Author: David Newhoff

David is an author, communications professional, and copyright advocate. After more than 20 years providing creative services and consulting in corporate communications, he shifted his attention to law and policy, beginning with advocacy of copyright and the value of creative professionals to America’s economy, core principles, and culture.

Read Jonathan Taplin: “Sleeping Through a Revolution”

I know I’m a little late to the party in featuring this article by Jonathan Taplin, but anyone who has not yet read “Sleeping Through a Revolution” should find time to do so. Taplin is a former motion picture and music producer and has for the last 12 years been Director of the USC Annenberg Innovation Lab. This article is certainly among the best summaries of the challenges posed by the digital age — creative, economic, ideological, social, and existential.  As others have done, Taplin emphasizes the point that the creative class is merely the proverbial canary in the coal mine, already passing out in an increasingly poisonous economic climate. Citing some chilling data, like the fact that wealth consolidation among the 1% is now more acute than it was immediately before the Great Depression, Taplin very efficiently paints us a comprehensive mural depicting the state of affairs. Unfortunately, it’s kind of like “Guenerica” if all the figures were holding smart phones. Writes Taplin:

“… within 20 years, starting with Peter Thiel’s cohort at Stanford University, the organizing philosophy of Silicon Valley was far more based on the radical libertarian ideology of Ayn Rand than the commune based notions of Ken Kesey and Stewart Brand. Thiel, the founder of PayPal, early investor in Facebook and Godfather of the PayPal Mafia that currently rules Silicon Valley has been clear about his philosophy.

He stated, “I no longer believe that freedom and democracy are compatible”, his reasoning being that “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron.”

One theme I’d like to highlight from Taplin’s article is the way he introduces the piece, citing a period in the late sixties when he says the most “critically acclaimed movies and music were also the best selling.”  This has been a big theme of mine since starting to write about these issues.  Because my own opinion is that Hollywood’s real golden era occurred between the late sixties and roughly the catalyst we call Star Wars. This was a transformative time when the movies that had the big runs, made the most money, and earned all the award nominations were the kind of films that today we would describe as “indie.” Obvious examples would be Woody Allen’s Annie Hall or Martin Scorcese’s Taxi Driver.  It was a time when mainstream, American film dealt with sophisticated material in a way that created great works of art that also dominated at the box office.

Hollywood studios and audiences moved steadily away from that kind of mainstream fare, which is not to say that everything big studios produce today is “bad,” but it’s certainly different.  The many reasons for the shift in material, at least initially, have little to do with the post-Napster market forces that have since exacerbated the problem by devaluing works across the board.  But I think the point Taplin is making is not to decry the fact that today’s Annie Halls aren’t box-office leaders, but that they face limited opportunities to survive at all.  And we can easily imagine that destructive model replicating across multiple sectors, as what used to be the middle of the economy is subsumed into the struggling 99%.  In keeping with Taplin’s sleeping metaphor, I find it interesting that the “revolution,” which gave us the shorthand 99% and 1%, was typical of our times — just a little trend that made money for social media companies but that anyone in power could safely ignore.

Read “Sleeping Through a Revolution” by Jonathan Taplin on Medium.

Free Speech III – Are Today’s Liberals Killing It?

Because there are laws against certain expressions of neo-Nazism in Germany, and because my history-buff son and I are slightly amused by the satire inherent in that otherwise understandable fact, we will jokingly conjure the image of some official kicking a would-be fascist and screaming, “You vill be tolerant!”  But if you really like your irony served thick and over-salted, consider the likelihood that if I made that same joke on an American college campus today, not only might it be utterly misunderstood, but it might get me into actual trouble — especially with anyone unfamiliar with the satire of Mel Brooks.  In fact, in a recent reply to my last post about free speech, the respondent suggested that I have made comments on this blog that would get me fired from American colleges today; and he or she is probably right. Because if this article by Kristen Powers for The Daily Beast is an accurate portrayal of today’s “liberal” college students, they really don’t get free speech at all.

In the context of this blog, I keep insisting that the Internet is not the greatest tool for free speech ever invented. But I should clarify.  The more accurate thing to say is that it doesn’t actually matter if the Internet is the greatest tool for free speech ever invented, if in fact a whole generation of American university students don’t understand free speech in the first place — why we have it, and the often painful experiences through which it has been preserved. “… the politically correct university is a world of land mines, where faculty and students have no idea what innocuous comment might be seen as an offense,” writes Powers.  She also cites an article from Atlantic in which attorney and free speech advocate Wendy Kaminer states, “The belief that free speech rights don’t include the right to speak offensively is now firmly entrenched on campuses and enforced by repressive speech or harassment codes. “

I don’t know if Powers is cherry-picking exceptions and making them sound like rules. She may be pointing to a phenomenon rather than a trend. The article references her book The Silencing:  How the Left is Killing Free Speech, and she identifies as a liberal, so I assume this is not just some Bill O’Reilly-style attack on liberals in general. Additionally, what she says does jibe with anecdotal evidence I hear through acquaintances and that I have read in some online commentary by contemporary college students. And if this is truly what is happening to the liberal tradition of socratic disciplines in higher education, then it is impossible not to sneer every time the heralds of Silicon Valley declare that freedom of speech is the motive behind whatever policy they seek to enact or destroy. I don’t want to suggest that these voices don’t ever mean what they say, or at least think they mean it, but rather how empty their gestures are in contrast to the censoring trends that their wonderful tools of speech have helped create.  After all, Powers’s description of the self-righteous mob shutting down ideas based solely on some hair-trigger offense at the speaker’s choice of words sounds a hell of a lot like life imitating social media to me.

So, let Google & Co. abuse the concept of “chilling” free speech by chucking every artist’s takedown request into the “Chilling Effects” database and tell the kids they’re standing up for the First Amendment.  Whatever.  If Powers’s article is a fair reflection, the kids don’t understand free speech anyway. It’s a lost cause. The irony, of course, is that what preserves both the right of speech and the intellectual rigor to use speech is the conscious choice to be Jacob and wrestle with the damned Angel, to welcome the confrontation and turn it into something new rather than to silence it or pretend it isn’t there. And isn’t it funny that this is exactly what artists do?  We’re just barely victorious over conservatives banning creative works or investigating artists for “obscenity” or some other offense to our half-Puritan nature. Are self-proclaimed liberals now going to write their own black lists and host their own Bradburyian bonfires?

Maybe not.  But Powers does quote comedian Chris Rock who says that playing colleges isn’t fun anymore because people are so easily offended.  And this is truly a sign of the intellectual apocalypse:  when we no longer have the mental fortitude or cultural literacy to be able to laugh at our own folly, to satirize our worst selves, we breed fanatics who would smother genius in a ball of coexist bumper stickers.  I have no idea what the ultimate solutions are to the new rise in racial tensions in this country, but understanding why Chris Rock is funny would probably be a step in the right direction.  It’s sad to think about the fact that Lenny Bruce was arrested for obscenity in the 1960s, that Richard Pryor had racially mixed audiences pissing their pants together by the 1970s, but that a legacy of those two comedians can’t get a smile out of college kids in 2015. I’m not sure that’s progress toward any kind tolerance at all.

Pandora wins on appeal. But stay tuned.

This week, the 2nd Circuit Court of Appeals ruled in favor of Pandora, upholding a ruling by Judge Denise Cote in affirming the 1.85 percent of revenue cost set by the rate court as “reasonable.” Maybe, but any way you slice it, songwriters and composers are still getting hosed by streaming services  You’ve probably seen some of the headlines or statements made by songwriters you know saying things like, “20 million plays earned me about two dollars.”  Maybe you didn’t care because you figured the famous person who made that statement was already rich; but setting that logic aside, it ought to be clear that today’s generation of new songwriters and composers will not be building professional careers based on revenue streams that turn millions of plays into pennies.

Music streaming is cool and convenient, but even as the dominant players in the space congratulate themselves for being “innovators,” the reality is that a tiny handful of guys are making millions of contemporary dollars while enjoying the benefit of paying antiquated rates to publishers, who in turn pay songwriters and composers.  This is because ASCAP and BMI (generically called PROs for Performance Rights Organizations), who traditionally negotiate and collect fees on behalf of publishers for public performance licenses are locked into consent decrees whereby a court has set the rate at 1.85 percent of revenue for radio broadcasting.  Spokespeople for ASCAP have consistently pointed out the absurdity that this particular class of artists is more regulated than the corporations that profit by using their work. As such, the PROs back the proposal of the Songwriters Equity Act in an effort to change rate setting to better conform to the new market.

It should be obvious to anyone that a Pandora-like service isn’t exactly radio. The collective earnings of thousands of terrestrial radio stations add up to considerably more than the revenues of a single Pandora.  At the same time, a single Pandora reaches a global audience, even obviating the need for listeners to use terrestrial radio at all.  That’s just technological progress, and nobody hopes or expects to put that genie back in the bottle.  But because the one Pandora is allowed to pay the same percentage of earnings as the collective of all terrestrial stations, that’s the reason millions of plays worldwide translates into pocket change for songwriters and composers.

So, in a nutshell, the appellate court ruled that ASCAP may not raise its rates to new benchmarks that would be aligned with this dramatic shift in the market, and it also ruled that the individual publishers Sony/ATV and UMG may not withdraw only their digital rights from ASCAP  in order to negotiate those specific licenses separately with Pandora.  But consumers should not assume this is a “win” for streaming that will perpetuate their desire to have all the music they want for free for the rest of time.  Because now the major publishers are faced with an all-or-nothing option.  They either leave all their rights with ASCAP and BMI or pull out entirely, which Sony/ATV’s CEO has already indicated may be the response to the courts not allowing them to extricate themselves from the outdated consent decrees. Meanwhile, the Department of Justice is reviewing the consent decrees and may yet recommend that the courts are wrong in their determination that a rights holder may not partially withdraw one of its bundle of rights without withdrawing entirely from the PRO.  Either way, that ruling will likely be the end of that particular debate.

If the larger publishers withdraw from the PROs, they’ll demand higher rates from Pandora no matter what; but attorney and blogger Chris Castle in this post suggests Pandora doesn’t care about that if they can effectively bust the PROs by forcing the big publishers to jump ship and leave the organizations populated with smaller publishers, who have limited bargaining power.  Thus, instead of a system of collective bargaining that represents both large and small publishers, we may see a bifurcated market in which the large players negotiate against one another while the smaller players continue to choke on the crumbs.

There’s no reason to assume this will mean longterm benefits for consumers, either with regard to affordable access or especially with regard to fostering and sustaining the greatest diversity of works.  At the same time, what may happen to public performance licenses other than streaming is unclear.  Presently, your local bar pays an affordable fee to be able to play damn near every song ever recorded, and it pays that fee to no more than three PROs — ASCAP, BMI, & SESAC.  If the major publishers are no longer part of those catalogs, your local bar owner, depending on what music he wants to play as well as other factors like size of the business, may have to pay for all three PRO licenses and also deal with the major publishers, who will be free to charge whatever they want based on any criteria they decide because they are no longer subject to the ASCAP consent decrees.  If nothing else, it sounds like a pain in butt for a small business owner compared to the old system, but it could get rather complicated when you consider the number and types of venues, even websites, around the world that traditionally cover their music needs with one to three blanket license fees.

Whatever is to come, people should be clear that Pandora’s strategy isn’t about consumers, it isn’t about innovation, and it sure as hell isn’t about competition.  Nobody I know dislikes  streaming in principle. What’s not to like?  But it’s not THAT innovative. If you didn’t see it coming at least by the time Napster became a thing, you weren’t paying attention. The companies that have emerged as dominant players in this space aren’t particularly great visionaries; they’re just the guys who were in the right place at the right time to capitalize on a relatively obvious means of distributing music akin to what we historically called “radio.”  So, let’s not beat the word innovation to death when talking about companies like Pandora; and let’s especially not get suckered into thinking this is about competition.

It is the nature of business leaders to want to dominate, which is healthy in a market that doesn’t foster natural monopolies.  Unfortunately, the Internet does foster natural monopolies. Why do you think Google+ couldn’t take, or even share, the market with Facebook?  Because most of us don’t really need two of the same kind of social media environments  in our lives.  Hell, many of us, have to force ourselves to limit the use of just one.  It doesn’t matter how dominant Google is in other areas or how good their programmers are; the Internet generally favors one winner at a time in certain lines of business. And so it may be with music streaming.

On that note, it will be interesting to watch the relaunch of Apple’s entry into the streaming market. Reported to be a subscription-only service, Apple may be in a position to offer the best available terms to all publishers and re-assert itself as the only game in town much as it did with digital downloads in the wake of Napster. Of course that move was directly tied to sales of a little device called the iPod, produced by the company that rules in the arena of attracting customers to new gadgets.  Streaming, of course, isn’t about gadgets, at least it’s not about any one particular gadget.  At the same time, both European and US trade officials are already investigating whether or not Apple is using its still-dominant position in digital downloads as leverage against rivals like Spotify and Pandora.  Sure, but again, I think there are natural reasons why one player at a time will be dominant, regardless of trade regulations.

Whether it’s Pandora, Spotify, YouTube, Apple, or some other company, one downside of digital, worldwide distribution is that consumers may not need more than one service provider when all is said and done. And, if all this is heading toward consolidation of delivery models and consolidation of production models, while limiting the variety of career paths for the next generation of writers and composers, there is no guarantee that either consumers or makers of music are going to win in the long run.  As with other copyrights, the so-called reformers seeking “balance” in the new market are only too happy to leave intact any outdated provisions that favor their own earnings to the detriment of those whose works are essential for their business models to work at all.