As noted in Part 1 of this post, Google, Amazon and others are filing what are reportedly “millions” of “address unknown” NOIs with the U.S. Copyright Office. I fully expect that Pandora will eventually do the same for its on-demand service and Spotify is likely to do the same. Note–this type of carpet bombing of NOIs would not have helped Spotify in the David Lowery litigation because David Lowery registered his copyrights that are the subject of that litigation.
If you click here, you will find the most recent iteration of these massive NOIs, which apparently are being posted on a regular basis. The screenshot above is the first page of these filings on the Copyright Office site, most of which came this month (September 2016).
Each Excel file can be downloaded–a word of warning, even the zipped files are large and may take a while to open on an average home computer.
Remember what you are looking at in these files–this is the list that results from comparing the list of sound recordings that the services are using to the data dump that the service purchases from the Library of Congress. Take a tip–you’ll never find the page on the LOC website unless you know where to look, which is right here.
Willful Blindness on Song Titles
This is an overwhelming amount of data, so in order to have any idea what is really going on, spot checking will be required. And since it’s Google, you know there’s a scam afoot, your challenge is just to figure out which scam it is this time. (Of course the entire exercise is a scam, but leave that to one side for now.)
Scam # 1 appears to be treating any song title that has any text in it other than the actual song title as a song for which the owner cannot be identified. Here’s two examples from Sting in the Google 9/16/16 NOI file:
Of course, the song “Fragile” is registered, but Google’s filing claims that there is a different song “Fragile (Live)” that is not registered by that title. Google has, no doubt, sent another NOI for the song “Fragile” (or has a direct license) and if so has actual knowledge of the song copyright owner.
And here’s the loophole–by claiming that “Fragile (Live)” is an “unknown” song, Google can try to get out of paying for the live version. (Because how would you know that “Fragile” performed by Sting for which you know the copyright owner is the same as “Fragile (Live)” performed by Sting for which you now claim to be shocked that is the same song–unless, oh, maybe if you listened to the two?) The government’s compulsory license says this:
If you search for live recordings in Google’s NOI filings, you will find many, many live recordings by artists such as Bob Dylan, Heart, Quincy Jones, Lynyrd Skynyrd and Chicago. And then there’s the medleys like “Hotel California Dreaming” which lists the Eagles writers with John and Michelle Phillips of the Mamas and the Papas.
Not to mention a ton of foreign songwriters who are under no obligation to register their songs with the U.S. Copyright Office.
Let’s also set aside for the moment whether the recordings that Google has listed on their certified filing are all lawfully distributed–some certainly look like bootlegs to me. Of course “bootlegs” these days have to include illegal live recordings posted on YouTube and then stream ripped into mp3 files to be distributed through Tunecore, CD Baby or someone else who doesn’t pay much attention to where the recordings come from and then subsequently distributed through Google–who invented the game.
So what appears to be happening is that Google and Amazon (which has hired MRI, I believe) are playing the willful blindness game. What can be done about it?
If the music-tech industry has one major failing from which all of their messaging and legal problems flow, it is their fascination with loopholes that predictably harm creators. Whether it’s YouTube’s nefarious reliance on a tortured interpretation of the DMCA safe harbors that bears no relation to the law, Pandora and SiriusXM’s bone headed refusal to pay statutory royalties on pre-72 sound recordings (not to mention Pandora’s purchase of a radio station in a failed attempt to pay songwriters lower royalties), Spotify’s absurdly unnecessary collision with Taylor Swift over windowing, the MIC Coalition’s ridiculous manipulation of the Department of Justice on 100% licensing, or Amazon’s bizarre fascination with compulsory licenses for which songwriters have no audit right, these companies rival each other in the undignified pursuit of loopholes.
And in particular, loopholes that hurt songwriters who can’t afford the litigation and lobbying machine that is always the not-so-veiled threat brought by all these companies. The latest debacle is no different–mass filings of NOIs to avoid paying mechanical royalties because of a loophole that is detritus left over from the 1909 Copyright Act that is being manipulated to benefit the rich Silicon Valley companies at the expense of songwriters.
Yes, that’s right. They’d rather pay enormous sums in filing fees that vastly exceed any royalties payable just to get out of paying royalties at all. You have a better chance of recovering an old utility deposit from a state unclaimed property office than you have of getting mechanicals once you fall victim to this latest move.
I have been reliably informed that Google, Amazon and Music Reports among others are filing “millions” of “address unknown” NOIs with the Copyright Office based on a database that these companies are purchasing for tens of thousands of dollars from the Library of Congress (remember that the Copyright Office is under the jurisdiction of the Library of Congress). And by the way–once they file this NOI, they don’t pay royalties until the copyright owner can be identified in the records of the Copyright Office. Regardless of how easily the copyright owner could be found in other readily accessible databases.
Mystified? I will explain. Rest assured, you’re not the only one who is surprised. And remember that bit about the utility deposit, we’ll come back to that one.
As you read this post, remember one thing–it didn’t have to be this way. This is all happening for the same reason. Google, Amazon, Spotify, and likely soon Pandora (for its yet-to-be-launched on demand service) are all far more likely to take the legalistic and aggressive route rather than reach out to the songwriting community to work cooperatively to find a solution.
One music tech executive told me, we decide what’s fair and then we jam it down your throat.
That doesn’t work.
Mechanical Licensing and the Compulsory License
For one reason or another, the U.S. Government has a tradition of being very interested in regulating songwriters. The Copyright Act of 1909 established the baseline rules that compel songwriters to license their songs and sets the terms on which those songs are licensed including the royalty rate.
Even if you are not troubled by this degree of attention that is probably the original wage and price control, it would be nice if the USG is going to pay enough attention to songwriters that they set the price at which they can license their work, that the same USG not forget to raise that rate for 60-odd years.
That’s right–the government set the mechanical rate in 1909 at 2 cents and refused to raise it until 1978 (as part of the 1976 Copyright Act revision). Adjusted for inflation, that 2 cent rate would now be about 80 cents. Instead, it’s been 9.1 cents for the last 10 years.
The current compulsory license law was crafted in 1909 and slightly amended in 1976, and amended again a couple times to include the concept of “digital phonorecord deliveries” which essentially makes that compulsory applicable to streaming.
The 1976 Act also got rid of the copyright registrations that formed the basis of copyright under the 1909 Act with the exception of requiring a registration to sue for statutory damages and attorneys fees in a copyright infringement lawsuit. (Not quite that straight a line, but that’s where we ended up.)
But here’s the twist–the compulsory license rules are a notice based system. A music user who intends to use a song that is subject to the compulsory license must send a notice to the copyright owner. These notices are called a “notice of intention” or “NOI”. If you’re going to require an NOI, then how do you deal with copyright owners who cannot be found?
There was an easy answer to this that derives from the registration requirements–look them up in the Copyright Office. If the copyright owner can’t be identified in the records of the Copyright Office, then the music user can send a notice to the Copyright Office which the Copyright Office then publishes. Just like when your state publishes a list of unclaimed utility deposits, closed bank account balances, etc.
Now we all know that nobody uses the records of the Copyright Office to find a copyright owner, or if they use those records they don’t use them exclusively. Most people will look first at the PRO databases, cue sheets, publisher websites, other materials like that. When all else fails, then they look at the Copyright Office. This is partly due to the lag time between filing a copyright registration and receiving a conformed copy of that registration (which is when it is “official”).
There is also another public record maintained by the Copyright Office called the “recordation section”. This is where people file documents relating to works of copyright, such as a notice of assignment or a mortgage of copyright (which is kind of like a UCC-1 financing statement). The recordation section requires paper filings and typically only ingests a handful of titles from a large acquisition. That results in a filing of “‘Yesterday’ and 10,000 other songs” or something along those lines.
In other words, the recordation section is not all that reliable either–and neither is dispositive because there hasn’t been a registration requirement for decades. Is it a good practice to register? Yes. Is it required to have valid copyright? No.
And it’s particularly not required for non-US songwriters. In fact, there’s a good argument that a registration requirement in order to enjoy your rights (such as the statutory mechanical royalty, however poorly handled by the government) is actually barred by the Berne Convention’s prohibition on formalities.
Yet, the U.S. Copyright Act allows a valid compulsory license to issue for a copyright owner who may be listed in the PRO databases, may be a foreign copyright owner, or be under license (even direct license) for other songs with the same music user–if that copyright owner of a particular song cannot be identified from the public records of the Copyright Office–as determined by the music user.
Now why is this a moral hazard that should not be resolved by the music user?
Because the Copyright Act also provides that the music user filing that “address unknown” NOI is not required to pay royalties until that copyright owner is identifiable in the public records of the Copyright Office.
And who decides if the NOI is properly filed for the right song title? That’s right–the music user. Who is incented to play games with the song metadata? That’s right–the music user.
So what comes next should be of no surprise given the bad advice that these giant companies receive about their artist and writer relations.
Original sin–In Christian theology, the condition of sin that marks all humans as a result of Adam’s first act of disobedience to God.
It’s kind of an Old Testament thing. The ASCAP and BMI consent decrees punish songwriters for a kind of original sin that most of them don’t know about and that happened some time before 1941–before most of them were born. And yet all of them are held guilty in advance.
The Obama Justice Department just had a spectacular loss on its misguided and probably unconstitutional 100% licensing position in front of Judge Louis Stanton, the BMI rate court judge who has primary responsibility for interpreting the BMI consent decrees. BMI asked for declaratory relief from Judge Stanton which was granted in a decisive opinion rejecting the government’s position. So now what?
Not only did the Obama Justice Department go down the wrong rabbit hole with the consent decrees, they also managed to get themselves sued–by songwriters. How in the world could that have happened? Not just one, but two separate and distinct lawsuits.
The songwriters lawsuit is against the Justice Department, the Attorney General of the United States and the head of the Antitrust Division, Principal Deputy Assistant Attorney General Renata B. Hesse. (It appears that Principal Deputy Assistant Attorney General Hesse is the prime mover in pushing the DOJ’s position on 100% licensing through the Justice Department, although it is hard to imagine that the Attorney General did not personally approve the position given the magnitude of the change in position.)
The songwriters’ lawsuit is not brought under the consent decrees. The complaint alleges that the DOJ attorneys, starting with Principal Deputy Assistant Attorney General Hesse, engaged in unconstitutional behavior by denying songwriters their due process rights as well as taking the economic value of private property without compensation (see Professor Richard Epstein).
The lawsuit also alleges that the process that Principal Deputy Assistant Attorney General Hesse engaged in–secret phone calls, no public comment on proposed amendments to the consent decree, deceptive practices designed to encourage songwriters to leave their PROs–violated laws governing the behavior of federal administrative agencies. The implication is that the DOJ intentionally engaged in deceptive practices lead by Hesse but also the recently departed Litigation III Section Chief David C. Kully. (Mr. Kully was probably “just following orders”, but we all know where that can lead.)
What are the possible steps forward from here?
No Change for Music Users
Some of the less knowledgeable reporting on fractional licensing suggests that somehow music users are burdened by the decision. Not true–most music users already have licenses from ASCAP, BMI, SESAC and increasingly from Global Music Rights. SESAC and GMR are not subject to consent decrees because more PROs means more competition which means good things happen, right? That was, after all, reason for the consent decrees in the first place–to encourage more competition, not less, in the public interest.
The choices afforded songwriters among competing licensing associations are no more burdensome for music users than having to deal with any other vendors in their business. On the contrary, if the Justice Department had been successful in their stated goals of encouraging songwriters to leave ASCAP and BMI, the Justice Department would have mandated mind numbing complexity in the market place.
The Missed Opportunity
The real policy failure is that the Department of Justice failed to adopt any of the hundreds of policy proposals made by the public to amend the consent decrees–the longest running consent decrees in the history of the United States–after years of review, negotiation and discussion.
Instead, the DOJ fixed on 100% licensing, which is something that nobody had asked for publicly as the Copyright Office noted (at p. 2, text accompanying note 8):
Despite the wide-ranging nature of the study and invitation to raise additional issues, none of the participants identified fractional licensing of musical works by the PROs as a practice that needed to be changed.
The Justice Department missed an historic opportunity to do something good for everyone.
This is tragic.
DOJ Changes Position on 100% Licensing
The easiest thing would be for Principal Deputy Assistant Attorney General Hesse to issue a statement acknowledging she got it wrong on 100% licensing and that the DOJ is abandoning the position. I doubt this will happen.
DOJ Appeals Judge Stanton’s Ruling
Given the general bull-headedness that produced the flawed 100% licensing statement in the first place, I think it is more likely than not that the DOJ appeals Judge Stanton’s ruling. If you were able to suspend reality to the point that you would come up with the idea in the first place, then you are probably possessed of the kind of denial that would make you believe you will prevail on appeal.
As Judge Stanton is a U.S. District Judge sitting in the Southern District of New York, the appeal in this case would go to the Second Circuit Court of Appeals. It seems unlikely that the Second Circuit is going to rule against the subject matter expertise of the BMI Rate Court judge–expertise is the point of having rate court judges in the first place. This is particularly true in a case requiring an interpretation of the consent decree.
Nevertheless, I will not be surprised to see an appeal, particularly one filed before the ASCAP rate court judge (Judge Cote) follows Judge Stanton’s which is likely. An appeal of the BMI case would allow the DOJ to drag out the uncertainty which seems to be the plan for reasons no one outside the Justice Department can understand.
ASCAP Asks for Declaratory Relief
Given the many rulings against songwriters handed down by Judge Cote, caution may be the watchword for any request for declaratory relief by ASCAP. However much I appreciate Judge Stanton’s ruling, it must be said that the conclusion is rather obvious. Even so, I thought that the ASCAP members’ partial withdrawal from collective licensing of the bundle of rights was so obviously the law that it was axiomatic, and Judge Cote ruled against that rather obvious policy.
It may be better for ASCAP to simply wait it out until the issue arises before Judge Cote in a future proceeding. Since the MIC Coalition seems to have its hand in the Justice Department’s positioning anyway, it would not surprise if the MIC Coalition went to Judge Cote for their own declaratory relief.
SONA Pursues Its Lawsuit
The most interesting part of the puzzle is the lawsuit brought by Songwriters of North America, Michelle Lewis, Thomas Kelly and Pamela Sheyne. As a threshold matter, it reinforces the idea that ASCAP and BMI are comprised of songwriters bargaining collectively. While it may be convenient for the broadcasters, Google and their MIC Coalition to heap condemnation on the PROs, when doing so they are actually shaming the individual songwriters who are members of ASCAP and BMI. Those songwriters don’t feel they’ve done anything wrong.
The SONA lawsuit confirms this for all to see. While it takes considerable courage to sue a defendant who comes with badges and guns and prints money to pay their legal bills, the DOJ is now faced with a process that reeks to high heaven, looks at least potentially fraught with corruption and which SONA will now put under a microscope–if they survive summary judgement.
Of course, it should not be lost on anyone that the DOJ’s position will be some version of “We lost, so no harm, no foul” as absurd as that may seem. I’m not sure that “just kidding” is a good look for them.
Until the ASCAP judge rules on the issue and follows Judge Stanton’s reasoning and the DOJ agrees not to file an appeal, there’s no reason for SONA to change course. If SONA survives summary judgement on one or both of its claims, then things may get interesting.
Governors Take Action
Texas Governor Greg Abbott was the first state governor to call on the Attorney General to back off of the 100% licensing rule, acting in defense of Texas songwriters. It would not be surprising to see other governors write their own letters to the AG, particularly now that Judge Stanton has ruled.
Terminating the Consent Decrees
What this episode should teach everyone is that the consent decrees have run their course. They are now being manipulated by crony capitalists for private commercial advantage. Hesse’s connections to Google and the MIC Coalition are well known and only further undermine the public’s trust in government’s ability to operate fairly.
Abandoning the consent decrees does not mean that songwriters would get a free pass on antitrust prosecution, it just means that the true free market would operate outside of a little intellectual elite in a far away Eastern city that thinks it can plan the lives of songwriters better than songwriters can themselves. Music users and the government would still be free to bring antitrust actions if the facts warranted it as has already happened to SESAC (which is not subject to a consent decree).
So for the moment, songwriters are in a holding pattern but with the wind at their backs.
I’m still looking forward to an explanation of why Google, Pandora, Clear Channel and a host of other giant multinational corporations with hundreds if not thousands of lobbyists need the awesome power of the U.S. Government to protect them from…songwriters.
Getting closure on this regrettable episode will be better for songwriters and for music users. It’s hard enough without the Nanny State intervening. Collective licensing is one of the few areas of the business that is working pretty well in the digital age.
Songwriters deserve the chance to live their commercial lives without paying for long-forgotten sins committed before most of them were born.
Recital 38 of proposed European Commission Digital Single Market reforms:
In order to ensure the functioning of any licensing agreement, information society service providers storing and providing access to the public to large amounts of copyright protected works or other subject matter uploaded by their users should take appropriate and proportionate measures to ensure protection of works or other subject matter, such as implementing effective technologies. This obligation should also apply when the information society service providers are eligible for the liability exemption provided in Article 14 of Directive 2000/31/EC.
The legacy safe harbors in the U.S. legislation commonly called the Digital Millennium Copyright Act (DMCA) and its European counterpart are a dichotomy: The law provides a little latitude to reasonable people acting reasonably, but it also provides a smokescreen for those who are trying to fake their way to one of the great income transfers of all time.
Which players are on which side of that dichotomy? One easy yardstick is the ISPs who participate in the Copyright Alert System and those who don’t. CAS members have a real commitment to infrastructure, are not in a line of business that is based on commoditizing other peoples value, and seem to have a genuine commitment to staying within the boundaries of the DMCA safe harbors.
And then there’s Google and its wholly owned subsidiary YouTube. It’s been 10 years since Google acquired YouTube and it’s an even bigger mess today than it was when it was operated as a blatant infringement machine. But the real risk about YouTube is that Google has shown other powerful multinational corporations that you don’t want to infringe a little–you want to infringe a lot.
Now we can add Facebook and Vimeo to the list of billionaires who profit themselves by hiding behind the DMCA safe harbors. These others, especially Facebook, are likely to simply point to YouTube and say if you’re going to shut us down, you have to shut them down, too.
And they have a point.
That’s why it’s so refreshing to see the European Commission taking a selective approach to tackling safe harbor abuse. While I’m sympathetic to the urge to try to abolish safe harbors altogether, I don’t think that’s fair to the good actors in the ISP space. Wouldn’t you rather have other ISPs point to the good corporate citizens like AT&T, Cablevision, Comcast, Time Warner and Verizon as a model rather than Google and Facebook? (After BMG Rights’ multimillion dollar victory over MIC Coalition member Cox Communications we have to assume that the industry understands where the boundary is, but time will tell.)
A better starting place for reforming safe harbor abuse might be to identify the bad actors and deny them the chance to misuse the law to commoditize the property rights of artists, among others. Given the lobbying clout that Google and Facebook can bring to bear in the U.S., we’re probably going to have to wait for the European Commission to lead the way forward as they have with antitrust prosecutions of Google.
It should come as no surprise that nations that value their creators are willing to take on rapacious multinationals even as the Googles and Facebooks desperately try to increase the size of their lobbying footprint on the faces of Europeans.
There is no motion, because that which is moved must arrive at the middle before it arrives at the end, and so on ad infinitum.
Zeno’s Paradox of Motion
Nashville is one of the cities who was in early on Google Fiber–Google’s much vaunted gigabit fiber to the premises Internet service. (Fiber is now reportedly called “Access” and is being downsized after Google’s reorganization under the “Alphabet” company name.)
The Nashville page for Google Fiber describes it as “Fiber is coming”. Which must mean Fiber is not there yet.
The Nashville Metro Council is considering a new ordinance to allow Google to quickly access utility poles and move existing equipment largely owned by rivals Comcast and AT&T. The measure will likely be voted on Sept. 6….Representatives from AT&T, Comcast and Google Fiber met with Nashville City Council members earlier this month to hash out the issue.Google Fiber claimed it might bypass the city if the ordinance isn’t passed.
Google parent Alphabet Inc. is rethinking its high-speed internet business after initial rollouts proved more expensive and time consuming than anticipated, a stark contrast to the fanfare that greeted its launch six years ago.
Alphabet’s internet provider, Google Fiber, has spent hundreds of millions dollars digging up streets and laying fiber-optic cables in a handful of cities to offer web connections roughly 30 times faster than the U.S. average.
Now the company is hoping to use wireless technology to connect homes, rather than cables, in about a dozen new metro areas, including Los Angeles, Chicago and Dallas, according to people familiar with the company’s plans. As a result Alphabet has suspended projects in San Jose, Calif., and Portland, Ore.
Meanwhile, the company is trying to cut costs and accelerate its expansion elsewhere by leasing existing fiber or asking cities or power companies to build the networks instead of building its own.
It is well to remember that when Google nixed the Google Glass project, the decision came out of the blue when it encountered a consumer reaction ranging from yawn to outright hostility. Also, Recode is reporting that “Google’s moonshot factory is having trouble getting products out the door.”
When Google was planning to launch its Fiber broadband and TV service, Fiber executives had ambitious hopes of signing up around 5 million subscribers in five years, said a person close to Google’s parent, Alphabet. But by the end of 2014, more than two years after service began, Google had only signed up around 200,000 broadband subscribers, said a former employee. The current number isn’t known, but it’s still well short of initial expectations, said another person close to Alphabet….But that’s only part of the story. Last month, Alphabet CEO Larry Page ordered Google Fiber’s chief, Craig Barratt, to halve the size of the Google Fiber team to 500 people, said the second person close to Alphabet.
As Nashville and internet providers debate pole attachment rules, a recent poll shows most residents of the Music City think rules should be relaxed to expedite Google Fiber’s network growth there.
Local polling company icitizen found that 94 percent of Nashville residents favor “one-touch, make-ready” legislation that would allow a single utility crew to rewire poles for all providers to accommodate a new company. Eighty-five percent of respondents strongly favored the idea, while only 4 percent were opposed to such legislation. Icitizen polled more than 550 Nashville residents Aug. 18-24 for its survey….Watchdog asked [an citizen representative] if she was concerned about possible bias in the poll, given that the question about the legislation notes the current law is leading to a delay in Google Fiber rollout but doesn’t emphasize the argument of rival telecom providers that one-touch, make-ready impedes on their property rights and doesn’t offer sufficient relief or notification in case their equipment is damaged. The question does note the concerns over possible disruption of infrastructure and giving a shortcut to Google.
The poll also omitted the fact that Fiber/Access is downsizing by 50% and is planning on shifting to wireless anyway. So why should Nashvillians go through the headache of “one-touch make-ready” in the first place? Google’s championing of the issue almost looks calculated to create a negative public perception of Google’s competitors in the Nashville market.
Austin has recently suffered through the Silicon Valley-style “take my ball and go home” tactics with Google Ventures portfolio company Uber. (Uber’s ballot proposition was defeated by a 56% majority after Uber and Lyft’s $10 million campaign trying to get Austin to yes backfired.) While some were aware that Uber is planning on replacing its independent contractor drivers with driver-less cars, most voters in the substantial majority of the Austin community rejected Uber’s threats anyway.
I’m not saying the two are synonymous, but it’s a lot easier for Google to leave Nashville before it installs cables on poles or wireless infrastructure. It’s hard to believe that a 50% cut in the Fiber workforce will result in anything like the bubbly version of the future of Fiber in Nashville that Nashvillians were thinking of when they took that poll.
If Nashville residents were told that they were going to get half the customer support and none of the pole problems, there’s no telling how that poll would have turned out.