by Ellen Seidler | Law, Music, Politics, Publishing
Time for music licensing to meet the 21st century
For consumers, the digital age means accessing music anywhere, anytime at a very low cost (or free) but the picture isn’t so rosy for those who actually make their living writing and performing music. Everyone acknowledges that online piracy was the first tsunami to hit the music industry, but now, though legal, the rise of streaming services like Pandora and Spotify have served to further undermine creators via an antiquated and utterly lopsided licensing system. While most consumers remain blissfully unaware of the complexities of the music licensing maze, those who depend on it for their paycheck are acutely aware that it’s in dire need of an update. In the eye of the storm sit nearly 75-year-old “consent decrees” that determine how rates are set for various forms of music licensing. With the advent of online streaming, those who make their living creating music have found that the outdated decrees have hamstrung their ability to earn a living in the digital age. As William McConnell explains in his piece “Copyright debate has new tune in the age of streaming” published on thedeal.com:
Artists and the publishing industry say the system needs to be revamped with the advent of digital delivery technology that has devastated sales of traditional CDs. That trend has intensified as listeners increasingly rely on streaming services like Pandora, Spotify, Grooveshark and Beats Music rather than on digital song-purchasing services like Apple Inc.’s iTunes, which pay artists and publishers significantly higher fees. The shift has cut into artists’ earnings from recording music.
The Antitrust Division of the Department of Justice has opened a review of ASCAP and BMI Consent Decrees and is soliciting public comments. ASCAP President and Chairman Paul Williams issued this statement on the review:
We are gratified by the Department of Justice’s decision to open a formal review of the ASCAP and BMI consent decrees. Since the ASCAP decree was last reviewed in 2001 – before even the iPod was introduced – new technologies have dramatically transformed the way people listen to music. ASCAP members’ music is now enjoyed by more people, in more places, and on more devices than ever before. But the system for determining how songwriters and composers are compensated has not kept pace, making it increasingly difficult for music creators to earn a living.
ASCAP remains committed to working with the Department of Justice and all industry stakeholders to modernize the music licensing system so that it better serves songwriters, the businesses who depend on our music and the people who listen to it – not just today, but for generations to come. Updating music licensing regulations to reflect the realities of today’s music landscape will preserve the benefits of collective licensing to businesses that license music, give consumers greater access to the music they love and allow the more than 500,000 songwriters, composers and music publishers we represent to be compensated for the true value their music brings to the marketplace.
With the deadline on August 6th for public comments fast approaching, it’s crucial that songwriters and those who support them speak up on the issue. As musician David Lowery explained in a call to action, published today on The Trichordist:
The DOJ is reviewing the WWII era consent decrees that force songwriters under federal court supervision for supposed anti-competitive practices. Yes the awesome power of the federal government is being used to protect multi-billion dollar companies like Clear Channel, Sirius, Pandora, YouTube/Google, Amazon and Spotify from hippy freak songwriters. Considering that many of these companies are effective monopolies it’s a stunning abuse of federal power on behalf of a few politically connected corporations. The consent decree forces songwriters to allow these services to use our songs while a single appointed for life judge (song czar) makes arbitrary sets our rate of compensation. You may remember that I posted that my million spins on Pandora earned me less than $17? And I can’t even opt out of this service. How is that even fair? That’s how this kind of outrage occurs. This amounts to a government mandated subsidy from songwriters to some of the largest companies in the world. If you are a songwriter, please submit comments. The DOJ specifically would like to hear from you. If you don’t’ understand the legalese just make a simple statement about how you feel about the compensation from these digital services that results from these consent decrees. Be passionate but polite. Here are the instructions: http://www.justice.gov/atr/cases/ascap-bmi-decree-review.html
You should check out Lowery’s post to read the complete comments he posted in response to the DOJ solicitation as well but here’s his opening paragraph:
I am an American songwriter, a member of BMI and a member of the bands Cracker and Camper van Beethoven. I’m submitting this comment on my own behalf in opposition to the ASCAP and BMI consent decrees. I believe these government actions essentially are a compulsory license outside of the Congress and take away songwriters’ rights to due process of law.
You can find out more on the DOJ’s review here but here’s an excerpt as to what they are seeking and where to send/email your comments:
Public Comments Are Solicited
As part of its review, the Department invites interested persons, including songwriters and composers, publishers, licensees, and service providers, to provide the Division with information or comments relevant to whether the Consent Decrees continue to protect competition. While Performance Rights Organizations, such as ASCAP and BMI, monitor for unlicensed uses, enforce copyrights against unlicensed users, and administer copyright royalties, the Department is most interested in comments on competitive concerns that arise from the joint licensing of music by Performance Rights Organizations and the remediation of those concerns.
In particular, the Department requests that the public comment on the following issues:
- Do the Consent Decrees continue to serve important competitive purposes today? Why or why not? Are there provisions that are no longer necessary to protect competition? Are there provisions that are ineffective in protecting competition?
- What, if any, modifications to the Consent Decrees would enhance competition and efficiency?
- Do differences between the two Consent Decrees adversely affect competition?
- How easy or difficult is it to acquire in a useful format the contents of ASCAP’s or BMI’s repertory? How, if at all, does the current degree of repertory transparency impact competition? Are modifications of the transparency requirements in the Consent Decrees warranted, and if so, why?
- Should the Consent Decrees be modified to allow rights holders to permit ASCAP or BMI to license their performance rights to some music users but not others? If such partial or limited grants of licensing rights to ASCAP and BMI are allowed, should there be limits on how such grants are structured?
- Should the rate-making function currently performed by the rate court be changed to a system of mandatory arbitration? What procedures should be considered to expedite resolution of fee disputes? When should the payment of interim fees begin and how should they be set?
- Should the Consent Decrees be modified to permit rights holders to grant ASCAP and BMI rights in addition to “rights of public performance”?
All comments should be submitted by electronic mail to [email protected] by August 6, 2014 and will be posted in their entirety for public review at this web address. Information that parties wish to keep confidential should not be included in their comments. Comments may also be sent, preferably by courier or overnight service, to
Chief, Litigation III Section Antitrust Division U.S. Department of Justice 450 5th Street NW, Suite 4000 Washington, DC 20001
Also worth noting–and supporting–is the proposed Songwriter’s Equity Act, which is “an important step toward leveling the playing field and modernizing the music licensing system. It will ensure that songwriters, composers and publishers are fairly compensated for the use of their music.”
by Ellen Seidler | Law, Music, Tech
Google Trying to Force Indie Record Labels into Submission
(Updated June 17, 2014)
This post was originally published in late May, but with news breaking that Google is pushing ahead on its plan to block indie labels from its new music service I’m reposting. Here’s the latest from The Guardian:
Adele, Arctic Monkeys and Jack White could disappear from YouTube “in a matter of days” after the Google video service confirmed it was dropping content from independent labels that have not signed up for its upcoming subscription music service…
…The company’s head of content and business operations, Robert Kyncl,told the Financial Times that the service – previously rumoured to be called YouTube Music Pass – will launch more widely later in the year.
His confirmation that YouTube will block videos from labels that do not sign licensing deals for the new premium tier will be hugely controversial among indie labels, with trade body WIN already filing a complaint to the European Commission about its negotiating strategy.
Here’s my original post from May 24th, 2014:
Excuse me while I choke back the bile rising in my gut. Our pal Google, the worldwide protector of free speech on the web, is showing its true colors as it reportedly goes toe to toe with indie record labels in negotiations over its new streaming music service. According to the New York Times, representatives from Google/YouTube are trying to strong arm the labels into crying “uncle” by blackmailing them into submission over contract terms:
Negotiations between independents and YouTube, which is owned by Google, have dragged on for months. But according to several people with direct knowledge of the talks, the indies’ decision to speak out was driven by a recent warning that if labels failed to agree to YouTube’s licensing terms, music on the indies’ official YouTube channels would be blocked. In addition, those labels would be unable to collect advertising revenue from user-uploaded videos that included their music.
The Worldwide Independent Network published a statement on their website taking Google to task:
YouTube is expected to launch a new music streaming service. The service has apparently negotiated separate agreements with the three major labels – Sony, Warner and Universal – but according to WIN’s trade association colleagues has yet to reach any substantive agreement with their members.
At a time when independent music companies are increasing their global market share WIN has raised major concerns about YouTube’s recent policy of approaching independent labels directly with a template contract and an explicit threat that their content will be blocked on the platform if it is not signed.
According to WIN members, the contracts currently on offer to independent labels from YouTube are on highly unfavourable, and non-negotiable terms, and undervalue existing rates in the marketplace from existing music streaming partners such as Spotify, Rdio, Deezerand others.
WIN has held extensive talks with YouTube at their instigation over the last 24 hours to try and resolve this issue but no progress has been made. WIN’s request for YouTube to rescind the termination letters sent to its members has not as yet been agreed to.
Google representatives have repeatedly pulled out the “free speech” card as rationale for allowing Google to run rough shod over artist’s rights (human rights) online and its lobbyists often employ the “protect free speech” argument as a sacred sword to move politicians and the public to its side during policy debates regarding its online business practices. That dearly held corporate concept seems to have gone out the window during these discussions demonstrating that ultimately, it’s not a matter of principle for Google, but profits.
Every time an artist sends a DMCA takedown request for any Google-hosted content (YouTube, Blogger, Search, Drive, etc) they are warned that a copy of the notice will be sent to the “Chilling Effects” website which, according to its “about” page, exists in order to, “support lawful online activity against the chill of unwarranted legal threats.”
Please note that a copy of each legal notice we receive is sent to a third-party which may publish and annotate it (with your personal information removed). As such, the content submitted in this form will be forwarded to Chilling Effects (http://www.chillingeffects.org) for publication. You can see an example of such a publication athttp://www.chillingeffects.org/dmca512/notice.cgi?NoticeID=861. For products like Google Web Search, a link to your published notice will be displayed in Google’s search results in place of the removed content.
I wonder if the folks at Chilling Effects would consider whether YouTube’s negotiating tactics are having a “chilling effects” on indie musicians?
More irony can be found on Google’s own policy blog the company touts how it “promotes free speech on the internet.”
Google’s commitment to freedom of expression is at the core of everything we do — whether it’s independent media organizations using YouTube to express themselves in Venezuela, or citizen journalists using Blogger to chronicle Myanmar’s crackdown last year on Buddhist monk protests. Unfortunately, many governments around the world impose limits on their citizens’ freedom of speech, and that often leads them to block or limit access to our tools and services.
Hypocrisy seems too gentle a term in characterizing Google’s current stance with indie labels on YouTube. Agree to our terms or we’ll block your work? Seems their “commitment to freedom of expression” doesn’t count if you refuse to add profits to their piggy bank.
by Ellen Seidler | Copyright, Film, Music, Piracy, Tech
I don’t need a study to prove that search engines are an integral force in fueling online piracy, but since the piracy debate is awash in dueling studies I’ll happily chime in on the subject again.
Last week Google published a report–a characteristically self-congratulatory piece of fluff–declaring themselves to be a leader in the fight against piracy and that took great pains to deny the significance of “search” in maintaining the online pirate economy. The report repeated claims made in a recent study (published by a consortium of tech giants including Google) that it’s poor SEO techniques that are the problem–not search engines.
Today, the MPAA came riding to the rescue with its own study, “Understanding the Role of Search in Online Piracy,” that sticks a pin in Google’s hot air balloon. Of course the MPAA is one of the anti-copyright lobby’s favorite whipping boys, because, after all, they represent big, bad Hollywood–an industry that employs more than three hundred thousand people in the U.S. (according to 2012 federal labor statistics).
May 2012 National Industry-Specific Occupational Employment and Wage Estimates
NAICS 512000 – Motion Picture and Sound Recording Industries
Why do I believe the MPAA study more accurately reflects reality? Because it jibes with everything I’ve discovered while digging through the world of online piracy (and profits) these past three years; and although I’ve never worked for a major studio, my interests as an independent filmmaker dovetail with those who do.
Whether grips, gaffers, makeup artists, script supervisors or caterers–we all have a shared interest in protecting our livelihoods so I’m thankful that the MPAA commissioned and released this study. The results are relevant for all content creators whose livelihoods are threatened by rampant online theft.
The MPAA study methodically examined how consumers, intentionally or not, ended up on pirates sites. It found that between 2010 and 2012 “approximately 20% of all visits to infringing content were influenced by a search query.” As wrote in an earlier blog post criticizing the Google funded study, its search engine should be considered a “gateway” to pirated content online. The MPAA study affirms this:
“Search is an important resource for consumers when they seek new content online, especially for the first time. 74% of consumers surveyed cited using a search engine as either a discovery or navigational tool in their initial viewing sessions on domains with infringing content.”
Even more troubling was the finding that many people who use search aren’t actually looking for pirated content, but by using typical generic search queries to look for content they often end up on pirate sites.
Ironically, the only good thing about the fact Google search makes it easy to find pirate websites is that content creators (like me) can use it to track down pirated copies of their own work so they can send those beloved DMCA notices.
At any rate, I’m sure there will be those who disparage these findings, but in my view, these results mirror my reality. I recommend reading the full report, including the methodology if you’re so inclined, and drawing your own conclusions. You can read the full version here.
While you have your reading glasses on you should take a look at another very comprehensive report (commissioned by NBCUniversal) released yesterday titled, “Sizing the Piracy Universe.“ This study found, among other things that, “Users of piracy ecosystems, the number of internet users who regularly obtain infringing content, and the amount of bandwidth consumed by infringing uses of content all increased significantly between 2010 and 2013.”
There’s an executive summary available if you don’t have the patience for in-depth analysis, but either way, the reality is that online piracy continues to be a growing problem.
Statistical analysis is helpful in putting the issue into context for policy makers in Washington and beyond who will debate what, if any, action to take. However, as content creators worldwide hope for progress in the fight against piracy, the reality detailed by these studies is a sobering one.
by Ellen Seidler | Copyright, Law, Music, Piracy, Tech
MPAA victory against Hotfile is a victory shared by all content creators hurt by online piracy
The best news in the fight against online piracy since Megaupload’s demise came yesterday as the MPAA annouced a big victory in their copyright infringement lawsuit against Hotfile, a cloud-based cyberlocker website known to harbor pirated movies, music, books and more. Though specific details of the court decision won’t be released for another two weeks, the judge issued a summary judgement in favor of the plaintiffs. From the LA Times:
This decision sends a clear signal that businesses like Hotfile that are built on a foundation of stolen works will be held accountable for the damage they do both to the hardworking people in the creative industries and to a secure, legitimate Internet,” said former Sen. Christopher J. Dodd, Chairman and CEO of the Motion Picture Assn. of America.
“We applaud the court for recognizing that Hotfile was not simply a storage locker, but an entire business model built on mass distribution of stolen content,” Dodd added. “Today’s decision is a victory for all of the men and women who work hard to create our favorite movies and TV shows, and it’s a victory for audiences who deserve to feel confident that the content they’re watching online is high quality, legitimate and secure.
Headlines called the decision a huge victory for the MPAA, which of course it is, but it’s also important to appreciate that it’s really a victory for the rest of us who create content for a living. Cyberlocker sites do not discriminate, offering pirated copies of indie films alongside the latest Hollywood blockbusters. It’s a business model that depends on stolen content (and the website traffic it attracts) to make money and pirate operators are happy to exploit the public’s thirst for free content, no matter the source. Hopefully this court decision will cause other pirates who operate similar sites and willfully facilitate copyright infringement to give pause.
Given these developments I thought I’d repost “Cyberlockers: Explaining Piracy’s Profit Pyramid ” a piece I wrote in 2011 explaining the cyberlocker (pirate) business model whereby operators earn millions by monetizing content theft at the expense of content creators around the globe. Some of the names have changed, but they piracy game remains the same.
First of all, make no mistake, the vast majority of today’s piracy is driven by the thing that has motivated mankind since time began—the desire to make money. If you take the time to spend a few minutes online exploring websites engaged in piracy (most people who speak out on the issue don’t seem to bother) you’ll quickly recognize that money is at the center of everything.
Mediafire download link (for flm-Unhappy Birthday) featuring Google ads.
If the ads aren’t hitting you squarely in the face, or the offers of high-speed, high quality downloads don’t spark suspicion, then perhaps it’s time to clean your glasses. How ‘bout I take you on a tour?
Let’s begin with the sites that serve as the lynchpin for today’s online pirates. No, I’m not going to talk about Pirate Bay or other notorious P2P (peer to peer) sites. No need for that. Consumers are all about convenience, and it’s not particularly convenient to download torrents and reconfigure the numerous file parts in order to view a movie. Today it’s all about the one-stop shopping experience, and for that there’s no better storefront than the cyberlockers where, with the click of a mouse, you can download (or watch) your favorite film. You’ll likely find other items on your wish list (e-books, music, software, and more) available for easy download as well.
You’ve probably heard the term “cloud based storage” floating around a lot lately. Well, thanks to companies like Apple, and the recent launch of their cloud based offering called “iCloud,” the notion of storing files online via a virtual hard drive is gaining ground. Cyberlockers have been providing this “service” for nearly half a decade now, and while there is legitimate activity taking place via some cloud-based storage sites like Drop Box and Yousendit, there are many others whose business model is predicated on content theft. The now disabled Megaupload.com is a good example of the latter variety. (Read the indictment for a step-by-step tour through the inner-workings of their criminal enterprise.)
How does an illicit Megaupload-like business model work? Well, if you want to understand how cyber lockers work it’s helpful to think of a company like Amway. Amway’s business success popularized the multi-level marketing style pyramid business model (or scheme ) whereby the operators at the top of the pyramid recruit people to work for them. They, in turn, recruit more workers who, in turn, sell products to the public. Those at the top make money only if they can recruit, and keep, enough people below to do the actual work. Those doing the bulk of the work earn money, but at a much lower rate than those at the top. It’s the trickle up theory of profits.
At any rate, if you journey to the cyberlocker of your choice–Megaupload, Filesonic, Fileserve, Filefactory, Uploading, Uploadstation, Mediafire, Megashares, Sockpuppet, Putlocker, etc. you will see enticements offered encouraging visitors to join this type of profit pyramid.
Cyber lockers offer CASH for uploads.
Why do they do this? Well the cyberlocker business model depends on traffic. In order to drive traffic to their site they need content that will attract visitors. What better carrot than popular movies, books or music? Never mind copyright, there’s the “safe harbor” provision of the DMCA that allows the cyberlocker operators to essentially look the other way (plead ignorance) when it comes to the content that affiliates upload. In fact, if uploaders did abide by a site’s published Terms of Service, the cyberlockers would quickly be out of business.
In other words, cyberlockers depend on an army of affiliates to do the dirty work for them. It’s a scenario that enables the cyberlockers to shield themselves from legal liability, while their servers are simultaneously receiving thousands of (stolen) files every day–fresh content sure to attract new (and returning) customers.
So, in order to set this eco-system into motion, the cyberlockers lure their minions. Uploaders can earn rewards, which usually start at around $35 per 1,000 downloads. Simply put, the more downloads you generate for your file, the more money you earn.
Cyberlockers are booming thanks to profits from piracy.
That fact sets in motion the next level of piracy—the viral spread of the download links. The affiliate armies take their links and post them on download (Warez) forums far and wide. The more these links are “shared” across the web, the more money made.
Click to for PDF with 36 posts of viral links.
To further ensure their earnings, these cyberlocker affiliate pirates—I’ll refer to them as CAPs from now on–usually upload their stolen files to multiple cyberlocker sites. This is called ‘mirroring” and what it means is that if a link is disabled on one cyberlocker site you can easily find the identical file on another. Each CAP generally has affiliate accounts with multiple cyberlockers so that their illicit income won’t suffer if some links are disabled.
Since they are paid per download to maximize profits, CAPs often break a film file into several parts. An average size for an uploaded film is around 700 MB (HD films can easily be double that size) but if divided into smaller chunks, requiring multiple links, and thus multiple downloads, the CAP can earn more download points. There’s a trade-off to this approach, however, as it can dissuade downloaders who prefer the convenience factor of downloading a “single” file.
Film download broken into several links in order to maximize profits.
Some sites like Megavideo (the streaming partner site to Megaupload) offer visitors the ability to watch an entire film streaming online with no download wait time. Watch the film, and if you like it, you can add it to your “collection” and download a copy for later viewing.
So, now that it’s pretty easy to understand how so much illegal content gets uploaded to the cyberlocker sites, let’s look for a moment how site operators turn that traffic into actual income.
At the top of the list is online advertising. Click a cyberlocker download link and you will arrive at a page like this.
Cyber locker site streaming the film “Unhappy Birthday” with Netflix ads serviced by Google.
There’s a link or stream for a film and there are ads. Various companies serve these ads, but one can’t ignore the fact that Google and other U.S. based ad servers like AdBrite are ubiquitous on the cyberlockers. For the record, the ads seen on the image above and below are served by Google, though now that they’ve changed their icon and obscured their connection to them, it’s more difficult to tell. In any case, no matter who serves the ad, the cyberlocker makes money and the ad service provider makes money. The creator gets squat.
Another cyber locker stream with more ads (provided by Google).
In addition to ad income, cyberlockers derive profit by offering “subscriptions.” In this instance users pay a fee, averaging around $9.00 per month, that enables high-speed downloads on the website. This means instead of waiting a half hour to download a full film, the entire process takes only 3 minutes. For those who are repeat customers, this may be money well spent. In this instance the cyberlocker site is making money and the payment processors (Visa, MasterCard, PayPal and the like) are making money. Again, the content creator earns ZERO.
Cyber lockers cash in on selling subscriptions for high speed downloads.
In order to boost its subscriptions cyber lockers again turn to affiliate rewards. Remember those forums where the CAPs go to spread their viral seed? Well, many, if not most of those forum operators also have relationships with the cyberlockers and are an integral part of the piracy profit pyramid. For every individual they “refer” who becomes a cyberlocker affiliate, they earn a referral fee. Thanks to unfettered access to free content and income, the eco-system of online piracy continues to thrive and grow.
HD-BB an online forum where viral cyberlocker links are spread.
HD-BB is just one example of such a forum. The forum operators boast of the high-quality “rips” shared by its members. If you drill down into forum posts you’ll quickly discover that moderators only allow users to post links to specific, “approved” cyberlockers that the forum has a relationship with. There are also links that direct users to the various affiliate options ensuring that the forum earns its fair share. The forum makes money, the cyberlocker makes money and the creator of the content makes ZERO.
This is what I know.
Now that this black market business model is entrenched as a way of doing business around the globe, what can be done to stop it? Well, I’m afraid that nothing can stop it–piracy will never disappear entirely–but something can be done to mitigate its effects. This can happen if we can encourage the majority of websites at the center of this illicit cyberlocker eco-system to become (more) legitimate.
Cutting off the money that feeds this pirate profit pyramid is one part of the equation, but there’s also another component that may be equally important. It’s a solution that it’s already working right in our own back yard.
I look to Youtube’s solution to piracy as an imperfect, but reasonable fix. Let’s meet the pirates halfway. Why not ask them to set up Content Management Systems (CMS) like the one Youtube has? A system like this would allow content owners to determine the fate of their work. A CMS system basically allows for the fingerprinting of content so that infringing content can be instantly identified upon upload to the cyber locker site.
Dashboard for Youtube’s “Content Management System.”
The content owner could then determine, as they do on Youtube, whether to remove the content, monetize the content, or block it in certain territories. In this scenario the cyberlocker can still earn money off uploaded content, but only at the discretion of the content owner. Users will also be less inclined to post infringing content in the first place. It’s a solution that allows the content owner to take back control from the pirates (thieves) and earn income off files that previously were simply stolen. In this equation, at least everyone gets a piece of the pie.
It’s at this point that the false “piracy is good for business” refrain parroted by piracy apologists begins to gain some traction and some truth. If piracy’s black market business model can be remolded into a practice that can financially compensate the content creator–and restore their control of the content–perhaps it could become better for business.
The problem is that cyberlockers are not going to adopt a CMS system just to be nice. Youtube, a U.S. company, was forced to act under threat of ongoing litigation and legislation. The only way today’s crop of cyberlockers can be forced to institute similar content ID systems is if their current business model becomes unsustainable. For that to happen, like Youtube, they too will need to face the threat of litigation and/or the long arm of the law. At this point, that puts the ball squarely back in the lap of Congress.
That is what I know…
