Tag: TikTok

Chronology: The Week in Review: TikTok has a Napster Problem; @Helienne on Spotify’s new free goods; @MarshaBlackburn’s tour de force

When Universal withdrew from TikTok, the social media company was suddenly thrown back to its pirate-site roots, at least for the Universal catalog of all sound recordings and many, many songs. The eponymous TikTok is now on the clock to take down or mute Universal’s entire catalog. So tick tock baby.

Universal head Lucian Grainge made the case for the company’s approach to terminating its TikTok license because his negotiators were unable to reach a meeting of the minds with the other side. Pretty simple, really. This is not a big deal, it happens every day. Because in a free market capitalist system, “fair” is where we end up. Which means you have to end up somewhere, including nowhere.

Lucian made that case in an open letter to artists and songwriters as a community. There are some great nuggets in that letter, but I like this section to explain the casus belli:

The terms of our relationship with TikTok are set by contract, which expires January 31, 2024. In our contract renewal discussions, we have been pressing them on three critical issues—appropriate compensation for our artists and songwriters, protecting human artists from the harmful effects of AI, and online safety for TikTok’s users.

We have been working to address these and related issues with our other platform partners.  For example, our Artist-Centric initiative is designed to update streaming’s remuneration model and better reward artists for the value they deliver to platforms.  In the months since its inception, we’re proud that this initiative has been received so positively and taken up by a range of partners, including the largest music platform in the world.  We’ve also moved aggressively to embrace the promise of AI while fighting to ensure artists’ rights and interests are protected now and far into the future.  In addition, we’ve engaged a number of our platform partners to try to drive positive change for their users and by extension, our artists, by addressing online safety issues, and we are recognized as the industry leader in focusing on music’s broader impact on health and wellness.

With respect to the issue of artist and songwriter compensation, TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay.  Today, as an indication of how little TikTok compensates artists and songwriters, despite its massive and growing user base, rapidly rising advertising revenue and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue.

Let’s not forget that TikTok does not have some statutory or other legal or theoretical right to use Universal’s recordings or songs.  Their rights come from one place–their contract with Universal. No Universal contract, no Universal content. (Sorry copyright infringer apologists in the professoriate.).

Contracts have a duration, and when contracts end you negotiate an extension. If you can’t get an extension or a new agreement, remember the clock is ticking and time is running out–fair is where we end up, so one place to end up is nowhere. Stuff happens. Contracts frequently address what happens when the contract is over and the relationship must be unwound, sometimes called post-termination conditions which are just as much of a promise as anything else in the contract even if the duration (or the “term”) of the agreement is over.

The answer to what happened with Universal is simple: TikTok couldn’t close. Mr. TikTok may be a lot of things, but he’s no Blake.

Now that TikTok allowed their Universal deal to spin out of control, the termination clause(s) of their agreement no doubt become effective. If I had to guess, I would guess that TikTok must immediately stop any new uses of Universal content. Then it would not surprise me if TikTok has about 30 days to take it all down so they are on the clock…so to speak. I would also guess (or hope) that Universal has some post term conditions that will protect them from having to take TikTok’s rube deal on DMCA takedowns. The difference between a post term DMCA take down and a bald take down with no pre-existing contract should be that TikTok has a unilateral obligation to police their network for at least a period of time after termination. Failing to do so could leave them open to breach of contract for failing to satisfy post-termination conditions. Or something like that.

Let’s not forget that TikTok started out as a pirate social media site that got retroactive and prospective licenses in settlement of potential copyright infringement lawsuits. If licenses terminate, TikTok is essentially in the same position as it was before the license–at least as to the content that is covered by the terminating license. 

But of course TikTok won’t be in exactly the same position as the status quo ante, because the company is dependent on passing itself off as this inevitable legitimate company, i.e., a licensed platform. That was not the case when TikTok began licensing to avoid mammoth copyright infringement lawsuits. And therein lies the rub. 

TikTok may have a Napster problem. Once you let unlicensed material into a platform, it’s deuced hard to get it out, even if you have license. And as Judge Patel said in granting an injunction against Napster, “I’m sure that anyone as clever as the people who wrote the software in the case are clever enough, as there are plenty or those minds in Silicon Valley to do it, [to] come up with a program that will help to identify infringing items as well.”  

Thank God for the smart people.

So what happens now? Looking to recent history, Spotify was in a similar pre-IPO position when David Lowery and Melissa Ferrick sued the company for massive use of unlicensed songs. This led Spotify to go to Congress to rewrite the copyright laws in order to stop future litigation (called the “Music Modernization Act” with its probably unconstitutional retroactive reach back safe harbor). They were able to do that because of compliant lobbyists and the hunger among the elites for cash money from a Spotify IPO (or more precisely DPO). Plus Congress got to hang out with famous people and generally felt good about it because dissenting views were strangely absent in the mainstream media.

What do you think will happen if TikTok also goes to Congress to change the law to protect their cash cow and undermine artists and songwriters like Spotify did? They may send lobbyists to Capitol Hill with some walking around money, but if you haven’t picked up on it yet, at least half of the Congress despises TikTok. How does TikTok thread that needle?

TikTok’s response reads like it was written by the editorial staff at the People’s Daily:

“It is sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters.

Despite Universal’s false narrative and rhetoric, the fact is they have chosen to walk away from the powerful support of a platform with well over a billion users that serves as a free promotional and discovery vehicle for their talent.

TikTok has been able to reach ‘artist-first’ agreements with every other label and publisher. Clearly, Universal’s self-serving actions are not in the best interests of artists, songwriters and fans.”

Note to Mr. TikTok and his PR bagmen, that “exposure” angle is not a winner. Not to mention that artists drive their fans to TikTok in huge numbers which is the real “free” promotion as in “uncompensated”. Also, newsflash, there is no free lunch so don’t embarrass yourself by starting the old “free promotion” okie doke. Mr. Tok needs to go home, think about his priorities and try again.

Also, don’t forget that TikTok has to do “blind check” licenses because it lacks the functionality to track and pay royalties, even the broken market centric royalty deal. Blind check licenses are the rough equivalent of an agreement not to sue TikTok rather than an industry standard royalty deal. Over time, it’s likely that the amount of the blind check must increase to compensate for the blindness.

The Universal episode is revealing, however. If TikTok thought they were going to get away with jamming artists because “exposure”, they need to go home and reconsider their life. The situation is completely out of control for one reason–TikTok underestimated Universal’s resolve. And they broke one of the cardinal rules of Business Affairs.

Never let it get to the point that you can’t just write a check.

@helienne’s Panel with Streamers and Label reps about artist centric, streaming fraud and Spotify’s new free goods

I interview Helienne Lindvall about a panel she was on in Europe with reps from Spotify, Deezer and WMG about artist centric implementation, streaming fraud and the new free goods, aka, Track Monetization Eligibility. 

How do you say “Bless your heart” in Mandarin?

If you didn’t watch the Big Tech hearing at the U.S. Senate, you should at least watch Senator Marsha Blackburn’s grilling of Mr. TikTok. Must-see TV.

@CrispinHunt on the TikTok showdown

Just in Time for Senate Hearing, TikTok’s Malthusian Algebra Meets Universal’s Artist Centric Mandate

MTP readers know that I’ve got no time for the scumbags at TikTok and never have. But it’s getting ridiculous and now the company has collided with Universal.

It was only a matter of time.  The artist-centric approach to royalty payments endorsed by Lucian Grainge requires more of the platforms than just rearranging the deck chairs on the Titanic.  It requires that the services say goodbye to a flat royalty pool calculated using impenetrable algorithms, formulas, and Malthusian algebra.  

It requires that the services open their checkbooks.  For you pie fans, it requires that the services grow the pie.  And not just for sound recordings, but songwriters, too.

If the collision between TikTok and Universal is any indication, getting past the threshold question is going to be a battle royale.

Here’s the other insulting part:  TikTok apparently wants to be able to create AI works (from whatever source derived) and repopulate their offering with these allegedly royalty free works.  Of course, AI tracks should not be royalty free at all since the AI will inevitably be ripped off from somebody.  

As I understand it, TikTok wants to salt the royalty pool with AI to increase the denominator and lower the per-stream royalty.  This, of course is insane. Whatever you think about AI, before you even get there it should be obvious that only royalty bearing tracks should be in the calculation for paying royalties.  Otherwise, the payments will be understated.  Which is of course what TikTok wants. Which was inevitable as soon as monkeys took photos.

But perhaps even more troubling is TikTok’s apparent refusal to be transparent about what it is doing to stop recruiting for illegal cartel activities, child trafficking and promoting hate speech—especially real porn with fake artists. They could do it but they won’t fix what Lucian calls “the tidal wave of hate speech, bigotry, bullying and harassment on the platform.”

Whatever bright and shiny object TikTok and their legion of lobbyists waive in front of artists, who is willing to have their music used as a honeypot for harmful acts?

It’s time for big changes at TikTok and if they are unwilling to modernize and reimagine their business, those who want to shut them down will be unleashed.  

And may find some new allies.

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?