Month: September 2020

Pandemic: Livestreaming is Silicon Valley’s Great Step Forward to the Venue DNR

Livestreaming was intended to be temporary.  It was a bridge between a pre and post COVID reality.  But it’s not.  The biggest of Big Tech companies intend it to be permanent and they mean to control it.  And you have to believe that a very high percentage of venues may not be coming back.

Live music venues are closing permanently at a rapid clip.  Cities like Austin and festivals like SXSW and ACL Fest are changed forever.  We know that the real estate developers are licking their chops at the idea of dumping those live music venues and onboarding Uber Eats, Google, Facebook or something really important.  (See “I Don’t Need Another Email Whining About COVID“)  But they are not the only ones who have no intention of helping live music recover in a venue-free future.

Facebook/Instagram is probably leading the way on this Great Step Forward, followed closely by TikTok and of course YouTube.  Facebook in particular is adopting policies to limit DJ-type listening parties on the platform.  (This very well may backfire.)  The elephant in the room is that Facebook seems to have gotten religion on music licensing after a 17 years growth binge of shredding artist rights.  While asserting “You are responsible for the content you post” Facebook also tells us “Unauthorized content may be removed.”  Why not track it and monetize it?  Because they can’t be bothered.  It does seem that Facebook intents to permit artist-branded live-streaming events which is nice of them, but it also seems like the new policy clears the way for Facebook to monetize live streaming events and take their cut.

It has become obvious that whenever audiences decide to come out of the lock down, there may not be any venues for them to go to.  (Or restaurants for that matter.)  As I have said almost from the beginning of the pandemic, Austin is about to become another college town with a Google/Facebook campus and the City government itself is just thrilled about that expanded tax base.  Cynical?  Not really.  Spend a little time getting condescended to by the City of Austin and you will get the idea that they would just as soon that live music was in the rear view mirror.  If that happens to Austin, which had styled itself as “The Live Music Capital of the World” to the great gnashing of teeth by almost every other sector starting with tech, it will happen in a host of cities around the world.

Of course Big Tech cannot be seen to be leading the charge to live music oblivion.  That would be quite impolitic (if not actionable).  But the vibe from governments in the erstwhile “music cities” like Austin, Denver, Seattle,  and even San Francisco is similar to the efforts of Spotify, Facebook, Google & Co. to support the venues that create the value and the fan base that drives traffic to the live streams they think are the future.  These politicians and Big Tech companies want to be seen to be helping, but not too much.  They don’t want to help so much that most of the venues might actually recover.

Evidence?  Talk to anyone at Facebook who has contact with artists and labels.  (And if you ever wondered who doesn’t click “Skip Ads”, it’s them.)

Facebook certainly is building its “Stars” tip jar model that is in closed beta but will be rolled out soon.   That’s partly because Facebook views live streaming as a permanent part of the data mining ecosystem that Facebook is uniquely positioned to control.  Facebook Stars will prove to be a key component of the venue free future after the COVID and Facebook duo deliver the venue DNR.  And in case you didn’t quite get how Facebook values music, a Star is worth 1¢.  That’s right–one penny.  (Which will make it easier to switch Stars scrip to Facebook Bucks aka Libra.)

Don’t forget, Tencent led the way on this “gifting” concept.  Tencent allows users (all users, subscription or ad-supported service) to make virtual gifts in the form of micropayments directly to artists they love.  (The feature is actually broader than cash and applies to all content creators, but let’s stay with socially-driven micropayments to artists or songwriters.)

Tencent, of course, makes serious bank on these system-wide micropayments.  As Jim Cramer noted in “Mad Money” :
“Tencent Music is a major part of the micropayment ecosystem because they let you give virtual gifts,” Cramer said. “If you want to tip your favorite blogger with a song, you do it through Tencent Music. In the latest quarter we have numbers for, 9.5 million users spent money on virtual gifts, and these purchases accounted for more than 70 percent of Tencent Music’s revenue.”
And that’s real money.  Tencent actually made this into a selling point in their IPO prospectus:
We are pioneering the way people enjoy online music and music-centric social entertainment services. We have demonstrated that users will pay for personalized, engaging and interactive music experiences. Just as we value our users, we also respect those who create music. This is why we champion copyright protection-because unless content creators are rewarded for their creative work, there won’t be a sustainable music entertainment industry in the long run. Our scale, technology and commitment to copyright protection make us a partner of choice for artists and content owners.

So in case you were wondering why we haven’t seen Big Tech really step up to contributing money to support venues in line with the value of the data they scrape from all the fans driven to live streaming, it’s because they don’t want live music venues to be sustainable.  They’ve been trying to break down live music for a decade and the pandemic presented the disruption opportunity for them to actually do it.

Facebook and their counterparts are getting all kinds of free content (and the corollary free data) from desperate bands in the latest example of pandemic price gouging.  Those desperate artists are now forced to consider the option of the Data Lords coin of the realm–advertising and brand integration.  The effect may well be that the only artists who survive the venue DNR are those willing to take the King’s shilling.  Welcome to the company store.

The Data Lords have finally found a way–fear of death–to get fans to substitute away from live music.  There’s nothing quite as disruptive as the threat of dying.  If you ever thought that the live experience was the last stronghold of authenticity against the onslaught of Silicon Valley disruption, you probably never thought that fear of mortality would drive the nail in the coffin of the backstage pass or burn the velvet rope.  Stars in every pot and a drone-delivered Big Box on every doorstep.

But you’d be wrong.  As we slip into the twilight days of live music and festivals, Facebook stands ready with their venue DNR orders.  And live-streaming will be driven by desperation to be the Data Lords’ venue free meal ticket.

Why is this bad?  Because if you talk to any of the label relations types at Facebook, Google or TikTok it is a name droppers paradise.  They don’t really understand how to do the careful spadework that is necessary to break an artist to have an actual career.  They have major artists handed to them after that work has already been done, and done long ago in many cases.  There may be the odd “influencer” who gets a movie or a commercial, but the jury is out on whether these platforms can build careers.  (Or whether there will be many movies for influencers to get a role in.)

Not so of venues.  We know what they do and they’ve been doing it for a long, long time.  But we have to face the harsh reality that unless something changes very quickly, the Data Lords may have just piggybacked the massive income transfer of their DMCA and 230 safe harbors into another takeover of our business.  And they’ll do it in a way that could leave the entire live music economy and workers flopping like fish on a beach.

TikTok’s Buyer Just Got Another Problem: Child Facial Recognition Class Action

There is a long line of copyright infringement cases that demonstrate how hard it is to right a situation that starts out wrong. In addition to TikTok’s copyright problems which it is frantically trying to buy its way out of, TikTok also has a problem with how it treats children.  This isn’t the first time around for TikTok’s exploitation of children–they also were fined by the FTC as the plaintiffs note in their complaint.  A group of child advocates have complained to the FTC that TikTok is ignoring the FTC’s orders.

As any TikTok buyer will soon discover, TikTok is the gift that keeps on giving.  TikTok has been sued in a multi district class action for violating the privacy rights of children and the biometric privacy laws of several states (TikTok’s parent company Bytedance is also named). In their complaint (now In re TikTok, Inc., Consumer Privacy Litigation, Case No. 1:20-cv-04699, Master Docket No. 20 C 4699, U.S.D.C. N. Dist. Ill. East. Div.)  the children state:

Part of the reason for TikTok’s popularity, particularly with younger users such as Plaintiff, are the filters and other effects users can apply to their own videos, as well as those uploaded by others. In order to utilize many of these effects, Defendants scan users’ faces and “face geometry” to capture their biometric data, as well as to determine the user’s age using an algorithm.

In collecting and utilizing Plaintiff’s and the Class’ biometric identifiers4 and biometric information5 (referred to collectively at times as “biometrics”), Defendants fail to: (1) warn users that the app captures, collects, and stores their biometric data; (2) inform users of the purpose or length of time that they collect, store, and use biometric data; (3) obtain users’ written consent to capture their biometric data; and (4) implement and/or make publicly available a written policy disclosing to users its practices concerning the collection, use, and destruction of their biometric information in violation of the Illinois Biometric Information Privacy Act (“BIPA”), 740 ILCS 14/1, et seq….

Many of the features and effects require scanning the user’s face geometry in order to place effects over the user’s face, swap the user’s face for an emoji or other individual’s faces, or enhance aspects of their facial features.

But Plaintiff and similarly situated users place themselves at risk when they utilize TikTok features that require access to users’ biometric identifiers and/or information. TikTok acknowledges that it shares personal information that it collects from users with third parties, including entities in China. Multiple U.S. military branches and the Transportation Security Administration have banned use of TikTok due to privacy and cybersecurity concerns.

TikTok, and its predecessor musical.ly, also have a long history of exploiting the millions of minors that make up the lion’s share of TikTok’s user base. In 2019, the Federal Trade Commission settled a case against TikTok and musical.ly for violating the Children’s Online Privacy Protection Act by improperly collecting personal information from children under 13 years old without their parents’ consent.8 The FTC fined Defendants $5.7 million, the largest COPPA fine in the FTC’s history.

In response to complaints regarding children under 13 years old using the app, TikTok implemented a feature that scans the user’s face to determine if he or she appears to be 13 years old or younger. TikTok compares the geometry and features of the individual’s face to an algorithm to determine his or her age.

In other words, TikTok violates the law by capturing child biometric data, then they capture child biometric data to use in an algorithm to catch themselves violating the law.

The case has progressed to the settlement stage.  In response to the reported allegations that TikTok was attempting to fix the outcome of the settlement by cherry picking which attorneys participate in the settlement mediation, the court issued this statement in a case management order dated yesterday (9/1/20) (my emphasis):

[T]he Court is informed by certain Plaintiffs’ counsel that progress has been made in settlement discussions with Defendants. Certain other Plaintiffs’ counsel take umbrage with the manner in which those settlement discussions have taken place, stating that they were not allowed to participate in the settlement discussions (for one reason or another) and have not been informed of the terms of any potential settlement. It goes without saying that, before this Court can approve a class-wide settlement of any kind, it must consider the factors set forth in Fed. R. Civ. P. 23(a), (b), and (e). Those factors include, without limitation, whether the settling class representatives and class counsel have adequately represented the class, whether the proposal was negotiated at arm’s length, whether the relief provided for the class is adequate, and whether the proposed settlement treats class members equitably relative to one another.

In the Court’s experience, it often is advisable for the settling plaintiffs to encourage the participation in the settlement process of attorneys who represent other plaintiffs who have brought similar claims in other venues. After all, those attorneys may represent potential class members, possible objectors, or others who may opt out of any settlement class altogether.

So the Court is basically not having it when it comes to TikTok’s tactics.  It may be shocking that TikTok even wound up in this situation of getting sued for strong arming children and then strong arming children in its attempt to escape liability (and potential criminal prosecution).

All of this occurs in the shadow of the US government’s order requiring that Bytedance divest itself of TikTok.  And that leads to the most interesting part of the court’s case management order:

[T]he attorneys for certain Plaintiffs have raised the concern that any upcoming sale of TikTok, Inc., or its assets by its current owner to a domestic company may result in the destruction of relevant documents as that term is used in the Federal Rules of Civil Procedure. The Court wants to make it clear that, in the event that such a sale takes place, any successor-in-interest shall be bound by Paragraph of CMO No. 1 (just as the Defendants are now) and must make all reasonable efforts to preserve any and all evidence in the possession, custody, or control of TikTok, Inc., that is relevant to the claims and defenses raised in this action.

Of course, I’m sure it’s not lost on the Court that much of this evidence may be located outside of the Court’s jurisdiction and would be subject to China’s National Intelligence Law.  

Who wants to bet that preservation ship has already sailed?