ASCAP, BMI And SESAC Continue To Screw Over Most Songwriters: 'Write A Hit Song If You Want Money'

from the well-that's-just-great dept

We keep hearing from folks how the collections societies in the US for songwriters and composers, ASCAP, BMI and SESAC, are supposedly the "good guys" in that they actually give money to the actual musicians, and they aren't like the RIAA at all. But the evidence continues to be lacking on that front. In fact, it increasingly looks like they're doing a lot more harm to most musicians. Earlier this year, we noted that their aggressiveness in getting just about any small venue to pay up fees was killing off open mic nights and other sorts of venues that allowed musicians to play live. Mike points us to the news that many venues are simply giving up on live music. The problem? Well, ASCAP, BMI and SESAC are all demanding huge fees. Even the restaurants that don't bring in cover bands are being told they need to pay up, just in case a musician happens to do a cover in the middle of a wholly original set. The licensing organizations don't seem to care, they just want you to pay, just in case. When asked how they know that covered music is being played, they admit they don't:

"Basically, we don't know," said Dave Ascher, the SESAC Music Licensing Consultant who sent the letters. "To make a long story short, there's no way, logistically, for us to know whether on a day-to-day basis they're playing SESAC music."

But, just in case, you need to pay up. Of course, rather than doing that, the venues are just giving up on live music, providing fewer places for musicians to perform, hone their craft, and build up a following (and a business model).

As for the claim that these organizations help bring in money for those musicians, well, that's not seen either. We've already seen how they only give money to big name artists in most cases, because that's all they're able to track. In fact, the article talks to one musician who's upset about all the venues closing, but is still registering his songs with ASCAP. When asked if he's received any royalty check at all, the answer was no. So, how do the collections organizations respond? They tell them to become more famous:

"I'm sorry to hear that, but what I would like to tell him is that he needs to write a hit song," BMI's Bailey said.

How nice. They funnel all the money to big name artists, force venues to close so new artists can't become famous, and then when asked about giving money to those up-and-coming artists, they flippantly tell them to become more famous.

At some point, musicians and songwriters need to learn that these organizations are not doing things in their best interests at all. They're simply bureaucracies to funnel money to big names, while limiting the competition.

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Sorry ASCAP, A Ringtone Is Not A Public Performance

from the nice-try-though dept

ASCAP and BMI have been pushing all sorts of ridiculous claims over the past few months, trying to squeeze extra money out of pretty much everything, rather than actually doing right by those they represent and helping them adapt new business models based on giving people a reason to buy. Beyond claiming that Congress should make sure their royalties never decrease, they've also been saying they deserve money for things like YouTube embeds (even though YouTube already pays them for that same traffic) and the 30 second previews on iTunes and other music stores. However, the most ridiculous of all was trying to claim that ringtones are a public performance, and thus mobile phone providers need to pay ASCAP/BMI. The thing is, ASCAP and BMI already get paid for ringtone purchases -- but this was an attempt to get a second payment on top of that for the fact that people might hear the ringtones.

Thankfully (as a whole bunch of you have sent in), a judge wasted little time totally rejecting that reasoning. The court pointed out that the Copyright Act is pretty clear that there's no royalty needed for any sort of "performance" that isn't done for commercial advantage and "customers do not play ringtones with any expectation of profit." It's a pretty complete rejection of an obvious stretch by ASCAP.

We might hope that ASCAP will take this and begin to recognize that the best way to serve songwriters is helping them embrace new business models, but we expect that instead they'll keep looking to squeeze more money and double dip from other providers... while continuing to pay industry insiders to smear those who want to protect consumer rights.

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Music Publishers, Songwriters To Congress: Our Royalties Should Be Guaranteed, No Matter What The Market Says

from the songs-from-luddites dept

In digging deeper into the request from music publishers and songwriters' representatives after they started demanding performance royalties for the 30-second previews in iTunes, Greg Sandoval was able to get a copy of the letter that was sent to the Senate Judiciary Committee concerning copyright laws from the National Music Publishers Association, ASCAP, BMI and the Songwriters Guild. Reading the quotes is stunning, in that you could basically paraphrase them as saying "we are luddites -- do not let technology change the way the world works." Here's one quote:

"Technology should not be used to strip rights from songwriters, composers and music publishers. The choice of certain audiovisual delivery systems or methods over others should not result in a diminution of creators' rights or royalties."

Read that one carefully. They are saying that as technology changes, and as the market changes, their royalties should never be allowed to drop. Notice that they're not taking responsibility for adapting to a changing market. They're not saying that they need to adjust and put in place smarter business models. No, they're saying that Congress somehow needs to guarantee that no matter what happens in the market, their royalties remain the same.

What's really revealing is that this quote highlights the fact that these representatives view their royalties as "rights" to be protected -- not revenue to be earned.

No wonder they're lashing out and doing all sorts of ridiculous stuff like trying to get extra royalties on embedded videos, ringtones and 30 second previews. These are the same groups that have publicly decided they need to try to start a PR campaign against people who are trying to protect user rights and fair use. Since that time, we've noticed various people associated with ASCAP and the Songwriters Guild putting up various blogs attacking copyright skeptics in the most ridiculous ways. There's one, which isn't worth pointing out, where a lawyer who works with these groups regularly mocks Larry Lessig, William Patry, Michael Geist and myself -- using nicknames and making up fanciful stories about us. It's the sort of activity you'd expect from a 12-year-old.

It looks like these groups simply feel entitled to having the government force everyone to hand over money. Songwriters who belong to these organizations are being led down a dangerous path. It seems like there's room in the market for groups to represent songwriters' interests without being anti-fan or anti-technology. Quite clearly, ASCAP, BMI, NMPA and the SGA do not fall into that category. Instead, they're pretending that the world owes them money just for existing, and they're going to lash out anyone who tries to suggest otherwise.

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ASCAP, BMI Demanding Payment For 30 Second Previews At Web Stores

from the are-they-insane? dept

It's been really stunning to see just how little dignity groups like ASCAP and BMI have in trying to suck every last penny out of any kind of musical usage, without ever once considering the damage they're actually doing to songwriters. It's as if the folks who run these groups have no concept of the actual impact of their crazy demands. In just the last few months, we've seen them try to squeeze more money out of music video games -- apparently not comprehending how much those games help promote musicians and sell more product. Then there was the fancy trick, where they claimed that websites that embedded music videos from YouTube had to pay even though they were already getting paid by YouTube directly. They just wanted to get paid twice. And remember back in the summer when they claimed that the ringtone playing on your phone required a public performance license on top of the royalties already paid? They have no shame.

So, I guess it should come as no surprise at all to find out that their latest target is the 30 second previews that you hear on iTunes or Amazon.com. Yes, they're claiming that those 30 second previews should count as a public performance, and they want to get paid. Now. And they're asking Congress to make it happen -- because, as we've been learning recently, if you're inept at running an actual business, just go to the federal gov't and ask them to bail you out.

Rick Carnes, the head of the Songwriters Guild of America -- and who, we've been reliably informed, is a big fan of this site (that's sarcasm) after our previous articles debunking some of his more absurd claims -- explains the situation:

"Yesterday, I received a check for 2 cents. I'm not kidding. People think we're making a fortune off the Web, but it's a tiny amount. We need multiple revenue streams or this isn't going to work."

Talk about entitlement culture. Because Rick Carnes is unable to structure a smart business model, and thus makes pennies, everyone else needs to just cough up and pay? Yeah... that's reasonable. How about rather than trying to squeeze every penny out of everyone else (and then funnel it to the top artists instead of the smaller artists, anyway), you spend some time actually understanding basic business models -- such as ones where you convince someone that something's worth paying for, rather than just demanding Congress give you a cut of everything, in a way that harms the very musicians you claim to represent?

And, of course, as the article above notes, it's a flat-out lie that songwriters aren't getting paid for a lot of this stuff:

"These guys are afraid that the business model is shifting away from public performances to a model of private performances," [David] Potter [from the Digital Media Association (DiMA)] said. "This is a turf battle. They are saying, 'The songwriters aren't getting paid.' Baloney. Songwriters are getting paid. They're paid sync rights and (mechanical) rights. They aren't getting paid for the public performance in a download because there is no public performance in a download."

This is a pure money grab by people who don't want to come up with a business model demanding free cash from those who did come up with a better business model. They're blaming everyone else for their own unwillingness to adapt.

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Songwriters Guild Boss Claims Songwriters Can't Write Without Copyright

from the oh-really-now? dept

Last week, we wrote about a rather level-headed and quite interesting FT opinion piece written by The Pirate Party's Christian Engstrom, who now represents the Swedish Pirate Party in the European Parliament. While the entertainment industry has tried to paint the Pirate Party as a bunch of thieves who just want stuff for free, Engstrom's piece was quite sensible in explaining the real thinking behind the party: a focus on individual rights and worries about privacy invasion. Of course, the usual copyright supporters couldn't let such thinking go unchallenged...

Rick Carnes, the head of the Songwriters Guild of America wrote a letter to the Financial Times, responding to Engstrom, but the letter is odd, poorly supported, flat-out wrong in some spots and seems to have totally ignored what Engstrom was actually saying. Let's take a look:

Christian Engstrom of the Pirates party is absolutely correct in his assumption that Elvis's music does not belong to him. It belongs to great songwriters like Otis Blackwell, who wrote so many of Elvis's big hits such as "All shook up" and "Return to sender", and who fought for years to protect and strengthen US copyright law. Without copyright, Mr Blackwell would never have been able to create that "common cultural heritage" that Mr Engstrom wants to think of as his own.

First, this is a near total misreading of what Engstrom said. You have to assume that Carnes -- by no means an unintelligent person -- is simply deliberately misstating Engstrom's claims to further his own protectionist positions. Engstrom's point is just in noting how odd it is that we can't share a key part of our common cultural heritage. If you look at pretty much all of human history up until recently, part of what made a common cultural heritage possible was the ability to share it. Engstrom wasn't claiming that it was his own as Carnes states, but that as part of our common cultural heritage it makes sense that we'd like to share it with others. That's how culture works.

But, more importantly, Carnes is flat out wrong in claiming that Mr. Blackwell would never have been able to create those works without copyright. The incentives may have been different, but as we've been showing time and time again, there are tons of alternative business models for the creation of music that do not rely on copyright. And, given the massive demand for musical entertainment, it's pretty clear that such business models would certainly allow for compensation of songwriters as well. This assumption that copyright is the only way to pay songwriters is just silly and ignorant. It's just not true and has never been true. For someone who positions himself as a creative person, to insist that there's only one mechanism for songwriters to earn money is simply unbelievable.

He forgets that it isn't technology that "opens up new possibilities" -- it is the people who create the technology, the very people who earn their livings from patents and copyrights.

No, actually, Engstrom is quite clear that he does not forget the people. He's quite focused on actually supporting their individual rights. What he's against is the abuse of their rights via overly encroaching government monopoly. Furthermore, Carnes is again wrong in claiming that these people "earn their livings from patents and copyrights." They do not. They earn their living by putting in place (or working for a company that has put in place) a workable business model that involves providing goods and services that people or companies want and pay for. They may use patents and copyright as a part of that, but it is false and misleading to claim they earn their money from the patents and copyrights. The patents and copyrights, by themselves, pay nothing. In fact, the only way to get money from such intellectual endeavors is to offer people something they want in order to generate money in a business model. No one is trying to take that away. We just think that it need not have the gov't setting up unnecessary and limiting barriers.

Computer code, songs, artwork and drug patents don't appear "as if by magic". These people invest their lives, their dreams, their money, their time and all their hopes for the future in their work.

Indeed. No one has suggested otherwise. But part of that investing of lives, dreams, money and time is making sure they put in place a reasonable business model.

Creative people don't necessarily create only for money, but the money is necessary if only for them to continue to create.

Again, this is a total strawman. Carnes is pretending that Engstrom said that creators shouldn't earn money. He did not. He was pointing out that how they earn money may change, but no one is saying they shouldn't earn money. That Carnes seems to think that copyright is the only way to make money from content is either willful ignorance or blatant lying by someone whose job it is to push for greater protectionism for his constituents.

The real "restriction" on Mr Engstrom's access to an Elvis song is a paltry 99 cents for a download on iTunes. For that he wants us to abandon the copyright and patent laws that have been constructed over hundreds of years.

Again, this is a total misreading of Engstrom's comments. Engstrom's complaint isn't with the 99 cents one needs to pay to download a tune (though, I don't believe they use American money in Sweden...), but with the fact that he should have to pay to share and promote such a cultural artifact with others. It is only with intellectual property that such a restriction is placed on it, and it is a massive limitation on how people interact through culture these days.

Nor is the world "at a crossroads", as he claims. We will not face the apocalypse if people have to pay for music again. What is already causing serious cultural damage is the failure to enforce copyright law on the internet. I started making my own music at eight years old and by 13 I was making money at it. By 27 I was a professional songwriter and built a lifelong career as an "active" creator of musical culture; until, that is, I was put out of business by illegal downloading.

Again, Carnes seems to have misunderstood and is misrepresenting what Engstrom said (I don't believe he reflected him accurately once in the entire letter, which is impressive). No one is saying we will face the apocalypse if people "have" to pay for music again. He's simply noting that it's impossible to stop what technology has allowed. There is no such thing as people having to pay for music again. No one has to pay for anything. They make decisions in the marketplace -- and many are choosing not to pay for music anymore.

Furthermore, while Carnes may sincerely believe that "illegal downloading" put him out of business, the only thing that really put him out of business was his apparent inability to adapt to the changing marketplace. There is absolutely nothing stopping him from writing any more songs, other than an apparent lack of creativity in adjusting to a changing marketplace.

Mr Engstrom warns that "society has to make a choice" between total anonymity or totalitarian control on the internet. This is naive. The right choice is neither. Instead, we need to find some sweet spot in between. It is simple to conflate the ideas of privacy and theft. I could, for instance, claim that it is my right to wear a ski mask into a bank in order to keep my identity "private" from the prying eye of the bank security camera. The security guards might take exception to that, and for good reason.

Must we really explain the difference between copying and theft yet again? Engstrom is not talking about theft. He's talking about the ability to share and to communicate through content.

Similarly, while governments should limit intrusion into people's private lives they also have the responsibility to protect citizens from the theft of their property.

Indeed. They do. But this is not about theft, and it's not about property.

Laws are passed based on history, common sense and hopefully the common good. The internet is a new medium and the world is still trying to come to grips with the balance between privacy and security. I would ask Mr Engstrom to give that a chance to happen by toning down the rhetoric.

This is the most amusing of all, seeing as Engstrom's piece was rather devoid of inflammatory rhetoric, but was amazingly reasonable and level-headed. And speaking of rhetoric, it was Carnes who recently did an amazingly inflammatory interview where he used all sorts of bogus rhetoric. In it, he referred to the internet as "cyber somalia." He claimed the days of the stand alone songwriter were "over." He claimed that those who are sharing and promoting music online are "a mob of anonymous looters." He said he was hoping for "a 'bail-out' for all the songwriters who lost their jobs because their intellectual property was not protected by the US Government on the Internet." He calls Google "a real culture-killer." He called anyone who suggested that perhaps songwriters should explore new business models in a changed market "unbelievably arrogant and self-serving."

So... if we're talking about "toning down the rhetoric" perhaps Carnes should start with himself? At the very least, he might want to take a step back and try responding to what Engstrom and others are actually saying, rather than this straw bogeyman he seems to have set up in his mind.

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YouTube Ordered To Pay $1.6 Million To ASCAP

from the making-sausages dept

You may remember last year around this time, a district court set a totally arbitrary royalty fee that AOL, Yahoo and RealNetworks had to pay ASCAP for music streamed over their services. Reading through the details of the decision was immensely troubling, because it seemed to calculate the amounts on a somewhat meaningless formula based on taking a percentage of revenue from the companies that had absolutely nothing to do with music itself. Basically, it looked at almost any revenue that somehow sorta kinda touched on music (including search) and included that as part of the calculation process. Recently, ASCAP and Google went through a similar case in front of the same district court to determine just how much Google has to pay ASCAP for all the music streamed on YouTube. To be honest, I'm still not sure why it makes sense that Google has to pay anything for this, but that's one of the oddities of modern copyright law.

While the decision hasn't received much press attention, last week, the court ordered Google to pay $1.6 million to ASCAP (thanks to Eric Goldman for sending me the decision). The court seemed to take a "split the difference" approach, as ASCAP had asked for $12 million for all music streamed between 2005 and the end of 2008 (and another $7 million for 2009). YouTube, in response, had suggested $79,500 for 2005 through the end of 2008 and then $20,000 per quarter ongoing. The court rejected both proposals, and dinged both companies for weakly supporting their positions, or being somewhat misleading in their assertions. Google, for instance, tried to focus on the number of "music videos" as compared to the total number of videos on YouTube, though the court noted that the music videos seem to get a lot more views than many of those other videos, and it doesn't take into account the time spent viewing each video. ASCAP basically said: "just take that formula you used last year for AOL, Yahoo and Real and apply it to Google revenue."

The court, instead, went into a lengthy justification of trying to come up with a "fair" proposal, involving an awful lot of redacted information on YouTube's revenue (though... if you work through all the numbers you might be able to piece back together some revenue info) and eventually came up with $1.4 million for 2005 through 2008, and then $70,000 per month afterwards, which, when added to the additional fees this year, brought it up to $1.61 million to date (and counting). Of course, this is all supposed to be a temporary sort of thing until the two sides can work out an agreement on their own -- but given the vast differences in proposals (as the court noted, ASCAP was asking for a rate 150 times as large as YouTube's proposal), it doesn't seem like the two sides are close.

Either way, reading this ruling as well as last year's ruling shows what a total mess this process is. Basically, ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash. I know that ASCAP supporters will claim that the money is for songwriters, not the record labels, and it's important and blah blah blah. But the whole system of such collective licenses is a mess that it makes it close to impossible to do anything with music without getting yourself into a huge licensing hole. For more than a century now, Congress and the courts seem to look at every innovation and simply slap another license fee on it, and leave it to the courts to sort out any mess. All of these license fees add up to a massive tax on innovation that divert money from good business models and into the hands of collections societies, who siphon off a piece and often don't do a very good job distributing that cash. It's a massively inefficient model that's simply not needed.

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Dispensing With Some Myths About The Poor Poor Songwriters Decimated By Piracy

from the cry-me-a-river-of-song... dept

Entertainment industry lawyer (and big time copyright supporter) Ben Sheffner has a blog post pointing us to a rather amusing "interview" between two other copyright maximalists: Chris Castle, another music industry lawyer, and Rick Carnes, the head of the Songwriters Guild of America. Sheffner, amusingly, absolutely loves to nitpick any news article or blog post from those who believe that copyright law is too strict -- ridiculing minor misstatements or weaving in questionable legal theories to mock those who question the abuse of copyright. Yet, in writing about this interview between two people who share his worldview, apparently all skepticism or critical thinking goes right out the window. So, I guess we'll have to do it for him.

Now, I almost hesitated, because Castle has this friendly and inviting header to his blog:

Copyright 2006-2008, Christian L. Castle. All rights reserved. NOT subject to Creative Commons deed, license, or whatever it's called this week by the self-serving shilling for the self-absorbed on the short con.

Yes, you see that anyone who recognizes how to benefit from the sharing and promotion of content is apparently a "self-serving shill for the self-absorbed" as opposed to someone with some basic knowledge about the economics of information and how to craft successful business models around it. Clearly, Mr. Castle would prefer that no one ever bother to help promote his blog, and I'm tempted to oblige and ignore him -- but there are some important points in his post that need to be discussed. And, despite his slightly threatening header, I'm going to bet that fair use covers the following clips for the purpose of commentary. If he disagrees, we can discuss it and, who knows, maybe this post will disappear (save it now!). Oh, and by the way, Mr. Castle, it's 2009 now. You might want to update the date on your notice (which, as a lawyer, I'm sure you know -- you don't actually need to retain your copyright).

So, off we go. He starts off ever so nicely, tearing down all "Internet analysts, self-appointed futurists as well as self-annointed consumer advocates," claiming they all "misunderstand the role of songwriters and the negative effects that rampant piracy has had on them." Way to totally demonize and pigeonhole anyone who speaks up with alternative business models. But clearly, Castle (and Carnes later) are not interested in alternative business models. They really, really like the way the world used to be, and they're going to keep on wishing that it could go back to that. Then there's this:

People who just write songs don't sell t-shirts, don't play shows, don't have all the other income streams available to them that the EFFluviati point to as subsititute revenues for the cruel theft of labor value by companies like Kazaa, Morpheus, Limewire and the Pirate Bay.

I like the "EFFluviati" coinage. So eloquent. But, of course, he uses it to brush off what he hasn't bothered to understand (amusingly, right after insisting that it was everyone else who doesn't understand). This is, unfortunately, all too common among some (though, I would say definitely not all) of the copyright system defenders. Rather than understanding the basic economic principles at play, and using those to understand how to craft new business models, they simply look at one or two business models being used by some (t-shirts! concerts!) and insist that's really all there is. It amuses me that folks who apparently claim to represent the "creative" industries are so uncreative themselves. It also amuses me that they insist that no one outside of the music industry can comment on music business models, but they have no problem commenting on economics without any experience in that subject.

If they bothered to take the time to actually understand the economics at play, they would recognize that there are always scarcities to be leveraged, and business models can be crafted around those scarcities. With song writers, of course, there's the scarcity of their time and their skill -- all of which can be monetized with smart business models. It's not that difficult to figure out how this works, if you look at a few other industries that employ "writers" and realize that songwriting can be compensated in much the same way.

Carnes and Castle jointly bemoan the fact that there are fewer professional songwriters these days, and it's just not like the old days anymore. They also take time to trash "amateur" songwriters as being not worth a dime. It's as if someone let Andrew Keen into the conversation. Carnes and Castle conveniently ignore that more music than ever before is being made today -- and, yes, a large percentage of that music is terrible, but there's a ton of excellent music mixed in. The real trick is just getting better filters. But, of course, rather than do that, Castle puts up this bogus experiment:

Lock yourself in a room for an hour with a continuous playback loop of "Chocolate Rain". Then try it with Gershwin, Cole Porter, Lennon-McCartney, Diane Warren, Carol King. See which you like better.

Right, pick a dreadful amateur song, and then pick wonderful (but all very old) professional musicians. Of course, Castle doesn't bother to note the obvious. I could pick some current indie songwriters, and suggest you spend an hour listening to... say... Corey Smith or Jonathan Coulton or occasional Techdirt author Blaise Alleyne or Techdirt reader and free culture success story Adam Singer or (my personal favorite) Vic Ruggiero (start with this song) or some other top indie songwriters... and then try it with NSync or New Kids On The Block or any other teenie bopper sensation from the past twenty years -- all using "professional" songwriters -- and see which you like better. See? The "point" is no point at all.

Then Carnes jumps in to blame all the troubles of songwriters on their unwillingness to recognize the way technology had changed the market, ignoring all sorts of new opportunities to make money... oh wait, no. He blames everything on those darn pirates, and the fact that things just "aren't the way they used to be." Yeah, and we all used to walk uphill both ways 10 miles there and back to school in the snow:

There are multiple causes for this situation but most of the damage was wrought by two specific problems. The first being that the internet has turned into a Cyber-Somalia.

Professional songwriters used to live on advances from their music publisher. These advances were to be recouped from record sales only ("mechanicals" is the industry term for these revenues). Music piracy killed record sales so that made it impossible for music publishers to recoup the advances they paid songwriters so they stopped signing writers and let go of the ones they had when their contracts ran out.

In other words, the market changed, and Carnes is screaming about how the world needs to stop and go back to the way it was. I guess Carnes wishes that we went back to an age when you picked up the telephone and had to speak to an operator. Eventually, phone technology reached a point where we could all make those connections ourselves, putting lots of phone operators out of work -- thanks to those darn "calling pirates" (but also enabling a communications and technology revolution). Oh wait, what am I talking about... the phone put all those old telegraph operators out of work, so it was probably evil too.

By the way, if you want a shorthand way to know of any business or industry that's in serious trouble, it's when you ask them what their main purpose or mission is, and they talk about "protecting" anything, rather than adding value and expanding the market. So, Carnes, what's your number one job at SGA?

The mission statement of the SGA is two words "Protect Songwriters". That lack of specificity has forced me to show up in all kinds of places I never thought I would be! I was the lead witness in the latest Copyright Rate Board hearing. I have testified on behalf of songwriters in both the Senate and the House of Representatives on many issues concerning song writers rights, and I have spent the last ten years flying all over the country talking to people about the harm that is being done to American music by the widespread theft of songs on the internet by a mob of anonymous looters.

Maybe, rather than than focusing on "protecting" them, you might want to look at enabling them to adapt and capture some of the massive new opportunities out there.

Then there's this rather interesting interpretation of the Constitutional clause that resulted in copyright (you know, the one that's "to promote the progress"). According to Carnes, it's not about promoting the progress, but about raising the standard of living of songwriters:

"At least the [Congressional] Members I have talked to understand that the Constitution includes provisions for royalties for creators because without them the quality of life suffers."

Interesting. Makes you wonder why Congress didn't mandate full protection for telegraph and phone operators when technologies changed how those professions worked as well. After all, I'm sure -- temporarily -- those workers saw their quality of life decline. But, of course, we all know that eventually, their quality of life improved greatly, thanks to all of the wonderful things enabled by those new technologies.

Then Carnes goes on to rip on basically everyone else for causing problems for songwriters -- never once recognizing that maybe the problem is that the rest of the world has moved on, while he and his group haven't even tried. He blames the record labels (well, we agree on that one), every internet service out there (not kidding: "I am not a fan of any particular online company since I have had to spend the last three years of my life fighting them...."), and, of course, Google: "I am not a fan of Google because I believe their search algorithm reduces all art to the lowest common denominator. That's a real culture-killer if I ever saw one."

Yup, hand this man one of the greatest tools for promoting, discovering and distributing new music for songwriters, and he hates it. It's a "culture-killer." Actually, what he really means is that it's a killer of legacy structures, and apparently he'd rather not recognize what it enables, but will complain about what it's taken away.

Carnes goes on to complain (again) about certain business models that don't work for songwriters (concerts, t-shirts), again apparently not creative enough to recognize the scarcities offered by songwriters, and then comes my favorite part:

The most infuriating thing about being lectured to by anti-copyright groups about how songwriters need to get a new 'business plan' is who gave them the right to tell us how to make a living? Who are they to say we shouldn't fight to defend our rights? In truth, I find their suggestions are unbelievably arrogant and self-serving.

This is a common complaint that we hear, and I'd like to address it head on, because it's 100% strawman, and it needs to be debunked and discarded. No one is telling them they "need" to get a new business plan. All we're doing is (a) explaining the changes in the economic and technological landscape and (b) explaining how that opens up new possibilities and (c) noting that if they choose (and it's their choice) not to adjust, they're going to be in trouble. The problem is that part (c) is happening, and rather than recognizing part (a) and (b) they're lashing out at those of us who tried to show them that there is a better way. If it's self-serving to show songwriters and musicians better ways to make a living and warning them that fundamental changes in the marketplace mean the old way can't survive, then so be it. But it's not, as Carnes and others (including Sheffner) seem to believe, an attempt to harm musicians. Songwriters don't need to change at all, but then they'll go out of business. The problem is that Carnes wants to blame everyone else -- including those who tried to suggest a better way. No good deed goes unpunished, of course.

I'm sure buggy whip makers were upset, as well, when people suggested they needed a new business model, but how many of us are really that upset about the diminished buggy whip industry these days?

Both Castle and Carnes take separate turns to suggest that anyone who's never put out a song shouldn't be allowed to comment on the matter at all -- which I'd argue could (again) easily be flipped around. Those who have never bothered to understand basic economics shouldn't be allowed to comment on business models either. Musicians are free to talk about music -- and I'd never try talking about what makes a great song, since that's not my area of expertise -- but it's somewhat ridiculous to claim that only musicians understand the economics that impact music creation. Besides -- as we've seen from our own Blaise Alleyne and Adam Singer -- there are plenty of real musicians who do, in fact, recognize the power of these issues.

And, finally, Carnes' big finale is quoting a totally unnamed "real economist" who claimed that "nothing competes with free." I could come up with a pretty long list of of examples showing musicians and songwriters who have, in point of fact, successfully competed with free and earned millions doing so. But, why let reality seep into a discussion when some unnamed "real economist" says it's impossible. But, if Carnes and Castle apparently only take lessons from real economists, rather than reality (which, of course, goes against what they said earlier in their discussion), I'd be more than willing to point them to various real economists who have shown how to compete with free -- including our most recent Nobel Prize winner.

So, of course, now that we have both real world examples and "real economists" showing how it works, I'm sure Carnes and Castle will admit that perhaps they were a little closed-minded? Or... maybe not. Cognitive dissonance will probably seep in and we'll hear about how economists don't know anything, but only real songwriters can comment on it. Well, okay, let's go back and look at the songwriters who, rather than whining and complaining about times gone by, actually bothered to understand basic economics and do something about it. How about Corey Smith, who not only figured out how to "compete with free" but figured out how to use free to make $4.2 million last year.

And then there's Trent Reznor. He figured out how to make $1.6 million in a single week for music he gave away under that "self-serving shilling for the self-absorbed on the short con" of a Creative Commons license. And, you know what? It didn't even involve t-shirts or concerts. But, you know, according to Carnes, Castle and Sheffner, that's impossible. And, we're all thieves or something. Now, Reznor and Smith are both performers as well as songwriters, but both employ a number of folks to help them do what they do (managers, tech guys, other musicians, etc.). If you're bringing in that much money "competing with free" I'd imagine spending some of it on songwriting help (for those who need it, of course) isn't that big a stretch, is it? Reality's a bitch, sometimes, ain't it?

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ASCAP Working To Shut Up Free Culture Supporters

from the we-are-the-enemy,-apparently dept

Well, gosh darn it. Apparently, folks who believe that freeing up your music can help you make more money are actually the enemy of musicians everywhere. At least that appears to be the opinion of ASCAP, the group that's supposed to represent songwriters' interests -- but often does the exact opposite. The latest is that ASCAP has put together a private luncheon for February 3rd... and on the agenda: "working together to counter the growing prevalence of the 'copy left/free culture' pontificators in the public discourse about creators rights."

Wow.

Is ASCAP really so confused that they think that the rise of such "pontificators" is harming musicians and songwriters? We're seeing story after story after story of musicians who find themselves much better off after embracing new business models based on the fundamental economics of music. For ASCAP to somehow think that these alternative models represent a force that needs to be "countered" just shows how incredibly out of touch ASCAP really is. It's a shame that a group that is supposed to represent the best interests of songwriters (unlike the RIAA who has always been about representing the best interests of the big record labels) is so confused.

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Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved'

from the compulsory-mess dept

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

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ASCAP's Bill Of Wrongs

from the stage-and-symptom-of-the-grieving-process dept

ASCAP has published a Bill of Rights for Songwriters and Composers, which, unfortunately, seems to be more like a bill of "wrongs."

Just as citizens of a nation must be educated about their rights to ensure that they are protected and upheld, so too must those who compose words and music know the rights that support their own acts of creation. Without these rights, which directly emanate from the U.S. Constitution, many who dream of focusing their talents and energies on music creation would be economically unable to do so - an outcome that would diminish artistic expression today and for future generations.

Which U.S. Constitution is ASCAP reading? The U.S. Constitution provision says, "the Congress shall have Power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." There is nothing in the U.S. Constitution to suggest that copyright law has anything to do with protecting artists' natural rights, copyright hardly exists for a limited amount of time anymore, and Thomas Jefferson and James Madison were quite skeptical of the concept.

And the claim that such laws are required to make a living as an artist is very debatable, and I'd beg to differ. There was art before copyright law existed, and many artists are making their living today despite copyright law (rather than because of it).

At this time, when so many forces are seeking to diminish copyright protections and devalue artistic expression, this Bill of Rights for Songwriters and Composers looks to clarify the entitlements that every music creator enjoys.

Who is seeking to devalue artistic expression? Price and value are not the same thing. Just because the economics of digital goods have pushed the price of music towards zero (the marginal cost) does not mean that music no longer has value. This sort of statement needs to be substantiated.

1. We have the right to be compensated for the use of our creative works, and share in the revenues that they generate.

Why? In what other industries do creators maintain control over their creations after they reach consumers? Lenovo has no right to be compensated for the use of my laptop or to share in the revenue I generate through developing software. This is not a given.

2. We have the right to license our works and control the ways in which they are used.

Again - why? How many other industries control the way their works are used? This is not a given.

3. We have the right to withhold permission for uses of our works on artistic, economic or philosophical grounds.

This is not the purpose of copyright law at all, especially since it’s supposed to be for a limited time. This, in fact, is a restriction on artistic expression. Though it may be troubling to have a work associated with something that you don't agree with, I believe that freedom of speech is more important for artistic expression than total control.

There are defamation and libel laws for serious abuses.

4. We have the right to protect our creative works to the fullest extent of the law from all forms of piracy, theft and unauthorized use, which deprive us of our right to earn a living based on our creativity.

Theft and copyright infringement are not the same thing. And the sharing and spreading of music through digital channels is natural and, more importantly, does not deprive artists of their right ability to earn a living.

Bad, out-dated, obsolete business models based on artificial scarcity deprive artists of their right ability to earn a living.

(I'm not sure if this is a "right" because they seem to be confusing royalties and salaries.)

5. We have the right to choose when and where our creative works may be used for free.

Why? Coca-cola doesn't have the right to determine whether its products can be given away for free as part of a promotion after a pizza store purchases them. This is not a given.

6. We have the right to develop, document and distribute our works through new media channels - while retaining the right to a share in all associated profits.

Wow, that started off great, but the ending sounds like Billy Bragg's whining in the New York Times. The phrase "all associated profits" seems quite overarching. This sounds like musicians claiming that MySpace and Bebo owe them money for their success, while denying that the reverse could ever be true, that a new media company would be entitled to share in "all associated profits" of an artist it enables to succeed.

Double standard much?

7. We have the right to choose the organizations we want to represent us and to join our voices together to protect our rights and negotiate for the value of our music.

Excellent! I actually agree with this whole-heartedly. I do not want ASCAP to represent me!

8. We have the right to earn compensation from all types of "performances," including direct, live renditions as well as indirect recordings, broadcasts, digital streams and more.

This sounds like Viacom's misunderstanding of the difference between content and communication. ASCAP is treating the Internet like other forms of broadcast, but the Internet isn't a broadcast medium. It's a communications medium. When it comes to communication, the idea of using copyright to restrict content gets weird in a hurry. Royalties are not the answer for the digital age.

9. We have the right to decline participation in business models that require us to relinquish all or part of our creative rights - or which do not respect our right to be compensated for our work.

Sure you do, but that doesn't mean you'll make any money. Economics aren't about what you want to happen, or what you think should happen. Economics are about what is happening. Business models that don't make sense given the economics won't succeed. Of course you have the right to choose whatever business model you like, but that doesn't mean it will be successful or that it should be protected by copyright law.

The end of that statement sounds like another case of confusing royalties and salaries.

10. We have the right to advocate for strong laws protecting our creative works, and demand that our government vigorously uphold and protect our rights.

Of course you do, but again, I don't think it's a great idea if you subscribe to this "bill of rights." Moreover, consumers also have the right to advocate for better laws that protect their interests and vigorously uphold and protect their rights, which our current laws fail to do.

Artists can advocate whatever they want, but it's a bad idea to advocate the opposite of what your fans want.

Conclusion

This supposed bill of rights is really just an assertion of the status quo by those who depend on copyright law to protect their obsolete business models. If people in the music business could only realize that they're in the business of providing an enjoyable experience surrounding music, rather than trying to control and monetize every possible use of art, they might open up to new business models that make sense rather than whine about the fact that their current business models don't work anymore.

This isn't a bill of rights. It's a stage and symptom of the grieving process.

Signing this and, worse yet, living by it, would be an economic and ethical mistake for any songwriter or composer.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

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Do Songwriters Deserve A Cut Of Yahoo Search Revenue?

from the highway-robbery dept

You may recall a couple weeks ago that a judge set new rates to be paid to ASCAP by AOL, Yahoo and RealNetworks. ASCAP represents the songwriters, and those three companies and ASCAP could not agree on licensing terms for music streamed online. While ASCAP ran around touting the (somewhat made up) $100 million owed, there was plenty more in the decision that deserved discussion. At last week's San Francisco Music Tech Summit, I got into an interesting discussion with a few folks who had read through the 153 page decision thoroughly, and noticed a variety of problems. You can read the whole decision (pdf) yourself, if you want, but there are a few key points that are extremely disturbing, and could spell a lot of trouble. Basically, there's a meaningless "formula" that's applied to a very large segment of these companies' revenue, taking a huge chunk of money that seems beyond reasonable.

The judge seems to consider what AOL and Yahoo do somewhat equivalent to the way TV stations use music, and refers back to the rate agreements set up with various TV networks, despite vast differences in the way these websites operate. It suggests a misunderstanding between the difference between broadcast and interactive content. But what's really troublesome, is when you look at the overall formula for how the royalties are set. It clearly overvalues the music, and undervalues just about every other part of these three companies' businesses. The formula is, basically, the total revenue made by any business unit (minus a few specific costs) multiplied by a bizarre fraction (called the music-adjustment fraction): total number of hours that music is streamed, divided by total number of hours used on the website. Then, you take the result of that and multiply it by the "rate fee" of 2.5%.

This formula is applied to revenue coming in from any business unit that is considered to have used music. This includes things like Yahoo's search engine. That's because Yahoo (smartly, from a consumer perspective) allowed users who searched on a musician or song to stream that song directly from the search results. But, in making that so user friendly, the company has now opened up its cash cow search revenue to this formula, despite the fact that it's incredibly difficult to think that music has anything to do with nearly all of the revenue Yahoo makes from this site. Similarly, RealNetworks has almost its entire consumer division revenue included in this formula, despite the fact that it makes a ton of revenue from its gaming business. Wondering why RealNetworks decided to spin off the gaming business a week after this decision was announced? Maybe because a rate court judge just chopped off a huge chunk of revenue from it and handed it over to songwriters who have nothing to do with these games.

As for the formula itself, it makes little sense. The "music-adjustment fraction" is a totally meaningless number. The number of hours music is streamed is hardly an indicator of how much of a site's revenue is actually music based. If I have music streaming in the background all day, but am still using the site for other purposes, it seems ridiculous to include all of that as music-based revenue. The denominator of the fraction is "total number of hours on the website" which is also a totally meaningless and unrelated number. Even worse, since the court notes that none of these sites actually track that information, the judge ruled that everyone should just use Comscore's numbers instead -- the same Comscore that most people admit is not particularly accurate. So, basically, you're dividing a meaningless number by an even more meaningless number and multiplying it by the total revenue of units who often have very little to do with music, and then taking 2.5% of that. If anything, this ruling should make any site think twice before including any streaming audio from any ASCAP-affiliated songwriters.

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District Court Tells Yahoo, AOL To Pay Millions To Songwriters

from the watch-for-the-appeal dept

In the latest of many arguments about the various rights and payments companies need to pay for streaming music online, a district court has ruled that AOL, Yahoo and RealNetworks most likely owe millions to ASCAP for songs that they streamed to users between 2002 and today (and continuing on to 2009). This has nothing to do with the record labels -- ASCAP represents the songwriters -- but is yet another extraneous "license" where the terms are hardly clear, but basically serve to make it more difficult for anyone to play music. It was never in question that these sites would need to pay some kind of royalty -- the question was how much. The odd part of this ruling, though, is that the rate set by the judge is likely to be higher than the rate that traditional terrestrial radio pays. If there ever were a formula for making companies less interested in streaming music online -- this might be it. Of course, it's quite likely that this ruling will be appealed, so it's far from over.

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Royalty Agreements Holding Up Necessary Change In The Music Industry

from the need-a-clean-break dept

Eliot Van Buskirk over at Wired's Listening Post has an interesting article about the latest music royalty battle: focused on royalties for songwriters and music publishers. He likens it to the TV writer's strike issue, and sides with the songwriters, noting that the recording industry needs to encourage songwriters to write good songs, and stiffing them won't help. However, I disagree that the best way to do this is to agree to what the songwriters are asking for -- which is a larger defined cut of any use of their songs. Just as the TV writers are wrong in pushing for an extra cut of internet revenue, the same is true in this situation. Yes, in both cases, it's totally understandable and reasonable to feel sympathy for the writers -- who are often squeezed out of money and treated unfairly by the big entertainment companies. I'm not denying that at all. However, it's the very structure of this compensation that's going to cause more harm than good in the long term. It will limit the options for the entertainment companies, and allow others, not tied to those legacy agreements, to run rings around them. It provides a crutch for the songwriters, allowing them to lean on that, rather than embrace important new business models. These types of agreements will only slow down the adoption of new models and will only make it less likely that people can earn a living from writing either TV shows or music.

Why? Well, with regards to music, the trend is clear that the music world itself is increasingly moving towards free music. That's just basic economics at work. Yet, by tacking on a defined royalty on each download or streamed song, it makes it much harder for anyone tied into that royalty system to actually embrace the opportunities that free music provides. And if you recognize that those opportunities are likely to be even larger than the existing market, then by agreeing to these royalty payments, the songwriters are actually limiting their own market potential. In the end, all it does is artificially inflate prices, leaving more efficient and innovative solutions to route around the existing songwriters, rather than rewarding them. Just like everyone else, songwriters will need to learn to change the way they're compensated. Trying to inflate the old, obsolete system won't help things. It will only make it that much more difficult for the entire industry to change.

One other aside on all of this. In the comments, more than a few times, we've had discussions where people have suggested that the models we've discussed wouldn't work for songwriters, specifically, claiming that the old system is fine, but any new system would never work -- ignoring the many ways it could work (using a straightforward pay-for-hire setup, for example). However, it's interesting to see that relying on the supposedly "successful" old model is starting to come under stress from everyone else in the industry. It highlights, once again, that when we talk about these models, it's silly to compare the "old way" and any "new way." It's more important to recognize that the old way just isn't sustainable. You need to compare the new models to what the old models are trending towards.

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