Tag: mike masnick

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.

Clinton equivocates so Masnick obfuscates.

Last week, Hillary Clinton released her Initiative on Technology and Innovation, brief, which reads a bit like a missive from the Internet Association and does very little to clarify her own views—possibly because she doesn’t have any—on the role of copyright in the digital age.  My general criticism of the whole brief is that it seems to view “technology” as an end rather than a means—still talking about access as its own reward, even in a time when Clinton’s opponent is as much proof as we should ever need that access alone does not necessarily foster a new enlightenment.

That Clinton’s statements are vague is the one criticism I share with Mike Masnick at Techdirt. Of course, what I hear in her rhetoric is that she’s been tippling at the Silicon Valley Kool-Aid, while Masnick seems to feel she hasn’t had quite enough. And that’s fine. We have divergent agendas.  But the substance of Masnick’s rebuttal on the subject of incentives does not accurately reflect the debate from either side, in my opinion.

Clinton’s statement contains the following:

The federal government should modernize the copyright system through reforms that facilitate access to out-of-print and orphan works, while protecting the innovation incentives in the system.  It should also promote open-licensing arrangements for copyrighted material supported by federal grant funding.

And Masnick rebuts …

What are the “innovation incentives in the system” right now? Well, on that, people totally disagree. Some people think that fair use, user rights and DMCA safe harbors are the innovation incentives in the system. Others, of course, argue it’s long copyright terms and insane statutory damages. These two groups disagree and the Clinton platform offers no further enlightenment. 

I’m sure his statement resonates inside Techdirt’s echo chamber, but portraying “long copyright terms and insane statutory damages” as core incentives for rights holders specifically oversimplifies both of these topics and it generally misrepresents creators and their motivations.

“…long copyright terms…”

Yes, the copyright term is part of the incentive rationale, but the actual duration of terms is influenced by various interrelated and dynamic factors—both philosophical and utilitarian—that consider market conditions and, yes, a discussion as to what seems appropriate to grant an author, which has generally extended to two generations of his/her heirs.  Presumably, there is an ideal threshold for terms—too short and incentive may be diminished for various types of works; too long and copyright’s purpose to promote progress may be defeated—but the sweet spot can only be theorized based on a holistic view of the contemporary, global market for the range of protectable works. To boil all that down to say that rights holders think long terms provide an incentive to create and distribute is no more nuanced than Hillary Clinton’s equivocal statement on the matter.

“…insane statutory damages…”

While it’s true that there is no reason to rely on a law that cannot be enforced, Masnick’s reference to “insane statutory damages” is stretching this tautology a bit thin in order suggest that rights holders view the prospect of litigation awards as an incentive to create in the first place. Statutory damages are set, in part, because the burden for a plaintiff to prove “actual damages” is quite steep. And because federal litigation is very expensive, hiring an attorney to represent a claim in which statutory damages may not be awarded can be extremely difficult for many rights holders.

Masnick also glosses over several details with regard to awards, including the fact that a lot of cases settle without awards anywhere near the statutory limits; that many copyright advocates currently support the creation of a copyright small claims court; and that statutory damages only apply in cases in which the works are registered with the Copyright Office. This last point is particularly relevant since Masnick seems eager to end the automatic copyright formalized in the 1976 act when he cites Clinton’s reference to “orphan works” and writes, “the only real solution to the orphan works problem is to go back to … requiring registration to get a copyright.”  But as a practical reality, when it comes to litigation and statutory damages, copyright registration is required, so the real pen-and-paper debate is not exactly defined by the lines Masnick is drawing with his oversized crayons.

“…fair use…”

As for the opposing view on incentives, it’s odd for Masnick to invoke fair use and DMCA safe harbors* when neither subject means anything without an enforceable regime of copyright in the first place. For example, to call fair use an incentive is preposterous absent an enforceably copyrighted work that is being used, so it cannot accurately sit on the opposite side of an imaginary line supposedly contrasting different incentives.  Fair use is a possible consideration, but most of the time, most creators don’t even think about copyright when they begin to author their own expressions.  This is because the idea/expression distinction in the law already has them well covered nearly all of the time—a principle codified into federal copyright law 136 years ago relative to the decade since Web 2.0 supposedly stirred up all this fair use controversy for all manner of creators.

“…DMCA safe harbors…”

I assume Masnick is not saying that the DMCA liability shield (safe harbor) for OSPs directly incentivizes creators.  Presumably, he’s saying that the safe harbor is necessary to provide a foundation to incentivize the blogger or YouTuber to create new works via these platforms, but that’s a pretty big logical leap.  As with the fair use fallacy, this view assumes that infringement is integral to expression and the incentive to express.  Additionally, the safe harbor shield doesn’t technically protect the user/creator at all. As noted in my recent post about Lewis Bond, this conflating of the OSP’s interests with the user’s interests is part of what I think gets some creators into legal hot water.  While, it is true that platforms like YouTube foster new forms of expression (e.g. mashups) that ask new questions about copyright’s boundaries and exceptions, it is misleading to highlight safe harbor as an incentive for those who make these expressions, especially when the liability shield clearly provides an incentive for OSPs to turn a blind eye to obvious infringements.

In my experience the most consistent incentive I’ve encountered among creators I’ve known, or known about, is that copyright inextricably links a given expression to its author.  This is not only a significant motivation for creators—one that often transcends money—but it is also a distinction that benefits society most by preserving the relevance of context—a value Web 2.0 seems well-suited to destroy with alarming frequency.

As for candidate Clinton, Masnick and I clearly want to hear different specifics from her as she progresses toward the White House (I hope).  Based on the choice of rhetoric in the brief, though, I do suspect the internet industry had a hand in its writing.  In particular, the arbitrary reference to “orphan works” is bizarre—as though this arcane bit of copyright flotsam represents some untapped cultural or economic potential for America.  Overall, between the brief and Masnick’s comments, it seems we’re in stuck in the meta-debate about what the debate is about.

*I’m ignoring user rights because it’s too vague and too broad.

Aurous has nothing to do with SOPA

The recording industry last week filed suit against a new music platform called Aurous.  With a Spotify-like interface, the app is designed to search, retrieve, and play music files, whether they’re stored on legal platforms or on BitTorrent sites around the world. And according to early reports, the primary function is the sourcing of pirated media on BitTorrent sites, leading some to refer to the app as “The Popcorn Time for Music.”  The RIAA suit charges Aurous founder Andrew Sampson and 10 unidentified collaborators with inducement to infringe as well as contributory and vicarious infringement.  “The defendant’s business model is new,” states the RIAA, “but it’s business plan is old; illegally profiting from piracy.”

Sampson himself has already made a number of smug and dismissive public statements about the case despite a general consensus—even among parties likely to be sympathetic to Aurous—that he stands on pretty shaky legal ground.  In fact, Mike Masnick on Techdirt writes, “I fully expect that Sampson will lose the lawsuit (and lose easily) if the case gets that far. However, that doesn’t mean that parts of the lawsuit aren’t concerning.”  What Masnick means by “concerning” is that several of the remedies sought by the RIAA are, he claims, remedies called for under SOPA, which we all know did not become a law.

As surprised as I am that Andrew Sampson thinks the market can actually use yet another way to source or pirate music at this point (I mean how much freer can it all get really?), it’s no surprise at all that it has become SOP to say “SOPA” among the same consortium of activists about every case in which any plaintiff seeks injunctive relief from third-party providers like search engines, ISPs, or registrars.  In fact, when the lawsuit was first announced, The Trichordist rather humorously (though not at all facetiously) announced an “office betting pool” as to how soon the Electronic Frontier Foundation would file an amicus brief on behalf of Aurous.  And while no serious IP attorney may reasonably defend Aurous against the infringement claims, that hasn’t stopped the EFF from repeating the latest mantra of Internet industry defenders:  That [insert plaintiff here] is behaving as though SOPA became law.  Although the EFF has not filed an amicus brief or anything so official on behalf of Aurous, here’s the tweet they sent out, as Ellen Seidler reports on Vox Indie:

Once again, @RIAA asks a court to order the entire world to block & filter an app they don’t like. https://t.co/Qwg138pFPB#SOPApower

While, all this SOPA chatter may be pretty good spin—and a great way to belabor the narrative that rights holders are just insidious, draconian, evildoers hating on freedom—the references to SOPA are entirely specious. I mean not even close.

Bottom Line:  Aurous is a Domestic Business 

SOPA/PIPA were exclusively written to target foreign-based piracy sites that are beyond the reach of U.S. jurisdiction for criminal proceedings, with the objective of starving these sites of both U.S. traffic and U.S. revenue. Far from the menacing, web-killing legislative sledgehammer they were made out to be, these bills were a limited variation on existing domestic law based on the reasonable notion that American Company A should not facilitate or incidentally profit from the foreign-based theft of American Company B. But regardless of all opinions about piracy itself, the remedy in which plaintiffs may seek injunctive relief from third parties was neither unique to the proposals in SOPA, nor unprecedented in U.S. law.

As explained in my post about the Equustek case in Canada, it is a well-established procedure that when a court enjoins a defendant (e.g. Aurous) from continuing to operate pending the outcome of a case, it may also enjoin third parties from aiding the defendant (even if that aid is not intentional) in the activities central to the case.  This is both common-sensical and common legal practice that has been applied—yes, even on the Internet—both in the U.S. and abroad. And this type of relief has been granted repeatedly without resulting in any of the supposed harms to civil liberty or the vital functioning of the Internet that was predicted to occur if SOPA had passed. Moreover, it’s worth noting that with regard to web entities like Google, a court order in such a case probably enjoins the service from being used in a manner already proscribed by the site’s own Terms of Service.

This was one of the ironies about the protest against SOPA—that Americans were duped into opposing legal remedies already in force in U.S. law, all using the not-broken Internet and uninhibited free speech to do it. As the language in the SOPA bill effectively says, if the foreign site in question would be subject to criminal charges or civil liabilities in the U.S., then by court order, U.S.-based third parties could be enjoined in the same manner as if the infringing site were domestically based. It’s a subtle distinction that the SOPA bell-ringers would rather not mention, but all SOPA aimed to do with regard to third parties was to apply a commonly used remedy in regard to a specific category of websites whose owners cannot be brought into a US court; but it imposed no new liabilities on the third parties than if the target websites had been domestically based. In fact—and this is what’s particularly funny about Masnick, EFF, and Sampson himself invoking SOPA here—enjoining a third party to take similar measures under SOPA would have been far more restrictive, involving more procedural protections, than civil procedure requires in a domestic case like Aurous.

One may argue the merits of enjoining third parties in these cases until doomsday, but the invocation of SOPA does not apply to Aurous for the simple reason that it is a domestic company with domestic owners and, therefore, well within the reach of U.S. courts.  Assuming the RIAA suit proceeds, the third-party injunctive relief being sought is fully consistent with the law, since long before most of the people who so vigorously protested SOPA were even born.

Of course, all legal technicalities aside, who isn’t sick of the infantile and tediously repetitive story that keeps playing out in these cases? It seems clear that not even Aurous’s natural defenders will attempt to claim it isn’t trading in pirated music.  And even though the logical contortions that “digital-rights activists” go through to defend on principle these predatory applications do beg in-kind rebuttal, they more reasonably inspire outright dismissal. It really is like arguing with a six-year-old who’s built an elaborate yet flimsy defense for not putting on a jacket or some damn thing. At a certain point, every parent reaches the limits of his tolerance for juvenile debate and explodes with ultimatum. And then there are tears. So, bring on the tears and get it over with already.  Then, we might begin to more effectively grow a more sustainable 21st century creative economy, and we can also stop the nauseating repetition of an absurd argument that defies common sense.