How Accurate are Music Subscription Service Subscriber Numbers?

All of you who subscribe to the New York Times, fly Quantas, use any of a number of mobile carriers or who are in the 6th month of your third Spotify 30 day (or 90) free trial may be interested in this post.

According to Billboard in a story titled “Spotify Officially Hits 50 Million Paid Subscribers“, the “official” announcement came from a tweet:

I found this intriguing–how did we go from “Spotify Officially Hits 50 Million Paid Subscribers” in the headline to a tweet that doesn’t really say the same thing?  Maybe like this?

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First, what makes a tweet “official”?  Much less “official” totals of “paid subscribers”?  Finding out may be like asking what makes ketchup “fancy”.

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Newspaper subscriptions have long been verified by a company specializing in verifying circulation.  Television has the Nielsen ratings, music has Soundscan, and so on.  None of these systems are perfect, but they make it harder to outright misrepresent success in a business where frequently the only people who really know how well they are doing are the people who would like you to believe they are doing well.  This is nothing new, it’s as old as moral hazard.

The quest for truth leads one to independent verification services.

spotify-clown-car
A clown car for 6 million streams

Reuters reported the same story with a more subdued headline: “Spotify Says It Reached 50 Million Subscribers“.  A little more factual, a little less Kool Aid.

This is important because I have yet to find anyplace that Spotify actually says the 50 million subscribers were “paid”.  The press leaped to that conclusion, but Spotify did not say that.

And neither does Apple, a company which is already public and has to be careful what they say about the money they are making or not making.  Yet somehow nobody transforms Eddie Cue’s statement that Apple has “well past 20 million subscribers” into an “official” statement implying a verified number of “paid” subs.

Actually–it may well be that there is a significant revenue difference between “paid subscribers” and “subscribers”.  As the Music Industry Blog wrote last year:

[T]here is a more important story here: Spotify’s accelerated growth in Q2 2016 was driven by widespread use of its $0.99 for 3 months promotional offer. Which itself comes on the back of similar offers having supercharged Spotify’s subscriber growth for the last 18 months or so. In short, 9.99 needs to stop being 9.99 in order to appeal to consumers.

As Spotify has been “dominant” in the music subscription business for a while now (and yes, I mean that in an antitrust sense of “dominant”), it seems that it’s high time for someone to independently audit the veracity of the number of their subscribers.

Or would the Securities and Exchange Commission like to rely on a tweet?

 

 

@katenash Shows that Permissionless Innovation is Just A Trumped Up “DMCA License”

Small business people dealing with big business people always have the same fear–what if they just stiff me.  You know going in that there are some big businesses that simply factor into their financials that the businesses will get away with stiffing a percentage of their contractors with claims of unsatisfactory work daring the small business to sue.  Claims that may be trumped up, so to speak.

Some–not all surely, but some–Silicon Valley companies have taken this “pay them when they sue” mentality to it’s logical conclusion under the guise of the faux “DMCA license” based on sheer bargaining power.  At least the real estate developer stiffing contractors on trumped up claims did actually hire the contractor with a promise to pay.

The Silicon Valley version of “pay them if they sue” is wrapped in the cant of Valley Boy catechism and the leap of faith to “the machines made me do it” or “disruption” resulting in the gospel of “permissionless innovation”.  That’s the trumped up theory that allows the “disruptor” to just take the contractor’s labor and materials without negotiating a contract or paying a dime and then saying “so sue me” and my $20 billion valuation.

UK artist Kate Nash recently called out Snapchat in a viral tweet for profiting themselves from a trumped up license

David Lowery called out Facebook for essentially doing the same thing starting the “#F*CKTHEZUCK” hashtag.

Remember–Snapchat and Facebook, two massive Silicon Valley darlings, have NO licenses and REFUSE to negotiate.  (Google does get licenses for some of its platforms like YouTube but is also busily serving millions of NOIs on the Copyright Office to use songs without paying royalties and also gaslighting the UK music industry with yet another meaningless “voluntary” code of conduct for the billions of takedown notices Google receives for search that Google refuses to fix.)

Kate Nash has put her finger on the key factor in the greatest income transfer of all time–it’s not that the music is free because it is without value, it is free because it is stolen using a trumped up legal theory based on loophole seeking behavior in a legacy statutory construct.  Nobody ever intended for the “safe harbors” to be used to trump up a nonexistent “license held in place by unequal bargaining power.

As Beggars Group Chairman Martin Mills said in his keynote at Canadian Music Week:

[An] imbalance I want to talk about is the safe harbour provisions, and similar terms in other countries. They were introduced, with some foresight, by the legislators in the USA framing the DMCA, to provide a notice and take down procedure for unlicensed content. But the legislation has been distorted into a protective wall behind which cyberlockers and torrent sites, and companies such as YouTube and Grooveshark, operate.

The original intent was to protect reasonable people acting reasonably from falling foul of the law, to enable the digital economy to grow without “ gotcha “ law suits against ISP’s who had no idea that their networks were being used for infringement. They were not intended to provide fortress walls behind which companies could build billion dollar businesses on content that had not been cleared. They were never intended to become a de facto “ licence “.

Kate Nash said it best:  “But where’s my paycheck?”

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#IRespectMusic: It’s Time for the New Congress to get Serious About the Performance Right for Artists

irm-marsha

Friends don’t let friends get LRFA’d.

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.

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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?

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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?

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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.

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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.

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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.

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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.

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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.

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Not to mention supporting future American artists.

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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.

And vote.

irmaiv-1

 

Jacqueline Charlesworth, Former General Counsel of U.S. Copyright Office, Joins Covington & Burling Law Firm

Showing excellent judgement by the firm, Covington & Burling announced that Jacqueline Charlesworth is joining their New York office.  I’m glad to see Jacqueline join the firm and they are lucky to have her.  What’s not included in the press release is that she was one of the counsel of record along with the Gerard Fox firm representing Songwriters of North America, Michelle Lewis, Thomas Kelley and Pamela Sheyne against the United States Department of Justice for the DOJ’s absurd overreach on 100% licensing.

Here’s the press release:

Jacqueline C. Charlesworth has joined Covington’s Intellectual Property Rights and Media and Communications practices in the New York office. She most recently served as General Counsel and Associate Register of Copyrights of the U.S. Copyright Office.

While at the Copyright Office, Ms. Charlesworth had primary responsibility for interpretation of the U.S. Copyright Act. As General Counsel she oversaw a wide range of litigation, legislative, regulatory, and policy matters, including the Office’s participation in cases before the U.S. Supreme Court, rulemaking proceedings under the Digital Millennium Copyright Act and other provisions, legal review of Copyright Royalty Board decisions, administration of statutory cable, satellite, and music licenses, and copyright registration and termination issues. She also advised Congress on copyright-related legislation and policy concerns.

Prior to joining the Copyright Office, Ms. Charlesworth was in private practice, in litigation and transactional matters. She also previously served as General Counsel of the National Music Publishers’ Association and as General Counsel of The Harry Fox Agency, a music licensing organization.

“Jacqueline’s experience includes a rare combination of litigation, transactional and policy work in both public service and private practice,” said Simon J. Frankel, co-chair of the firm’s Intellectual Property Rights Practice Group. “At a time of significant technological developments and potential revisions to the Copyright Act, we believe Jacqueline’s deep expertise will enhance our ability to serve a wide range of clients dealing with copyright and related intellectual property issues.”

“I am excited to resume my private practice and was particularly drawn to Covington because of its outstanding legal talent and highly collaborative culture,” said Ms. Charlesworth. “I look forward to drawing on my government and private sector experience to assist a diversity of clients with their copyright needs.”

Ms. Charlesworth received a B.A. from Brown University and a J.D. from Yale Law School. She clerked for Judge Betty Fletcher of the U.S. Court of Appeals for the Ninth Circuit and Judge Miriam Goldman Cedarbaum of the U.S. District Court for the Southern District of New York.

Jan 30 Save the Date! T Bone Burnett in Conversation with Jonathan Taplin in Los Angeles on The Value of the Artist

T Bone Burnett
in conversation Jonathan Taplin on The Value of the Artist, and the Value of Art
Monday, January 30, 2017
8pm
Ann and Jerry Moss Theatre

New Roads School
Herb Alpert Educational Village
3131 Olympic Boulevard
Santa Monica, CA 90404

Reserve seating, click here for ticketing.

This will be an inspiring evening with two of the deep thinkers in the artist rights movement!

Mass NOI Update:  Christopher Sabec and Rightscorp Tackle the Songwriters’ Copyright Office Problem 

We’re going to assume that readers know the general background on the millions of “address unknown” NOIs filed with the Copyright Office under a loophole in the Copyright Act (Sec. 115(c)(1)).

The nutshell summary:  Starting April of last year,  Google, Amazon, Pandora and other on-demand digital services using compulsory licenses began filing very large numbers of “address unknown NOIs” for compulsory mechanical licenses with the Copyright Office.  These filings were implemented through a taxpayer funded customized electronic filing process that allows services to exploit songs for free–no royalty is payable.  The Copyright Office created this customized platform for these services about the time that the Copyright Office announced a reduced fee structure for this customized electronic filing process that increases the burden on songwriters.  (Even though Pandora has yet to launch its on-demand music service, Pandora appears to have served the Copyright Office with well over 1,000,000 address unknown NOIs.  Since it’s early days, we can probably expect that number to increase, perhaps dramatically.)

The Copyright Office then posts these “address unknown” filings one-by-one as part of the public record of the Copyright Office, apparently so that songwriters can find out if their songs are being used.

There are no reciprocal countermeasures provided by either the Library of Congress or the Copyright Office.  We’ve posted about this process before and Billboard reported on Music Reports, Inc.’s involvement in supporting the entire filing but has yet to report on the scope of the problem.

The two key differences between serving an “address unknown” NOI and serving a “regular” NOI is that the “address unknown” NOI is served on the Copyright Office instead of the copyright owner and the  digital music service never sends an accounting or a royalty payment.

At such time-if ever-that the song copyright owner identifies themselves in the Copyright Office, which the copyright owner is not obligated to do under US law or the Berne Convention, statutory royalties will be payable thereafter–not retroactively.  That mess is unlikely to ever get sorted.

I’d sum it up by saying that in my view anyone who participates in this mass NOI filing is manipulating a loophole in the law as a way of forcing copyright owners to let their songs be used for free.

Rightscorp has developed a proprietary database to assist songwriters with sorting out this mess and we interviewed Rightscorp CEO Christopher Sabec about the process for Music Tech Solutions.

Chris Castle:  Thanks for participating in our interview today on the “mass NOI” filing.  Why don’t you start by telling readers the 10,000 foot view of your resume and what Rightscorp does, especially in the landmark BMG v. Cox case, currently on appeal.

Christopher Sabec
: I am the co-founder and CEO of Rightscorp, Inc, which is a leading provider of data and analytic services to support artists, songwriters and owners of intellectual property. We assist rights holders by monitoring and monetizing their copyrights on peer-to-peer networks such as BitTorrent. We also provide data and support for DMCA litigation, most recently supporting BMG with gathering evidence, assisting with e-discovery and providing testimony in their groundbreaking litigation against Cox Communications. [BMG won a $25 million damages award against Cox that is currently on appeal.]  I am an attorney by training and in the past, I have served as CEO of the Jerry Garcia Estate LLC, discovered and managed the rock band Hanson, and represented Dave Matthews in the early years.

Castle: So you’re coming at this from the artist/songwriter/copyright owner side of the desk?

Sabec: Correct. We are dedicated to the vision that creative works should be protected economically on the Internet so that the next generation of great music, movies, and other content can be made and creators can prosper.

Castle:   You’ve had a chance to look at some of these mass NOI filings and that’s what we’re going to focus on today.  Let’s start by giving readers an idea of the scope of these filings.

How many songs have you identified so far that have been filed with “address unknown” NOIs?

Sabec:  As of January 18, we have identified more than 25.6 million address unknown NOIs that have been filed with the Copyright Office.

Castle:  That is a mind-numbing number.  How easy is it for any songwriter to search for themselves in these “address unknown” filings to see if the NOIs were even filed correctly since the Copyright Office does nothing?

Sabec: It would be a huge manual process. It would require downloading all the individual mass filings, sorting through them to look for particular copyrights, and creating reports that would makes sense of the volume of data. We don’t see this as an easily achieved manual process.

Castle:  So the Copyright Office has not set up a searchable database for these filings?

Sabec: No. The Copyright Office just publishes the filings as they are received, placing the burden of sorting the information on the songwriters and rights holders.

Castle:  That sounds like the songwriter is effectively not able to find themselves in the Copyright Office filings?

Sabec: It’s a true needle-in-a-haystack situation.

Castle:   When I looked through these filings, I found a number of songs that I recognized that were clearly identifiable and were registered for copyright long ago.  Did you find any songs like that when you sampled the NOI filings?

Sabec: Yes, we found songs by top artists and songwriters, and verified there are copyrights on-file with the Copyright Office for these works.  Examples would be Taylor Swift, Alan Jackson, The Eagles, Disney musicals, many other recognizable and–more importantly–findable song copyright owners.

Castle:  Which means that those copyrights should not be subject to “address unknown” NOI filings because their address is known.

From what I understand, Google is taking the position that if a song copyright owner is not identifiable in the public records of the Copyright Office Public Catalog, they treat it as address unknown.  I’ve also heard that Google is refusing to accept address changes directly from copyright owners for whom they already have a “regular” NOI relationship (or direct agreement) and are telling those copyright owners that they will only deal with them through the Copyright Office Public Search Catalog:

We now receive our data from the United States Copyright Office Public Catalog, as required by Section 115 of the US Copyright Act. If any of the information in the Notice is out of date, then please update your registration with the United States Library of Congress (http://copyright.gov). For more information on compulsory licenses, please visit: http://www.copyright.gov/circs/circ73.pdf.

The most immediate problem with this approach is that the Copyright Office Public Catalog clearly states that it only covers titles that were registered after 1978.  Pre-78 titles are on paper records at the Copyright Office.

Did you find any pre-78 songs in your sampling of the “address unknown” data?

Sabec: Yes, we found very well known songs from well known artists from the pre-1978 period. We also found songs from the pre-1978 period that have filed renewal registrations available in the Copyright Office Public Search Catalog.

Castle:  That’s odd because the Copyright Office puts users of their catalog search on notice that it only covers post-78 titles, as does the Library of Congress which sells this information out the back door for big fees.

Have you been able to afford the tens of thousands of dollars to purchase the Library of Congress database of copyright registrations and recordation to compare what’s been registered to what’s in the “address unknown” filings?

Sabec: No, we have not purchased the database.

Castle:   So it doesn’t appear that Google, Amazon or Pandora are doing anything in the way of searching the card catalog or using the many other resources available to it to find, say, The Beatles, The Rolling Stones, Garth Brooks, or Alan Jackson, not to mention songs from the pre-78 period?

Sabec:  No, it does not. And it makes no sense. We are cross referencing the NOIs and using the available Public Search Catalog to determine that many of these “address unknown” NOIs should not have been filed in the first place. Many owners are known and easily identifiable in the Public Records.

Castle:   What can the average songwriter do to find out if they’ve been forced into getting involved in this entire debacle?

Sabec:  This is a daunting task. It takes a lot of time and energy, and is a very expensive undertaking. Rightscorp are investing the time, energy, and money to solve this debacle and we intend to offer songwriters and rights-holders appropriate solutions.

Castle:  It sounds like you’re collecting the data that would allow you to be in the same position as whoever is filing all these “address unknown” NOIs.

Given that you have that data, what’s the next move for Rightscorp on these mass NOIs?

Sabec:  We intend to create a technological solution to this technological problem. We have already created a searchable database and can assist rights holders in determining the extent of their exposure. If a rights-holder would like to know more about our solution, I can be contacted at info@rightscorp.com

Castle:  Thanks for participating today, Christopher, please keep us informed of your next moves.