpose and meaning of the requirement in the consent decrees that ASCAP and BMI offer blanket licenses that provide users the ability to play all the songs in the PROs’ repertories. Importantly, this does not mean that ASCAP and BMI are required to provide a full-work license to a work when their members cannot grant them the ability to offer such a license. That is, we do not suggest an interpretation of the blanket license that is inconsistent with the Copyright Act. Rather, if the members of ASCAP or BMI are unable to grant to their PRO the rights to license their works on a full-work basis, those works are ineligible for licensing by ASCAP or BMI.

Both sides in this debate pointed to past practices they believed supported their view of whether ASCAP and BMI licenses were full-work or fractional. We think the evidence favors the full-work side. Our determination begins with the language of the consent decrees themselves, which unambiguously require ASCAP and BMI to offer licenses to all works or compositions in their repertories, and not to interests in works. For example, in the case of ASCAP, it must provide a license to perform “all of the works in the ASCAP repertory.”

Our view is also based on what is required for all participants in the industry to enjoy the substantial procompetitive benefits of the PROs’ blanket licenses – benefits that differentiate the PROs from joint price-setting entities that often present significant problems under the antitrust laws. The Supreme Court described blanket licenses in the BMI case as providing “unplanned, rapid, and indemnified access” to the songs in the PROs repertories. Fractional licenses would not offer the benefits the Supreme Court described.

A full-work blanket license from ASCAP or BMI allows the music user to publicly perform, without risk of copyright infringement liability, all works in the licensing PRO’s repertory. Particularly for music users – such as bars and restaurants – that cannot meaningfully control in advance the music they play in public, this feature of the PROs’ licenses benefits both the licensees as well as music creators in that it ensures that users can and will continue to play the creators’ music.

Fractional licensing would not offer the same benefits to users. If a PRO’s license granted a user something less than a license to play a particular song, music users seeking to avoid infringement liability would face the daunting task of identifying and ensuring they obtained licenses from all fractional owners – a challenge made more difficult by the lack of a comprehensive, reliable, and transparent catalog of rights. Under those conditions, even music users with control over the music they perform would have to curtail their performance of music until they were certain they had obtained licenses from all fractional owners. As BMI itself argued in a recent rate-court filing, a BMI license grants to a music user “insurance against copyright infringement . . . and immediate access to more than 10.5 million works in BMI’s repertoire.” A fractional license could not provide these benefits.

A lot of this was rumored a month or so ago, and a bunch of songwriters and publishers freaked out about it. They shouldn't be freaking out about it. This is actually good for them. Back when the expected result was leaked to the press, even Digital Music News, which frequently sides with the legacy industry, said directly that the songwriters' freak out was wrong and that this was a good thing for the music world -- and also notes that this could help finally create the holy grail in the music industry of a single database of published songs.

This should also help create more useful services that will get consumers to use authorized music sources, rather than unauthorized ones. As we've covered, ASCAP played some ridiculous tricks on music services like Pandora, and got slammed for it. But with full work licensing, such gaming will be even less possible, creating more openings for new music services to thrive.

Of course, the PROs, ASCAP and BMI, immediately lost their shit over this announcement and promised to fight back. BMI also announced that it will go to court to try to overturn this decision, while ASCAP has decided to focus on getting Congress to fix it through the legislative route (there's a reason for this bifurcated approach: in the cases involving both organizations, both BMI and ASCAP recognize that BMI has a judge that seems more willing to accept BMI's version of the story, whereas ASCAP's slimy behavior was so egregious that the judge covering its case actually understands the issues at play).

The end result, though, is the same old story: ASCAP and BMI want to abuse their monopoly position to try to jack up rates. Meanwhile, by not allowing that to happen, most songwriters will actually be better off, allowing more useful services to thrive, creating more opportunities for revenue. It's kind of insane that we have to point this out over and over again, but the legacy industry always fights against new innovations in the false belief that it will harm revenue -- yet when they learn how to embrace the opportunities, it turns out that a larger audience has been created and there are even more ways to make money. But ASCAP and BMI, like the RIAA on the recording side, are so focused on controlling their turf rather than seeing the big picture that they miss this entirely.

Filed Under: antitrust, consent decree, doj, fractional licensing, full work licensing, licensing, music publishing, songwriting
Companies: ascap, bmi

But Wait: Copyright Law Is So Screwed Up, Perhaps The Rolling Stones Are Right That Donald Trump Needed Their Permission

from the stupid-pre-1972-sound-recordings dept

So for years and years and years, every time a musician or a group whined about politicians using their music at an event, we'd point out that they have no legal basis to complain. Assuming either the venue or the campaign (or both) had the proper blanket licenses from ASCAP/BMI/SESAC no other permission was needed. That's actually part of the point of the structure of those blanket performance licenses. Everyone recognizes that it would be virtually impossible to play music publicly without such a blanket license structure. And so, every time a musician complains that the use was "unauthorized," they're almost certainly wrong. In fact, we pointed that out (again) for the nth time earlier this week. Now, as we've said all along, we still think smart politicians and smart campaigns should first seek out musicians who don't mind (or, better yet, who endorse the candidate), because otherwise they're just giving someone famous an easy platform to slam them. But, from a legal standpoint, we've always pointed out that there's basically no legitimate argument here, and people who toss around non-copyright theories like publicity rights and Lanham Act arguments are generally wrong.

But... we forgot about one thing. Copyright law is so screwed up that there actually may be a case where the law does require permission. And it has to do with pre-1972 sound recordings. If you've been reading Techdirt for any length of time, you know that we've discussed this issue many times in the past. Historically, while compositions were covered by copyright, under the 1909 Copyright Act sound recordings were not. This resulted in a patchwork of state laws (and state commonlaw) that created special forms of copyright at the state level. Eventually, sound recordings were put under federal copyright law, but it only applied to works recorded after February 14, 1972. Works recorded before that are not under federal copyright law, but remain basically the only things under those state copyright laws (the 1976 Copyright Act basically wiped out state copyright laws for everything but that one tiny thing).

In the last few years, this has created a bit of a mess and a whole bunch of lawsuits. Why did these lawsuits just start recently? In large part because the recording industry is desperate for new revenue streams, having failed to adapt to a changing market. So they've focused an exorbitant amount of attention on using pre-1972 sound recordings as a wedge against internet platforms. We've covered various stories on this, with many siding with the labels, but a few going the other way.

Needless to say, the law around pre-1972 sound recordings is still a bit of a mess, and arguably a work in progress, and the courts struggle to sort it all out. And that brings us back to the issue of blanket licenses. The always excellent reporter Eriq Gardner has a fantastic story noting that thanks to this mess with pre-1972 sound recordings and what copyright regime they fall under, it's possible that the Rolling Stones may have a legitimate legal gripe against Donald Trump and the Republican convention, while Queen... would not. Under modern copyright law, songs recorded on or after February 15th, 1972 require an ASCAP/BMI/SESAC license for the performance rights. But performance rights for sound recordings was basically a new concept at the time, and it's unclear how they apply to pre-1972 sound recordings.

The issue is not that simple, because nothing around this particular issue is simple. However, based on at least some of the rulings in pre-1972 sound recording copyright cases, federal copyright law doesn't apply at all to those songs (other court opinions have come out otherwise). And thus, there's an argument that the requirements involving blanket licenses for pre-1972 sound recordings may not apply, because the use of the sound recording may require a special public performance license from the copyright holder:

To sum up where we're at: An ASCAP license covers the public performance of songwriting, but not the sound recording. A sound recording authored before 1972 like "You Can't Always Get What You Want" might require special permission to be performed in public. Whomever owns that song — whether it's the Rolling Stones or their record label — could bring a lawsuit asserting misappropriation.

But... it depends. In this case, it depends on the specific state copyright laws in Ohio and how a judge interpreted it. Of course, it's still tremendously unclear because, (as we noted at the time), the big ruling on pre-1972 sound recording copyrights for Flo & Eddie basically upset decades of settled law on whether or not "public performance" rights applied under state copyright law. For decades, it was strongly believed that those state copyright laws applied to things like reproduction and distribution but not public performance rights. It's only through rewriting history (and confusing some judges) that suddenly public performance rights have been shoehorned back into those mostly obsolete state copyright laws.

As Gardner points out, one of the most famous cases involving performance rights actually involves Ohio state law. It's the somewhat infamous Zacchini v. Scripps-Howard involving a question around a TV station broadcasting an "entire" human cannonball act. In a ruling that is still troubling, the Supreme Court turned performance rights into a quasi-copyright. But that ruling could be used if the Rolling Stones tried to argue that the performance violated Ohio state copyright laws on public performances. It would be a nutty case, and a risky one, but it's possible that it might work. I'm guessing the Rolling Stones aren't actually interested in following through on any actual legal threat, but this is yet one more example of just how screwed up copyright law is today.

Filed Under: copyright, donald trump, performance rights, pre-1972 sound recordings, republican national convention, rolling stones
Companies: ascap, bmi

John Oliver's Story On Campaign Music And Copyright Is... Wrong

from the this-again? dept

Yes, let's start with the obvious: John Oliver's "Last Week Tonight" is a comedy program meant to entertain and is not meant to be journalism. It's a point that Oliver himself has made repeatedly. But others disagree with him, pointing out that his show regularly does actual journalism. The fact that he's hired a bunch of journalists on his team kind of says a lot. Also, according to multiple people I know who have been interviewed for stories on his show, while his focus is on making things funny, his team also spends a lot of time making sure they get the details right. It's why we so frequently end up posting his videos on stories that relate to Techdirt topics -- because they're not only entertaining, but are also generally dead on in accuracy. It's why we've posted his videos on net neutrality, corporate sovereignty, encryption, surveillance, civil asset forfeiture and patent trolls.

But this past weekend, he not only covered last week's Republican National Convention, but also, separately, the fact that representatives for both Queen and the Rolling Stones complained publicly about the RNC using their music in prominent parts of the convention. Oliver got together a bunch of famous musicians (many of whom have protested politicians using their music) to sing a song telling politicians not to use their songs, claiming that it's "stealing" and unauthorized because the politicians didn't reach out to get permission. This is flat out wrong in most situations. As we've pointed out again and again and again and again, in nearly all cases, politicians using music at an event have the proper licenses. They don't need to get permission from the musicians so long as either the campaign or the venue have ASCAP or BMI blanket licenses, which they almost always do. The whole point of ASCAP/BMI licenses is that you don't need to get individual permission from the artists or their publishers.

There are instances, occasionally, where politicians ridiculously don't have such a license, but it's pretty rare. And there may be a few other narrow exceptions, such as if there's an implied endorsement by the musicians, but that's rarely the case.

Unfortunately, the song from John Oliver and friends ignores all of that, even stating directly at one point that for a politician to use music, you first have to call the publisher. That's wrong. ASCAP and BMI already have taken care of that.

Perhaps this isn't a huge deal, but one would hope that Oliver would actually get the basic facts right on this too, because every election season this issue comes up and spreading more misinformation about it doesn't help.

Filed Under: copyright, john oliver, licensing, music, performance license, political campaigns, politicians
Companies: ascap, bmi

BMI Records Record Revenue... While Whining To DOJ That It Can't Function Under Antitrust Agreement

from the something-doesn't-add-up-here dept

As we've been discussing, the two big music collection societies in the US, ASCAP and BMI, are desperately fighting to get the DOJ to alter (or end entirely) the "consent agreement" that they operate under. The consent agreement, in various forms, has been in place for decades, after the DOJ properly recognized that in licensing songwriters' and publishers' public performance rights, they had something of a monopoly. And monopolies can be dangerous when abused. Thus the consent decree to keep the organizations in line. However, both are really angry about this, in large part because they believe that without the consent decree, they could create a world in which they could force everyone to have to pay much higher fees (you can see some of how they tried to collude with publishers to jack up rates to Pandora).

So far, the attempt to get rid of the consent decree has not been going well. It has resulted in more investigations into the publishers for collusion for one thing. The DOJ has also apparently realized that the collection society's treatment of songs with multiple copyright holders may be another anti-trust violation.

And, yet, ASCAP and BMI keep trying to convince everyone that they're suffering under this "obsolete" consent decree, and they need to have it modified greatly. BMI, in comments to the DOJ, has claimed that it's suffocating under the current system, which it says is "broken":

The digital revolution in information processing and communications has completely transformed the way music performances are heard by the public and equally changed the way in which information about music performances is collected and processed. In particular, the rise of Internet streaming as a principal way the public hears performances of music has created market needs that are now not being met because of inefficient and anticompetitive restrictions in the BMI consent decree that serve no sound purpose today.

There is an urgent need for action now. BMI agrees with the Register of Copyrights’ recent testimony characterizing music licensing as “broken,” and certain aspects of the BMI consent decree have contributed to that breakdown. The decree creates rigidities and restrictions in the way BMI must operate that undermine BMI’s efficiency as a resource for both music users and music copyright owners in the digital world. The existing rate court mechanism has proven too slow, too expensive, and too legalistic to keep up with the speed of change in real-world markets today. The need is so dire that, rather than press for comprehensive reform at this point, in these public comments BMI urges the Department to prioritize particular changes that address these immediate needs.

Things must really suck for BMI and all the songwriters who get paid via BMI, right? Oh... wait. BMI has just announced a new record in revenue collection and pay out to artists.

BMI, whose full name is Broadcast Music Inc., collected $1.013 billion for the 12 months that ended in June, up almost 4 percent from the year before. That is slightly more than the $1.001 billion that its competitor Ascap took in last year.

In the number that will be scrutinized most closely by musicians — royalties — BMI paid slightly less than its rival. After deducting its operating expenses, BMI distributed $877 million to its thousands of members, including songwriters like Taylor Swift, Nile Rodgers and Adam Levine of Maroon 5. Last year, Ascap paid its members $883 million.

Why is it paying less than ASCAP? BMI doesn't blame the broken consent decree, but rather "significant legal costs" made up mainly of its lawsuit against Pandora. In other words, something that BMI had control over. The article also notes this little fact:

Since 2005, BMI’s collections have increased about 40 percent.

So, uh, can we hear again about how "dire" the situation is and how BMI can't function, even as its revenue has grown 40% in the last decade and it's setting all kinds of new records? Did BMI think the DOJ would just ignore that bit?

Filed Under: anti-trust, antitrust, collection societies, consent decree, doj, pros, publishers, revenue, songwriters
Companies: ascap, bmi

Split Works Debate Raises Thorny Issues For Music Companies (And For The Rest Of Us)

from the what's-a-free-market dept

Michael Corleone would understand. Just when music companies and their performance-rights organization (PROs) thought they were getting out from under supervision by the U.S. Department of Justice, the DOJ may be about to pull them back in.

For some time now, the DOJ's Antitrust Division has been investigating whether to modify the special antitrust consent decrees that govern the two leading PROs: the American Society of Composers And Publishers (ASCAP) and Broadcast Music Inc. (BMI). These broad settlements, originally reached in 1941, were designed to prevent anti-competitive behavior by the music publishers and set the rules for how the PROs can operate. This includes licensing on non-discriminatory terms (preventing the PROs from blocking a radio station or music service from playing their songs).

The consent decrees have been modified before; BMI's was amended in 1994 and ASCAP's in 2001. But some music publishers argue these agreements are showing their age. The publishers and the PROs are hoping (and expressly asking) the DOJ to agree with their view that, here in the Internet Era, digital music doesn't need so much government intervention. Some suggest the DOJ's antitrust lawyers have shown sympathy to arguments for a "partial withdrawal" of digital copyrights from the consent-decree framework.

But new arrangements to replace that framework ultimately may pull the labels and PROs back in. Billboard reported recently that the DOJ may be considering revisions that impose an even tighter regulatory scheme. According to the report, the Justice Department circulated a letter letting ASCAP and BMI know it is considering allowing any single co-owner of a "split work" — also known as a "fractional, "co-authored" or "co-pub" composition — to issue a license for 100 percent of the work. This is in contrast to the current practice in the music industry, whereby everyone who has a piece of the copyright needs to agree to license the work. The music companies have let their resulting unhappiness be known, albeit only off-the-record.

Not everyone has been so unhappy with the DOJ trial balloon on split works. Billboard quoted streaming service Pandora as saying: "We appreciate that the Department of Justice is taking steps to prevent further anti-competitive behavior in music licensing." Matt Schruers of the Disruptive Competition Project has framed the reported DOJ inquiry as actively pro-competition. Per Schruers, the music industry has created "artificial gridlock" among its rights-holders by allowing each co-author the power to unilaterally veto, but not unilaterally authorize, the license to use a copyrighted song. This means that a single rights-holder with only a small percentage of ownership in the work may pull the work when a licensing agreement ends, or deny a license to begin with.

These sorts of unilateral decisions by fractional rights-holders have been costly to services like Pandora Radio. Two years ago, Universal Music Publishing Group, owners of at least fractional rights in 20 percent of the music in the BMI catalog, withdrew its digital rights from BMI, a move that was followed by doubling the rates it sought to charge Pandora. And in another example, a different publisher, BMG, also withdrew its rights, but in this instance the result was Pandora took down all of BMGs wholly owned works and Pandora's customers were cut off from a substantial trove of the BMG catalog.

Is this what Congress intended with its last major revision of the Copyright Act, back in 1976? It doesn't appear so. Contemporary reports from the U.S. House summarizing the changes conclude:

"Under the bill, as under the present [pre-1976] law, coowners of a copyright would be treated generally as tenants in common, with each coowner having an independent right to use or license the use of a work, subject to a duty of accounting to the other coowners for any profits."

That's not always how split works licensing model operates today, as the UMG example demonstrates. To license use of a song, Internet companies may end up having to cut separate deals with each fractional rights-holder. More deals mean more transaction costs, as well as more potential dissenters with the power to scuttle those deals. The process is particularly onerous for new potential entrants to the digital market, and the leverage enjoyed by the major labels and publishers only grows as they continue to consolidate. Today, Sony alone controls nearly half of all royalties collected.

The purpose of copyright is not merely to provide monopoly revenue streams to content companies, but to ensure that creative works actually reach the public. Thus, for the DOJ to clarify obligations under the decades-old consent decrees could make sense. Allowing fractional rights-holders to authorize use of a work unilaterally is one potential avenue to untangle the complex web of rights in music and bring the licensing system more in-line with those of other copyrighted works with multiple authors.

To be clear, no one is asking to eliminate the consent decrees, even though all sides officially say they favor competition and the free market. Ironically, those who laud the competition they say would follow from allowing rights-holders to "partially withdraw" digital music rights tend to fear simplification of the system as a whole, precisely because would make competition among rights-holders more likely.

For instance, they oppose allowing fractional rights-holders to license joint-authored songs on grounds that this would create a "race to the bottom" in digital copyright licensing, lowering prices that could be commanded on the open market. Publishers and PROs thus must find a way to thread the needle in arguing both that the free market commands we let them partially withdraw digital rights and that the free market is lousy when co-authors compete with one another on price.

Any recommended modifications by the DOJ would have to be agreed to by the PROs and then approved by a court. In the meantime, we need a more robust public conversation around how to handle thorny issues like split works. Of course there's an irreducible tension between (a) the "exclusive rights" held by rights-holders in their "writings and discoveries" ("exclusive rights" just means the power to "exclude" non-rights-holders' use) and (b) the goal of the U.S. Constitution's Progress Clause, which gives Congress the power to grant such rights to "promote the progress of science and the useful arts" for rights-holders and non-rights-holders alike.

There are a few things about which almost everyone in this conversation already agrees: markets should be competitive; the public has an interest in copyright; and public policy should meet its Constitutional aim to encourage both creative and technological innovation. We can't help but wish, in navigating this thicket of thorny issues, we were discovering simpler arguments and simpler solutions.

Mike Godwin is General Counsel and Director of Innovation Policy at R Street Institute. Sasha Moss is a Google Policy Fellow at R Street Institute.

Filed Under: collection society, competition, consent decree, doj, fractional licensing, free market, licensing, music, pros, split works
Companies: ascap, bmi, sony music, universal music

ASCAP's Desire To End Antitrust Agreement Leads DOJ To Investigate Latest Collusion Between Music Publishers

from the look-at-that dept

Over the last few months, you may have noticed that ASCAP, BMI and the various music publishers have been pushing strongly to end the so-called "consent decree" around music publishing. This was an agreement from 1941 (and reviewed in 2001) limiting how performance rights organizations like ASCAP and BMI could act, given their position as a somewhat natural monopoly over the compositions they represented. The idea was to stop those companies from holding those works hostage -- which is why there are things like rate setting procedures by the Copyright Royalty Board. Now, we have our problems with the CRB and the rate setting process, but there is a very real fear that ASCAP, BMI and others would make music streaming prohibitively expensive if given the chance. The whole focus on getting rid of the consent decree is to try to remove any effort to block them from jacking up their prices to ridiculous rates.

The attempt to ditch the consent decree seemed especially odd, given that just months earlier, a court had called out the clear collusion by ASCAP and a bunch of music publishers to try to artificially jack up Pandora's rates. The details were a little convoluted, but basically certain publishers "withdrew" certain music from ASCAP, claiming they wanted to negotiate directly with Pandora. They didn't negotiate in good faith, and basically waited right up until the deal was about to expire. They then refused to even name what songs would no longer be covered, leaving Pandora at a very real risk of streaming songs it no longer had the right to (without even knowing which songs were being "pulled.") Because of this, Pandora was forced to sign exorbitantly high rates, which ASCAP and others then used to try to get even higher rates for others. It was clearly collusion, because while ASCAP should have been upset about publishers withdrawing music, it clearly was not. Furthermore, there were clear discussions between ASCAP and the publishers about all of this.

The end result of that case was that ASCAP lost its attempt to really jack up rates to Pandora much higher, but many people wondered how ASCAP could get away with doing that without any sort of punishment. Well... new reports say that the Justice Department is investigating ASCAP, BMI, Universal Music Publishing and Sony/ATV over possible collusion. This is being done as part of the DOJ's review of the consent decree, but ASCAP's decision to attack the consent decree right after a court called it out for collusion may backfire badly:

The CID requests are seeking documentation across a lot of particulars, including the effect of the consent decrees on rates, whether partial withdrawals of digital rights should be allowed, and plans to license other rights beyond the public performance rights that PROs handle today. However, a memo obtained by Billboard that was sent to employees by ASCAP senior VP of legal Richard Reimer began by noting that the CID is connected to the DOJs review of the consent decree. And, as a possible reminder to be careful of what you wish for, the DOJ is also investigating of alleged coordination among ASCAP, BMI, Sony/ATV Music Publishing, and Universal Music Publishing Group.

That aspect of the DOJ investigation was mentioned in a note to ASCAP employees telling them to "preserve all documents, whether in paper or electronic format, on all the CID-related topics."

In the Billboard article, the publishers and ASCAP insist they're not worried about all of this because they believe the judge in the Pandora rate setting case "got it wrong." That's quite a bit of hubris to have, given all of the evidence of collusion that was presented in that case. It seems quite possible that rather than ending the consent decree, as ASCAP and publishers would like, the DOJ may actually come down on all of them for some fairly serious antitrust problems.

Filed Under: antitrust, collusion, consent decree, doj, music, music publishing, partial withdrawals, streaming rates
Companies: ascap, bmi, pandora, sony music, sony/atv music publishing, umg, universal music, universal music publishing group

Legacy Recording Industry Claims Pandora Is Playing A 'Sick Joke' In Seeking The Same Rates Others Pay

from the really-now? dept

The ability of the record labels and RIAA front groups to flat out lie about the internet is really quite incredible. There's been some buzz recently about the crazy fact that Pandora just bought a small terrestrial radio station in South Dakota. Now, you might wonder, why would an innovative company that basically seems to be focused on making terrestrial radio stations obsolete need to own such a station... and Pandora is rather upfront in its answer: because the music collections societies, like ASCAP and BMI discriminate against internet companies, in direct violation of an antitrust agreement that ASCAP signed. Furthermore, ASCAP not only won't offer Pandora the same rights, but it engaged in highly questionable negotiation practices, such as refusing to tell Pandora what songs it was pulling the rights to, such that Pandora risked huge statutory awards for copyright infringement:

During negotiations, ASCAP and the publisher increased the pressure by refusing to provide Pandora the list of tracks that were being withdrawn, exposing Pandora to copyright infringement liability of up to $150,000 per work. At Pandora’s scale, such liability would be enormous. Faced with such potential liability, Pandora negotiated an agreement that resulted in increased rates. Shortly thereafter, additional major publishers took steps to withdraw their catalogs from ASCAP, again with respect to Pandora.

ASCAP created additional ways to circumvent its antitrust consent decree. Our motion also describes how ASCAP refused to provide Pandora a license under the same terms as the iHeartRadio service, for only one reason: iHeartRadio is owned by a terrestrial broadcaster.

All of this is in direct violation of the antitrust agreement ASCAP has with the DOJ, in which it's supposed to make sure that ASCAP can't use its monopoly power over compositions to discriminate against certain players. Yet, ASCAP is clearly trying to discriminate against internet streaming services, by charging them significantly higher rates.

So, Pandora has bought the station in order to get the same rates as other streaming radio stations that are owned by terrestrial stations. As Public Knowledge points out:

This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they’re using. This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.

And this is only about composition rates, not even getting into the rates that Pandora has to pay for sound recordings, which is infinitely higher than terrestrial radio. Buying the radio station won't help on that front, because the internet streams are charged differently than terrestrial radio no matter who owns it, but just the fact that it's paying different rates than everyone else seems ridiculous.

And, of course, the incumbents try to twist all of this. First up, we see that BMI has sued Pandora for buying the radio station. I'm not joking. I can't see on what possible grounds a lawsuit would make sense. Are they saying it's illegal for a company to seek to get the same rates that BMI offers radio stations?

But, even worse than that is the reaction of the RIAA front group, MusicFirst, a lobbying group set up by the RIAA and SoundExchange solely for the purpose of lobbying against internet companies and seeking ever higher rates for those companies, to make sure no internet music company can stay in business. That this is short-sighted and stupid never seems to occur to MusicFirst, who is always quick with a blog post arguing that internet companies are up to no good. In this case, it accuses Pandora of playing a "sick joke" in making this purchase:

This has to be some kind of sick joke. Pandora bought an FM radio station to game the system in order to pay songwriters less?

Pandora continues to find new ways to give artists and songwriters a raw deal from the bottom of the deck. In their race to the bottom to see how little they can pay music creators, they have stooped to misleading legislation, bait and switch petitions, and now fronting as an FM radio station.

Oh really now? It's a "sick joke" to try to get the same license rate that ASCAP and BMI offer terrestrial radio stations? How so? It's a "sick joke" that the company doesn't think it's fair for ASCAP and BMI to discriminate against internet streaming radio services? The only "sick joke" is MusicFirst pretending to represent artists as it seeks to kill off new and innovative internet services that are helping artists build bigger fan bases. No wonder the RIAA-funded MusicFirst has to resort to silly claims like this. The RIAA has never wanted to adapt to an internet world, and is, once again, looking to spread completely bogus propaganda in an attempt to stifle internet progress, which tends to help independent artists, such that they don't need the RIAA labels any more. What's incredible is that the RIAA, which set up MusicFirst, has it pretend to represent the interests of "artists" when it's never been anything more than a big-label front group. If there's any "sick joke" it would be MusicFirst's pretend concern for artist's rights, that just so happen to align entirely with the interests of the big labels.

Meanwhile, David Israelite, the lobbyist for the music publishers has piled on as well, claiming that this is about Pandora "going to war with songwriters."

David Israelite, CEO of the National Music Publishers Association (NMPA), tonight interrupted his state-of-the-industry speech at the group's annual meeting in Manhattan to lash out at Pandora's decision to acquire a radio station in South Dakota. "Pandora is going to pursue lawsuits and gimmicks," Israelite told the hundreds of songwriters and composers in attendance. "Pandora is hoping to fraudulently sneak in the back door. Any shred of credibility that Pandora had is gone. They are at war with songwriters "

Once again... huh? Asking for the same rates that radio pays to stream music online is "going to war"? How does that compute? It's as if the music publishers, collection societies and the RIAA can't help but lie because they have such distaste for Pandora actually figuring out a service that people like online, when they've spent so many years trying to ensure that online services fail. If there's any "war" going on here, it's the legacy recording industry against online services that fans seem to love.

Filed Under: discrimination, licensing, lobbyists, music publishers, radio, recording industry, royalties, streaming
Companies: ascap, bmi, musicfirst, nmpa, pandora, riaa

Canada Approves New Music Tariffs; Weddings Cost Double If You Dance

from the footloose? dept

The Copyright Board of Canada, which reviews copyright tariffs for various collection societies (like ASCAP and BMI in America, which collect performance licensing fees from venues) has just approved a new set of fees to cover recorded music at a bunch of different live events. Karaoke bars, conventions, parades, weddings and several other classes of event—which already pay fees to SOCAN, which represents songwriters—will now begin paying additional tariffs to collection society Re:Sound, which represents recording artists and labels.

We've talked a lot about the problems with the whole idea of the collection society structure in the past, especially the fact that most societies are constantly pushing for higher fees and trying to extract money for ridiculous things, even though they have a poor track record of actually redistributing the money they collect to the artists they supposedly represent. But of course, the people behind the tariff talk it up as a boon for small musicians:

"We are trying to establish tariffs for the remuneration of everybody involved in the music — everybody that has some rights to receive some remuneration," said Gilles McDougall of the Copyright Association of Canada, adding that the tarriff will likely result in a few million dollars a year for performers.

Re:Sound spokesman Matthew Fortier said the money collected will make a big difference to small operations.

"Sometimes you think of the larger artists or record labels, but most often it goes to small, struggling artists and record labels — we have thousands signed up with us," he said.

But as Howard Knopf points out, small artists are the last ones to get anything out of a scheme like this. Megastars and their labels can make money—but even that pales in comparison to the real beneficiaries of the tariff:

Sadly, very little of this money through gets to the artists that need it the most. This is because the copyright collective system tracks and rewards commercial success. Celine Dion, U2, Lady Gaga and their record and publishing companies do very well by the this system but emerging creators see very little of this money. The ones who really and consistently benefit the most are those who run the collectives, those who are consultants to the collectives, and the lawyers who punctually pursue new and higher Copyright Board tariffs using money raised from the previous tariffs and paid for ultimately by the Canadian public. Many if not most Copyright Board hearings generate millions of dollars in legal fees in order to generate average annual payments to creators that are typically much less than a junior lawyer’s hourly rate.

As with many such licensing schemes, the specifics of the fees seem almost completely arbitrary. Karaoke bars pay a rate based on nights-per-week, parades pay a different rate per-float, and weddings pay a third rate that for some insane reason gets doubled if the wedding involves dancing.

Some people will look at the fees themselves, which in any singular instance only generally add up to a few hundred dollars at most, and ask what the big deal is. But that's ignoring the big picture: Canada loves copyright tariffs, and each one serves to shift massive amounts of wealth around, often with little justification and no way of ensuring that the money is being properly distributed. And we just keep piling new tariffs on top of old ones, with no clear idea of how effective they are—except at funnelling money to the collection societies:

It’s true that most people do not tend to get married very often. And many weddings cost $25,000 or more. So, some may not be too concerned about the macro or even microeconomic aspects this particular tariff item. It won’t likely harm Canada’s economy overall or even the institution of marriage.

But these little tariffs add up. The little tariffs such as $0.29 for a blank CD or $5.16 per year for each K-12 student, or $253.45 for a wedding soon add up to about $500 million a year in Canada. One is tempted to say that "A half billion here, a half billion there, pretty soon, you're talking real money." Copyright Board tariffs siphon huge sums out of the educational system, the broadcasting and telecom industries, businesses of all kinds that use blank media for ordinary data storage and transfer purposes, etc.

Now we can add this one to the bloated list. And you can guarantee it won't be long before Re:Sound is back before the Copyright Board, pushing to raise the fees and expand the tariff to new classes of events and venues. Copyright tariffs rarely decrease—even when they absolutely should.

Filed Under: canada, collection society, copyright board, licensing, tariffs
Companies: ascap, bmi, re:sound, socan

What If There Was A Music Collection Society That Actually Understood That Free Isn't Always Bad?

from the well,-here's-a-shot dept

In the US we have three main music collection societies for performance rights (ASCAP, BMI and SESAC), and then SoundExchange for satellite/online streaming. However, many other countries just have a single collection society, with somewhat monopolistic tendencies. There have been efforts (mostly failed) to create more competition in Europe, mainly by encouraging the organizations to leave their local country and work across Europe. There have been precious few new entrants, however. At least one group is trying to change that -- and they're doing so by embracing the internet and the concepts of free culture. C3S, or the Cultural Commons Collecting Society is trying to enter the market in Europe in a much more culture-friendly manner:

C3S is a collaborative effort to found a new and ground-breaking European collecting society for musical creators to register their works outside of traditional schemes, released under free licences for commercial exploitation. More than just for works published under Creative Commons Licences, C3S is open for other free licences as well.

The new operation wants to encourage free distribution for non-commercial use, and a much more reasonable (and appealing) deal for both musicians and consumers. Just the fact that the organization has to make it clear that members are encouraged to make use of free licensing is an amazing step forward. Compare that to organizations like GEMA that have tried refusing to recognize Creative Commons licenses, and operations like ASCAP, who insist that Creative Commons is threat to musicians, rather than a useful tool. Who knows if C3S will go anywhere, but it's nice to see that it's at least being tried.

Filed Under: collection society, cs3, europe
Companies: ascap, bmi, creative commons, gema, sesac