Category: Art

What Went Down at the DOJ 

“… last week a former Google lawyer at the DOJ anti-trust division against the recommendation of the US Copyright Office rammed through a 100% licensing rule that effectively brings the last of the “free” songwriters under the consent decree.”  

— David Lowery at The Trichordist —

“The Department of Justice’s position is arrogance at its worst. The decision fails to address the vitally important issue of terminating or reforming outdated consent decrees, and instead broadly expands its interpretation of existing consent decrees.”

— Rep. Doug Collins (R-GA) —

“… the consent decrees were put in place before the transistor radio was invented. They were never meant to, nor could they envision, existing in a world of iPhones, streaming and instant access to practically all music. Unfortunately, the DoJ went the opposite direction and chose the outcome most harmful to songwriters and the creative community.” 

— David Israelite, President & CEO, National Music Publishers Association —

The internet and tech industries like to evangelize a message that creators’ rights laws are “outdated” because they supposedly stand in the way of innovation and competition.  Of course, if a truly outdated law benefits their bottom line or their business models, then they’re only too happy to promote a message that the status quo must be preserved in the name of competition and innovation.  For instance, rights holders would like to see reform to the 1998 DMCA, while OSPs generally want the law to remain as obsolete and ineffective as it is.  But this general hypocrisy may be best dramatized by efforts to entrench the WWII-era federal consent decrees governing music composition and songwriting.

If only a songwriter could buy food and housing at 1940s prices, maybe this rate structure that now earns pennies on the dollar for millions of streaming plays could somehow be justified.  Instead, composers and songwriters remain shackled to a federal, Rate Court system that began when “Boogie Woogie Bugle Boy” was a new hit—one that could never have anticipated the holistic transformation to the music market produced by innovations like digital streaming. For the past few years, the songwriters and composers have been seeking reform to these licensing regimes in order to adapt pricing regimes that reflect the realities of the new market.  That’s how augmenting legal systems is supposed to work.  But on July 1—just in time for Independence Day as David Lowery pointed out—the Department of Justice recommended that American songwriters weren’t quite hampered enough by their rusty handcuffs. (Remember:  this is about regulating songwriters and composers — not weapons, automobile, or chemical manufacturers.)

Deputy Assistant Attorney General Renata B. Hesse, a former Google lawyer, issued two key recommendations.  The first is that any of the performance rights organizations PROs — ASCAP, BMI, or SESAC—must license 100% of a song for public performance no matter what percentage of the song the PRO legitimately represents.  Historically, when songwriters collaborate who are signatories to different PROs (which has happened thousands of times to produce songs you love), the associated PROs co-manage the rights so that all parties receive royalties accordingly.  On this matter, music attorney and blogger Chris Castle writes …

“… the [Obama] Administration has to ignore the implications to international trade, replace a voluntary licensing doctrine with a government mandate, ignore written agreements between generations of songwriters, and impose untold transaction costs on songwriters without requiring an increase in royalty rates to permit cost recovery.”

The second recommendation from Hesse is to reject songwriters’ and composers’ requests to withdraw their individual catalogs from digital licensing in order to negotiate fair market rates with services like Spotify, Apple Music, or Google.  This independent negotiation already occurs between the digital service providers and labels and artists who are not signatories to the PROs bound by the WWII-era consent decrees.

The real hypocrisy in this recommendation is that the DOJ is rejecting fair market negotiation for one class of artists on the grounds that such a ruling would be necessary to maintain the antitrust rationale for consent decrees in the first place.  But not only is Hesse looking at the 21st century market through an early 20th century lens (the largest PRO, ASCAP, was formed in 1914), but she is failing even to consider that the companies we now need the government to regulate are Apple, Google, Spotify, et al.  It cannot possibly be news to Hesse or anyone else at Justice that the titans of Silicon Valley are the new prospective monopolists of our times.  On the other hand, Chris Castle pulls no punches here when he argues that Hesse is in violation of Obama’s own Executive Order on Ethics because she is “working on antitrust matters for the benefit of Google, her former client.”

Organizations like Public Knowledge that support the recommendations by the DOJ, say that Hesse has acted properly in the service of the public interest.  Arguing that consolidation in the music publishing industry leads to monopolistic control of large catalogs, Raza Panjwani, Policy Council at PK, writes …

“… it’s refreshing to see that, based on reports, it appears that the Department of Justice is once again demonstrating that robust enforcement of antitrust law in the United States can play an integral role in preventing anticompetitive behavior, whether that’s the development of cable monopolies, price fixing in the ebook market, or collusion in an increasingly concentrated music publishing market. In each case, the ultimate winner is the public.”

I have to say, when I look at the many challenges in the world, I’m glad Public Knowledge is there to protect us from the caprice of songwriters.  I know that’s sarcastic, but seriously?  I think we have to admit that consolidation continues in every sector of the American economy and that the major internet players are only accelerating this phenomenon while paying lip service to the virtues of competition. Meanwhile, what sector more than music has been so dramatically warped by black-market forces that pegged the “natural price” for a song at zero?  To pretend that piracy is not still a bargaining chip for legal streaming services when negotiating with songwriters—if the DOJ would be so kind as to let them negotiate—is a disingenuous assessment of the market.

As is typical of our increasingly short-sighted business culture, the DOJ also fails to recognize that its recommendations are self-defeating—that they would act as disincentives to produce, collaborate, and innovate within this community of artists. Just like her former client, it seems that Hesse is too narrowly focused on the exploitation of existing works while failing to imagine the works that may (or may not) be produced in the future.  As such, her recommendations are unfortunately consistent with the digital market’s tendency to cannibalize older investments rather than to support newer ones. Yes, that’s an oversimplification, and the digital market continues to evolve.  But if history teaches us anything, it’s that the new, disruptive companies quickly become the new dominant forces—as willing and able as any to engage in non-competitive practices or to exploit suppliers.  As such, the DOJ’s recommendation to tighten these 75-year-old regulatory bonds on one class of independent (and often invisible) artists seems far less likely to foster competition than they are to further subsidize the free ride for America’s billionaires.

R Street & Techdirt Dissing Prince

“R Street is a free-market think tank with a pragmatic approach to public policy challenges.”         — R Street About Page —

If one is going to comment on public policy, then one ought to make an effort a) to understand the nature of a given topic; and b) to present facts instead of fiction.  In this regard, R Street might want to be careful about republishing articles from the blog Techdirt, as it did last week with this Op Ed by Zach Graves all about what Prince did wrong in the management of his career.

Graves notes that although Prince was a musical genius, he was one who “…never quite found the right approach when it came to licensing his music for redistribution—in spite of the fact that he sold over 100 million records, placing him among the best-selling artists of all time.”  If it seems as though the second half of that statement contradicts the first, that’s because it does.  When you combine terms like musical genius and best-selling artist, it takes some chutzpah to presume to know best—in a post-mortem analysis—how the artist in question might have made wiser choices.  In fact, Graves is working overtime trying to shoehorn Prince into an online market the artist rejected. He writes, “ … his fans were left in an odd position, on the news of his death, of being frequently unable to provide links to Prince’s massive oeuvre.”

Speaking as a representative of the 80s, and of those who have been Prince fans since he first emerged, that statement is not only surprisingly disrespectful to the wishes of a beloved artist who just passed away, but it lays bare a mindset that actually believes these fleeting moments on social media are of much greater emotional and cultural value than they really are.  The shared sense of loss among Prince’s fans is not diminished because a friend does not post “Little Red Corvette” on Facebook via YouTube.  Micro-moments like these are fine, occasionally interesting, but are utterly forgettable because of the very nature of the interface itself. Our relationships with Prince’s music, as with all music, are based on associations his songs have with tangibly profound, wonderful, painful, or intimate moments in our lives.  And if the next generation doesn’t form these same types of realtionships with music, then they probably won’t relate to music at all.  Meanwhile, the fact that YouTube & Co. were deprived of a few million advertising impressions they would have sold on the trending of Prince’s death is exactly what he wanted to deny these companies.  He saw through the lie that the OSP’s revenue model has anything whatsoever to do with his music or our love of it. And he was absolutely right.

It is fairly well known that Prince spent considerable effort and resources during his career in order to gain and maintain control of his work.  Quite simply, he did not like anyone dictating how, when, or where his music ought to be distributed—not Warner Music 23 years ago, not YouTube last month.  So, the fact that Graves chose to compare and contrast the market potential of Tidal (which licensed Prince) with Spotify (which Prince rejected) is entirely irrelevant, whether Graves’s math in this case is sound or not.  Prince was a Mozart.  And it’s rare to see that kind of genius without the individual also being fiercely proprietary about his work.  And although Graves acknowledges that Prince’s decision to license exclusively through Tidal “may have been a reflection of his proclivity to assert tight control of his brand,” he remains steadfast in his bias when he writes “…making music less accessible poses serious challenges for artists and consumers alike.  For one thing, as English singer/songwriter Lily Allen explains, it will reinvigorate incentives for piracy.”

News flash:  Prince did not disappear into obscurity despite his rejection of these “free” platforms.  Yet, somehow, Graves believes the “lesson” we are supposed to draw from Prince’s legacy is that this hugely successful, influential, and universally-respected artist was fundamentally wrong, while the new-economy sages at Techdirt and R Street are right. Their logic says that if the artist chooses not to be fractionally exploited by a YouTube or a Spotify, then he naturally deserves to be fully exploited by outright piracy.  Put that way, it sounds more outrageous, right? But that’s essentially what Graves and others are saying.  Prince told that proposition to go screw itself, and maybe that’s the real lesson he leaves behind.

Of course, Graves actually reprises the blame-the-artist-for-piracy theme because he wants to point readers to a remarkably obtuse statistic presented by Techdirt founder Mike Masnick’s very own, brand-new “think tank” called Copia.  The stat says that, “55% of 18-29 year-olds pirate LESS when offered a free, legal alternative.”  Wait for it. It’ll happen…

I’m no longer amazed at the capacity some people have for presenting bad news as if it were good news.  Because somehow Copia et al think nobody will notice that the truly stunning fact revealed by this stat is that 45% of the demographic will continue to pirate as much as ever no matter what free, legal alternatives are available.  But creators should feel molified by the prospect that the other 55% of the market will pirate less!  It is certainly indicative of a Kool-Aid narcosis that Techdirt, Copia, and R Street would even present these data with a straight face. After all, if one were to provide the same market research to the dumbest investor on earth, no matter what the business sector, he would tell you that no investment will be forthcoming.  Try pitching investors and telling them that 45% of the target market is guaranteed to steal from you while 55% of the market will only steal some from you, and watch what happens.

Perhaps most importantly, R Street in particular should be held accountable for republishing an article that completely misrepresents the facts in what is commonly called the “dancing baby” case.  Graves writes …

“Famously, Prince, via Universal Music, was behind the “dancing baby” DMCA lawsuit, which featured Prince’s “Let’s Go Crazy” playing faintly in the background of a short clip as a toddler danced. Ultimately our friends at EFF, who were representing defendant Stephanie Lenz, prevailed on their fair use claim. In 2013, EFF awarded him their “Raspberry Beret Lifetime Aggrievement Award” for “extraordinary abuses of the takedown process in the name of silencing speech.”

Setting aside the relatively minor detail that Prince himself was never directly involved in this case, the most important fact is that EFF sued UMG after the Lenz video was actually restored to YouTube via counter-notice procedure; and nobody ever sued Stephanie Lenz–at least not pertaining to this matter.  The reader is free to review the facts of this eight-year litigation and decide for himself whether the temporary takedown of the “dancing baby” video represents “award-winning” abuse of DMCA—or if perhaps the EFF chose this case because it would inevitably lead to misrepresentation exactly like the quote above.  “Prince sues mom and baby” makes good drama, but it just didn’t happen.  And to say that it did in the immediate aftermath of this artist’s passing is as rude as it is irresponsible.

As for Zach Graves’s concern that Prince’s music may not “reach a new generation of fans” due to its absence from certain free platforms, I’d like to tell him not to worry.  Prince’s work has touched millions of people and influenced thousands of other musicians around the world. It will transcend generations in spite of what web platforms have done to culture and memory itself.  At the same time, although YouTube’s predatory and monopolistic strategy may position its platform as “essential” in a certain sense for musical artists, one must ask if this winner-take-all outcome is the kind of “free-market pragmatic approach” R Street policy hopes to support.  The idea that Prince’s music needs YouTube in order to live on in our cultural memory would be a quaint conceit if it were not the kind of arrogant proposition that has hypnotized many policy thinkers by means of ceaseless repetition.

Google Books & The Semantic Maze of Fair Use

Photo by author.

This week the Supreme Court declined to consider the Authors Guild v Google case, which lets stand the Second Circuit Court ruling that Google’s use of scanned published works for its search tool Google Books constitutes a fair use.  Various pundits and advocates have hailed this as a victory for the fair use principle.  In fact, I saw a headline the other day on Facebook that began with the words “Fair Use Wins …”, and although the decision is unquestionably a win for Google, the fair use principle actually remains mired in a semantic confusion about which the high court might have at least provided some clarity.  It’s all about the word transformativeness.

The fair use doctrine was added to the Copyright Law as part of the 1976 Act, and its original intent was to protect various types of expressions—commentary, parody, education, artistic remixes, reportage, etc.—that by necessity made limited and conditional uses of copyrighted works.  I’ve written longer posts about fair use doctrine in general, and won’t repeat all that here, but readers will remember that there are four interrelated factors to be considered* in assessing whether a use constitutes a fair use.  But in 1994, in a landmark case that was heard by the Supreme Court called Campbell v Acuff-Rose Music, the fair use doctrine grew a new appendage called “transformativeness” that has, in the age of the internet, not only become something of a fifth factor that seems to override consideration of the other four, but also has not been clearly defined as a term of art in legal practice.

As I continue to learn from my attorney friends, some of the words we use in everyday language become terms of art in the legal world, which generally means that court rulings have shaped, narrowed, or expanded the dictionary definition of key terms.  For instance, based on the current ruling by a federal court, the word articles can only mean “physical objects” with regard to the International Trade Commission’s authority to prohibit the importation of illegal goods.  So, if Congress wants to grant that body the authority to restrict the importation of digital data for illegal purposes, they’re probably going to have to rewrite the law.  (More about that another time, perhaps.)

The concept of “transformativeness” in fair use parlance was introduced by Judge Pierre Leval in his paper “Toward a Fair Use Standard” published in the Harvard Law Review in 1990, and coincidentally it was Leval who wrote the decision in the Second Circuit’s ruling in Authors Guild v Google.  But even though the “father of transformativeness” himself has ruled in this case, there is still much confusion about the term and what it means when considering fair use. As Thomas Sydnor of the Center for Internet, Communications and Technology Policy at the American Enterprise Institute writes about the situation:

“As cases applying this judge-made “transformativeness”-based approach to fair use accumulate, that term becomes increasingly incoherent, inconsistent, and counterintuitive. Collectively, its incoherence(s) now threaten to turn what was once a productively flexible multi-factor balancing test into little more than a perfunctory recitation of factors ending in judicial ipsa dixit – “because I said so.” Under such circumstances, rule of law cannot persist.”

Sydnor further points out that the word transform already exists in the 1976 Copyright Act in reference to the preparation of “derivative works,” which is another term of art to describe works such as spin-offs or adaptations into other media. These rights belong exclusively to the copyright owner of the original work and should not be confused with the more casual way we might use the word derivative to describe, or even criticize, a work that is mimicking some other work.  For instance, the above-mentioned Campbell case involves a work of parody that we might describe in common language as derivative, but not so in the context of copyright law.

Campbell v Acuff-Rose Music involved a new, expressive work, specifically 2 Live Crew’s raunchy parody of the song “Oh, Pretty Woman” co-written and originally performed by Roy Orbison.  The court held in Campbell that “the more transformative the new work, the less will be the significance of other factors.”  In this case, the court is referring to the extent to which 2 Live Crew “transformed” the original song to make a new song.  By contrast, though, Google does not “transform” any of the original works to create new expressions but instead uses the contents of the works to create a new search service called Google Books.

So, with these two rulings, we are looking at two significantly distinct definitions of the word transformativeness.  The first refers to modification of an expressive work in order to make a new expressive work.  The second implicitly refers to transformation of the external world (society) by the introduction of some new capacity (i.e. function) it did not have before.  This is particularly relevant because the language used by SCOTUS, asserting that “transformativeness” should “lessen the significance of the other factors,” can only rationally be applied—if the spirit of fair use doctrine is to be kept intact—to the first definition in which an original work is “transformed” to create a new, expressive work.  In the second usage of the word, in which the external world is assumed to be transformed by some new functional use, then “transformativeness” becomes too heavily weighted against the other factors, thus giving (for instance) a giant, wealthy service provider extraordinary latitude to define just about anything it does as socially “transformative.”

If the courts are going to apply this second definition of “transformativeness,” then it seems the consideration ought not to carry any more weight than the other factors because the second definition provides a basis for large-scale, corporate-funded uses of millions of works in a way that the first definition does not.  In other words Google Books may be deemed a fair use in the end, but it is not sensible that the application of “transformativeness” in Campbell be applied.  As it stands, the courts appear to be giving the same weight to “transformativeness” while using two very different definitions of the word.

Semantically speaking, I would argue that transformative is not exactly the right word to use when one specifically wants to describe some measure of modification to an existing thing like a creative expression.  The term is problematic because it begs exactly the confusion we now have in the courts—because transformative more properly describes the effects of an invention or expression to the external world (e.g. electricity was transformative in that it made modern society). While it would not be wrong in common parlance to describe, for instance, Jeff Buckley’s rendition of Leonard Cohen’s “Hallelujah” as “transformative,” even this usage would generally tend to convey that both song and listener are in some way transformed.  But in law, this is too vague.  This is why the attorneys refer to a term of art –a definition that is established within the language of the law that may or may not conform to everyday usage.  Sydnor points out that Leval himself provides little guidance in this regard when he quotes the judge thus:

“The word “transformative” cannot be taken too literally as a sufficient key to understanding the elements of fair use. It is rather a suggestive symbol for a complex thought….”

 “[T]he word “transformative,” if interpreted too broadly, can also seem to authorize copying that should fall within the scope of an author’s derivative rights. Attempts to find a circumspect shorthand for a complex concept are best understood as suggestive of a general direction, rather than as definitive descriptions.”

Right. I’m no legal scholar, but I think the concept “transformative” is a troublemaker.

Because the precedent SCOTUS ruling in Campbell is based on the use of “transformativeness” to describe the modification of an expressive work, it would make sense to settle upon this definition and to seek another term for considering functional uses akin to Google Books. As CEO of Copyright Alliance Keith Kupferschmid writes in a post on the organization’s website:

“The fair use doctrine is an equitable doctrine, but in functional use cases it hasn’t worked that way because the transformative use test is ill equipped to effectively balance the competing interests at stake in these cases.  Fair use analysis should take into account not only the interests of owners and users but also the underlying policy objectives of the copyright law.  To account for these factors in a reasonable and balanced way, it is time for the courts to begin using a functional use test.”

Unfortunately for rights holders, the confusion about “transformativeness” that leaks into general consciousness results in a casual logic, which assumes that simply changing the context of a work, like placing a photograph on one’s Facebook page, is “transformative” enough to make a use fair.  Google Books is a misstep in that direction, and if this becomes the application of fair use, then that’s the ballgame.  There are no copyrights left. I can take your songs or images, put them on this blog, call it “transformative”, and get away with it.  That may be an attractive proposal to the internet industry, but it is far from the original intent of fair use doctrine in the copyright law, which was to protect expression, and it would have disastrous effects on the professional creative industry as we know it.

*Changed from original publication, which stated that the factors are considered by a three-judge panel.  As pointed out by Anonymous commenter, this is only true in an appellate court. A mistake I made in haste owing to the fact that many famous fair use cases are famous because they’ve gone to higher courts.