At the time, which was during Pandora’s bad old days of what Billboard called “World War P”, Pandora was suing songwriters to lower royalty rates for their one product–music. According to Pandora, they were not treated fairly because terrestrial radio paid lower rates to songwriters then did they as webcasters. Apple, meet orange. Pandora’s strong move was to buy a relatively inexpensive radio station so it could try to pass itself off as a broadcaster which it clearly wasn’t. Hence, Radio Loophole.
Some speculated at the time that Pandora’s board might have gotten confused that the station was in South San Francisco rather than South Dakota as it is unlikely any of them had ever been to South Dakota (and it’s almost as equally unlikely they’d ever been off the 101 in South San Francisco, for that matter).
But Pandora plopped down $600,000 of the stockholder’s cash (Old Pandora’s preferred form of tender for acquisitions it seems) and then went to get the blessing of the rate court. Kind of a knucklehead move that also unnecessarily stoked the battle fires of World War P.
Here’s a tip–there’s this thing called a “post closing condition”. In the case of Radio Loophole, it would go something like, “I’m only buying your station if I can use it to lower what I pay to songwriters and it’s worthless to me unless I can. So this transaction will not close until I get the rate courts’ approval which I have to accomplish within 12 or 18 months. And here’s 10% of the purchase price for you to keep for having to stand still long enough for me to find out. Deal?” Not that different than a transaction being subject to FTC merger approval.
A post closing covenant (or “post closing condition”) is the precaution you take if it’s your money or you take your duty to your shareholders very seriously. But what happens to inexperienced management with hundreds of millions of someone else’s money burning a hole in their pocket is hard to explain.
Let the Old Pandora’s disastrous acquisition of Radio Loophole and Ticketfly be examples to entrepreneurs of the honeytrap of cash in the bank. And that loophole seeking behavior eventually catches up to you, so why do it in the first place?
With Pandora’s endorsement of the CLASSICS Act that would change the law to require webcasting royalty payments to artists whose recordings were released prior to 1972, I have to say that it feels like there’s a far more enlightened leadership at Pandora just in the last few weeks. Not to look the gift horse in the molars, but it would be really nice if Pandora didn’t wait for the bill to pass and just started paying the statutory rate on a go-forward basis at least.
Either way, three of the gargantuan unintelligible blunders of Old Pandora are being put right–Ticketfly, pre-72 and now the sale of Radio Loophole. Fingers crossed we have more good news to come.
Longtime PRO opponent Rep. Sensenbrenner introduced a bill entitled “The Transparency in Music Licensing and Ownership Act“, a piece of work that is Dickensian in its cruelty, bringing a whole new meaning to either “newspeak” or “draconian,” take your pick. It’s rare that the Congress can accomplish the hat trick of an interference with private contracts, an unconstitutional taking and an international trade treaty violation all in one bill. But I guess practice makes perfect. And since the MIC Coalition gave the bill a rousing cheer followed by a heaping serving of astroturf, we should not be surprised. (Read the bill here.)
While this legislation currently applies only to songs and sound recordings, other creators should not feel that they’ve dodged a bullet. I hear that the House Judiciary Committee staff is planning on closing the loop and making all copyright categories subject to the same “register or lose it” approach favored by Lessig, Samuelson and their fellow travelers. If you thought that we are in an era of the triumph of property rights, that must be a different Congress you’re thinking of.
The bill perpetuates the myth of the “global rights database” that no one who understands the complexities believes will ever be created. It sounds logical, right? We have county recorders for real estate, the DMV for cars, why not a database for music?
That is an 11th century idea being welded onto a 21st century problem, the Domesday Book meets a unicorn. The problem isn’t knowing who owns a particular work which evidently is either what they believe or want you to believe.
The problem is that the users don’t want to seek permission or beg forgiveness, either. They want to get away with it. This bill demonstrates that unassailable fact in colors bold as the Google logo.
Think about it–by the time you finish reading this post, 1000 songs will be written and 500 songs will be recorded somewhere out there in the world. Or more. (Not to mention photographs taken, paintings painted, chapters written and so on.)
Do you think that songwriters around the world are thinking, now I know what lets do, let’s rush to go register that new song in the U.S. Copyright Office–in the database, the registration section, the recordation section? Otherwise, I’ll never be able to afford the lawyer to sue Spotify if they don’t pay me. I don’t think they’re thinking that at all and are about to fall into the MIC Association’s trap for the unwary. Why the MIC Coalition? We’ll come back to them.
In a nutshell, the bill requires the extraordinarily heavy burden of requiring all songwriters and recording artists (or their publishers or labels)–all, as in the entire world seeking to sue in the U.S., not just the US writers–to register numerous fields of data in a yet to be created database if they plan on suing for statutory damages:
[I]n an action brought under this title for infringement of the exclusive right to perform publicly, reproduce, or distribute a nondramatic musical work or sound recording, the remedies available to a copyright owner [ANY copyright owner] that has failed to provide or maintain the information [required] shall be limited to…(A) an order requiring the infringer to pay to the copyright owner actual damages for the public performance, reproduction, or distribution of the infringed work; and…(B) injunctive relief to prevent or restrain any infringement alleged in the civil action.
That means if you haven’t undertaken the formality of registering in this new database, then the user has no exposure to statutory damages and will not have to pay the victorious songwriter or artists attorneys’ fees. And this new safe harbor applies apparently even if that songwriter or artist has filed a copyright registration under existing law.
There is nothing in the bill that actually requires the protected class to actually look up anything in this new database, or actually be in compliance with existing statutory licenses (such as the webcasting or simulcasting licenses).
So who is in the new protected class entitled to the Nanny State’s protection from those collusive and pesky songwriters and artists? Let’s look at the victimology of the “ENTITLEMENT” paragraph.
Well, actually, there’s no “ENTITLEMENT” paragraph for the entitled, it’s actually called “APPLICABILITY” (see “newspeak”, WAR IS PEACE, etc.). The connected class includes five different categories of cronies.
First, the defined term “An establishment” gets the new even safer harbor. “Establishment” is a defined term in the Copyright Act (in Sec. 101 for those reading along at home):
An “establishment” is a store, shop, or any similar place of business open to the general public for the primary purpose of selling goods or services in which the majority of the gross square feet of space that is nonresidential is used for that purpose, and in which nondramatic musical works are performed publicly.
Like the members of this organization, the National Retail Federation:
Then another defined term “A food service or drinking establishment”. Kind of like these people:
That is, the National Restaurant Association, the American Hotel and Lodging Association (aka those who put their kids through college thanks to SXSW) and their suppliers, the American Beer, Wine and Spirits Retailers.
Next, “A terrestrial broadcast station licensed as such by the Federal Communications Commission”. I guess that would include the National Association of Broadcasters, iHeart, Salem and Cox (which of course raises the question of whether this entitlement also applies to Cox’s Internet group), kind of like these people:
Don’t forget “An entity operating under one of the statutory licenses described in section 112, 114 [webcasting and simulcasting], or 115 [mechanical licenses].” Note–not that the statutory license applies to the particular song or sound recording in the way it is used that is the subject of the lawsuit, just that the entity is operating some part of its business under one of those licenses regardless of whether the service that is the subject of the lawsuit operates under one of these licenses or not. (Pandora’s on-demand service compared to webcasting, for example, could be out of compliance with its sound recording licenses but claim the safe harbor because it is “operating under” one or more of the statutory webcasting license in the radio service or the statutory mechanical licenses for songs.)
It appears that would include these people:
and don’t forget these people who are DiMA members and need the government’s protection from songwriters and artists:
And then I guess you could throw the Consumer Technology Association and CCIA in there, too.
So I think that’s everyone, right?
Last but not least there’s this group as “belt and suspenders”:
An entity performing publicly, reproducing, or distributing musical works or sound recordings in good faith as demonstrated by evidence such as [i.e., but not limited to] a license agreement in good standing with a performing rights society or other entity authorized to license the use of musical works or sound recordings.
Note: The license need not be for the musical works or sound recordings for which the “entity” is being sued, just any license for any musical works or sound recordings.
There are loopholes in the bill that you could drive a fleet of Street View cars through, so you have to assume that the loopholes will be hacked given who is involved. Don’t let anyone tell you “oh that’s just legislative language, we can fix that.” The whole thing has to be voted down.
Let’s call this bill what it is: Crony capitalism, the triumph of the connected class. The Domesday Book writ large.
It’s some of the biggest companies in the world deciding that they don’t want to hear from songwriters or artists anymore.
The truth about blockchain is that at its core, it requires its regime to be enforced on rights owners in order to scale–and that is its essential flaw.
Call me a blockchain skeptic. I agree with many of the conclusions reached by Alan Graham in his MusicTechPolicy interview, but I also think that at its core, blockchain as currently contemplated fails as an industry-wide rights registry. Since I understand that its essential purpose is to be a reliable rights registry, it seems obvious to me that blockchain has limited application at best.
I spent a good deal of time helping some very smart people build an independent rights registry around 2005 and have thought about these issues for a long time. (All the major labels and many indies participated in that registry.)
Based on that experience, I believe that the core value proposition of a rights registry is that it be easy to use; that the information in it be objectively verified and only changed with a proper showing of authority; that it be capable of making or directing the making of royalty payments (which means holding necessary tax information); and that it can be easily and timely updated with information for new releases. I believe all these elements are essential and that blockchain accomplishes none of them well and some of them not at all.
“Blockchains force action… If I were to make a statement about a work that I own in a blockchain, and I were to send it to you…you have three choices: yes it’s correct and I agree, no it’s not correct, or ignore it, which means it’s correct.”
“What blockchain may bring to the table is something you cannot ignore, because ignoring it is the same as accepting what’s there in the table is truth… A blockchain-based system at scale could force people to work with it, in a way that exposes them to decentralisation and transparency, arguably whether they like it or not.” (emphasis in original)
In other words, organizing the world’s information whether the world likes it or not. Sound familiar?
It is one thing if blockchain is a voluntary regime that artists and users can decide to participate in–and submit themselves to forced “decentralization and transparency” as Mr. Rogers articulates so well. But it is entirely another thing altogether if blockchain is enforced by law.
I would not rule out that it is ultimately the goal of the blockchain investors to force songwriters and artists to submit to the blockchain as a matter of law. This is certainly a familiar refrain if you have followed the various meltdowns over the desire of online retailers and search companies to force songwriters and artists to submit to their exploitation. We have heard these ideas frequently over the years whether it is even safer harbors, orphan works or massive numbers of unauditable address unknown NOIs under the US compulsory mechanical license.
If you doubt that could happen, realize that two unmovable government agencies are currently allowing millions of songs to be exploited with unverified and dubious authority–the U.S. Copyright Office with mass NOIs and the Department of Justice with 100% licensing. What’s to stop them taking the next step?
One person’s forced “decentralization and transparency” is another’s eminent domain. So when you hear about blockchain, imagine if the blockchain bubble had the awesome power of the sovereign forcing someone else’s interpretation of truth on creators.
Especially when the time it takes to correct someone else’s interpretation of the truth as Mr. Rogers suggests their job would become will be even more uncompensated time for another free ride that will probably end the same way that DMCA notices do for the vast majority of independent artists.
Once again we’ve started a new session of Congress with really old news–the National Association of Broadcasters is yet again circulating the reactionary Local Radio Freedom Act (or the grammatically challenged “LRFA”) that’s been warmed over and served up again from the last Congress.
LRFA’s purpose is twofold. Get unsuspecting Members to support a policy to deny recording artists their fair share for the performance of their recordings on terrestrial radio. How? By aligning America with the practice of Iran and North Korea that is out of step with the business of every other major world economy. And because America denies the world’s recording artists the same treatment that American artists would enjoy overseas, America’s trading partners justifiably refuse Americans reciprocal treatment in foreign countries. Which is more embarrassing?
It’s not that American artists don’t earn the foreign performance royalties–it’s that the royalties earned overseas by hardworking Americans are denied to them because Congress is misled by the NAB into thinking that fair compensation is somehow bad policy and the US denies equal treatment to foreign artists. Why should those countries–who actually care about their creative class–grant reciprocal treatment to Americans?
It goes like this: When you hear Aretha Franklin sing “R-E-S-P-E-C-T” written by Otis Redding on the radio in your car, that economic transaction results in Otis Redding (the songwriter) getting paid as a songwriter under the government’s 75 year consent decrees (another sad story). Aretha Franklin, however, gets ZERO.
When that same recording is played in the UK, Otis Redding still gets paid as the songwriter, but the artist does, too. Except that because Aretha is an American, her money is never paid to her.
This obvious inequity is what motivated over 14,000 musicians and music fans to sign the I Respect Music petition in the last Congress and created the largest grass roots movement in the history of the music business with a positive message. Because friends don’t let friends get LRFA’d.
It’s one of the few issues left that is truly bipartisan.
When Blake Morgan and the IRM team took the 14,000 signatures on the IRM petition to Congress, they had to carry two huge books of signatures. And yet, we once again are presented with getting LRFA’d.
LRFA is the Alinsky-style straw man–demonize your opponent as something you want people to believe your opponent to be (a “tax” for example), then perpetuate that mischaracterization no matter what. (In the current parlance, something pretty close to gaslighting fake news.)
This LRFA legacy “nonbinding resolution” has become an evergreen in the arsenal of the NAB’s gaslighting efforts to perpetuate exploitation of recording artists for one reason and one reason only–because they can. The NAB gets a bunch of Members to sign up, don’t tell them the truth about what they signed, and hope that nobody tells them otherwise until it’s too late. But when Blake teaches the I Respect Music story on college campuses across America, it requires little explanation.
What the NAB’s vast army of lobbyists will do with the LRFA after they largely dupe Members into signing on to it (and dupe Members staffs into allowing their bosses to sign on without doing the real staff work to know how they are being duped) is to perpetuate the greatest inequity in the Copyright Act by convincing members that any performance right legislation is doomed to fail so why support it?
How do we know this? Because the NAB did the same thing in the last session. When artists met with Members in their offices to discuss what happened, it turned out that many Members had no idea what the real story was behind LRFA.
It’s important that your Member of Congress understand what the NAB is up to with this gaslighting campaign. The truth behind this great inequity needs to be told along with the hard economic facts–because of faux legislation like LRFA, America is leaving hundreds of millions in real revenue from foreign countries that could easily be repatriated by American artists.
Not to mention supporting future American artists.
We cannot let another session of Congress pass by without fixing this great inequity. Don’t let your Member of Congress be fooled again–because friends don’t let friends get LRFA’d.
Call your representatives and sign the I Respect Music petition by clicking here.