A Little Context: Texas Leads 50 State Coalition Investigating Google

Google is finally getting some pushback from the nation state.  Texas Attorney General Ken Paxton is leading a broad coalition of state attorneys general into Google’s business practices starting with violations of state antitrust laws.

According to the Washington Post:

The states’ investigation is led by Texas’ Paxton and seven other attorneys general, four Democrats and four Republicans in total. Every state except Alabama and California, the home of Silicon Valley, so far has signed onto the bipartisan effort, as have Puerto Rico and the District of Columbia. A spokeswoman for California’s attorney general did not immediately respond to a request for comment.  [Gee, I wonder why?]

…Another group of 11 state attorneys general — led by New York’s Letitia James — has begun their own probe against Facebook, exploring whether it violates competition laws and mishandles consumers’ personal information.

Google also disclosed in an 8-K filing with the SEC that they’d received a “civil investigative demand” from the Department of Justice:

On August 30, 2019, Alphabet received a civil investigative demand from the DOJ requesting information and documents relating to our prior antitrust investigations in the United States and elsewhere. We expect to receive in the future similar investigative demands from state attorneys general. We continue to cooperate with the DOJ, federal and state regulators in the United States, and other regulators around the world.

Sending a CID is how these things usually start.  A CID is a discovery request that is similar to a demand for production of documents, oral testimony or answers to interrogatories.  How did this whole state AG thing evolve?  A little context.

Mississippi Attorney General Jim Hood tried a similar approach with Google in 2014 and was immediately set upon by Google’s lawyers and the “policy” groups it funds like the Electronic Frontier Foundation, R Street, Engine Advocacy and others.  While General Hood didn’t exactly win that, he didn’t really lose it either.

General Hood invited me to be on a panel he moderated at the 2013 summer conference of the National Association of Attorneys General.  The panel topic was “Intellectual Property Crimes Online: Dangerous Access to Prescription Drugs and Pirated Content”.  General Hood spoke on “Google Guiding Consumers Down Illegal Paths.”  My topic was “Protecting Consumers and Advertisers from Unfair Trade Practices,”  which was essentially a briefing on how Google played a central role in brand-sponsored piracy by duping advertisers on both pirate sites and Google’s own properties like YouTube (starting with duped advertiser #1, President Barack Obama).

I have to say that speaking to 50 AGs at the same time is a rather sobering experience.  As our panel presented the case against Google, it was probably the first time that I realized my standing joke that Google opposed the nation state actually wasn’t a joke.  At all.

After talking with some of the AGs who attended our panel, it became apparent that some of them were learning for the first time of the company’s profits from piracy and selling ads against recruitment videos on YouTube for salafi jihadism.  When Google called out all of the dogs on General Hood a few months later to get an injunction that stopped enforcement of Mississippi’s CID, the company’s antics only confirmed to the AGs that it would take a village to challenge the most powerful media company in commercial history.

That epiphany led to 40 attorneys general filing an amicus brief supporting General Hood in the appeal of the aptly titled case of Google v. Hood that crystalized the issue before the 5th Circuit:

This is a case about the authority of state Attorneys General to exercise one of their fundamental powers: the ability to investigate potential violations of state law. What should be a routine discovery dispute in Mississippi state courts, resolved under established state procedures…has instead evolved into a contrivance for a company doing business in the state of Mississippi to invoke federal jurisdiction by asserting potential affirmative defenses to claims that have never been filed.

The NAAG conference and General Hood’s efforts resonated with me, too.  Not to quote myself, but I think this 2017 post about then Missouri AG Josh Hawley’s consumer protection subpoena of Google captures what just happened:

One of Google’s worst policy nightmares is that state attorneys general will wake up to their obligation under state laws to protect both consumers and advertisers from Google’s overreach.  This would potentially force Google to answer for its actions in 51 jurisdictions–some state laws that are essentially common to all 50 states plus the federal government.  These state laws include consumer protection statutes and unfair competition or state antitrust rules that are not overriden (or “preempted”) by simultaneous federal jurisdiction.

Since General Hood got the Full Google (the only thing missing was the fake petitions and Open Media tools), there have been a few efforts by state AGs like Josh Hawley (now Senator Hawley).  While the current case may seem to come out of the blue, it is really the next step in the evolution of the response of dealing with Google as a white collar crime law enforcement matter.

Betting on the House: Five Issues that House Judiciary Should Investigate Against Google–End Supervoting Shares for Publicly Traded Companies

The House Judiciary Committee announced yesterday that it was opening an antitrust investigation into “tech giants” including Google.  Chairman Jerry Nadler said:

[T]here is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content, and communications…Given the growing tide of concentration and consolidation across our economy, it is vital that we investigate the current state of competition in digital markets and the health of the antitrust laws.

We’re going to look at five issues Chairman Nadler should consider that relate both to Google and to some others, too.  Let’s start with reforming corporate governance and bring eyesight to the willfully blind.

1.   One Share, One Vote, Not Ten:  Anyone in the music business has had just about enough of government oversight, so I don’t recommend it as a solution in general.  But–in the absence of marketplace transparency, the government is about the only place to go to bring reforms to well-heeled corporations.  So rather than ask the government to fix specific problems on an ad hoc basis, the government would do well to ask what causes the market to fail as it clearly has with Google.

The first question to ask is where was the board?  In Google’s case, the core problem is both easy to find and easy to fix.  It lies in the voting structure of the shareholders.  Shareholder rights and corporate charters are state law matters and don’t relate to the federal government, but–the federal government does have a say about who gets to sell shares to the public and has an interest in protecting the shareholders of publicly traded corporations.  It is this nexus that gives the House Judiciary Committee clear oversight authority over the corporate structure of publicly traded corporations.

While anti-coup d’etat provisions might make sense for private companies whose investors are sophisticated financiers, or newspapers seeking to retain editorial independence, once that company is publicly traded a bald discrepancy that simply mandates voting power to the insiders forever seems like it has to go.  And as we have seen with Google, the lack of corporate oversight has resulted in unbelievable arrogance and a complete failure of corporate responsibility.  And worse yet, because Google got away with it, lots of other tech companies follow essentially the same model (including Facebook, Spotify and Linkedin).

It must also be said that stock buybacks approved by a board where insiders who benefit from the buyback have supervoting shares and control the board is a practice that reeks to high heaven.  Buybacks and dual class supervoting shares have been widely criticized including by Securities and Exchange Commission Commissioner Robert Jackson who is also a critic of supervoting shares.

So how did this happen to Google?  The supervoting structure started when Google was a private company as a way for the founders to preserve control and avoid venture capital investors pushing them around.  OK, fine, I understand that.

Google (which is really its parent company, Alphabet) trades under two ticker symbols on the  NASDAQ: GOOGL Class A and GOOG Class C.

Oops.  What happened to Class B?  Ay, there’s the rub.

Class B shares are not publicly traded and are held by insiders only.  But as you will see, they control every aspect of the company.  So why would Google’s insiders want this share structure?  There’s actually a simple answer.  Class A shares (GOOGL) get one vote per share, Class B shares get 10 votes per share and Class C shares (GOOG) get no votes.

That’s right–Class B shares cannot be purchased and their holders get 10 times the voting power of the Class A holders, often called “supervoting” shares, because their super power is…well…voting.

The Class C shares were created as part of a 1:1 stock split that doubled the number of shares, halted the price per share, but resulted in no change of the voting power of the Class A and C shareholders.

When the dust settled, the Google/Alphabet voting capitalization table looked something like this:

Class A: 298 million shares and 298 million votes, or roughly 40% of the voting power with votes counting 1:1.

Class B: 47 million shares and 470 million votes, or roughly 60% of the voting power with votes counting 10:1.

What this also means is that the holders of Class B shares voting as a bloc will never–and I mean never–be outvoted at a shareholder meeting, their board of directors will never be challenged much less replaced and shareholder meetings are a sham.

Who controls the Class B shares?  The people that Commissioner Jackson might call the “corporate royalty“:

Larry Page: 20 million shares (as of 2017)

Sergey Brin: 35,300 Class B shares plus 35,300 Class A shares (as of 2018)

Eric Schmidt: 1.19 million Class B shares, 40,934 Class A shares, and 10,983 Class A Google shares, plus 2.91 million Class B shares through family trusts.

Sundar Pichai: 6,317 Class A shares and no Class B shares.

The House Judiciary Committee has a chance to correct the supervoting system as bad policy and implement a long-term fix across the board for all dual-class companies that want to trade on the public exchanges.

 

 

Minding the Value Gap: The UK Parliament’s Report on Disinformation and Fake News

It’s been a rough couple weeks for Silicon Valley in Europe.  Hard on the heels of an embarrassing lobbying loss in the European Parliament with the Copyright Directive (aka “Article 13”), the UK Parliament issued a damning report on the failings of social media.  The title tells you a lot:  Disinformation and Fake News.  Headline readers will come away from the news reporting with the impression that the report is about the UK government regulating Facebook due to the manipulation of the platform by Russian trolls using active measures.  If you read the report, even just the summary, you will see that it is the work product of an eight-nation committee and it is targeted at all social media platforms and “user generated content” (or “UGC”).

Unlike US-style regulation that these companies simply ignore and pay the paltry fines, it is unlikely that Google, Facebook and others will be able to simply conduct business as usual in the UK or Europe (Brexit or no)–particularly when you see statements like the following from Tom Watson, the Labor Party’s Shadow Culture Secretary:

Labour agrees with the committee’s ultimate conclusion: the era of self-regulation for tech companies must end immediately. We need new independent regulation with a tough powers and sanctions regime to curb the worst excesses of surveillance capitalism and the forces trying to use technology to subvert our democracy.

Few individuals have shown contempt for our Parliamentary democracy in the way Mark Zuckerberg has. If one thing is uniting politicians of all colours during this difficult time for our country, it is our determination to bring him and his company into line.

Tom Watston BASCA

Considering that the corporate bot farming techniques and the corporate comms version of Marcuse-esque messaging that Google and Facebook used against Article 13 are even more insidious than the Russkie election manipulators who were the focus of the Parliamentary report, it’s all pretty breathtaking.

They’ll Take Us in a Rush

Corporate whack a mole is–or was–the ultimate de facto safe harbor and is at the heart of the value gap.  Two truths were obvious from the moment in 2006 when a lawyer from Google’s recently acquired YouTube told a bar association meeting in Los Angeles that they could either make a deal with her for weaponized UGC on YouTube or play whack a mole using the DMCA notice and takedown–that Google and their shills intended to fight every step of the way (see Ellen Seidler’s excellent take down of the take downs).

First, it was obvious that Google executives intended to enrich themselves building a business on the backs of artists and songwriters who couldn’t fight back (what I call the ennui of learned helplessness), and next that Google intended to use those grey market profits and their vast wealth from public markets in a particularly nasty way that would have made Leland Stanford proud.  Google would simply crush any opposition from any rights holder or competitor who stood up to them.  But most of all that UGC is the ultimate front end for the data profiling back end which is where the real money is made.

This 2006 display of corporate molery had special resonance for me.  I spoke at the OECD’s Rome conference on digital stuff early in 2006 where Professor Terry Fisher and Google lawyer-to-be Fred Von Lohmann essentially laid out the strategy of using UGC to overwhelm the system and the abuse of the safe harbors.  That strategy was at the heart of their humiliating loss in the Grokster case and should be seen as implementing Grokster by other means (recall that Fred did a first rate job of articulating the losing argument before the 9th Circuit Court of Appeals that carried the day in the 9th Circuit but failed where it mattered in the U.S. Supreme Court).

During a very spiffy dinner that probably cost enough to have provided fresh water to a million in South Sudan, Professor Fisher told the slightly boozed up crowd of bureaucrats how the world was going to work with UGC.  I was very likely the only one in the room who knew enough about Fisher and Von Lohmann and about Google’s tactics to really get the message.  I whispered to my dinner partner, “They intend to take us in a rush.”

And so they did.

Platforms Are Fit for Purpose but Their Purpose Isn’t Fit

The Parliament’s report on Disinformation and Fake News is a strong rejection of Silicon Valley data miners like Google, Amazon and Facebook.    (You could say a latter day Big Four, but the Big Three won’t let there be a fourth in the best traditions of the Big Four.)

Google is a thought leader among the aristocracy of Silicon Valley’s real-time data miners and subsidizes many other pundits who support its business model in a variety of ways.   It’s not surprising that Facebook followed the path that Google blazed with YouTube since Google got so rich doing it.

In many ways, Facebook is the ultimate UGC profiteer–and blissfully chose to largely ignore the moral malaise that UGC will inevitably bring with it.  Zuckerberg, Paige and Brin ignored these problems because The Boys Who Wouldn’t Grow Up were making too much money–and getting away with it.  The fundamental problem is that these companies care more about enriching themselves than they care about who their users are or the content their users generate–as long as users keep generating.  It is that greed that underlies the studied lack of control designed into Google and Facebook.  It’s not that bad guys exploit a design flaw–it’s that the platforms work exactly as planned.

Nowhere is this more obvious than with the failure of Google and especially Facebook to manage their platforms to prevent bad actors from using the very tools that enriched the Silicon Valley monopolists for very odious disinformation campaigns.

Despite repeated warnings, governments have allowed these nation-state level actors to play their whack a mole game so freely that by the time democracy itself was on the line it has been difficult to regulate the monopolists.

Until now–or so we hope.  The UK Parliament’s Select Committee on Digital, Culture, Media and Sport has rendered its final report on “Disinformation and Fake News.”  While the report nominally focuses solely on Facebook, lovers of democracy should welcome the broader hope for both its methods as well as its findings.

The International Grand Committee

The Select Committee’s methods are refreshing:

We invited democratically-elected representatives from eight countries to join our Committee in the UK to create an ‘International Grand Committee’, the first of its kind, to promote further cross-border co-operation in tackling the spread of disinformation, and its pernicious ability to distort, to disrupt, and to destabilise. Throughout this inquiry we have benefitted from working with other parliaments. This is continuing, with further sessions planned in 2019. This has highlighted a worldwide appetite for action to address issues similar to those that we have identified in other jurisdictions….

[A]mong the countless innocuous postings of celebrations and holiday snaps, some malicious forces use Facebook to threaten and harass others, to publish revenge porn, to disseminate hate speech and propaganda of all kinds, and to influence elections and democratic processes—much of which Facebook, and other social media companies, are either unable or unwilling to prevent. We need to apply widely-accepted democratic principles to ensure their application in the digital age.

The big tech companies must not be allowed to expand exponentially, without constraint or proper regulatory oversight. But only governments and the law are powerful enough to contain them.

Let’s hope so.  In the face of well-financed resistance by some of the biggest corporations and the most devious robber barons in commercial history since the days of the Big Four railroads, our governments and law enforcement have pretty much failed so far.  That’s how we got here and that’s how the problem evolved well past private attorney general-type remedies.

The public attorneys general need to mind the value gap.  Hopefully the European governments have the spine to stand up and show America how it’s done.

 

 

Don’t Get Fooled Again: Piracy is still a big problem

I know it’s not very “modern,” but music piracy is still a huge problem.  As recently as yesterday I had a digital music service executive tell me that they’d never raise prices because the alternative was zero–meaning stolen.

Very 1999, but also oh so very modern as long as Google and their ilk cling bitterly to their legacy “safe harbors” that act like the compulsory licenses they love so much.  Except the safe harbor “license” is largely both royalty free and unlawful.  Based on recent data, it appears that streaming is not saving us from piracy after all if 12 years after Google’s acquisition of YouTube piracy still accounts for over one third of music “consumption.”  The recent victory over Google in the European Parliament indicates that it may yet be possible to change the behavior of Big Tech in a post-Cambridge Analytica world.

It’s still fair to say that piracy is the single biggest factor in the downward and sideways pressure on music prices ever since artists and record companies ceded control over retail pricing to people who have virtually no commercial incentive to pay a fair price for the music they view as a loss leader.  If the Googles of this world were living up to their ethical responsibilities that should be the quid pro quo for the profits they make compared to the harms they socialize, then you wouldn’t see numbers like this chart from Statistica derived from IFPI numbers:

chartoftheday_15764_prevalence_of_music_piracy_n

The good news is that there is a solution available–or if not a solution then at least a more pronounced trend–toward making piracy much harder to accomplish.  It may be necessary to take some definitive steps toward encouraging companies like Google, Facebook, Twitch, Amazon, Vimeo and Twitter to do more to impede and interdict mass piracy.

Private Contracts:  It may be possible to accomplish some of these steps through conditions in private contracts that include sufficient downside for tech companies to do the right thing.  That downside probably should include money, but everyone needs to understand that money is never enough because the money forfeitures are never enough.

The downside also needs to affect behavior.  Witness Google’s failure to comply with their nonprosecution agreement with the Criminal Division of the Department of Justice for violations of the Controlled Substances Act.  When the United States failed to enforce the NPA against Google, Mississippi Attorney General Jim Hood sought to enforce Mississippi’s own consumer protection statutes against Google for harms deriving from that breach.  Google sued Hood and he ended up having to fold his case, even though 40 state attorneys general backed him.

Antitrust Actions:  Just like Standard Oil, the big tech companies are on the path to government break ups as Professor Jonathan Taplin teaches us.  What would have been unthinkable a few years ago due to fake grooviness, the revolving door and massive lobbying spending all over the planet, in a post-Cambridge Analytica and Open Media world, governments are far, far more willing to go after companies like Google, Amazon and Facebook.

Racketeer Influenced and Corrupt Organizations Act Civil Prosecutions:  “Civil RICO” claims are another way of forcing Google, Facebook, Amazon & Co. to behave.  Google is fighting a civil RICO action in California state court.  This may be a solution against one or more of Google, Facebook and Amazon.

As we know, streaming royalties typically decline over time due to the fact that the revenues to be divided do not typically increase substantially (and probably because of recoupable and nonrecoupable payments to those with leverage).  At any rate, the increase in payable revenues is less than the increase in the number of streams (and recordings).

While it’s always risky to think you have the answer, one part of the answer has to be basic property rights concepts and commercial business reality–if you can’t reduce piracy to a market clearing rate, you’ll never be able to increase revenue and music will always be a loss leader for immensely profitable higher priced goods that artists, songwriters, labels and publishers don’t share be it hardware, advertising or pipes.

I strongly recommend Hernando de Soto’s Mystery of Capital for everyone interested in this problem.  The following from the dust jacket could just as easily be said of Google’s Internet:

Every developed nation in the world at one time went through the transformation from predominantly extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West we’ve forgotten that creating this system is what allowed people everywhere to leverage property into wealth.

What we have to do is encourage tech companies to stop looking for safe harbors and start using their know-how to encourage the transformation of the extralegal property arrangements they squat on and instead accept a fair rate of return.  My bet is that this is far more likely to happen in Europe–within 30 days of each other we’ve seen Europe embrace safe harbor reform in the Copyright Directive while the United States welcomed yet another safe harbor.

If we’re lucky, the European solution in the Copyright Directive may be exported from the Old World to the New.  And if Hernando de Soto could bring property rights reform to Peru in the face of entrenched extralegal methods and the FARC using distinctly American approaches to capital, surely America can do the same even with existing laws and Google.

@robertblevine_: Will Tech Startups Finally Make Record Labels Obsolete? Not So Fast — Artist Rights Watch

[Editor Charlie sez:  Great analysis of Google’s “United Masters” adventure by Robert Levine.]

Stop me if you’ve heard this one before: Record labels are irrelevant because they’ve been disrupted by a venture-funded technology start-up. The major labels exploit artists, who can now distribute their music directly to consumers online, plus get the data they need to make money playing concerts, selling merch or doing sponsorships. Sound familiar?

via @robertblevine_: Will Tech Startups Finally Make Record Labels Obsolete? Not So Fast — Artist Rights Watch

Mass NOI Charts: An Update from Royalty Claim — MUSIC • TECHNOLOGY • POLICY

An update on the state of the Copyright Office debacle also known as mass filing of “address unknown” notices under Section 115 (you can see the largely unusable posting of these notices at this link on the Copyright Office site). Here’s some charts you won’t see in the trades or even on the Copyright Office site-Royalty Claim’s Address “Unknown” Mass NOI chart that Royalty Claim measured by number of filings January 1-June 30, 2017.

via Mass NOI Charts: An Update from Royalty Claim — MUSIC • TECHNOLOGY • POLICY

Holding the Line on Tradeoffs for Statutory Damages

It is very likely that we will hear about a move to make significant amendments to the Copyright Act at some point before the beginning of campaign season in 2018.  There are a significant number of copyright-related bills that have been introduced in the House of Representatives in the current session, so brace yourself for an “omnibus” copyright bill that would try to cobble them all together Frankenstein-style.

A Frankenstein omnibus bill would be a very bad idea in my view and will inevitably lead to horse trading of fake issues against a false deadline.  Omnibus bills are a bad idea for songwriters and artists, particularly independent songwriters and artists, because omnibus bills tend to bring together Corporate America in attack formation.

MIC Coaltion
The MIC Coalition

When you consider that Google and Facebook are part of Corporate America (not to mention Apple), the odds of the independent songwriter and artist, but really any songwriter and artist, just holding onto the few crumbs they currently have crash and burn.  The odds of actually righting wrongs or–God forbid–getting rid of the legacy consent decrees that protect Big Business vanish into the limit.

Of course, what certain elements of Big Tech would really like to do is push all licensing of music into one organization that they could then control through consent decrees or other government regulation and supervision by exercise of the massive lobbying and litigation muscle of the MIC Coalition and DIMA.  While I realize that may actually sound anti-competitive, it is typical of monopolists to use the antitrust law to destroy competition (as Professor Taplin has taught us).   That’s certainly what has happened with the PRO consent decrees–reduced competition and lower royalties.  Not to mention such a licensing organization would collapse under its own complexity.  This is probably why the Copyright Office envisioned a “Music Rights Organization” that would combine the PROs and mechanical rights licensing but provided the relief valve of an new opt-out right so that songwriters could escape the madness.  (“Under the Office’s proposal, except to the extent they chose to opt out of the blanket statutory system, publishers and songwriters would license their public performance and mechanical rights through MROs.”  Copyright Office Music Licensing Study at p. 9)

If you want some ideas about the kinds of property rights that Big Tech wants the government to take away from songwriters and artists, just read Spotify’s most recent filing in the songwriter litigation in Nashville where their lawyer tries to define away mechanical royalties (unsurprisingly, the lawyer is a long-time protege of Lessig).  Why?  Because they are being brought to a trial by their peers on statutory damages for copyright infringement and the potential for having to pay the songwriters’ lawyers due to a statutory right to recover attorneys fees.  (Statutory damages for copyright infringement has long been an attack point of Big Tech and we get a preview of where they want it to go in Pamela Samuelson’s “Copyright Principles Project”–essentially abolished.)

One way or another, the Big Tech cartel (which includes all the companies in the MIC Coalition and MIC Coalition member the Digital Media Association which itself has members like Spotify and, curiously, Apple) is very likely going to go after statutory damages and try to create yet another “safe harbor” for themselves with no burdens–a “friction free” way to infringe pretty much at will because the actual damages for streaming royalties will be pennies.

If the cartel succeeds in eliminating statutory damages and attorneys fees awards, this will truly make copyright infringement litigation toothless and entirely eliminate the one tool that independent songwriters and artists have to protect their rights.  It will neuter massive copyright infringement as alleged in all of the Spotify class actions, not to mention cases like Limewire.

Oh, you say–did you just switch from song copyrights to sound recording copyrights by referencing Limewire?  Yes, I did–because that’s exactly what I predict the DIMA and MIC Coalition have in mind.  Why do I say this?  Because that’s what these companies are backing in the radioactive Transparency in Music Licensing and Ownership bill (HR 3350).  And if you blow up all the current separate bills into one omnibus copyright “reform” bill, the pieces may reconstitute in forms you didn’t expect.

But realize that in almost all the many copyright bills currently before the House of Representatives, the other side is trying to bootstrap unjust harm into a negotiation chip to shakedown creators.  And it’s not just pending legislation–the shakedown is especially observable with the millions of notices of intention to rely on statutory mechanical licenses for songs filed with the Copyright Office.  That’s a nice song you got there, it would be a shame if something happened to it.

Big Tech’s basic negotiation method is to rely on a loophole, bootstrap the loophole to build up the pressure on people who can’t fight back, then run the shakedown to get concessions that should never be made.  This is what Google has done with the DMCA and is the same shakedown tactic on mass NOIs taken by Google, Amazon, Pandora, Spotify, and others–but curiously not Apple.  Somehow Apple has made it work with the most successful digital music platform in history.

Let’s go down the issue list:

Bootstrapped Issue

Fix

Bill

Pandora and Sirius stopped paying artists for digital royalties on pre-72 recordings—because of loophole based on federal copyright protection for sound recordings Start paying artist royalties on classic recordings made before 1972 CLASSICS Act
Terrestrial radio created a loophole so they don’t have to pay performance royalties to artists on sound recordings; stop artists from opting out Start paying artist royalties for broadcast radio (with protection for noncommercial and small broadcasters) Fair Pay Fair Play Act, PROMOTE Act
Big tech suddenly started using a loophole to file millions of “address unknown” NOIs with Copyright Office after indie songwriters filed class actions Require Big Tech to use existing databases to look up copyright owners or don’t use the songs or recordings. None
No “central database” that has all songs (but no requirement to actually look up anything), requires double registration If songwriters and artists don’t register, then no statutory damages Transparency in Music Licensing and Ownership Act

Blown up into parts:

–Avoid raising mechanical royalty rate or paying artist royalties on terrestrial at all

–How to use the lack of the mythical “central database” as a bright and shiny object to avoid paying royalties and shirk liability for not doing copyright research, an absurd position for companies that owe much of their wealth to their unprecedented ability to profile people around the world and “organize the world’s information”

–Avoid paying statutory damages

–How to avoid paying royalties that should have paid anyway (pre-72, terrestrial, mass NOI) through distorted interpretations of the law or even safer harbors

–Avoid an obligation to actually look up anything (new databases)

–Use any work they want if all they have to pay is actual damages and no attorneys fees

–Keep songwriters and artists from opting out

–Create biggest black box possible

It should be apparent which way Big Tech is trying to push the creative community.  It is important for creators to understand that any legislative concession that the MIC Coalition or DIMA win against songwriters or artists they will then turn around and try to extract in the next shakedown–authors, photographers, film makers, all the copyright categories.

It is in everyone’s interest to support a healthy creative community that will continue to engage fans and do enough commerce to create value for the tech monopolies.  But–it is crucial to understand that it doesn’t work the other way around.

The purpose of the creative community is not to create value for tech monopolies.  It is to support compelling artists and help them engage with fans, and sometimes it is art for art’s sake alone.  If those artists throw off some commercial gain that the tech monopolies can turn to profit themselves, fine.  But creating profit for these monopolists is not the goal of artists.

Instead of creating fake problems to try to extract concessions that further undermine creators like offering ice in winter, the tech monopolies like Google, Spotify, Amazon and Pandora should identify real problems and work with us toward real solutions–and not a loophole-driven shakedown.