Tag: Featured

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.  

Another Inscrutable Attack on Copyright by CCIA 

In a blog post last week for Project DiSCO (of the CCIA), Jonathan Band uses less-than-subtle sleight of hand to conflate the potential business implications of new photographic technology with photographers’ interests in copyright enforcement.  Citing a Washington Post article by Geoffrey Fowler, which proposes that ever-improving, AI-enhanced photographic tools built into smart phones are “democratizing” the opportunity for anyone to make “beautiful” photographs, Band notes that these technological advancements threaten the livelihoods of at least some segment of professional photographers.  

“Now, someone with a decent eye and a Pixel 3 can take photographs that are good enough for many events. The default aesthetics of Night Sight [a new technology] will satisfy many, if not most, potential customers,” Band writes.  And this may be true up to a point.  Off-the-shelf, push-button technical “perfection” in the hands of everyone can threaten the market value of many types of professional photographers.  

Of course that premise opens up a multi-faceted discussion about the myriad skills necessary to be a great portraitist, photojournalist, fine-art photographer, and so on.  And while that particular conversation may be very engaging, it has almost nothing to do with any particular photographer’s interest in her copyrights, and it has even less to do with the target of Band’s criticism—the copyright small-claim proposal called the CASE Act. 

“In response to this changing technological landscape, many of the organizations representing photographers have focused their energies on reforming copyright,” Band writes.  But this is a disingenuous segue because CASE is not remotely a response to changes in photographic capture technology.  The right or ability to protect an image is agnostic with regard to how the image is made.  Period.  Moreover, the premise of the CASE Act (i.e. enforcing a copyright claim for less than the cost of federal litigation) actually predates digital technology, although widespread infringement of works online does emphasize the urgent need for a small-claim remedy.

As described in this post about the House Judiciary hearings on CASE in September, one of the major complaints among independent creators is that commercial entities use their works for online marketing etc. without license.  If CASE passes, we can probably expect to see rights holders most often avail themselves of the small claim tribunal for these types of claims; and it is frankly impossible to fathom why anybody who cares about basic fairness in the market would have a problem with that.  Least of all the corporate behemoths represented by CCIA.  

Moreover, while it is true that advocacy of CASE has emphasized the plight of photographers—because theirs are the works most often infringed on the web—we should remind the CCIA and its readers that the bill proposes a small-claim option for all copyrightable works.  So, at best, Band’s focus on the latest advancements in cellphone photography have nothing to do with, say, musicians or graphic artists whose works are infringed in cases ideally suited to a small claim. 

Band’s post is, of course, a variation on a tired theme; and in that regard, I feel confident about telling the folks at CCIA (and the Internet Association also opposed to CASE) that authors of all stripes are sick to death of the following words of wisdom …

“The energy of associations representing photographers would be better directed toward helping photographers develop business models and skills that would allow them to thrive in the digital environment, rather than lobbying Congress to make changes to copyright law of questionable utility.”

Perhaps the energy of associations representing THE BIGGEST TECH CORPORATIONS ON EARTH would be better directed at playing Beer Pong than smugly telling professional creators time and again how little they they understand their own crafts and business interests.  Maybe CCIA can adapt to that new model.

 Photo source by meatbull

YouTube’s Tactics Re. Article 13 Are the Real Concern

When a media conglomerate is the subject of a news story, we expect the news organization owned by the parent company to acknowledge that relationship in its reporting.  So, when ABC News reports a story, positive or negative, about the Disney Corporation, it is standard practice that the reporter remind viewers that she is talking about her ultimate employer.  Unfortunately, the paradigm is very different when it comes to new media companies like YouTube, which can leverage the global reach of its platform (fueled by the capabilities of Google) to evangelize any message that serves its policy interests. 

In a new guest post on The Trichordist, Volker Rieck lays out the manner in which YouTube uses the power the platform to influence public debate (i.e. scare the bejesus out of people) when seeking a policy outcome favorable to the company.  After CEO Susan Wojcicki addressed the community of YouTube creators in a blog post and video warning them that Article 13 of the EU Digital Single Market Directive threatens their livelihoods, she got the response she was looking for.  As Rieck describes…

“Wild claims circulated that YouTube channel operators would already see their livelihoods threatened in 2019, that Article 13 was a censorship law, and so on. The platform helped the videos made in response to its own appeal to become highly visible and to reach wide audiences by displaying them on user home pages and by categorizing them as “trending.” Three of the top 5 videos in the YouTube trending charts at the beginning of November transported these dystopian visions.”

So, apropos my intro, even if the claims and assumptions made about Article 13 were accurate—and they are not—it should be more than a little frightening that a corporation with the scope of influence of YouTube can so effectively shape reality in regard to any matter of public policy.  To quote a recent post by Neil Turkewitz, responding to the EFF’s lopsided approach to Article 13, he summarizes the current draft of the directive in the following sober terms:

“… it requires large commercial platforms who are in the business of content distribution (defined in the legislation) to license the works that they are distributing, and to take steps to guard against the distribution of works for which it is not licensed. While the use of filters is not explicitly mentioned (unlike an earlier version of the Article), it is anticipated by most parties that most covered platforms would discharge their obligations to prevent distribution of infringing materials through the use of available technologies — either bespoke like ContentID, or off the shelf from a supplier like AudibleMagic. 

It is also important to keep in mind that, while it is timely for all creators (including YouTubers) to become better informed about Article 13 and to weigh in on the merits of the proposals, it will take at least a couple of years for all of the member states to implement the directive.  Thus, YouTube’s efforts to panic its entrepreneurial creators this month should be reason enough to question both its methods and its motives.  Is it really about those creators, or is it about a $160-billion company not wanting to pay license fees to other creators?

On the one hand, this type of scare-mongering is business as usual.  A corporation or industry doesn’t want the responsibility or cost of complying with a proposed law, and so tells consumers or employees (or both) that they will suffer if the policy in question were to be implemented.  But on the other hand, when a media platform like YouTube claims that a new policy will have “unintended consequences” like shutting down various channels, the company is uniquely empowered to spread its self-serving message and to manipulate user experiences in order to prioritize that message over other narratives.  As Rieck puts it …

“Ultimately, the way YouTube channels have been pressed into the service of the platform demonstrates just how urgent the need for measured political regulation of the platform has now become and how easy it is for the platform to exploit the ecosystem of private and semi-professional pseudo-journalism it hosts for its own ends.”

I would go so far as to at least entertain the possibility that YouTube could shut down or severely limit various channels as a false-flag tactic aimed at sowing further resentment against proposals like Article 13.  Perhaps the company would never engage in such an underhanded scheme, but really, what’s to stop them?  After all, they are already willing to engage in bad-faith PR designed to mislead YouTubers about the true nature of the EU directive.  In her open letter to YouTubers, CEO Susan Wojcicki, states:

“Article 13 as written threatens to shut down the ability of millions of people — from creators like you to everyday users — to upload content to platforms like YouTube. And it threatens to block users in the EU from viewing content that is already live on the channels of creators everywhere. This includes YouTube’s incredible video library of educational content, such as language classes, physics tutorials and other how-to’s.”

Really?  Even if we set aside the fact that Article 13 is a proposal to develop protocols that will take time and further negotiations to implement (if they happen at all), this statement implies that a very high percentage of YouTube channels rely substantially on unlicensed copyrighted material.  If that’s the case, why the should that status quo be preserved?  I’ve seen a lot of funny, informative, creative videos produced for YouTube that do not make any use of other creators’ protected works. 

For the YouTube creators who do use some portion of protected works, Wojcicki raises a subtle but important dichotomy when she addresses them as “a diverse community of creators who are building the next generation of media companies.”  Because that sounds to any reasonable person like a business enterprise.  And if these YouTubers are indeed engaged in business, then why shouldn’t they have the same responsibilities as every other type of professional creator to work within boundaries that respect copyrights?

It seems that when it suits the platform’s interests, we are meant to think of YouTubers as either hapless children (remember Lawrence Lessig?), who cannot be expected to know about copyright; or we are meant to think of them as the vanguard generation of new creative professionals, who should not be burdened by copyright.  Notice how, in either case, YouTube seeks to avoid its responsibility—as the only multi-billion-dollar media company in this narrative—by aligning its interests with the interchangeable interests of its users.

I recognize that underlying YouTube’s ability to frighten this class of creators about Article 13 is a litany of mistakes and abuses of existing models like Content ID or the DMCA notice and takedown process.  YouTube creators have had their own works targeted, either through error or willful misuse of these systems; and bad actors have targeted works they do not legally represent. 

While the anecdotes of bad-faith use of these systems are true, they feed a broader narrative which is not true:  that abuse of content-filtering systems is so rampant that the status quo is preferable to any attempt to make these systems work better for all stakeholders.  The status quo may be working for YouTube’s bottom line, but it certainly is not working for rights holders whose works are infringed at uncontrollable volume on the platform.   In fact, I have yet to see any data that even indicates that filtering or DMCA abuse is anywhere near the scope of infringement.  

Meanwhile, assuming Article 13 becomes law in the EU, YouTube creators have at least a couple of years to assess the extent to which their channels truly rely on the protected works of other authors.  Those who do not use other people’s works should be entirely unaffected; and if they are, their complaint may be properly directed at YouTube rather than Article 13.  Creators who use protected works legally—either by license or fair use—should play a particularly active (but informed) role in these developments.  

As professional creators, I suspect YouTube creator interests will increasingly share common cause with other types of creators.  In fact,  YouTube’s July launch of its Copyright Match system to address creator-to-creator disputes certainly suggests that YouTubers care about their own copyrights and should, therefore, take a proactive rather than a reactive look at the goals of Article 13.  After all, with regard to the way Wojcicki’s letter spawned a lot of misinformed outrage, it’s worth noting that just because this class of creators uses YouTube is no reason to let YouTube use them.

Source illustration by studiostoks