The DOJ & Songwriters Simplified (mostly)

The performing rights organization (PRO) called ASCAP was formed on February 13, 1914 when a group of about 100 American composers met at the Hotel Claridge in New York City to create a mechanism for collecting “public performance” royalties.  The 1909 Copyright Act had extended the performance right to this class of copyright holders, but it did not define exactly what “public performance” actually meant.  Part of that definition came with the Supreme Court case Herbert v Shanley Co. (1917), in which Justice Oliver Wendell Holmes offered the opinion that music played in a venue like a restaurant constitutes a “public performance” even if the customers are not charged a fee for the music itself.  The premise was, and continues to be, that the venue relies on music just like other products it needs to run the establishment, and so the music plays a key role in the profit interest of the venue.

In a 1923 case, radio broadcasts were determined also to be “public performances,” but the National Association of Broadcasters (NAB) was critical of ASCAP’s monopoly control over the music and its ability to set licensing rates at will.  In response, NAB formed the competitor BMI, and when this failed to have a mitigating effect on ASCAP’s rates, the broadcasters banned ASCAP music from the airwaves.  That’s when the DOJ showed up and told everybody to get out of the pool.  Justice sued ASCAP and BMI, and both national radio networks at the time, for violation of the Sherman Anti Trust Act.  The result of this action was a rate-setting system known as consent decrees—compulsory licenses the two PROs must grant for “public performances” of their music according to rates set by a “rate court” established at the federal court for the Southern District of New York.

Cathedral RadioFor the next 70 years, the PRO licensing system under the consent decrees generally served all parties—the composer/songwriters, venues and broadcasters, and the general public.  Yes, there are anecdotes describing various ways in which the system has failed or overreached to the detriment of a venue or even a member songwriter; and these stories naturally provide grist for the anti-copyright mill that loves to portray all rights-enforcement regimes as universally extortionist.  But many of these stories cited by critics like Mike Masnick pertain to collecting organizations outside the US, and even those associated with ASCAP and BMI are either old enough or nuanced enough to require deeper consideration in context to the overall cost/benefit of the organizations over many decades.

Fast-forward to the digital-age, when “public performance” is a whole new animal.  Streaming services, which are unquestionably a benefit to consumers, simultaneously reduce demand for sales of physical media and digital downloads, and they reduce demand for traditional broadcast radio, which was the distribution format that led to the consent decrees in the first place.  Plus, streaming affects the worldwide music market almost overnight. Unfortunately, for the songwriters and composers, the rates set for a pre-streaming market were suddenly worth doodley-squat in a streaming market.  This is why you hear about a songwriter making about $30 for a million plays of a song.

So, the songwriters and composers campaigned the DOJ to amend the consent decrees in order to allow more flexibility and more efficiency in licensing—a regime that would better reflect the dramatically changed, digital market. In response, the internet industry and its network of pundits complained that the PROs would then be free to capriciously raise rates, which would “stifle innovation” and harm consumers. For copyright watchers, this is a funny one because this same crowd usually argues that existing laws are doing all the stifling, but in this special case, it’s the WWII-era regime that is actually fostering innovation. Gotta hand it to the DOJ of 1941 for anticipating Spotify like that!

By now, consumers should understand that innovation often means money—money in the pockets of OSP shareholders made on the backs of rights holders who are getting hosed.  But last month, DOJ Deputy Director Renata Hesse not only affirmed the consent decrees, but she went a step further by rejecting the practice of “fractional licensing” for works made through collaborations.  When songwriters or composers represented by different PROs collaborate on a musical work, a user has had to obtain licenses from both organizations.  Hesse ruled that either PRO may license 100% of any work in either catalogue—a decision so deaf and blind to understanding the nature of music licensing that observers like music attorney Chris Castle can only conclude that Hesse’s former role as a Google attorney provides the only rational explanation.

Meanwhile, in an August 8th post on Techdirt, Mike Masnick ‘splains how the DOJ decision was not only the right decision, but one that will be “good for songwriters,” even if the songwriters are too naive to realize it yet.  I’ll let that hubris hang there for a moment, and then quote this refrain of one of Mike’s favorite saws:

“It’s kind of insane that we have to point this out over and over again, but the legacy industry always fights against new innovations in the false belief that it will harm revenue — yet when they learn how to embrace the opportunities, it turns out that a larger audience has been created and there are even more ways to make money.” 

I can’t decide which is more arrogant, the unwavering faith that he knows better than all the songwriters what’s best for them, the feigned exasperation at having to explain it again to these dumb songwriters, or the use of the royal we in this statement.  Or was that a revealing slip?  Which we is he speaking for here?

Of course, it may not matter what the pundits think because the DOJ may have opened up Pandora’s Box to let the music fly away.

As David Lowery explains—and David has written like way more songs than Mike Masnick—the DOJ may have spawned an unenforceable clusterfuck, the result of which could be tracks disappearing from streaming and other services.  In a recent blog post, Lowery states that it could cost him thousands of dollars in legal fees to revise the contracts between him and collaborators on a portion of his catalog.  In fact, some of those collaborators have passed away, so he would have to negotiate with their estates, making the process even more complicated. Can the DOJ constitutionally compel Lowery and thousands of other songwriters and composers to incur these legal fees to rewrite these contracts? We should hope not.

So, what will songwriters in this circumstance do?  The most cost-effective thing for them to do would be to pull the tracks from ASCAP & BMI that are more trouble than they’re worth.  That will reduce the music available on streaming services and also create a thorny problem for venues currently paying PRO licenses.  Right now, the coffee house where I’m sitting has all three licenses—ASCAP, BMI, & SESAC—and can play any song without worrying about it.  What happens if portions of the ASCAP and BMI catalogs are no longer covered by their licenses?  This is just a glimpse of the “chaos” the Copyright Office and others warned the DOJ would ensue as a result of their ruling this way on consent decrees.

The entire history of American copyright is one in which the contours of the law have been reshaped to conform to changing market conditions in order to protect artists and maintain the incentive to create and distribute.  As is so often the case today, the DOJ seems to be taking the narrow, Googley-eyed view that artists will continue to create and distribute no matter what happens.  Consumers are free to decide whether the songwriters know what they’re talking about or the copyright antagonists are correct.  But if they choose to ignore the former, I really hope they like the musical stylings of the latter.

FCC Set-Top Box Proposal Is About Copyright

Let’s clear one thing up right off the bat. Consumers are not entitled to high-quality TV programming.  It’s a business. If that business doesn’t make sense, the shows won’t be produced.

I know that seems obvious, but as with so many arguments made by technology companies seeking to hijack the distribution of works for themselves, this latest one  seems to proceed from a typical assumption that the “content” will just be there no matter what.  As I said in an earlier post on this same subject, if the producers and distributors are correct in their criticisms, the FCC set-top box proposal could provide consumers with new methods of acquiring a lot less content over time.

In a nutshell, the TV programming we enjoy is made available because the producers (copyright owners) enter into licensing agreements with distributors, referred to as Multichannel Video Programming Distribution (MVPDs). Generically we tend to call MVPDs “cable providers,” but MVPDs include satellite and various other ways to receive television programming that has been licensed from the copyright owners.  These licenses sit on top of a network of other licenses between the producers and their suppliers, advertisers, etc. For instance, the actors on a show not only receive fees for their performances but also have residuals and health & pension plans paid through SAG from those licensing fees that are paid by the MVPDs.

Not to say it’s complex, but Register of Copyrights Maria Pallante, in her 17-page August 3rd letter to the FCC, referred to “a constellation of arrangements between MVPDs and program producers.”  Pallante further states …

“… the copyrighted works that make up an MVPD’s multichannel video programming are produced and made available to the public only as a result of complex, private negotiations between content owners and MVPDs, and on the understanding that the MVPDs will make works available to the public in accordance with the terms of the resulting licenses. Typically, a violation of the license terms will constitute either copyright infringement or breach of contract.”

What the FCC says it wants to do is to unchain consumers from the dreaded box — that thing we rent from the cable companies to unscramble the channels, and which symbolizes whatever frustrations we might feel with the service, the pricing, or the lack of competition in the pay TV market.  I feel these frustrations myself, so on the surface, Chairman Wheeler’s proposal to give me options to watch TV more flexibly—through tablets, smart TVs, and other products sounds appealing.  But there’s a bug.

The proposal would mandate that the MVPDs make their programming and data available to third-party manufacturers of devices (surprise, Google is one of these), who would not pay license fees but would be free to distribute, brand, and monetize with advertising as they see fit.  The producers and the MVPDs have argued that this circumvents the aforementioned network of complex and costly licensing; and some producing interests have also raised the concern that because these third-parties operate on web platforms, a more seamless integration between legal and illegal viewing may exacerbate the adverse effects of piracy on the market.

The Electronic Frontier Foundation asserts that none of the criticisms of the FCC proposal made by producers and MVPDs implicate copyright law at all.  Mitch Stoltz of the EFF this week argued that the proposal is exclusively about allowing new technology products to come to market and to provide consumers with new choices.  Interestingly, despite his insistence that the proposal has nothing to do with copyright, Stoltz—and Cory Doctorow in a companion EFF post—refers to one of the most important copyright cases to support this position.

Sony v Universal (aka the Betamax case) is the reason consumers may use recording devices for “time-shifting” TV programs for their personal use; and these proponents of the FCC proposal appear to be arguing that Sony provides the only precedent needed to reject any further consideration of copyright in this matter.  Stoltz writes …

“Copyright gives rightsholders power to control copying, but not technology design. In fact, that sort of control is the antithesis of copyright’s purpose. Over thirty years ago, in Sony v. Universal, the Supreme Court refused to allow movie studios to “extend [their] monopoly” into “control over an article of commerce”—the videocassette recorder—“that is not the subject of copyright protection.” Today, you can search all 280 pages of the Copyright Act, and you won’t find anything that says a copyright holder has the power to control search functionality, or channel placement, or to decide who can build a DVR or video app.”

But here’s what Register Pallante says about Sony in her letter to the FCC:

“Sony itself focused on the distribution of an article of commerce where the seller had no ongoing relationship with the purchaser after the sale, and no connection to the content being exploited.  Nor did the Court address fair use where the device distributor was itself engaged in copying activities, as opposed to private home users. Both of these factors could conceivably be present with respect to devices and services under the Proposed Rule.  Nor have courts gone so far as to obligate rights holders to provide content in a manner that would facilitate time-shifting or other non-infringing uses.” 

So, maybe the FCC proposal has a little to do with copyright.  And that word obligate is an important one, referring back to my opening note that there is no right to TV programming.  Its production has to make sense as a business, and that only works because of copyright.

A rights holder of any work has the discretion to make decisions about the manner in which that work is distributed.  This is in fact fundamental to copyright’s purpose.  If you write an autobiographical novel about a serious subject, for instance, not even your publisher may blithely repackage it with a steamy romance cover (unless you sign those rights away) because they think it will sell better.  But that’s basically what the third-party manufacturers want to do.  They want the federal government to compel MVPDs to deliver programming and data to them, for which they will not pay a license fee but will be allowed to distribute, package, and advertise against the works in any way they see fit.

The implications of that business model go well beyond the scope of mere gadget-making, clearly falling into the purview of copyright law.  Kevin Madigan on Mister Copyright summarizes the distinction between the device and the model thus:

“The difference with the current navigation device manufacturers is that they will receive copyrighted TV programs to which they’ll have unbridled liberty to repackage and control before sending them to the in-home navigation device. The third-party device manufacturers will not only be able to tamper with the channel placement designed to protect viewer experience and brand value, they will also be able to insert their own advertising into the delivery of the content, reducing pay-tv ad revenue and the value of the license agreements that copyright owners negotiate with pay-TV providers.”

That’s not what VCR’s (and now DVRs) do, and I’d be surprised if any court had much patience for a party relying heavily on Sony to support the FCC proposals. Additionally, as reported, the EFF recently took the bold step of suing the federal government on the grounds that Section 1201 of the DMCA is unconstitutional. Perhaps their assertion that the FCC proposal has “nothing to do with copyright” presumes that they have already won this argument because Register Pallante recognizes a “tension” between the FCC proposal and the 1201 anti-circumvention measures in the DMCA ….

“The Proposed Rule would inhibit the ability of MVPDs and content programmers to develop, improve, and customize technological solutions to protect their content in the digital marketplace.  It would do so in part by requiring MVPDs to give third-party actors access to copyrighted video content and associated data according to one or more security standards prescribed by an outside organization rather than through their preferred (and potentially more secure) protocols negotiated between copyright owners and the MVPDs. In addition, the Proposed Rule suggests that the FCC might allow third parties to self-certify their compliance with whatever security standards are adopted.  The Proposed Rule would thus undermine content creators’ ability to choose how best to protect their content in the marketplace, as Congress intended in enacting DMCA.”

Between Stoltz’s latest editorial and the recent suit over 1201, it seems the EFF is increasingly uninterested in working with copyright law and is focused on efforts either to abolish it or simply pretend it doesn’t exist.  This post is not meant to suggest that I can endorse every business practice of every MVPD, but the EFF’s assertion that these parties are “cloaking” anti-competitive practices in false claims about copyright is misleading.  Moreover, it should be abundantly clear by now that if the name Google is on the list of providers seeking a new regime from a federal agency, then customer choice and free-market competition are likely not at the forefront of that effort.

Why is Fight For The Future Rocking Against the TPP?  

Rock the TPPI will admit it right now. I have not read the full text of the Trans Pacific Partnership agreement.  And I don’t intend to.  I also do not have even encyclopedia-entry knowledge about all of the other 11 countries involved in the TPP and do not have more than a basic understanding of global trade.  Absent this information, the honest answer is that I have no earthly idea what the full scope of consequences might be of either passing or not passing the TPP.

What I have just said about myself applies to nearly the entire American public. And it very likely applies to the folks at Fight for the Future, who are now promoting a concert event called Rock Against the TPP.  Here’s their description of the largest international trade deal in history:

“…an anti-democratic deal between 12 countries that was negotiated in complete secrecy by government officials and hundreds of corporate lobbyists. If it becomes law, the TPP would be the largest deal of its kind in history, and it poses a grave threat to good-paying jobs, internet freedom, the environment, access to medicine, food safety, and the future of freedom of expression.”

I have written previously about the false claim that TPP can have an ill-effect on free speech and that the “secrecy” thing is blown out of proportion.  (As indicated above, the full text has been freely available since early in the year, but nobody is going to read it.)

The first criticism I have about FFTF’s declaration is that this organization is not functionally concerned with good paying jobs, the environment, access to medicine, or food safety.  Individuals within the group may personally care about these things and have certain related knowledge, but nobody who works there is an international policy expert in these areas; and addressing these issues is not part of the mission of the organization.  Fight for the Future is, in principle, a “digital rights” group—concerned with “internet freedom,” a concept that is itself a little vague for my tastes, but that’s another conversation.

“Act Now! Or Things Might Stay Very Much the Same!”

That doesn’t exactly stir one to action, but it’s an honest distillation of “digital rights” groups’ complaints about the TPP with regard to “internet freedom” and free speech. This is because the part of the treaty they see as a threat are the IP provisions, which do not actually have any effect on the status of free speech online for the trading partners.

And even confined to its wheelhouse, Fight for the Future’s concern for “internet freedom” in the context of the TPP typically glosses over the complexity of interrelated issues, raising this one paradox I can’t help but repeat:  You cannot have internet freedom without global trade because you cannot have devices that connect you to the internet without global trade.  Ain’t that a bitch?

I mean I hate to be a buzzkill, but there’s a lot of environmental hazard and unsafe, unfair labor involved with producing the computers and smart phones and tablets FFTF is using to rally people to Rock Against the TPP.  So, the hard question is this:   Can we privileged Americans say with confidence that this trade deal only exacerbates these problems rather than makes progress toward improvements for workers and environmental policies in partner nations? I can’t.  Can you?  And, without this level of understanding, it seems cynically irresponsible to get people into a lather about their right of free speech—a right that is not threatened at all—while potentially denying a step forward for someone halfway around the world, who lives in pretty deplorable conditions.

Still, the economic and environmental concerns are not dismissible.  Here’s a quote cited by the organization Citizens Trade, which is linked to by FFTF:

CWA president Chris Shelton: “Even a cursory review demonstrates how this trade deal fails working families. It forces U.S. workers to compete with the 65-cent an hour wages of Vietnamese workers and the slave labor employed in Malaysia. It allows multinational corporations to challenge environmental, financial, consumer and other regulations through international tribunals – and outside the court systems of member countries. It pays lip service to addressing real concerns about currency manipulation that costs American jobs and leads to more jobs being sent offshore. And it allies the U.S. with countries that abuse their own citizens, including Brunei, Vietnam and Malaysia.”

I don’t want to support any of that.  Of course there’s a lot in that statement begging further research, but on the last point, for example, about allying with countries that abuse their citizens, here’s some sample text from the TPP:

Article 19.3: Labour Rights

1. Each Party shall adopt and maintain in its statutes and regulations, and practices thereunder, the following rights as stated in the ILO Declaration 3, 4:

(a) freedom of association and the effective recognition of the right to collective bargaining;

(b) the elimination of all forms of forced or compulsory labour;

(c) the effective abolition of child labour and, for the purposes of this Agreement, a prohibition on the worst forms of child labour; and

(d) the elimination of discrimination in respect of employment and occupation.

So, if ratifying this trade agreement could reverse precedent disenfranchisement of minority workers in Malaysia, I don’t necessarily want to rock against it either.  So, which do we believe?  More to the point, how can we know without thoroughly digging into the laws, economics, and conditions of people in Malaysia, Brunei, Vietnam, etc.?  Fight for the Future seems to trade on a very American-centric notion that an “open internet” is all that’s needed for the rest of the world to become more democratic and socially just.

The labor-related critics cited by Citizens Trade—Steelworkers, Machinists, CWA, and the Teamsters—have an immediate, American-jobs interest in fighting against free trade. This is a valid concern to say the least, but it also makes these parties rather strange bedfellows with an organization like Fight for the Future, whose anti-copyright agenda is not exactly supportive of domestic labor. Teamsters, for example, do a lot of work for the motion picture industry. And FFTF’s criticism, based solely on the premise that copyright enforcement is in conflict with free speech, is both unsound and wants to ignore the adverse effects of criminal-enterprise infringement of works like motion pictures.

Although certain pundits like to point to the total revenues of the American film industry as “proof” that large-scale piracy does no harm, the evidence is clear that investment in middle-market production is wavering as a direct result of piracy’s eroding margins for these products.*  This can lead to fewer total projects being made with full budgets and union crews, which can lead to fewer teamsters being hired to support film and television production.  Likewise, many members of the CWA have a direct interest in protecting copyrights around the world, so how is FFTF’s anti-IP agenda not a threat to those jobs in addition to any concerns regarding other aspects of the TPP?

In the end, I think it’s very tough to say whether or not we could, or would even want to, put the global-trade genie back in the bottle.  What is not hard to say is that Fight for the Future’s gasping over the prospect that TPP would unify copyright terms among the partner nations and promote measures for enforcement is a naive, anti-progressive stance that ignores the complexities of the real world. Former Canadian diplomat Hugh Stephens describes a hypothetical—though not impossible—scenario in which Taiwan is invited to join the TPP, which would diversify its economic relationships, making it less dependent on China.  Meanwhile, what do “digital rights” activists think is more likely to motivate a nation like China to migrate toward a more open society with an uncensored internet—rock concerts or global trade?

With regard to American jobs, there’s no getting past the fact that certain sectors have suffered from free trade deals. In response, I’m with those who say there are jobs to be had by investing in domestic infrastructure; it’s long overdue for renovation and cannot be outsourced.  Maybe somebody should rock that.

*Although there is new investment in middle-market works predicated on Netflix-like models, it is too soon to know how this market will evolve to remain sustainable.  It is also equally vulnerable to piracy.