The saga that has been Twitch's last six or so months is long and somewhat varied, so you should go read up on our historical coverage if you're not familiar with it, but we need to at least preface this post with the origins of how Twitch's bad time began. What has been a tumultuous several months began when it absolutely freaked out over a flood of DMCA takedown notices it received, mostly from the music industry. In response to that, and without warning to its creative community, Twitch nuked a bunch of content from the platform, mostly ignored the outcry from its creators, and did very little to put anything in place that would keep such a disastrous situation from happening again.
So of course it happened again. Twitch recently sent out an email that it had received roughly 1,000 additional DMCA takedown notices, almost all of them again over music playing in the background of recorded Twitch videos.
Said Twitch in its email on Friday: “We are committed to being more transparent with you about DMCA. We recently received a batch of DMCA take down notifications with about 1,000 individual claims from music publishers.
“All of the claims are for the VODs and the vast majority target streamers listening to background music while playing video games or IRL streaming. Based on the number of claims we believe these rights holders used automated tools to scan and identify copyrighted music in creators VODs and clips, which means that they will likely send further notices."
Of course they will. Twitch invited them to when it showed itself to be a willing partner in treating Twitch creators like a testing ground for DMCA cluster bombs. There are platforms out there that manage to both treat DMCA requests seriously and also provide some protection, or at least communication, to its users. A few tools for creators aside, Twitch's inaction on behalf of its creative community amounted essentially to greenlighting ever more DMCA takedowns from the music industry. Any surprise at that by the Amazon-owned company is laughable.
But this neutered, throwaway line from that same email is simply maddening.
“This is our first such contact from the music publishing industry (there can be several owners for a single piece of music) and we are disappointed that they decided to send takedowns when we were willing and ready to speak to them about solutions.”
As the old saying goes, be disappointed at the music industry's aggressive copyright enforcement in one hand and spit in the other and see which fills up faster. There is no substance to this disappointment. Of course the music industry has gone kazoo filing DMCA notices at Twitch. Twitch has made it clear its on their side, even making it easier than before to file these notices.
The real disappointment here is that Twitch, and by extension Amazon, has so wildly left its creative community out to dry when it comes to copyright enforcement and DMCA takedowns. It's simply not doing enough.
For all of the traditional recording industry's claims of how important copyright is for "supporting artists," the most egregious examples of legacy industry folks screwing artists over tend to involve copyright -- and especially cases involving sampling. The law around sampling is particularly stupid, and has been for decades. Musicians can pay a compulsory license to cover a song, but if you just want to sample a bit, that's a whole different story. And even if you try to do it right... well, copyright will fuck you over. Perhaps the most egregious example is what happened with the Verve's hit song Bittersweet Symphony. Unless you've lived under a rock for the past two decades, you've heard this song. And you may have heard variations on the story of how it used a sample from the Rolling Stones, who were then credited as co-songwriters, giving them a cut of the publishing (which has become a common practice these days when songs are sampled). At least that was the story I initially heard years back. But the full story is truly despicable, and it's back in the news now because, more than two decades later (also, two decades too late), the Rolling Stones have given back the rights. We'll get to that in a second. Because the background here is worth understanding.
There are a few different versions of the story floating around -- and not all of the details match. But at the very least, the Verve's Richard Ashcroft wrote the song Bittersweet Symphony, and the recording used a barely noticeable sample of a recording by the Andrew Oldham Orchestra. That recording was an orchestral cover of the Rolling Stones' song The Last Time. Andrew Oldham had been an early manager of the Stones, and the Andrew Oldham Orchestra was a side project (that sometimes involved the Stones themselves). The sample that the Verve wanted for Bittersweet Symphony wasn't even the same as the Rolling Stones song. It was part of the original arrangement for the Oldham Orchestra, apparently done by composer David Whitaker, who is credited in none of this. Also, the opening violin solo that is so iconic and so identified with Bittersweet Symphony is not actually from that sample. It was done by the Verve themselves, designed to flow right into it the part with the sample.
Oh, and here's the real kicker: the Rolling Stones totally copied the song "The Last Time" in the first place -- from a 1955 gospel track by the Staple Singers, called This May Be The Last Time, which itself was based on some traditional gospel songs. The Rolling Stones nowadays totally admit they copied the Staple Singers song. Keith Richards said:
"We didn't find it difficult to write pop songs, but it was VERY difficult - and I think Mick will agree - to write one for the Stones. It seemed to us it took months and months and in the end we came up with The Last Time, which was basically re-adapting a traditional gospel song that had been sung by the Staple Singers, but luckily the song itself goes back into the mists of time. I think I was trying to learn it on the guitar just to get the chords, sitting there playing along with the record, no gigs, nothing else to do. At least we put our own stamp on it, as the Staple Singers had done, and as many other people have before and since: they're still singing it in churches today. It gave us something to build on to create the first song that we felt we could decently present to the band to play..."
So... the Stones copy a recorded version of a traditional song, and then their manager makes an orchestral version of that song, arranged by David Whitaker. A few decades later, the Verve comes up with Bittersweet Symphony, and correctly licenses the sound recording from Decca Records. However, as the song was coming out, another former Rolling Stones manager, Allen Klein, who owned all the publishing rights on early Stones' recordings, insisted that they needed to license the composition as well, which he controlled. But, of course, remember, the "composition" that Klein controlled was basically a cover of a public domain gospel song (and the Stones' lyrics). But none of that was what the Verve was using. It was using Whitaker's arrangement and Oldham's recording (properly licensed from Decca).
Klein claimed that he hated sampling and basically refused to do a deal. Klein completely brushed off the Verve's manager, and then the head of EMI went to try to convince Klein to cut some sort of deal. From a book about Klein
Ken Berry, the head of EMI Records, came to New York and called on Klein. He played Klein the completed Verve album, Urban Hymns, which EMI’s Virgin label was betting would be a big hit. And “Bitter Sweet Symphony” was its obvious lead single. So Allen could appreciate how imperative it was that he grant a license.
“There’s no sampling of our music,” he said. “We just don’t believe in it.”
“Oh, f---,” said the head of EMI Records.
Klein let a day or two pass before calling Berry. He realized EMI and the band were in a bind, he said, and he was willing to make an exception to his rule and grant a license — if Ashcroft sold ABKCO his rights as lyricist and the company became the sole publisher of “Bitter Sweet Symphony.”
It actually gets worse. The initial deal was a 50/50 split on royalties with Richard Ashcroft. But soon after the song was released and was clearly becoming a huge megahit, Klein insisted that the sample was actually longer than what the band had licensed (the band has always insisted this was false). Klein said the deal for the license was voided, and sued for copyright infringement. Facing a huge expensive legal fight, the band caved and agreed to hand over all of the publishing royalties.
And it gets worse. After watching all of this go down, Andrew Oldham (the other former Stones' manager who had recorded the track that was actually sampled) also sued the band, insisting that while they had licensed the sample, they hadn't paid the mechanical licenses. As we've discussed before, with music there are many, many different licenses at play. The band settled with him as well and, years later, Oldham was still mocking the Verve and Ashcroft for the whole thing.
“As for Richard Ashcroft, well, I don’t know how an artist can be severely damaged by that experience. Songwriters have learned to call songs their children, and he thinks he wrote something. He didn’t. I hope he’s got over it. It takes a while,” Loog Oldham added.
Talk about adding insult to injury.
As for Klein, he also seemed to get perverse pleasure in screwing the Verve and Ashcroft:
The deal was as unsparing as any in Klein’s career; he held all the cards, played them, and raked in the pot. When music photographer Mick Rock happened to call Klein that day to see how he was, it was obvious to him that Allen was enjoying himself. “I was very bad today,” he said.
And then, he too decided to add insult to injury. When Ashcroft didn't want the song used in TV commercials, Klein took matters into his own hands:
ABKCO actively exploited the composition, licensing it to be used in commercials around the world for various products, including Nike shoes and Opel automobiles. When the band decided the song was being overexposed and overused, they declined to license the original recording for any more commercials. As the publisher, ABKCO instead commissioned its own recordings for commercial use.
So, yes, it's "great" that Mick Jagger and Keith Richards have now agreed to voluntarily hand over their share of the royalties on the song to Ashcroft, decades too late. But this whole story is a total travesty and a demonstration of how copyright is not just used corruptly, but to lock up the public domain and to steal from actual creators.
One of the striking features of copyright is how over three centuries, it always seems to become longer, broader and stronger. Just as a matter of probabilities, you might expect copyright to become a little shorter once in a while, but strangely that doesn't appear to happen. One consequence of the copyright ratchet is that the public is often cheated. Copyright is based on a bargain: that a time-limited, government-backed intellectual monopoly will be granted to creators in return for allowing the work to enter the public domain at the end of that limited period. Instead, what has happened repeatedly is that the copyright term has been extended before works enter the public domain, thus denying society its promised payback. If anything deserves to be called "copyright theft", it is this.
The copyright ratchet is on display once more in a new op-ed Michael Geist has written for The Globe and Mail. He reports on some documents obtained under Freedom of Information laws, including a 30-page reform proposal from the Canadian Music Policy Coalition, an umbrella group representing 17 music associations. It's a submission to the Canadian government regarding a copyright review that is currently underway in that country. According to Geist, the document calls for:
radical changes that would spark significant new consumer fees and Internet regulation. The plan features new levies on smartphones and tablets, Internet service provider tracking of subscribers and content blocking, longer copyright terms, and even the industry's ability to cancel commercial agreements with Internet companies if the benefits from the deal become "disproportionate."
You can read the full details of how the Canadian music industry wants to ratchet copyright up a notch or two in Geist's post. With remarkable honesty, the report is entitled "Sounding Like a Broken Record", and the familiar demands to make copyright longer, broader and stronger are indeed tiresomely repetitive and anachronistic. But what makes those one-sided proposals to demand more money from the public, while depriving them of basic rights like privacy and freedom of speech, even more outrageous is the fact that the Canadian music industry is thriving under the current legal framework:
The Canadian music market is growing much faster than the world average, with Canada jumping past Australia last year to become the sixth largest music market in the world. Music collective SOCAN, a coalition member, has seen Internet streaming revenues balloon from [Canadian] $3.4 million in 2013 to a record-setting $49.3 million in 2017.
Moreover, data confirms that music piracy has diminished dramatically in Canada. Music Canada reports that Canada is below global averages for "stream ripping", the process of downloading streamed versions of songs from services such as YouTube. Last month Sandvine reported that file sharing technology BitTorrent is responsible for only 1.6 per cent of Canadian Internet traffic, down from as much as 15 per cent in 2014.
Since shrinking markets and increasing levels of unauthorized downloads are routinely used to justify a strengthening of copyright legislation, it seems only fair that the public should be allowed to argue that copyright law in Canada can be dialed back now that the reverse is taking place. But the music, film and publishing industries and their lobbyists would scream in horrified outrage if such a thing were even whispered. After all, everyone knows that when it comes to copyright, enough is never enough.
Over the past few months, the legacy recording industry has coalesced around a new talking point -- a so-called "value gap" between different kinds of music services. In particular, the phrase is used to attack YouTube and to claim that it's somehow unfair that the ad rates and money made from the ad supported YouTube is much lower than purely subscription services. This has lead to the repeated false claim from the RIAA and others that revenue from vinyl records is more than from ad supported streaming.
Unfortunately, this value gap phrase has caught on in certain circles -- including over in Europe where the European Commission has mentioned it as it puts in place plans for copyright reform. Tragically, and incorrectly, EU officials have started referring to reasonable intermediary liability protections and other things as a "loophole" within copyright law that somehow allows platforms to "unfairly benefit." It allows them to claim that they're just trying to "level the playing field" when that actually means tilting the playing field heavily in one direction.
The claim that this difference is “unjustified” or somehow “unfair” should be challenged. The music industry’s revenues have
always differed depending on the sources (i.e. the sales of sheet music and phonograms, live performances, radio and TV
broadcasts). Online services have become additional sources of revenue, with different business models and technologies
generating different incomes – reflecting the current situation in the offline world.
And that's true, but even that underplays the reality of the situation -- which is that there are good reasons for differentiation here. It's not just about differences in sources, but differences in how people consume music and the money that changes hands reflects that. Terrestrial radio is free and ad supported -- and it's an easy low-barrier entry point for people who aren't necessarily huge music fans. Then as you travel up the ladder of musical fandom, and people get more committed, they may use a subscription service, or have their own locally stored music.
Sacquet further points out how the ideas that the EU is apparently considering would create a massive disaster for internet services that provide platforms for music:
Among the potentially very harmful measures considered by European policymakers to solve this “value gap” is the “clarification”
of the right of “communication to the public” – i.e. both user and online hosting services would be “communicating to the public”
each time a user is uploading a content online. Online platforms, today only indirectly liable for copyright infringement, would
become directly liable. All online hosting services would de facto fall outside of the scope of the liability protection
regime of the E-Commerce Directive.
Such a measure would have far reaching consequences.
Firstly, it could cause online services to shut down their upload and sharing services, thereby chilling innovation.
Secondly, this would severely restrict users’ freedom to impart and receive information, something that policymakers have
struggled to grapple with in the past.
Thirdly, it could cripple the growth of the digital economy – when the purpose of the Digital Single Market is the exact opposite.
But, perhaps even more importantly, is that it would end up harming the very musicians clamoring for such a solution. We're still in the very early days of figuring out how music services should best work online. The whole concept of the "value gap" and "leveling the playing field" really are all about deciding that there is "one true business model" for all music services to live under, and EU technocrats (heavily pressured by the legacy recording industry) are going to tell the world what that is. That's a recipe for disaster not just for the tech sector, but the very musicians who rely on these services to make money today.
Most importantly, they will completely lose out on the differentiated ways in which fans enter the music ecosystem. When you have a one-size-fits-all model, it pushes towards a world where the vast majority of casual music fans are left out, in a misguided effort to try to force more money out of stronger music fans. Years ago, music economist Will Page pointed out that the industry was wrongly focusing on share of wallet that they were able to extract from people, rather than trying to expand the population that was listening to music and contributing to the music ecosystem in some way. That is, there's a large percentage of the population that doesn't support the music ecosystem in any way. They don't subscribe to anything. They don't go to concerts. They're casual music listeners at best. And there's a real opportunity to offer low barrier entry points to those people, allowing them to "move up the ladder" to become bigger and bigger music fans.
But you lose all of that with a forced "level playing field." The "value gap" is not a value gap at all. It's simply showing differentiated pricing to help bring in more casual music fans and create new opportunities going forward. So the end result here would be not just harming technology companies and leading to fewer services with less innovation, but, even worse, a significantly smaller population of music fans who are willing to support the industry -- and the ones who remain will be getting squeezed harder and harder by the industry, eventually probably shoving many of them out of the market as well.
The talk of a "value gap" is not only misleading and wrong, but it's dangerous. And it's dangerous to both internet services and musicians -- which shouldn't be a surprise because, despite all the rhetoric, the two are pretty closely aligned in their overall interests.
The fact that the best-known music streaming service, Spotify, is still struggling to turn a profit despite its huge popularity, is often held up as proof that making money in a world of digital abundance is almost impossible. Of course, here on Techdirt, we've published many posts about people and companies that have adopted various innovative strategies to get around the problem. But what about music streaming as a mass medium: will it ever be possible to make money in this sector?
A fascinating article on Mashable shows that it is already happening, but perhaps not where most people are looking. QQ Music is part of the extensive digital empire of the Chinese giant Tencent, best known for its messaging app WeChat, and now the largest Internet company in Asia. Last year, its turnover was $15.8 billion (pdf). As the Mashable article explains, QQ Music's general manager revealed last week that the service is now profitable. One reason is the sheer scale of Tencent's user base:
As one of China's biggest dotcoms -- WeChat has 762 million active users -- the company has far better negotiating power at the table with record labels.
Back in 2014, Tencent already used this to its advantage, striking exclusive Chinese distribution deals with large music producers the likes of Sony, Warner Music and South Korea's YG Entertainment.
Similarly, QQ Music is itself large compared to Spotify:
QQ Music reports 100 million daily active users, and 400 million monthly actives.
Spotify, in comparison, has about 100 million monthly actives, although it has 30 million paying subscribers -- three times QQ's 10 million paying subscribers.
The secret to QQ Music's profitability seems to be the following:
Chinese analyst iResearch estimates that over half of [QQ Music's] users in China would have paid for something on their music apps this year. That could be a one-off purchase like an album or concert tickets, even if it's not an ongoing subscription.
Moreover, beyond the 57% that already buy ancillary items, a further 20% said they were willing to do so at some point. That means over three-quarters of QQ Music's users have or will buy other goods. Crucially, Tencent makes that as easy as possible by offering its own payment system as standard. That emphasizes a key point about making money in a world of digital abundance: success flows from removing as many barriers as possible, so that people can pay you for things they want at the moment they want them.
Digital Music News has an unfortunate story that we've heard too many times before: that of an independent musician successfully building a following... only to do a deal with a major label and see it all come crashing down. What's interesting is that the artist, Terra Naomi, was willing to lay out all of the details. It's worth a read, as it's a story that is pretty common. That is not to say that signing a major label deal is necessarily a bad thing. For some artists it may be the right decision. But the way that major labels work is that you'll only get enough attention for the label to determine if you're "the next big thing" where all its revenue will come from for the next few years... and if things don't seem to be going that way, you'll be pushed aside quickly. The standard stat given is that 90% of major label deals "fail." That does not mean they are not profitable for the label. The way RIAA accounting works, the labels can make out like a bandit on many of those record deals, while the artist gets hung out to dry. That appears to be the case with Naomi as well.
She points out that she was one of the first artists to build up a large fanbase solely based on her YouTube and MySpace accounts. Here was her most popular song, Say It's Possible:
In the article, she talks about how she was connecting with fans and giving them a reason to buy. She talks about using YouTube to directly communicate with her fans, answering their questions, sending them messages and the like. And then, Universal Music came calling. And she made the very reasonable decision to sign with them, noting that while she had just pressed her own EP and quickly sold 5,000 of them in the first month they were available, she was still in debt, and a $250,000 advance was hard to pass up. It's easy to mock this decision, but you're probably not the one sitting there in debt with $250,000 on the table. That's why it's so tempting and why so many artists jump at the opportunity. It's not a crazy decision to make -- but it may present long term challenges, which is exactly what Naomi discovered.
Despite attracting attention for her success on YouTube, the label basically (1) had no understanding of YouTube and (2) recommended that she stop connecting with her fans. In other words, the exact opposite of what artists need to be doing in this internet connected era:
Contributing further to their feelings of betrayal was the mandate that came from my team at the label. They needed me to be “less accessible” and more untouchable. All these kids on YouTube saw me as an equal, as “one of them” – did I want to be a YouTube star, or did I want to be a rock star? They threw down the gauntlet, and there was no question in my mind. I wanted to be a rock star.
I handed over my mailing list and social media logins to the record label. I trusted this team of professionals to grow it into something much bigger than I could ever hope to create on my own. I backed off, disappeared, focused on writing songs and hanging out with the “right” people rather than connecting with my fans and the community I’d grown to love and depend on, prior to signing my deals. I figured I’d play by their rules for a little while, build my career into something even bigger, and reunite with my community once the label was satisfied with my rock star status.
Not surprisingly, it didn't work out that way. The label also pushed her to make a more commercial album, which she hated:
The producer I worked with told me we only had one shot, and I needed to make the album he wanted to make – with its “radio-ready” production – and once I had a few hits, I could make any album I wanted. So I made the album he wanted to make, and things didn’t happen the way he said they would. Instead of the big commercial radio success that would give me the freedom to seamlessly transition into the music I truly wanted to make, I had a big commercial flop (I think we sold something like 25,000 albums), an album I didn’t like, and I’d wasted what could have been the biggest opportunity of my life. The exposure I built independently on YouTube was more than the record label ever did for me, and I couldn’t believe I’d been so willing to hand it over for a longshot gamble on mainstream stardom.
And, of course, once she finally got out of the major label system, the audience that she had originally connected with, but forsaken, had moved on. As she notes:
My biggest takeaway from this time was a lesson in authenticity. It’s tempting to listen to people who want to change us, even just a little bit, and steer us in a direction that isn’t authentic. It’s easy to doubt ourselves, especially when we’re just starting out. We think people with more experience know better than we do about what’s best for us, and it’s simply not the case. We fall for the hard sell, the glitz and glamour, but for every massive major label success, there are dozens of disappointments and disastrous failures.
This isn't a huge surprise. For well over a decade we've been pointing out stories of successful artists who have built up huge fan bases online -- and the one factor that shows up again and again and again is authenticity. That's a huge part of the whole idea of connecting with fans. Actually being authentic is a great way to connect with like-minded fans, but it has traditionally gone against the cookie-cutter model of the major labels (though, to be fair, some are finally starting to figure this out, if only way too late).
Either way, Naomi's story is a good read, and should be worth thinking about for others who are tempted by the deals presented to them when they're first building a following. Put it in the group with the stories about RIAA accounting that further explain how a big advance may not actually be so big once you understand all the details.
When it comes to the nexus between competition and regulation, competition is all too often cursed with fair-weather friends. For today's example, we'll take a trip down the copyright regulation rabbit hole.
It begins with a Copyright Royalty Board (CRB) proceeding for setting webcaster rates under a statutory license in Section 114 of the Copyright Act. The process, called "Web IV" because it is the fourth such proceeding under this section of the Copyright Act,[1]was announced late last year and should conclude by the end of 2015. By mid-December, non-interactive webcasters like Pandora and iHeartMedia will know how much they must pay to stream (or "publicly perform") recorded music to listeners from 2016-2020.[2]
These statutory license rates, part of a complex multi-tiered system that, as we've noted in the past, legally requires discrimination against new technologies, are set for 5-year periods and are paid to an entity called SoundExchange. SoundExchange is designated to collect royalties under the statutory license for certain uses of sound recordings, including Internet radio play of music.
(Perhaps you're thinking, "wait, I thought radio stations didn't pay royalties to play records on the air?" You would be right: traditional terrestrial radio does not pay royalties for playing sound recordings – which has historically been defended with the argument that radio play provides valuable promotion for sound recording owners. But in another example of copyright law discriminating against new entrants, while conventional terrestrial radio is not compelled to pay for the public performance of sound recordings, Internet radio must pay to do the same, under Section 106(6) of the Copyright Act.)
The rate Internet radio services pay is supposed to represent what a "willing buyer" would pay a "willing seller." During the round of rate setting that governed 2006-2010, however, the CRB announced a fairly punitive "willing buyer/willing seller" rate, which was so high that it exceeded some webcasters' total revenues. The risk that the Internet radio industry would collapse led Congress to enact the 2008 and 2009 Webcaster Settlement Acts, under which most non-interactive music licensees directly negotiated settlements with SoundExchange for that time period. An important wrinkle to this legislative action, however, was that Congress also directed that these settlements could not be used as benchmarks for future rates – which includes the current rate setting proceeding.
So, why is this relevant? It matters because in the current Web IV rate setting proceeding, SoundExchange has argued that recent deals struck in the free market by non-interactive webcasters should not be used as the benchmarks for non-interactive rates.
Those deals include an arrangement between Pandora and the collection of indie labels known as Merlin. The terms of that deal were lower than the existing statutory rate, and encouraged Merlin music to be played more (and thereby the music of major labels to be played less). At the time, rights-holders openly criticized Merlin for entering in the deal, noting that it could become a benchmark, and might result in prices coming down. It was a peculiar moment: despite all the cheerleading of moving toward a free market in music licensing of willing buyers and willing sellers, Merlin came under fire for actually being a willing seller at the best price it thought it could get.
SoundExchange previous said it was seeking "rates that reflect a fair market value for recorded music… based heavily on evidence of other deals that exist in the marketplace". Now, however, it argues that an analogous free-market deal with Merlin should be ignored, because it was in some way influenced and thereby tainted by settlements reached 6-7 years ago.[3]
This situation illustrates an issue larger than webcaster rate setting: there is cognitive dissonance about what it means to have free-market transactions in lieu of statutory licenses. In parts of the music industry, there is hostility to the statutory licenses. While statutory (or "compulsory") licenses help overcome the enormous transaction costs of licensing millions of works from millions of rights-holders, they don't allow rightsholders to say "no" to all uses.[4] These statutory licenses, it is sometimes argued, are unfaithful to the notion of copyrights being property rights. Such transactions would be better handled in the free market, the argument goes, and so statutory licenses should be repealed.
Nevertheless, the free market enthusiasm disappears when a free-market deal was actually reached outside the statutory license. To the dismay of other licensors, Merlin's competitive price was *lower* than the statutory rate, and suddenly the free market doesn't look so hot. Hence, Merlin was criticized and now efforts are being made to expunge Merlin's deal from the record.
There are numerous transactions cost-related reasons why — absent better copyright ownership records — it is impossible to have a completely free market in music licensing at present. Still, insofar as anyone is going to champion competition as an alternative to statutory licenses, that means accepting prices that may be below statutory rates. If "free market" means rates can only be higher than statutory rates, then we don't have a free market; we have a price floor. Or, stated otherwise: we're not really talking about "willing buyers and willing sellers" if we're only going to entertain market-based deals that come in above the statutory rate.
[1] Officially, "In re Determination of Royalty Rates and Terms for Ephemeral Recording and Digital Performance of Sound Recordings."
[2] The CRB only sets rates for "non-interactive digital music services"; interactive services like Spotify, which are "interactive" because users can determine themselves which music is delivered, fall outside the statutory license.
[3] The rationale for this is that Congress directed in Section 114(f)(5)(C) that Webcaster Settlement Act (WSA) agreements shall not "be admissible as evidence or otherwise taken into account" in a rate settlement proceeding. Because SoundExchange contends the Merlin agreement resembles the 2008-09 settlements, considering the Merlin rate would be "taking into account" a WSA agreement.Instead, SoundExchange contends that the benchmarks for non-interactive rates should be deals between interactive services like Spotify. When all the relevant apples are inadmissible, we're left referring to oranges.
The recording is old news. Last century. Dead. The Access versus Ownership debate should have finished 10 years ago, but we're still bickering. Access models (eg. streaming) are not supposed to replace Ownership models. They're supposed to power a new reality, a new age for the Music business, in which the record industry possibly has no place.
"The Music industry" has become synonymous for the recording industry, just as it was synonymous for sheet music publishers prior to the rise of the recording companies. With new technology, come new companies, and the old companies move into the background. The new Music industry will likely not consist of those that depend on the recording (eg. major labels, or even Spotify), but those that apply technology to change what it means to listen to or interact with Music, just as the recording did in the 20th century.
Even the creative process will have to change.
Interactivity
Prior to the invention of the record, Music was far more participative than it has become throughout the age of mass media and mass consumption. Back then, if you wanted to hear your favourite song, you better know how to play an instrument, or have a member of the household who sings well, or you're simply not going to hear it. That sounds extremely restrictive given our current reality, but it also gave Music certain characteristics that made it richer:
Music was participative
Music was mostly a social experience
Music was more intimate
Music sounded a little bit different every time
Music belonged to everyone
I believe these are natural characteristics of Music, that got temporarily pushed into the background in the age of Mass Media and Western individualism. Entertainment and Culture became passive, and the ownership of Culture became less ambiguous, economically. A Creating Class arose, and a Consuming Class. The companies selling the output of the Creating Class benefited from the passiveness of the Consuming Class, because you couldn't consume high margin products while you create.
The KLF's Bill Drummond about Recorded Music
The KLF's Bill Drummond about what the recording took away from Music. From 1:23. Quote below.
"As the technology to record music evolved through the twentieth century, it sucked in and seduced every form of music around the world. They all wanted to become recorded music. They all wanted to become this thing that could be bought and sold. And that narrowed the parameters of what music could do and be. And it took away from music a big part of what can make music powerful, which is about music being about time, place, and occasion."
"Until 100 years ago, every musical event was unique: music was ephemeral and unrepeatable and even classical scoring couldn't guarantee precise duplication. Then came the gramophone record, which captured particular performances and made it possible to hear them identically over and over again. […] I think it's possible that our grandchildren will look at us in wonder and say: "You mean you used to listen to exactly the same thing over and over again?""
Introducing Interactivity
The recording is not the end of the line for Music. Every medium is a transition to the next medium.
Most people call performed music "live music" —
some people call recorded music "dead music"
The Media evolved and spawned Computers, the Internet, Video Games. The latter a highly Interactive example of Culture that went on to give birth to MMORPGs, where large Communities of players Interact and define their own Meaning, participatively. A particularly good example of the aforementioned elements coming together is Minecraft, a world-creating game where players work together to build whatever they can dream of. Deadmau5 uses this to enter a digital world of fan art and interact with his fanbase. Imagine what that's going to look like with the unstoppable momentum Virtual Reality currently seems to have. The Consuming Class has become the Creating Class: Consumption and Creation are becoming, in part, synonymous.
Why is Music still static by default?
Why am I not being offered more ways to interact with Music?
Look at the gaming industry. It's a 1,000 times easier to get someone to pay to unlock a 'special ability' than it is to sell them a piece of content.
Intimacy and Immediacy
The old Music industry is not interested in creating Intimacy. It's hard to scale. The dominance of the recording industry's model depends on hundreds of thousands of well-timed sales, and a long-tail that provides income until 70 years after the death of the Creator.
Yet the fact that we carry computers in our pockets that are more powerful than the PCs on our desks a few years ago, and always connected to the Internet, offers amazing opportunities for Intimacy and Immediacy, ones that fans are happy to pay for. It means that Kevin Kelly's theory of a 1,000 True Fans will become increasingly easy to apply for a growing number of Creators.
The rise of Intimacy and Immediacy will benefit those Creators who work with small teams, who are open about their creative process, and involve their fanbase early on in this process. This enables them to secure funds through crowdfunding, as opposed to trying to secure investment from large corporations, whether recording companies or brands.
One can create dynamics of social competition within a fanbase. Who can recruit the most new fans, or active members? Who are the most valuable contributors to the Creator's wiki? Who spend the most money on merch and who have the most complete collection? The ones that rank highest, get access to perks. A weekly 1 hour video chat with the top 10, weekly 10 minute preview of what you're working on for the top 50, 20% discount on merchandise for the top 200, etc.
An app that has a great idea for how to get people to actively discover new Music, engage with it, and feel part of the artist's success is Tradiio. It gamifies Music discovery and lets users invest virtual coins in songs they believe in. This helps artists rise to prominence on the platform and earn rewards. If this platform evolves from a reward-based game, to a real economy where users can purchase coins and artists can cash out, it would be a good example of the type of company the new Music industry will be made up of. Just to mention some other exemplary companies for music's future: look at Smule and Sonic Emotion.
More on Games
The Gaming industry got into the same mess, at the same time, that the Music industry got into, brought about by the fact that what they thought was their product could suddenly be communicated through networks at zero cost. A whole new Gaming industry emerged with the arrival of connected devices: smartphones. Instead of charging money for the game, they made the game free to play and highly social, and instead charged for a limited set of actions.
Treat money-poor, time-rich fans as well as the money-rich, time-poor, because it's the former that provide value for the latter.
Music needs a new format that's feature-oriented, rather than content-focused. The content remains central to the experience, but the interaction around the content is what brings in the money. Likewise, playback of recorded music will remain important in the future, but perhaps not as the part of the industry that rakes in the most important part of Creators' incomes.
Examples
There are countless examples of companies pioneering the future of Music. From aforementioned Tradiio, to ones started by game developers, Music business serial entrepreneurs, and artists themselves. First let's start with an example from another part of the entertainment industry.
Example: Affectiva & Portal Entertainment
The former is an emotion analysis startup spun out of MIT Media Lab in 2009. The latter is a studio which produces 'movies' for interactive devices. According to a recent article on Wired, using Affectiva's software, Portal Entertainment is creating a horror series that's "exactly as scary as you want it to be":
"The software will read your emotional reactions to the show in real time. Should your mouth turn down a second too long or your eyes squeeze shut in fright, the plot will speed along. But if they grow large and hold your interest, the program will draw out the suspense."
Imagine applying that to music… Some companies are already closing in on that.
Example: Inception, by Hans Zimmer and RjDj
Music producer and film composer Hans Zimmer collaborated on an app for the Inception movie, with RjDj, a company that specializes in Context Aware Music and Augmented music, founded by one of the co-founders of last.fm, Michael Breidenbruecker. Hans Zimmer on the project:
"There's a thing I've been searching for and I've been working on forever now, is a way to get beyond recorded music. To get beyond 'you just download a piece of music and it's just always the same'."
The application they made draws information from the world around the user, and transforms it into fantastic music. It seems as if you're being immersed in dreamlike worlds, as happens in the movie.
They continued their collaboration and made another app for The Dark Knight Rises. RjDj also created a Reactive Music game called Dimensions, which owes its name to the trippy effects of the Augmented Music that make it feel like you've just crossed into another dimension. The game is free-to-play, and offers in-app purchases to unlock new experiences or further augment existing ones.
I asked two of the people behind RjDj whether people are ready for adaptive music. This is what they had to say.
Michael Breidenbruecker:
"I think many of them are ready. Apps like Inception or Dark Night Rises show that people are really into this sonic experience. The problem is how this is presented packaged. I can tell you from experience that not many people hear the difference between 5 hours of generative music and 5 hours recorded music. So really... no one cares if your music changes all the time through an algorithm and never sounds the same or if [it] is a preproduced track. Music has to have a reason why it is dynamic and not linear... that's why we sync it to real life."
Robert Thomas:
"I think Inception especially proved that if the experience is delivered in a way that makes sense, perhaps within a bigger conceptual framework, then millions of people can understand it and really like it.
As for people understanding the depths and details of how reactive music changes. It is very very easy to lose a huge part of the audience here. I think its fair to say that only musicologists and very serious music listeners could pick out the ways in which detailed generative music is changing for instance. Making a reactive music experience meaningful requires that the listener can tangibly feel that the change in the music is linked to his / her activity or life in some direct and hopefully emotionally powerful way.
Often making linear music is about manipulating the emotional state of the listener into particular states of mind over time for dramatic effect. Reactive music poses a different set of possibilities - what if the music is manipulated by them / their emotional state? As a composer this is totally different - its like using a sniper rifle instead of a shotgun - you can make your music hit exactly the right spot for the moment."
Adaptive soundtracks are actually quite common in games, where the Music transforms depending on the player's absolute and relative position (it's called Dynamic Music). Some developers are chucking all the other game elements aside to focus fully on that.
Example: Proteus
Proteus has been described as a non-game. The game (or 'game') was developed by one developer and one sound designer, and places you on a mystical island. There's nothing there to kill, no need to score points, and you can't die. All you have to do is to wander around the island to discover new areas and to enjoy the way objects around you influence the soundtrack. This is the literal embodiment of the phrase 'soundscape'. The changing seasons, different weather conditions, time of day, and varying ecosystems all have an impact on the Music.
I asked David Kanaga, the game's sound designer, whether this is something anyone could do, in order to understand whether this could become a more mainstream medium for Music:
"Yes, anyone could do it. It's maybe even more natural than writing static music in a way. That said, very few people are doing it, and maybe it takes years of UNLEARNING, which maybe means everything needs to be played again, to stop fixating on what's successful and beautiful in recorded music, in Sgt. Peppers and Pet Sounds, to find the play aspect of those and to move on, to stop admiring recordings.. improvise only, this is the tactic that i've been practicing myself to try this unlearning.. no serious learning is needed, really, but the UNLEARNING is totally necessary."
Example: Biophilia, by Björk
In recent years many artists have taken to releasing albums as apps. Björk had a particularly interesting take on it, releasing her album as a 3 dimensional galaxy that can be navigated and interacted with. The app even became part of MoMa’s collection.
Through the use of in-app purchases, the user can unlock new parts of the galaxy, which provide new Music to Interact with.
Example: Don't Be Scared LP, by DJ Vadim
Ninja Tune veteran DJ Vadim released an 'immersive album', which allows users to interact with different elements of the song, recomposing it according to their own wishes. What better way to create a sense of Intimacy between your fans and your Music.
Example: Central Park (Listen to the Light), by BLUEBRAIN
Then there's Bluebrain, a musical duo that produced their own apps, location-aware albums, one of which can only be used in New York's Central Park. In a way it's similar to Proteus, except in this case, the soundscape is mapped to physical locations rather than virtual.
Example: Weav
Recently a new music startup by one of the creators of Google Maps started making waves: Weav. Weav's aim is to simply make music elastic. Unlike Spotify's new feature which picks songs that match your tempo while running, songs on Weav's platform will actually adjust to your pace. The team created tools for musicians to create dynamic music: you don't just write the song, you also program rules for it to recompose itself and adjust to different tempos. Co-founder Lars Rasmussen:
"We believe that as our lives become increasingly digital, and as our increasingly powerful mobile devices play greater and greater roles in our lives, having a song that can change and adapt -- in real time -- to what you are doing will become increasingly important. And delightful. This is why we built Weav."
Conclusion
If you're waiting for disruption in the music industry, don't look at the big platforms like iTunes or Spotify. They belong in the Age of the Recording.
Look at platforms that offer actual Interactivity, Immediacy, Intimacy, and Involvement. Now more than ever can Creators help give shape to future formats of Music, and to new ways to connect the listener to the Music.
Imagine Music in the Age of the Internet of Things.
Music may be static, but it doesn't have to be. And the relation between Creator and Fan certainly shouldn't be.
Bas Grasmayer (@basgras) is a music startup consultant, and former Product Lead of Zvooq, the leading music streaming service in Russia & CIS. He’s best known for his thesis The Answer is the Ecosystem: Marketing Music through Non-Linear Communication and has previously spoken at conferences such as Amsterdam Dance Event, European Lab, Midem and Sochi Winter Music Conference.
Musician and producer Steve Albini has never been a fan of the recording industry. He posted the definitive essay on how labels screw artists over 20 years ago, and it's just as relevant today as it was then. The internet (read: file sharing) has been public enemy #1 for the recording industry (and now the motion picture industry), despite offering a host of benefits to artists and labels. Those at the top see its decentralized distribution as a threat, with any accompanying gains in marketing power and reach deemed a net loss after totalling up the "lost sales."
Albini -- similarly affected by these same "negatives" -- doesn't see it this way. While acknowledging the fact that infringement occurs in amounts previously unseen (but that it's not in any way a new thing -- just far more efficient and not necessarily a bad thing), he continues to point out that the problems the music industry suffers from are mostly self-inflicted.
Speaking to an audience in Barcelona, Albini elaborated on his "updated" rant against the industry. Now expanded to include the massive increase of internet usage, the points still remain largely the same. There's a problem in the recording industry -- one virtually identical to the one pointed out by Albini in 1993. And that problem is… the recording industry.
“I don’t feel like I’m part of the music industry, the music industry meaning the corporatised business structures where you have people who are in the lower level, people in the upper level, people in administration, and people making legal relationships between all those people. [...]
This administrative business structure that’s syphoning money out of that whole scene has always seemed artificial and unnecessary and I’ve spent my life trying to remove its influence.”
While the industry frets about "lost sales," it has done very little to evolve from the bloated form it took on during the 40+ year run where multiple format shifts resulted in unprecedented sales figures. It's not just the corporate structure that's a problem. And this isn't to say labels haven't shed personnel over the years. It's just that they've been forced to make cuts due to falling revenue, rather than actively working to streamline their operations to fit the expectations of the internet age. Frontline staff and low-level employees have lost jobs but there are still many layers of employees distancing artists from those who own them.
Then there are the lawyers. Some are there to ensure every last bit of revenue can be wrung out of an artist before any royalty checks are cut. Some are there to explore every possible legal angle that might be used to combat piracy The first sort have always been present. The latter still exist only because industry heads still hold out hope that file sharing can somehow be defeated with court orders and legislation.
Albini says the first set are roughly as useless as the last.
“The idea that you have to have contracts to do [business] agreements, that you have to have formal understanding between people in order to have a long relationship, is a complete fallacy.
If you enjoy working with someone and both feel the relationship is working out, you naturally carry on indefinitely.
That’s the way I’ve approached essentially all of my business, you don’t need contracts."
But you do need a contract if the "relationship" is actually just exploitation. This is why contracts are of utmost importance to the recording industry. Artists may initially show enthusiasm when offered a recording contract, but a few years down the road, they often find they're cranking out recordings just to avoid going deeper in debt. An equitable agreement -- like those used by Albini (who prefers a flat-rate fee for his production work, rather than seeking a cut of every sale or stream in perpetuity) -- doesn't need a multi-page contract or a team of lawyers. Honesty and openness up front can trim a lot of pages from an agreement... as well as the jobs of lawyers whose entire purpose is to ensure "agreements" are as long and inscrutable as possible.
Lastly, Albini goes after copyright -- itself a legacy business model.
“The old copyright model – the person who creates something owns it and anyone else that wants to use it or see it has to pay them – has expired in the same way that around the world you’re seeing structures and social norms [lapse] that were standard for many years.
It’s going to take a lot for the business to catch up to where the audience is, in the same way it takes a while for the church and the laws to catch up to where the people are.
But there is no longer the possibility to exclusively control music through copyright.”
Those arguing that stronger copyright protections will somehow "control" social sharing aren't grasping the reality of the situation. As it stands now, any copyright holder can demand $150,000 per infringement in statutory damages, and yet, that has had no appreciable effect on infringement. Just ask Rightscorp, which offers $20/infringement "settlements" while waving threats of $150,000 "fines" over internet subscribers' heads. It's in the business of spending money to lose money.
The idea that lifetime+ copyright terms will put creators' grandkids through college is likewise suspect. Grandkids are going to college thanks to these terms, but they're the descendants of label execs and studio heads.
The "control" offered by copyright is an illusion. The continued belief in this misconception allows labels to take advantage of artists. An artist may feel (incorrectly) that an individual can never hope to fully exploit his or her creations without the assistance of the marketing and legal teams of major labels, but they almost invariably have to give up full control of their creations to make use of these services. What good is their copyright then? It's not even theirs. And the assistance they're receiving is charged up front at full retail and paid off with royalties -- a tiny percentage of actual sales and profit.
As Albini points out, the way people enjoy music continues to change, and attempts to offer iterations of existing platforms and services is missing the point. People, for the most part, don't care about the quality of streaming music. They only care about the convenience. Albini notes that people carried around transistor radios to enjoy music on the go, something that offered truly terrible sound quality, but was no less popular for doing so. The way people consume and distribute creations will continue to change, but trying to harness that potential using contracts, outdated business models and delusions of control will never work.
For more than a decade and a half here on Techdirt, one of the common themes we've discussed are business models for musicians in the internet era. On this week's podcast, we have composer Adam Fong on to discuss his thoughts, both as a composer and as the founder and director of the Center for New Music in San Francisco (which is also where we record many of our podcasts). Fong provides a different perspective — especially discussing those who are classically trained, and not looking to be rock stars, noting the different challenges and opportunities for such musicians. The music on this week's episode is Adam's own composition, Five Times Remembered.
