Tag: David Lowery

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.

Is Adele an anomaly?

According to Peter Kafka writing for re/code, the fact that Adele has broken all-time records with sales of her new album “25” while simultaneously rejecting streaming services is too much of an oddity to provide any guidance for music professionals vis-a-vis their business models.  Kafka writes the following:

“If you are looking for big lessons in Adele’s success selling more albums in the last week than anyone, ever, don’t. She’s the definition of anomaly.”

He raises a valid question—one I certainly can’t ignore, having criticized many Internet industry pundits for citing exceptions in order to prove rules on a variety of topics.  And nobody can deny that megastars like Adele are rare individuals; but this has always been true of megastars, which is not quite the same thing as saying that their business models have always been radically different from smaller stars or middle-class creators. The business model that sold The Beatles and The Kinks was fundamentally the same; the Beatles were simply more popular and, therefore, sold more recorded music.

In truth, though, I think the significance of Adele and Swift boycotting these services scares the hell out of people invested in the streaming future because it just might reveal how naked the emperor really is.  Looking at the top ten tracks on Spotify this week, I see several artists—in first place is Rihanna—who could theoretically do just fine, or better, without that service’s nickels and dimes.  And as for the “music discovery” argument, I see that tracks in 5th and 7th place are both from the soundtrack for a film called Fifty Shades of Grey, which means these songs had a decent shot at discovery via a rather old model.

So, it seems that the real question is whether or not some portion of contemporary artists really can learn anything from Adele or Swift (or Prince) even if most artists cannot realistically expect to achieve that level of popularity. After all, streaming is financially nominal to all artists and songwriters, so the risk in keeping music off these platforms—especially for the purpose of windowing the release of a new album—isn’t necessarily as high as pundits like Kafka might suggest.

David Lowery, frontman of the bands Camper Van Beethoven and Cracker (both typical, middle-class bands), and founder of the artists rights blog The Trichordist, offered me this insight when I spoke to him about the relative value of streaming:

“Camper Van Beethoven earns more from sales of live albums and oddities not available on streaming services than the albums available on streaming services even when calculated at source.  And Camper Van Beethoven as an obscure, cult band works more like a “new” band than you would think.  We rely on new discovery as well. But when a single sale of one album provides as much revenue as 7,000 free streams on Spotify/YouTube  it makes more sense for us to pursue sales in a grassroots manner and sustain the business by putting the money into new works.  I know. I’ve tried it both ways. My free streaming critics may be unwilling to admit this but  I’m pretty good at business.  I’ve made a profit every year as a musician and my tech credentials are generally better than my critics. Remember in 2005, many pundits were declaring MySpace the future of the music business.  That’s ten years ago.” 

To date, the argument from from the pundits of “conventional wisdom” has been that artists less popular than Adele can’t afford not to be on Spotify, et al because that’s where prospective fans are hanging out. The implication is that even if these platforms are not revenue providers, it’s either swim in the stream or go over the falls into obscurity.  As Paul Resnikoff of Digital Music News writes in a recent post:

Artists like Ari Herstand told fellow musicians that they were compromising their careers if they didn’t go where the fans were; vitriolic pundit Bob Lefsetz called you an idiot for challenging the emerging status quo.  And this of course goes beyond Spotify: YouTube, Soundcloud, Rdio, Pandora, Apple Music, and half-a-dozen other big platforms are woven into this stained fabric.

But it seems that the digital music market has generally fostered two things:  false hopes for many new creators and billions of dollars for the peddlers of false hopes. As such, there is now such an overabundance of works—even great works—that obscurity can only be the status quo for most artists. Meanwhile, the paths to market cannot logically be “discovery” through digital platforms and social media alone; there’s just too much stuff out there.  So, it’s entirely possible that all consumers, even digital natives, relate to music, discover music, and share tastes in music in similar ways to their pre-digital forebears. Yet, in regard to a star like Adele supposedly “living” where the real fans are not, Kafka makes the following odd statement:

“If you still insist on looking for lessons, you might head in this direction: We live in a pop music, track-and-hook world, but Adele lives in her own world, and it turns out lots of other people do, too. And an educated hunch is that many of those people are women, and/or older* than the people who camp out at Spotify and YouTube, and many of those people are happy to pay for a thing they like if it is convenient, which buying songs from iTunes (or even at an actual store!) can be.”

I’m not sure how educated that hunch really is.  For one thing, I believe the age range of Adele fans is actually quite broad.  Her songs are played on my terrestrial radio station and my teenage daughter’s station, which is not true of Taylor Swift, who also successfully snubbed streaming, but whose fan base almost certainly comprises a majority of digital natives. Additionally, while age demographics among Spotify users are hard to find, one source I located states that 55% of its 75 million users are women, and I have to imagine some of these women fit the profile of the Adele fans Kafka presumes to describe as outliers. (As a side note, I’m not sure why Kafka mentions purchase via iTunes, when “25” is available for download.)

Above all, Kafka is guilty of the same fallacy that pundits like Bob Lefsetz, and even like John Seabrook in this recent article for The New Yorker, tend to promote. And this is the fallacy of believing that the axiomatic statement “streaming is the future” is beyond all question.  Although there is plenty to love about streaming technology itself, I think the business as it exists today is well within the boundaries of question. After all, one cannot confidently call a revenue-free model “the future” without some reasonable doubt.

We are from the 80s. We are not afraid of these machines.

Kafka also seems determined to emphasize the fallacy of the digital divide—as though the truly contemporary consumers are cruising Spotify and YouTube, while their decrepit, technologically challenged parents are (snort-laugh) buying CDs.  Of course, I’d point out that the more time a prospective music fan has to “camp out on Spotify and YouTube,” the younger they probably are and, therefore, the less likely they are to be buying anything on their own. Also, most digital natives are the children of us Gen Xers, and we are not our parents who still have (snort-laugh) AOL email accounts; we are in fact the earliest adopters of all this fabulous technology that people are convinced has metamorphosed the millennial music consumer into some unfathomably wired creature.  Yes, streaming is convenient and cool, but it’s not quite so revolutionary as it is sometimes made out to be. And if the business models never provide real revenue for the music makers, it could still fail plenty before it truly succeeds.

Still, Adele actually is an anomaly, though not necessarily the way Kafka describes.  As David Lowery explains on The Trichordist, 1% of the artists today earn 77% of the revenue. And so, he writes:

Perhaps the larger irony here is that those who sought to destroy the major labels through piracy have only empowered them. The major labels now not only capture the larger share of revenue from recorded music but also as a result they also capture the most favorable deal terms (including equity shares) from the digital service providers (DSP). The net result being that indie and DIY artists who once accounted for a robust middle class of musicians have been pushed down into the realm of hobbyists. Of those few, rare indie/DIY outliners that manage to flourish none of them will get equity stakes or the same terms that the major labels do from the DSP’s.*

This is the harangue many of us have been on for years:  that piracy can only lead to wealth consolidation and destruction of the middle-class creator for the same reasons devaluation of human labor will always cause harm to the middle-class workers in any business sector.  Meanwhile, pundit Bob Leftsetz loves to cite the relative success of superstars in his many rose-colored editorials, which come very close to saying that complaints about piracy or predatory business practices by streaming services only come from musical “losers.”  As cited in this older post of mine, Leftsetz writes:

Superstar talent may make less money off recordings than in the past, but the live business far exceeds the money it once made. And then there’s sponsorships/endorsements and privates and sync and so many avenues of remuneration that no one who is a superstar is bitching.

Skipping the bullshit about alternative revenue sources, which professional artists have criticized to death, what will Bob say about his sanguine superstars if many more of them decide to follow Adele’s lead and tell services like Spotify to get stuffed? Or at least to wait their turn like the tertiary delivery platform they deserve to be?  And this brings us back to the central question:  How major does a musical artist have to be to tell Spotify and Pandora to get stuffed and not suffer for it? If no artist is leaving real money on the table, then what does any artist of any size really have to lose?  How badly do the investors in the streaming future want to find out?

*This should not be misconstrued as a generic indictment of labels. For a nuanced perspective on related issues, as well as a debunking of another piece by John Seabrook, see Chris Castle’s piece here.

Advertisers Announce Effort to Keep Ads Off Illicit Sites

A longstanding challenge with regard to websites that profit from pirated media, counterfeit products, and/or malware is the frequent placement of major brand advertising on the pages of those sites.  Musician David Lowery’s activist website The Trichordist has published lists of major advertisers whose banner ads have appeared on various pirate sites, seeking to hold advertisers accountable for supporting exploitation of musical artists. This kind of activism has drawn both public and industry attention to the problem. In its most basic form, the principle is that Legit Entity A should not benefit from a site that derives its traffic by exploiting Legit Entity B. That probably sounds reasonable to most people, including most advertisers themselves, but what to do about it is another matter — until now.

This morning, the advertising industry announced a new, voluntary initiative that helps advertisers better understand the nature of sites on which their ads may be placed.  The initiative produced by the Trustworthy Accountability Group (TAG)  is called the Brand Integrity Program Against Piracy and it was developed in collaboration with the three major advertising associations — the Association of National Advertisers, the American Association of Advertising Agencies, and the Interactive Advertising Bureau.

For context, it is generally true that advertisers do not want their ads placed on sites dedicated to illegal or harmful trade. Companies spend billions of dollars and thousands of hours developing, cultivating, and managing their brands; and even as brands evolve and experiment to keep up with a changing consumer market, very few brand managers will actively choose to be associated with a site engaged in illegal or exploitative commerce.  Chrysler and Target really don’t want their ads next to an ad for a questionable “dating service” or a link to a media player that will probably load spyware onto your computer.  But unlike other media, ad buying on the Internet is not all directly placed by the advertiser.  When you see an ad on a major site, it was selected and specifically paid for, like when Nissan buys a week of placement all over CNN.com.  But other ads scattered around the Web are what are called “remnants,” and these are placed somewhat blindly through low-cost, generic buys with various ad services.  It’s a bit confusing, but the blind aspect of these media buys has been one reason the advertising community has responded to the content industry that they only unintentionally advertise on sites hosting infringing content. In fact, the aforementioned Target makes a good example.  As Target now offers a movie streaming service, it would stand to reason that the company does not purposely choose to advertise on a site dedicated to movie piracy.

The whole problem won’t be solved with a single program, but thanks to demand by advertisers themselves, TAG today announced a new technology solution that enables advertisers to view site analysis based on assessed risk to their brands.  From the press release issued by TAG:

“Under the program, TAG will work with a small number of independent third-party validators, including Ernst & Young and Stroz Friedberg, to certify advertising technology companies as Digital Advertising Assurance Providers (DAAPs). To be validated as a DAAP, companies must show they can provide other advertising companies with tools to limit their exposure to undesirable websites or other properties by effectively meeting one or more criteria.”

The initiative is designed to identify what TAG calls Ad Risk Entities (AREs), meaning sites that have a high probability of facilitating illegal activity, including dissemination of unauthorized intellectual property.  Through voluntary application of these tools by the advertising industry, the expectation is that online providers who want to maintain relationships with quality advertisers will make the effort to become Digital Advertising Assurance Providers (DAAPs).  A validated DAAP would have to take steps–or show that it already takes steps–to mitigate advertiser exposure to risk according to five criteria designed to provide safeguards and assurances that their brands are not inadvertently supporting illicit activity.  These criteria include identifying properties disseminating infringing material, enabling advertisers to restrict ad placements, preventing fraudulent transactions, providing tools to monitor ad placements, and eliminating payments to undesirable entities.  It is the first initiative of its kind in which the advertisers who support most websites seek to collaborate with providers to keep legitimate trade from supporting black-market trade.

tag graphic

Not only is this effort a step forward in terms of putting advertisers in control of their placements, providing them better stewardship of their brands; but it also demands greater accountability of advertisers by rights holders and other victims of exploitative sites.  In short, the “I didn’t know” defense weakens considerably with the deployment of these new tools, and since this effort comes from the advertising community, it’s fair to assume they’re generally not looking to hide behind that excuse. Still, the initiative only works if enough parties participate, so we can certainly expect The Trichordist and similar watchdogs to continue to look out for major brand advertising on infringing sites. But on the whole, I expect advertisers do hope to shun these associations because their ad value is being effectively hijacked by these types of sites.  There’s a reason most torrent and cyberlocker sites are so often supported by very sleazy ads:  because it’s a very sleazy business.