Judge Highlights Bogus Collusion By ASCAP, Publishers In Rejecting Their Attempt To Jack Up Pandora's Rates

from the mafioso-techniques dept

Last month, we wrote about the rate court fight between ASCAP and Pandora as ASCAP attempted to massively increase Pandora's rates through moves that were quite clearly collusive. ASCAP had already lost an earlier ruling showing that it had violated its consent decree by letting publishers selectively remove certain works in order to force Pandora into paying much, much higher rates. However, the details of ASCAP and the publishers' deception became much clearer during the rate court battle. Last week, the judge handed ASCAP a huge loss, keeping the rate where it had been, at 1.85%, rather than jacking it up to ASCAP's requested 3%.

The ruling clearly highlights just how obnoxious the publishers and ASCAP acted throughout this process, and how their actions not only were intended to harm Pandora, but also the very songwriters that ASCAP pretends to represent. ASCAP has done an amazing propaganda job of pretending that it's always looking out for songwriters -- when the simple fact is that it focuses on benefiting its giant publishers, often at the expense of songwriters. The key issue in this whole action was how ASCAP allowed publishers to selectively "withdraw" their rights from ASCAP and then effectively hold a gun to Pandora's head, saying that if Pandora didn't accept a new license directly with those publishers, it would be infringing (to make this work, the publishers also refused to even let Pandora know which songs had been withdrawn). ASCAP effectively encouraged this to happen, knowing that it could use this to jack up its own rates, even though, on its face, publishers withdrawing rights from ASCAP should be seen as bad for ASCAP. But withdrawing from ASCAP (even though ASCAP effectively encouraged it) is also bad for songwriters because the publishers aren't exactly good at paying songwriters (shocking), whereas at least ASCAP has some level of transparency. Even the judge highlighted the songwriters and publishers' interests here were not aligned, but ASCAP was still siding with the publishers.

But the really damning stuff comes from the things we highlighted earlier during the trial -- and the judge found those points quite damning. There was clear collusive behavior between the publishers and ASCAP, meaning that ASCAP's claims that those "independently" negotiated deals were not done in a true marketplace. It started with ASCAP boss, Paul Williams, trying to calm down angry songwriters, but flat out admitting that these "withdrawals" were all really about getting higher rates for everyone:

The large publishers were well aware of the discomfort that at least some writers felt with the new media withdrawals and made the following argument to convince them to come on board: if the major publishers could get higher license rates by direct negotiations with new media companies outside of ASCAP then those rates could be used in rate court litigation to raise the ASCAP license fees. The publishers found an ally on this issue in writer and ASCAP chairman Williams, who agreed with the new media rights withdrawal strategy. His email illustrates the strategy he pursued to get writers to support the publishers’ partial withdrawal of rights from ASCAP:

My job is to make this transition as smoothly as possible in the board room . . . to assuage the fears of the writers who may see this as an ASCAP death knoll . . . . [W]e are in fact giving [the major publishers] the right to negotiate. The end result being that they will set a higher market price which will give us bargaining power in rate court.

In other words, far from real competition and a market rate, Williams was flat out admitting that he was encouraging publishers to leave his own organization, making life more difficult for the songwriters he claims to represent, just so they could set up these sham agreements (negotiated with a gun to Pandora's head) and then pretend there was a higher "market rate" to use at the rate court.

This kind of behavior went to extreme levels, with Universal Music more or less threatening Pandora's lawyers with mafioso like claims, and then immediately emailing ASCAP folks, to talk about how the strategy of jacking up the rates was working, and how ASCAP should be strong, since Pandora was supposedly running scared and would settle quickly. This, you'll note, is not the behavior you'd see in a competitive market. It's the behavior of organizations colluding against Pandora.

The day after the rate court filing, UMPG’s Horowitz called one of Pandora’s attorneys at Greenberg Traurig. As Horowitz promptly memorialized in an email to ASCAP’s LoFrumento, Horowitz

told [Pandora’s outside counsel], as a “friend” of the firm, that I thought both the firm and Pandora are completely tone deaf. That whether his firm has the legal right to rep Pandora in litigation, the firm has lost huge goodwill with writers and artists by doing so. And that filing now for a rate court proceeding against ASCAP . . . had the effect of unifying artists, writers, and PROs against Pandora.

Horowitz also gave some advice to LoFrumento regarding ASCAP’s negotiating stance with Pandora. His advice boiled down to two words: be strong. Horowitz wrote:

My take: [Pandora’s outside counsel] and Pandora are scared. They just want to settle with ASCAP and settle fast. Be strong. Time is on your side. Pandora is now under intense pressure to settle with ASCAP. They have to put this behind them. You can really push Pandora and get a much better settlement as a result. They are reeling. They will pay more, a lot more than they originally intended, to do that.

Horowitz forwarded this same email to other ASCAP board members, including Sony’s Martin Bandier, and BMG Music Publishing’s Laurent Hubert. Besides these ASCAP Board members, Horowitz sent the email to David Israelite of the National Music Publishers Association (“NMPA”), which is a music industry trade group based in Washington, D.C. LoFrumento assured Horowitz that he was approaching Pandora with the mindset Horowitz advocated.

In other words, this was all a coordinated effort, rather than actual market competition. The ruling further confirms the fact, as Pandora had publicly stated, that ASCAP and Pandora had actually agreed to terms on a rate, and then ASCAP backed out of the deal, suddenly demanding much, much higher rates, leaving Pandora in a difficult spot at the last minute on some negotiations.

Either way, the judge makes it quite clear that he views ASCAP's activities as "coordinated" with the major publishers, rather than any sort of independent competitive market, as ASCAP had tried to tell the judge. Furthermore, the judge notes that the publishers, along with ASCAP, put Pandora in an impossible "gun to the head" kind of situation to agree to massive increases to the publishers, by withholding the list of songs that would soon be "infringing" if Pandora didn't agree to a much higher deal.

With only a few business days remaining in the year 2012, ASCAP refused to provide Pandora with the list of Sony works without Sony’s consent, which Sony refused to give. Without that list, Pandora’s options were stark. It could shut down its service, infringe Sony’s rights, or execute an agreement with Sony on Sony’s terms. Then, despite executing a confidentiality agreement with Pandora, Sony made sure that UMPG learned of all of the critical terms of the Sony-Pandora license. And LoFrumento admitted at trial that ASCAP expected to learn the terms of any direct license that any music publisher negotiated with Pandora in much the same way.

[....] What is important is that ASCAP, Sony, and UMPG did not act as if they were competitors with each other in their negotiations with Pandora. Because their interests were aligned against Pandora, and they coordinated their activities with respect to Pandora, the very considerable market power that each of them holds individually was magnified.

The judge certainly finds Sony and ASCAP's behavior in withholding the list of songs it was withdrawing from Pandora incredibly suspect, and further that the testimony from Sony's representative was simply "not credible" on this issue.

Brodsky received this request for a list of the Sony works, but never responded. In their telephone conversations during the month of November, Rosenbloum reiterated the request for a list of works on several occasions but never got any response. Rosenbloum repeated the request once more at a breakfast meeting that he and Pandora’s Kennedy had with Sony’s Brodsky and Bandier on November 30. Again, Sony did not respond.

The list of Sony works was potentially important for several purposes, and Pandora referred to those several purposes in its discussions with Sony. In addition to wanting to be able to remove the Sony works from its service if Pandora and Sony could not come to terms, Pandora needed the list so that it could understand how to apportion any payments between the EMI and Sony catalogues since the payments would apparently be made at two different rates. Pandora also wanted the list so it could evaluate whether the substantial, non-refundable advance that Sony was demanding would likely be recouped.

Sony had a list readily at hand, since the Compendium required that a publisher and ASCAP work together during the 90 day period before the effective withdrawal date to confirm precisely which works were being withdrawn. Sony understood that it would lose an advantage in its negotiations with Pandora if it provided the list of works and deliberately chose not to do so. Brodsky’s explanation at trial that he did not provide the list because he believed that negotiations were proceeding smoothly and did not want to impose an unnecessary “burden” on Sony’s staff is not credible. The negotiations were not going smoothly; the list had already been prepared and its production imposed no burden. As Brodsky recognized in his testimony, the list was “necessary” to Pandora in the event the parties did not reach a deal. Sony decided quite deliberately to withhold from Pandora the information Pandora needed to strengthen its hand in its negotiations with Sony.

The judge recounts how Pandora also tried to get the list from ASCAP directly, and ASCAP after conferring with Sony similarly refused to give Pandora the list. The ruling also details how when ASCAP broke the handshake agreement it had with Pandora, it basically left Pandora less than a week to come to terms with Sony or be at risk for huge liability for playing Sony songs that it couldn't remove since no one would give it a list. In other words, Pandora was given effectively less than 5 days to negotiate a deal with Sony, without even knowing the basic information it needed to know. When Pandora further asked for the list just so it could figure out how much of its music database would be covered by Sony's license, Sony again refused to give the list, but just said that about 30% of the music consisted of Sony and EMI combined.

Then there's the fact that Sony officials then leaked information about the deal terms all over the place, despite a confidentiality agreement.

By mid-January 2013, and despite the existence of a confidentiality agreement, Sony leaked the key terms of the Pandora license to the press. The headlines in three articles said it all: “Sony/ATV ‘Now Has the Power to Shut Pandora Down…’”; “Sony/ATV gets 25 percent increase in Pandora royalties”; and “Sony/ATV’s Martin Bandier on new ‘quite reasonable’ Pandora deal.” A New York Post article featured a photograph of Sony’s Bandier in shirt sleeves with a large cigar in his mouth, as it reported that Sony had “wrangled a 25 percent increase in royalties” for a one year license.

The judge also notes that it's quite clear that, despite denials, Sony broke the confidentiality agreement and leaked these deal terms:

Although Brodsky denied knowing that anyone at Sony had leaked the terms of the license to the press, the evidence is that Sony did just that. Despite reporting dutifully that Sony had “declined” to comment on the terms of the deal, the articles referred to anonymous industry insiders as their source and quoted Bandier’s analysis of the deal. While Pandora had absolutely no interest in seeing the 25% hike in its rates known to other licensors, Sony hoped that its rate would be a jumping off point for the next publisher’s negotiations with Pandora, and it was. Pandora had its attorneys call Sony to complain of the breach of their confidentiality agreement.

The whole ruling is quite a read. It shows over and over again how ASCAP and the big publishers basically did everything possible to collude and screw over Pandora, potentially harming songwriters in the process, by giving those songwriters less clarity and less information about licensing rates and how much they were owed. The claim from Universal that Pandora would regret going to rate court doesn't seem to have come about, as it's the publishers and ASCAP itself that have come out of this whole process with a massive black eye.

Filed Under: collusion, paul williams, rates, streaming
Companies: ascap, emi, pandora, sony music, universal music

Comcast Still Blocking HBO Go On Roku (And Now Playstation 3), Incapable Of Explaining Why

from the crash-the-gatekeepers dept

For years, HBO and Time Warner have refused to give people what they want and offer a standalone streaming video service, because they're afraid of shaking up their cozy, promotion-heavy relationship with the cable industry. Instead, HBO's Go streaming service has been made available on desktops and a growing number of devices, TVs, set tops and game consoles -- provided you log in with your traditional cable subscriber information. It's a half-measure, and availability to this day remains a little fractured.

Case in point: Sony this week finally made HBO Go available on the Playstation 3 (despite HBO Go launching in early 2010), but not the new Playstation 4. The new Playstation 3 version works for most cable operators in the country -- except for users on Comcast. Why not? Comcast doesn't really give an answer other than to say the massive (and soon to get much larger) company only has so many people available to ensure TV Everywhere authentication works on new devices:

"With every new website, device or player we authenticate, we need to work through technical integration and customer service which takes time and resources. Moving forward, we will continue to prioritize as we partner with various players."

Which might almost sound like a reasonable explanation -- until you realize that HBO Go on Roku hasn't worked for Comcast users since 2011, despite Roku being one of the most prominent Internet streaming devices available. Apparently, it's a matter of priorities? Comcast's argument for being allowed to acquire companies is always that these acquisitions make them bigger and more efficient. So apparently, getting simple TV authentication to work takes Comcast years longer than every other pay TV operator because Comcast is simply too big, efficient and fantastic?

Now, Playstation 3 users have joined the Roku user chorus, asking Comcast in their official forums why they can't use HBO Go, and are being greeted by the same silence Roku owners have enjoyed for years. I'm not sure you can get away with calling this a net neutrality violation (I think the term is mutated to the point of uselessness anyway), given HBO Go on Roku will work if you have Comcast broadband -- but get HBO from another pay TV provider like Dish. Still, it's fairly curious how Comcast's own Internet video and on-demand offerings (which include HBO content) tend to take priority.

The problem illustrates once again how the TV Industry's "TV Everywhere" mindset fails because it winds up taking value away from the user, not delivering it. It's also another shining example of how HBO should shake off its fears, embrace innovation, leapfrog the gatekeepers and release the standalone Internet streaming app everyone has been clamoring for.

Filed Under: cable, hbo go, playstation, streaming, television, tv everywhere
Companies: comcast, hbo, roku

NBC Crows About Thwarting 45,000 'Illegal' Olympic Videos, Ignores The Fact That It Drove Users To Them

from the gold-medal-inconsistency dept

Aside from a now-traditional lack of enough live coverage, pretty awful commentary, a ridiculous over-abundance of a strangely limited rotation of ads, making Bode Miller cry and Bob Costas' double eye infection, NBC did a pretty good job covering the Winter Olympics, right? NBC certainly believes so, even though it seems that many Americans found NBC coverage so immensely annoying, they went to great lengths to install VPNs so they could watch Canada's version of the games instead.

What has NBC achingly proud, however, is the fact that the company cleverly worked with Olympics officials to prevent viewers from trying to access the games via non-sanctioned NBC streams and online outlets. According to NBC, the company worked to kill off some 45,000 videos of Olympics competition, and an estimated 5,000 live streams (they avoid showing their math or any historical context for those numbers):

"Officials estimate that 20,000 videos of Olympic competition were kept off YouTube, either through filtering technology that prevents them from being posted in the first place or locates and takes them down shortly after they are added. Another 20,000 were stopped from distribution on similar video-sharing sites popular elsewhere in the world, like Dailymotion in Europe or VK.com in Russia, NBC said."

Right, well, good job I guess. The problem is that while NBC was busy waging their proud war on Olympic videos, they were simultaneously engaged in practices that were driving users to those same viewing options. While NBC did offer some live streams on their website, they were largely restricted to customers that only pay for cable, as part of the industry's lame "TV Everywhere" mindset (a mindset that increasingly doesn't seem to be doing much of anything for anybody, including cable). Worse, even some paying TV customers, like those paying for Comcast's new HBO, basic cable and broadband bundle, weren't allowed to watch the streams because they weren't buying expensive enough TV packages.

To hear NBC tell it, this kind of absurd inconsistency in policy is all a perfect example of how when NBC and sanctioned friends work together to be inconsistent, it results in online perfection:

"When all the players in the digital ecosystem cooperate and work together, it is possible to create an online environment in which legitimate commerce thrives, jobs are created and consumers receive content how, when and where they want it," said John McKay, NBC spokesman."

A real gold medal performance all around, NBC. You really stuck the landing.

Filed Under: olympics, piracy, streaming, vpn
Companies: nbc

US Solicitor General's Office, Run By Former Top MPAA Lawyer, Shockingly Sides With Broadcasters Over Aereo

from the it's-the-little-things dept

As the Aereo case is set to be heard by the Supreme Court in April, there have been a flurry of amicus briefs filed on both sides. It's disappointing, but not too surprising, to see that the official position of the administration is to side with the broadcasters over Aereo, arguing effectively that the length of a cord changes the copyright calculation. This position goes against every Aereo court ruling to date, except for one odd ruling in Utah. That the US government would take this position isn't too surprising. After all, the Solicitor General of the US (whose office prepared this brief) is Donald Verrilli -- who probably would have been representing the broadcasters in this case if it had happened a few years ago. For years, he was Hollywood's go to litigator for their big copyright cases, including the infamous Grokster case, in which he convinced the Supreme Court to create a new "inducement" standard for infringement. Technically, Verrilli "recused" himself from this filing, but what were the chances that the folks who report to him were going to file a brief that sided against the organization most likely to employ Verrilli once he leaves government service?

The key issue in the case is whether or not Aereo is retransmitting to the public. As we've explained multiple times, Aereo's setup is technologically insane, but legally sensible, given just how stupid copyright law is today. Because it's recognized as legal that you can place shift legally accessible TV (a la a Slingbox) and that you can watch over-the-air TV via a personal antenna (duh), Aereo has set up "individual antennas" for each customer, connected to the equivalent of a Slingbox, such that you can "subscribe" and get access to over-the-air channels. It's technically no different than you setting up an antenna and Slingbox in your home, except that the distance of the cable between the antenna/Slingbox combo and your TV is much longer with Aereo (across the internet) than in your home. However, broadcasters and other supporters of them (now including the US government) argue that this longer cable somehow, magically, turns this individual antenna into a public broadcast for which Aereo should be expected to pay ridiculously steep retransmission fees.

The arguments put forth by the US government are basically a carbon copy of what the broadcasters are saying. They completely reject the length of the cable argument by basically saying that, what really matters, is how this might undermine the retransmission fees broadcasters get. Specifically, they say that it doesn't matter that people at home can create their own Aereo legally, what matters more is that Aereo looks too much like cable retransmission:

Respondent observes that, from the subscriber's perspective, respondent's service provides substantially the same functionality that consumers could obtain by purchasing equipment for their homes. In enacting the 1976 Copyright Act amendments, however, Congress overrode decisions of this Court that drew on the same analogy. In applying the Copyright Act in its current form, the more important functional equivalence is between respondent and the cable systems that the 1976 Congress brought within the Copyright Act's purview.

But that totally and completely ignores some pretty significant differences, especially around how Aereo has an individual antenna for each user, as well as making sure that there's an individual copy made. That was not the case at all with cable systems.

While this filing is careful to state that it is not trying to undermine the important precedent set in the Cablevision case (which said a remote DVR controlled by a cable company is legal), which was a key reason why the lower courts sided with Aereo, it's important to note that back when the Cablevision case was up for appeal to the Supreme Court, Verrilli's predecessor sided with innovation over claiming infringement. It's just now that the Solicitor General who has a long history of representing Hollywood is in control, that the administration seems to be happy to side with copyright maximalism, over innovation. The one potential saving grace: the prior solicitor general who sided with Cablevision and against the broadcasters? Elena Kagan... is now a Justice on the Supreme Court.

Filed Under: broadcast, solicitor general, streaming, television
Companies: aereo, mpaa

Australian Broadcasters, Netflix Competitors Pout Because Netflix Hasn't Banned VPN Users Yet

from the give-the-people-what-they-want dept

Australia has a long and proud history of seeing higher copyright infringement rates, thanks in large part to the country's failure to offer up legitimate, affordable streaming video options. With Netflix officially unavailable Down Under, many viewers there have taken things into their own hands and have started using VPNs to mask their location and subscribe to the service anyway. Cue the rising hysteria from both broadcasters and Australian Netflix competitors, who insist that something has to be done about this flagrant outrage. They're helped by regional paper The Australian, which suggests that these paying users are "pirates":

"Highlighting how the TV networks view these people, an article this morning in News Corp-owned The Australian went as far as labeling subscribers as “pirates”, even though they are paying for the service..."There is concern at local networks about the growing impact of the US company flouting international regulations by accepting payments from Australian credit cards, despite maintaining a geo-block that is easily bypassed by VPN manipulation or spoof IP addresses,” the paper said."

Granted, if companies were delivering what users wanted, this wouldn't even be an issue. In fact, that would seem to be a much easier solution to this "problem." Instead, broadcasters and Australian streaming provider Quickflix (HBO is an 8% owner) seem to think it would make more sense to force Netflix to ban the use of a very common technology that has innumerable uses well outside of just skirting regional limitations. Some users, for example, are finding that VPNs are one (albeit sometimes inefficient) way to bypass some of the annoying new peering feuds erupting here in the States. Still, Quickfix thinks somebody really should force Netflix to start blocking VPNs before the country starts falling apart:

"Quickflix chief executive Stephen Langsford has accused US online streaming service Netflix of turning a blind eye to copyright infringement in order to get a free ride in Australia, as competition heats up in the TV and movie streaming market..."The studios have licensed Netflix to distribute content on particular terms in the US and other larger markets, they haven’t licensed Netflix for Australia. I have no doubt that the studios are in discussions with Netflix about VPNs because it is blatantly in breach of terms and Netflix is essentially getting a free ride into Australia."

It seems like only a matter of time before proxies and VPNs see a renewed focus as public enemy number one by the entertainment industry. Most of the world's graduated response programs, including ours here in the States, can't detect users who are using proxies and VPNs at all. With Australia now contemplating a graduated response program of their own, you can expect the vilification of VPNs to ramp up quickly, even though any laws restricting their use would be met with swift and steep opposition.

Netflix hasn't stated why they've yet to head to Australia yet, but it's either because they want to prioritize larger international markets, or they're having a hard time securing content licensing from Australian broadcasters. Until Netflix does show up Down Under, Australian cable operators like Foxtel are engaged in the kind of brilliant anti-piracy maneuvers we've grown used to, such as locking down HBO's Game of Thrones in an exclusive streaming and download arrangement. Surely that will stop copyright infringement of what's become the most pirated show on the Internet, right?

Filed Under: australia, streaming, television, vpn
Companies: hbo, netflix, quickflix

Broadcasters Warn Supremes Of The Innumerable Non-Existent Horrors That Will Befall Everyone If Aereo Wins

from the your-threat-is-not-even-remotely-scary dept

As we've noted for some time, broadcasters have long argued that if they're not given what they want they're sure to go out of business, even if the evidence never actually supports that. Their latest incarnation of that has been in heavy rotation during their battle against live TV streaming service Aereo, with broadcasters arguing that if Aereo is allowed to survive, they'll pull all of their broadcast channels from over the air and move them to paid cable tiers. As we've stated previously they should go right ahead and do that, as the publicly-owned airwaves they're currently using can certainly be put to good use. Also, enjoy the wrath of sports fans (and the oodles of politicians who'll side with sports fans to earn political brownie points) when you attempt to do that.

Gearing up for their Supreme Court showdown with Aereo on April 22, broadcasters have once again gleefully pulled out this empty threat. Hoping to convince the court's eight Judges (Justice Alito recused himself, possibly due to stock holdings) an Aereo win would be disastrous, the petitioners proclaim that free "quality" programming will cease to exist:

"The TV broadcasters reject Aereo's conclusion that cloud computing and other novel technologies could be at stake, but they do raise dire warnings about what might happen should the Supreme Court rule in Aereo's favor. As the brief states, "Indeed, if that is the world in which broadcasters must live, then they may be forced to reconsider whether they can afford to continue making the same quantity and quality of programming available to the public for free in the first place."

The debate over the word "quality" aside, note the pretense again that they they would struggle with finances, ignoring the fact that CBS posted record earnings last year and even CBS's CEO recently admitting that an Aereo win would have no serious impact on earnings. Perhaps scarier is this dire warning included in the brief by the petitioners:

"If the transmit clause could be circumvented through the simple expedient of simultaneously supplying each user with a distinct transmission generated from a distinct copy, then cable and satellite companies could potentially devise Aereo-like workarounds of their own, and in the process render the transmit clause a dead letter."

Wow, that would be rough, huh? Cable and satellite operators giving subscribers more flexible options for content that might in the process make a customer or two happy? Could even Lovecraft or Dante forge a more horrifying hellscape? Is there any point in living?

Filed Under: broadcast, retransmission, streaming, supreme court, television
Companies: aereo

Musicians Increasingly Realizing That Streaming Services Are Actually A Really Good Thing

from the oh,-look-at-that... dept

For over four years now, we've been somewhat mystified by the hatred from some musicians and labels towards streaming services like Spotify. The general complaint seems to be that "it doesn't pay enough," but "enough" is often at ridiculously high standards. I've now seen three separate analyses that show that, on a per listener-per play basis, Spotify pays more than any other source. The problem, it often seems, is one of expectations. Part of it is simply that musicians seem to forget that their labels take a giant chunk of their earnings, and that the payments that eventually trickle down to musicians are often months or years late. Also, those doing the complaining often seem unable to comprehend that these services take time to grow, and as they grow, the payouts get bigger and bigger. But the biggest mistake of all seems to be the idea that not having your music where your fans want it is somehow a good idea. We've pointed out repeatedly that making music disappear from where people are looking for it only harms the musicians.

Furthermore, as we've seen over and over again, as these services get bigger and start to catch on, artist are realizing all sorts of ways they can profit from them. Two recent examples are quite handy. First up, we have independent musician Ron Pope (music here), who has written a fantastic piece for the Huffington Post about just how wonderful Spotify has been for his career.

My music was added to Spotify in September of 2010; through the most recent report, which runs through November 2013, I've had over 57 million plays and they've paid me out $334,636 with over $200,000 of that coming in 2013.

That seems quite a bit different than those stories you hear from some whiners, claiming that Spotify pays peanuts for each million plays or whatever.

But, even more important, is that Pope has noticed that it's not just about the money directly paid by Spotify. Instead, as many have suggested for years, Spotify makes his fans even more attached to him, opening up all sorts of other opportunities. For example, he describes how it opened doors to large shows -- where the fans are totally knowledgeable about his entire catalog:

I'm getting over a million streams in Sweden alone most months. As a result of this, I was offered a very respectable guarantee to play at the Bravalla festival there last summer, where singalongs like this happened during every song: I have an extensive catalog; Spotify allows fans to take in all of my music so that they can become a fan of me as an artist, rather than directing them to one particular single. That's why my Swedish fans are able to sing along to songs that are eight years old the same way they sing along to songs that are eight months old. With Spotify, it's not about a single; the fans can pour over my entire catalog and follow my journey from my first album all the way through to today.

Similarly, he notes that when he last played shows in Norway, he could only sell about 100 tickets. But there has been an explosion in people from Norway listening to his music on Spotify lately, so his upcoming show in Norway sold out of its 450 tickets three months in advance.

Of course, it's notable that, despite being an American, a lot of what he discusses is the money he's been making from Sweden and Norway -- two countries where Spotify is absolutely dominant. One could argue that he's lucky that folks in Scandanavia apparently really like him, but a better point might just be that once streaming services are really mainstream, there's plenty of money to be made by artists. Flipping out now in other countries, where streaming is just building up an audience, seems counterproductive in the extreme.

A second story, courtesy of TorrentFreak, is from another musician, Benn Jordan (music here), who wrote up a fascinating post suggesting other musicians get over the whole Spotify hate thing, because it's misplaced. He notes the same things that we've already noted above -- about bad contracts and the fact that Spotify is still really just getting started in the US and other places -- but also notes that Spotify is beginning to stand out as a significant revenue source for himself.

So just short of publicly divulging my income, I can tell you that Spotify has made me about 30% more than iTunes, Pandora, Amazon, Xbox Music, Google Play, eMusic, Rhapsody, Rdio, Deezer, MediaNet, Simky, Nokia, and Myspace Music combined in that period. Even if you tack on my checks from ASCAP to that long list, Spotify is still ahead.

I can tell you that Spotify alone, for the last 9 months or so, has paid for my rent in a 2 floor coach house with garage. But what is predictably notable, is that the numbers for Spotify are growing monthly, and have actually doubled from the first month to the last while sales on other platforms remained the same.

He also notes that people who really love his music now generate a lot more money for him -- since before they'd just buy an album, and he'd never be able to get more than the $7 from that album. But if they stream it over and over again, it can add up to much, much more.

Obviously, these are just two stories -- and we've heard stories from other musicians who still think that they're not getting "enough" from Spotify. However, as we see more musicians noticing that streaming revenue is increasing, it seems like a lot of the old premature kneejerk "hate" is likely to dissipate.

Filed Under: music, streaming
Companies: spotify

No, Netflix's New Deal With Comcast Probably Won't Destroy The Internet. Yet.

from the too-many-experts,-not-enough-data dept

The mysterious performance problems customers on large ISPs (specifically Verizon, AT&T and Comcast) have been having with Netflix streaming has just gotten slightly clearer. For months people have posted traceroutes as undeniable proof that large ISPs like Comcast, AT&T and Verizon had intentionally been throttling subscriber Netflix streams. However, as we've been noting, simple route analysis doesn't tell the whole story, and it's not always possible to determine where video transit breakdowns are occurring without direct access to ISP network data (data they hide completely).

Adding a sliver of insight into the problems, Netflix and Comcast announced over the weekend that they had struck a new interconnection deal that involves Comcast providing Netflix with direct access to the Comcast network. The announcement itself says little, other than to insist that Netflix "receives no preferential network treatment under the multi-year agreement." A Wall Street Journal report had a little more insider detail, noting that the two sides bypassed core network operator Cogent in an arrangement that involves Netflix paying Comcast for direct access:

"(The connection to Cogent) was starting to become overwhelmed with Netflix traffic, congesting traffic and leading to slower Netflix streams for Comcast Internet users, people familiar with the matter said. At the same time, Comcast presented Netflix with more attractive deal terms than the operator had been offering, the people said. The deal spans several years. Netflix was aiming for a long-term deal to make sure its projected traffic growth wouldn't put it at a disadvantage, one of the people said. The connection is a so-called "paid peering" deal, which connects Netflix's network to Comcast's directly. Netflix was previously using several middlemen to access Comcast's network."

Why the sudden interest on Comcast's part in getting a deal done? They're likely not too excited about the fact that they've been receiving bad press for poor Netflix streaming performance at the same time they're trying to sell regulators on the purported technical benefits of their $42 billion acquisition of Time Warner Cable.

Despite a lot of Internet hand-wringing about the deal and counter-kvetching about said hand-wringing (all based on no actual data, mind you) -- the agreement on its surface appears to be good for everybody involved except Cogent. That's thanks to the fact that in this case, Comcast appears to have been willing to make apparent concessions on price and deal length in order to keep up appearances for the merger. Netflix pays the same money they were paying Cogent to Comcast (or less), Comcast makes revenue they weren't making before, and customers get better streaming performance at no added costs (since Netflix is probably paying about the same, for now).

The problems are twofold: one, these deals are kept highly secret so promises of "no special treatment" aren't something people can confirm, and as Timothy Lee at the Washington Post discusses, the continued expansion of last mile ISPs into CDN and transit markets over time (note this is not new) could potentially lead to higher prices and less competition overall across the Internet's core:

"The fact that Netflix agreed to pay Comcast suggests that Cogent will likely lose its fight with Verizon as well. And as Cogent's chief executive Dave Schaeffer told Ars, "once you pay it's like blackmail, they've got you, there's nowhere else to go. They'll just keep raising the price in a market where prices [for transit] are falling." Indeed, in the long run, this development threatens the survival of independent backbone companies like Cogent. If it becomes industry practice for backbone providers to pay residential ISPs, companies like Cogent will become mere resellers of access to the networks of large broadband companies. Or they may be cut out of the loop altogether, as large customers such as Netflix cut deals directly with broadband providers such as Comcast."

I'm not sure Lee helps his argument by bringing net neutrality into the discussion though, as this is again more about market power than neutrality (for the moment). It's also worth noting that Cogent has a reputation of being difficult in peering disputes, and when a breakdown happens, more often than not Cogent is at the heart of it for not following through on truly balanced peering. Cogent was busy telling media outlets last week that it was Comcast and Verizon that were to blame for recent slowdowns. To hear Cogent tell it, Verizon and Comcast have been refusing to upgrade their interconnection links, largely because the ISPs want to move from an era of settlement-free interconnection, to one where the ISPs play a larger role in transit and get paid:

"This isn't the kind of problem consumers can solve by purchasing a faster Internet connection, because they'd be paying only for a faster path to Verizon's network, not a faster path to the rest of the Internet. In some cases, Verizon has actually purchased and installed the necessary equipment to upgrade ports, but not turned it on, according to (Cogeco CEO) Schaeffer. "They actually put it in, so they spent the money, but they just politically have not been willing to turn it on in order to ensure that Netflix will not work as well as Redbox," he said. When Netflix can't get through to Cogent, it sends traffic through other providers, but Schaeffer claims that "everybody is full." So what are they fighting over? Schaeffer said Verizon "wants a price that is about 10 times the market price for transit." Again, transit is a service that takes traffic across the entire Internet, whereas peering is just a connection between two networks."

To intentionally belabor a point again though, nobody can confirm anything either side says because the details aren't released. Meanwhile, while the Comcast deal might not be bad, the worry among consumer advocates is that in a world where ISPs get bigger and more powerful and transit options are reduced and replaced under absolutely no transparency, the overall industry could get less healthy. With Comcast controlling the last mile conduit, an ever-increasing slice of the core networks, and the media content itself, you start to see the monopsony concerns Comcast's expansion could raise among antitrust regulators.

Remember of course this deal only impacts Netflix on Comcast, there's continued ongoing problems for Netflix and YouTube traffic reaching the networks of a number of larger ISPs (Time Warner Cable, AT&T and Verizon), with no indication of when they'll get resolved. While I don't think the FCC's Wheeler is going to do much of anything meaningful on broadband competition, net neutrality, or prices, I do think he'll work to find some way to bring a dash more transparency to these disputes if everybody involved can't start getting along. Mainstream services grinding to a halt with nobody willing to admit fault and everything kept in the complete dark is simply bad for business. For everyone.

If this is all tl;dr for you, all you need to know is that if you're on Comcast and your Netflix streaming stinks you should either see improvements right away, or sometime over the next few months as the changes are implemented.

Filed Under: broadband, streaming, throttling
Companies: at&t, cogent, comcast, netflix, time warner cable, verizon

If You Do A Search Almost No One Does, Google Might Point You To Unauthorized Version Of House Of Cards

from the reporting? dept

We've noted in the past that various copyright maximalists who are hellbent on blaming Google for their own failures to adapt and innovate, like to point to various searches on Google that point to what are likely to be unauthorized sources. They'll use examples like adding "download" or "free" to a search and then point out that the link appears to go to an unauthorized source. But that's silly, because (1) the people doing such searches probably aren't going to pay for the authorized version anyway and (2) very few people do those searches.

Chris Crum over at WebProNews has a story that's been getting some attention claiming that Google points to an unauthorized site ahead of Netflix if you do a search for "watch house of cards" on Google. Here's the screenshot he's showing: While that may sound damning, it only matters if people are actually doing that search. But they're not. Most people are just searching for plain old "house of cards" as you can see by looking at the Google Trends searches on both terms: The red line is people searching for "house of cards." The blue line that is basically across the bottom is "watch house of cards." In other words, this search that Crum and others are making out to be some evidence of Google "favoring" unauthorized sites over the official Netflix channel is a search that almost no one uses. The one that everyone does use -- "house of cards" -- doesn't appear to show any links to unauthorized sites.

You could argue that perhaps Netflix should do a bit more optimizing on searches for shows with "watch" before them, but given the fact that it appears almost no one does that search, why should they bother?

Filed Under: copyright, house of cards, piracy, search, streaming
Companies: google, netflix

Wall Street Journal Manages To Make The Netflix, ISP Streaming Kerfuffle Even Muddier

from the yes-I-said-kerfuffle dept

Major ISPs have slowly seen their Netflix streaming experience deteriorate over the last six months, major carriers like Comcast, Verizon and AT&T all dropping like a stone in the Netflix ISP streaming ranking index. We've discussed how, despite a bevy of well-intentioned claims, these ISPs are intentionally throttling connections for their own gains, there's still not really enough evidence to conclusively prove ISPs are up to no good here. Much of the network data just isn't publicly available, and there's an ocean of peering and CDN relationships between you, Netflix and your ISP that muddy the waters further.

That said, the Wall Street Journal this week complicated things somewhat with a report on the streaming shenanigans that offers this curious, anonymously-sourced paragraph, which suggests big ISPs are letting peering links saturate intentionally:

"Until the standoff gets resolved, the bulk of Netflix's traffic continues to flow across Internet intermediaries, including low-cost carrier Cogent Communications Group. People familiar with Cogent's and Netflix's thinking say the cable and telephone companies are delaying upgrading existing connections. Executives at major broadband providers, meanwhile, privately blame the traffic jam on Netflix's refusal to distribute its traffic more efficiently."

Again though, nobody can prove any of this because the network and peering data needed to do so is held tightly by all parties involved. Peering disputes generally involve core Internet companies agreeing to exchange equal amounts of data at hand-off points, often without compensation under confidential agreements. Historically, there have always been occasional skirmishes between companies as that balance gets out of whack. In recent years, those battles have intensified as last mile ISPs like Comcast have pushed for significantly more money to carry traffic, as we saw with the Comcast Level 3 peering fight from a few years ago.

In these disputes it has always been a goal to make the other guy look like the greedy one for leverage, though the Netflix problems have reached a new level. Netflix offers ISPs free access to their own Open Connect Content Delivery Network, which improves streaming performance. Larger ISPs have refused to join, not wanting to give what they see as a competitor to their own services (like Verizon RedBox streaming) any leg up, instead relying on their own CDNs that, theoretically, should offer equally decent performance. That those ISPs are suddenly seeing such dismal streaming performance suggests someone along the chain is being either cheap, incompetent, or is up to no good. Potentially all three.

Incumbent ISPs don't exactly have what you would call a stellar reputation for playing nice with disruptive companies or competitors, thus the theory that AT&T, Verizon and Comcast are intentionally letting these peering points saturate then pointing the finger at Netflix in the hopes of making them look bad. If that's the goal it's not working: data released this week suggests that Netflix just reached a three year high in customer satisfaction -- despite the price hike and Qwikster nonsense of a few years back. If the goal is to make Netflix look stupid, it doesn't appear to be working so far, and as the lowest rated industry in these kinds of rankings, it's probably futile for pay TV companies to try.

The whole mess is a good example of how net neutrality violations, should they occur, might not knock you over the head with their obviousness as traditional discourse has suggested. In fact, they might not even be provable. ISPs are too smart, and too wary of getting socked with new regulations. Instead, what you'll see is gatekeeper abuses dressed up under the guise of legitimate technical issues. Verizon Wireless, for example, blocked activation of Google's Nexus 7 tablet on their LTE network for six months, blaming Google and obscure technical certification issues (while selling users their own, inferior tablet in the interim). Wireless carriers also blocked Google Wallet from devices for proclaimed security reasons, while at the same time pitching their own, Isis mobile payment platform.

People were quick to cry foul in both instances. Do incumbents have a history of this sort of thing? Yes. Can you prove carriers were up to no good in either instance? No. It all makes the point that you probably could get away with net neutrality violations without regulators batting an eyelash. You just need to be a little bit clever about it -- with a dash or two of believable technical jargon for good measure. It also makes the point that with real neutrality violations inhabiting such murky territory, we're going to see a lot more people crying net neutrality wolf -- which only helps those engaged in anti-competitive shenanigans.

Filed Under: isp, net neutrality, streaming
Companies: at&t, comcast, netflix, verizon, wall street journal