Tag: Blake Morgan

Podcast – Artists’ Rights with Musician Blake Morgan

Blake Morgan

If it can be difficult to keep up with artists’ rights in the news, that goes double for music. Fortunately, there are some incredible artists who devote as much energy and passion to rights advocacy as they to do making music—and among those individuals is Blake Morgan. Singer/songwriter, recording artist, indie label owner, and producer, Blake epitomizes the hard-working, middle-class artist—grateful to make music for a living, but still a guy with a mortgage and bills to pay. In this podcast interview, Blake and I discuss the major threats he sees to artists’ rights and why he keeps fighting the good fight. And to say the least, his optimism is infectious. Hope you enjoy!

Photo by: Taylor Ballantyne

Episode Contents

  • 02:37 – Why I fight for artists rights.
  • 07:22 – The biggest threats facing artists.
  • 11:52 – The American Music Fairness Act
  • 16:27 – Dying of “exposure.”
  • 18:40 – A middle-class face on the cause.
  • 24:00 – Spotify’s “big payouts” to artists.
  • 30:00 – Support for the TikTok legislation.
  • 36:10 – Private equity investment in music catalogs.
  • 45:00 – The VanGogh diversion.
  • 46:10 – Advice to the next generation.
  • 50:11 – The latest album Violent Delights.

Articles/Posts Cited:

Spotify “Loud & Clear” Payout Report

“Same Old Song: Private Equity is Destroying Our Music Ecosystem” by Marc Hogan

Trichordist Guest Post:  “A musician’s View of the TikTok legislation” by Blake Morgan

Spotify Still Wrangling with Songwriter Royalties

On January 8 of this year, The Trichordist ran a story that the Huffington Post apparently rejected in which indie musician Blake Morgan describes a closed-door meeting between Spotify executives and a group of musicians.  According to Morgan, he actually had to explain that Spotify’s “product” is not Spotify itself but music—music that Morgan and his friends make, and which Spotify monetizes.  And that’s fine, even welcome, if the company pays for licenses.

But Spotify has a big—potentially very big—problem when it comes to paying for mechanical licenses, which compensate songwriters and composers for their compositions, regardless of which artist(s) perform the work.  These licenses are required for reproduction under §106(1) or distribution under §106(3) of the Copyright Act; and based on precedent, a streaming service like Spotify is held to both reproduce and distribute musical compositions.

Unfortunately, the company has allegedly failed to pay for mechanicals for thousands of compositions, which is why it currently faces litigation from several complainants with potential damages running into billions of dollars.  Biggest among these is the Wixen Publishing suit, filed on the eve of the Music Modernization Act (now law) first being introduced in committee.  The suit implicates around $1.6 billion in damages for failure to license works by songwriters including Tom Petty, Stevie Nicks, Neil Young, et al.

With such prominent names in the mix, one might think that Spotify’s original defense (i.e. that rights holders are hard to find) would not have held up very well.  And it did not hold up very well, as exemplified by the comparatively modest Lowery/Ferrick class-action suit, which settled in May 2017 for a $43 million fund to various songwriters.   

Then, with the pending Music Modernization Act, which would bring an end to new litigation over failure to obtain mechanicals, late 2017 saw a spate of new complaints against Spotify for its apparently sweeping failure to secure these licenses.  And perhaps it was the extinction-scale degree of the potential damages that then inspired fresh creativity in Spotify’s defenses.

In a September 2017 post, I described the suits filed by Bluewater Music Services and songwriter/musician/producer Robert Gaudio.  In its initial response to this complaint, Spotify implied that, as a streaming platform, it was never obligated to pay for mechanical licenses.  This drew immediate reaction from the National Music Publishers Association and CEO David Israelite’s declaration that the platform was then “in a fight with all songwriters.”

Spotify’s rationale in that brief was that streaming only implicates the right of public performance and not distribution; but as I noted in that post last September, even if a court agreed with this interpretation (and that is a big IF), this would still leave the reproduction right, for which a mechanical license is still required.  This no-license-needed defense remains among Spotify’s arguments in its current filings, but according to a recent article by Eriq Gardner in The Hollywood Reporter, the streaming company has introduced a new theory to the Bluewater case.

Because Bluewater administers copyrights for publisher clients, but is not the owner of those copyrights, Spotify questions whether the company has standing to sue for infringement of the mechanical right for all the titles named in its complaint.  Spotify’s theory turns on the premise that because a) Bluewater is not empowered to license for less than statutory rates without written consent of its publisher clients; and b) because any party can obtain a mechanical license at the statutory rate by filing a Notice of Intention (NOI) with the Copyright Office, then Bluewater’s authority to grant the license is non-exclusive. If that’s the case, Spotify contends, then Bluewater does not have standing to sue for these alleged infringements.

Spotify’s argument hinges substantially on the fact that mechanical licenses are compulsory.  No songwriter/composer can deny any party a mechanical license to use a musical work as written.  On the other hand, these owners can authorize parties like Bluewater to administer those rights on their behalf, so if this reads like a very fine parsing on Spotify’s part, it will be interesting to see whether the court thinks so, too.  In either case, a mechanical licensing after January 2018 is subject to the terms of the MMA, so it seems doubtful that the Sixth Circuit opinion will have substantial effect going forward regardless of how it rules.

It was Devlin Hartline at the Center for the Protection of Intellectual Property (CPIP) who shared this story on Twitter, so I asked his view, and he replied …

“It’s quite noteworthy that Spotify summons no support in the case law for its newfound position that there can be no exclusive licensee of the mechanical rights in a musical work at the statutory rate since there’s no exclusivity given the compulsory license. The compulsory mechanical license has existed since the Copyright Act of 1909. If the argument had any merit, you’d think Spotify would be able to find at least some precedent in support. Instead, this move comes across as another desperate attempt by Spotify to avoid paying for the works that it failed to license properly in the first place.”

Further, Hartline opined in his tweet Spotify counsel Christopher Sprigman’s presentation of this unique defense might be another reason to be concerned about his leading the Restatement on Copyright Law initiative at the American Law Institute.  As described in a January post, some prominent copyright skeptics have pushed for this Restatement project, which is unprecedented in the annals of all statutory law—not just copyright.  As I wrote in that post …

ALI Restatements have never been written for comprehensive federal laws like copyright because these are already statutory, or black-letter, laws.  Congress writes the statutes, the judiciary interprets them, and attorneys make their arguments; but everybody’s working from the same statutes and a much more narrow body of case law than common law entails.   Hence, this request for a Restatement of copyright law represents an end-run around Congress—an effort to reshape the Copyright Act without a legislative process.

Sprigman is counsel for Spotify; he’s the lead Reporter on this ALI Restatement project; and he’s the co-author of a paper called The Second Digital Disruption (see two-part response here), which rather speciously asserts that because market data reduces risk, this obviates the author’s need for strong copyright protections.  Not that I generally like picking on any one individual, but it just so happens that Sprigman’s name seems to feature in a trifecta of the anti-copyright agenda—litigation, policy, and academia—and largely in the service of billion-dollar tech companies like Spotify that don’t even know they’re in the music business.  

Will SCOTUS Close Cy Pres Loophole in Class Action Litigation?

Suppose there were a company whose minions went around whacking people in the head with two-by-fours.  Then, suppose that in response, the multiple victims of said whacking joined a class-action lawsuit against the corporation and won their case.  Now, imagine that rather than any damage award going to the plaintiff class members, the money instead went to various organizations, including non-profit and academic institutions, that advocate policies favoring two-by-four head-whacking by the very industry that includes the defendant company.  If that seems absurd, welcome to the often maddening outcome known as the cy pres award in the world of class-action litigation.

From the French cy près comme possible, meaning “as near as possible,” cy pres is supposed to provide a reasonable alternative to awarding damages stemming from class-action lawsuits where the members of the injured class cannot effectively be compensated by the penalties collected in settlement.  So, in my exaggerated example above, if ten million class members are whacked by two-by-fours, and the company settles for $20 million, it may not be practical to distribute two bucks a head (literally) to the class, especially after the plaintiff attorneys take their cut (more about them below).

So, in lieu of paying the class members themselves, the court may order a cy pres award to an organization, or organizations, that, in theory, work to benefit the class members’ interests indirectly.  For example, the money in my hypothetical scenario might go to the American Society for the Prevention of Two-By-Four Whacking.  But this is often not what happens.  

In fact, just the opposite occurs according to the petition granted cert by the Supreme Court in Frank v. Gaos, for which oral arguments will be heard tomorrow.  The petition alleges that district courts too-frequently approve cy pres awards without “rigorous analysis,” and this results in (among other problems) victim classes winning settlements that only serve to fund institutions who advocate on behalf of the very parties they sued.  

Cy Pres Awards Fund Google’s Anti-Copyright Agenda

The aberrant nature of cy pres awards is the basis on which three musician/copyright activists—David Lowery, Blake Morgan, and East Bay Ray—filed an amicus brief in Frank v. Gaos, written by attorney Antigone G. Peyton. The brief describes how cy pres awards, resulting from lawsuits Google has settled, end up funding policy advocacy that favors Google, including the company’s global assault on copyright law.  “Artists such as amici watch in powerless amazement as the lower courts allow millions in cy pres awards to be funneled to Google’s academic and nonprofit influencers through dubious class action settlements, …” the brief states.

For instance, the Electronic Frontier Foundation apparently received $1 million of the $17 million Google paid in 2011 to settle a consumer privacy lawsuit (the Google Buzz case) filed by the Federal Trade Commission.  An otherwise reasonable circumstance for issuing a cy pres award, this is just one example where Google wins for losing—paying a “fine” for one transgression that directly funds organizations that generally advocate public policy in its favor.  Plus, Google gets a tax break for giving money to non-profit institutions!

Thus, Lowery et al demonstrate, in context to the larger complaint against cy pres, how copyright owners are injured through what almost amounts to shadow funding of organizations and academic institutions that consistently attack copyright through litigation and amicus briefs, academic papers, and public communications. Other parties named in the brief as receiving Google money through cy pres settlements include Public Knowledge, the Center for Democracy and Technology, the Berkman Center, and Stanford’s Center for Internet and Society.  

The Bigger Picture

Naturally, the broader complaint in Frank v. Gaos demonstrates the negative effect of cy pres awards in class actions beyond complaints against the internet industry, although the litigants here do arise from yet another Google privacy violation case settled in 2010. The petitioners’ complaint lays out the means by which an $8.5 million settlement in that case first paid class counsel a substantial fee and then funded organizations with existing relationships to Google.  From the petition …

“There are recognized conflicts of interest between class counsel and the class, because the defendant cares only about its total cost of settlement, while every dollar going to class members is a dollar that will not go to class counsel’s fees.  In the absence of legal rules explicitly forbidding such gamesmanship, class counsel and settling defendants have a variety of gimmicks available in a class-action settlement to maximize class counsel’s proceeds while minimizing the cost of settlement to the defendant.”

Essentially, the courts’ tendency to “rubber stamp” cy pres awards in these settlements creates a powerful incentive for class counsel to abrogate its responsibility to the class members because counsel’s interests and those of the defendant become deviantly aligned.  To put it in stark terms, the attorney who graduated from Harvard Law has an all too-tempting opportunity to earn a substantial fee for himself and also negotiate a donation to his alma mater and call it a “win” for his clients, who get nothing.  

Further, the petition asserts a constitutional complaint arising from the fact that a cy pres award may infringe class members’ First Amendment rights by way of forcing them to support organizations or institutions they would never choose to fund.  For instance, because the AARP was one of six recipients of the cy pres award in this particular Google settlement, the petition states, “Petitioners also objected to being compelled as a class member to subsidize the AARP’s advocacy and lobbying on controversial policy issues, which petitioner Frank often opposes.” 

Few readers of this blog need to be convinced that “digital rights” organizations such as those mentioned above present themselves as a public-serving groups while advocating policy positions that are often insidiously industry-serving.  But at least direct donations by Google to EFF et al are clearly identifiable, while cy pres awards create a layer of obfuscation between the effective “donor” and the recipient of substantial operating funds.  

From the broader petition, it seems that every citizen who doesn’t want to be whacked by a metaphorical two-by-four has an interest in the Supreme Court’s decision in this case; but copyright owners should be keenly aware of the outcome in Frank v. Gaos for the reasons described.  As the amicus brief concludes, “Allowing cy pres awards to continue along their current path means that the courts are complicit in allowing Google to fund its network of academics, think tank partners, and friendly nonprofits at the expense of class members.”