Tuesday, March 22, 2016

Shaping up the US Copyright Office for the 21st Century

By Emmanuel Legrand

How should the Copyright Office be structured and what functions should it perform in the 21st Century? This are not simply rhetorical questions. The subject matters because of the central role that the United States Copyright Office (USCO) plays in shaping the country's copyright policies, administering existing copyright laws, and being the country's registry of copyrighted works.

Copyright itself has grown in importance over the years and the role of CO has changed to a point that the CO is a centre for creative industries,” said Troy Dow, VP/Counsel at the The Walt Disney Company during a seminar titled “A Copyright Office for the 21st Century” organised in Washington, DC on March 18 by the Duke Law School Center for Innovation Policy and the New York University Law School’s Engelberg Center on Innovation Law & Policy.

The CO has been critically important in the development of copyright law and has been heavily involved in shaping copyright law,” Dow added. “We have to make sure that its structure and status reflects its mission.”

Defining missions

But what should be the missions of the Office? The discussion is particularly timely at the moment because several key issues need to be addressed regarding the future of the USCO in the coming months and years. The USCO was established in 1897 by Congress as a separate department of the Library of Congress, and its initial task was to dealing with copyright registration, which was previously the responsibility of district courts. This function is still performed today by the USCO. It processes over 700,000 registrations a year of books, music, movies, software, photographs, and other works of authorship.

The USCO also works as an expert to Congress on copyright issues and works with a wide range of government agencies, from the Department of Justice to the US Trade Representative. The USCO has itself initiated the debate, first by publishing in 2015 a strategic plan covering the period 2016-2020, titled “Positioningthe United States Copyright Office for the Future in which current Register of Copyrights Maria Pallante expressed her “vision” for the USCO: a “lean, nimble, results-driven, and future-focused” organisation.

In addition, acting at the request of the House Committee on Appropriations, the USCO has issued on February 29 a Notice of Inquiry seeking public comments on its funding strategies and implementation timeline for its Provisional Information TechnologyModernization Plan and Cost Analysis. (The deadline for submitting comments on the plan is March 31, 2016.)

IT modernisation
This is particularly sensitive as the USCO's IT system is dependent on that of the Library of Congress and is in need a major overhaul to perform its tasks in a digital environment (anyone who has tried to register a work or researched past registrations can testify to that). If adopted (and financed by Congress), the $165m five-year plan would see the Office adopt a drastic new cloud-based system.
USCO's Maria Pallante

It is clear that making incremental improvements will not be enough,” wrote Pallante in the report’s executive summary. “We must shift the approach entirely, and the IT Plan therefore provides a flexible platform that others can build upon for the effortless protection and licensing of copyrighted works.”

According to the participants to the Duke/NYU conference, the IT overhaul is a necessity, but the ways to get there are multiple. This investment would part of a larger picture which incorporates the two main functions that the USCO serves: The registration and recordation role; and the regulatory and adjudicatory functions.

Jim Griffin, Managing Director of digital consultancy company OneHouse, is of the opinion that the sheer mass of data that flows through the USCO's system requires drastic approaches. “If the purpose of copyright is to incentivise creativity then we're doing a fine job. Generally there's lots of creativity and content,” said Griffin. “But how do you keep up with all that stuff. The answer what the CO needs to be doing is MORE because there is more stuff, and the pot grows every single year. And the answer to dealing with more is to do less, and re-focus our priorities.”

Managing data
Griffin believes that the CO alone cannot cope with the volume of data and advocates for a public-private partnership. “We cannot leave the CO confront this huge amount of content with the same resources,” said Griffin, who added that the answer would be to create bridges between public and private interests in order to create a market for registration.

For example, photographers could expedite registration of the pictures they take through existing platforms like Instagram or Flicker. Matt Schruers, VP for Law and Policy at the Computer & Communications Industry Association, said that it was not difficult to add a specific software to existing platforms to deal with a function of registration into the software.

Jeff Sedlik, President and CEO of the PLUS Coalition, which regroups various photographers' representative bodies, said that a news photographer could add up to 1,000 pictures a day and usually has neither the time nor the resources to register all these pictures. “When platforms can allow to identify the works, everybody benefits,” said Sedlik. “But we need to keep the registration control under the guidance of the new CO.”

Christopher Springman, from the NYU School of Law, suggested that the USCO should continue to play a role in registration, but as the “regulator of the registration system not the operator. The CO would set the rules for the system, how data should be stored, and it should be handled by private companies a little bit like the domain name system works.”

An independent agency?

The debate on the future of the USCO also turned on what should the mission of the new USCO be and where should the Office fit within the US government structure. Some advocated for the USCO to become an independent government agency, free from its affiliation with the Library of Congress, with a Register of Copyright, or a CEO, named by the President of the United States, serving at the request of both the White House and Congress. In recent communications, the current Register of Copyright, Maria Pallante, also seemed to favour such approach.

Pam Samuelson, Professor of Law at the University of California at Berkeley, said she favoured a CO as an independent agency, but she added a few caveats. To fully function and reflect the complexity of the situations it has to deal with, as well as taking into consideration different perspectives, the CO should add to its staff “a well respected” chief economist; a “very talented” chief technology officer who would not deal with internal IT issues but rather participate in advising the CO on technology issues; a social scientist to do qualitative and quantitative researches; and an ombudsman “who would take a higher perspective.” “Copyright affects everybody and the CO would benefit from people who would bring new perspectives,” said Samuelson.

For Sandra Aistars, Clinical Professor of Law at the George Mason University School of Law in Arlington, Virginia, a 21st Century version of the Copyright Office “needs to include more the individual creators and also the public” and should also take adjudicatory functions to help creatives.

There were, however, different views when it came to regulatory functions. Disney's Dow would want the USCO to have more regulatory responsibilities but warned that “you have to have the resources to make sure you succeed in that space.” His views were echoed by Joseph Liu, Professor of Law at Boston College Law School, who also suggested that the regulatory fields covered by the USCO should be selective. “Copyright law is as complex as tax law,” he said. “There are obviously lot of big issues to walk through.”

Google's way

A dissonant voice came from William Patry, Senior Copyright Counsel at Google, who agreed that the USCO had “not been funded properly” to do what it was meant to do, but he drew the line with things that the Office currently does not do and could be tasked to do if it became a regulatory agency. “The Copyright Office has an institutional memory, and that is good," said Patry. “There are things that the CO does not do. It does not make fair use determination or damages in cases. These are all common law things. It does not make a lot of sense to give more responsibility [to the USCO] where it does not have institutional expertise. I'd say the same thing for a small claims tribunal.”

Patry added, “If you had a number of huge areas now handled by Congress or the courts [passed on to the USCO], you would still need to give guidance to the CO through the law. I don't see Congress delegating some fundamental issues without ensuring guidelines. I don't see much of an upside. I don't think Congress is actually that bad.”

[Patry also said, while Mary Rasenberger, Executive Director of The Authors Guild, was sitting next to him, that he saw no problem “in getting more money in authors' pockets.” As the case Google vs. Authors Guild on the digitisation of books is to be reviewed soon by the US Supreme Court, the irony of this statement was not lost on the audience...]

Rasenberger took the opposive of Patry's views by advocating for “an independent US CO that should not be within the LoC” and whose head should be a presidential appointee. She also would see the CO have “broader” regulatory powers. “In most countries, copyright law sets the principles, and then you create regulation along these lines,” she explained.

Rasenberger is also less keen to see Congress getting involved in copyright issues. “Congress can't keep pace with technological changes and when it does gets something like the DMCA [Digital Millennium Copyright Act], it is heavily negotiated and then when technology changes, [the law] can't keep up. The world so much more complex today. There are so many issues in which Congress has left gaps and the CO could help with those. Congress is the right place to discuss what the frame should be, then it should have to get the expert agency to implement the law. That is what other countries do.”

Friday, March 11, 2016

A Reservoir of talents

By Emmanuel Legrand

[An edited version of this story was published in Music Week.]

Golnar Khosrowshahi could have easily enjoyed a very successful career as an advertising executive. Instead, she chose to steer her family's business from pharmaceuticals to...music publishing. In the process, she has build one of the fastest growing independent music publishing boutique, Reservoir Media.

In less than a decade, Reservoir has become a force to be reckoned with the US music publishing business. It now has somewhere south of 100,000 copyrights and has grown through the acquisition of catalogues and signing new fresh talent as well as established songwriters.

This strategy has paid off as Reservoir writers were involved in no less than 11 projects nominated for a BRIT Award in 2016, including How Deep Is Your Love, by Calvin Harris + Disciples featuring (and co-written by) Ina Wroldsen; Major Lazer, whose hit single featured and was co-written with Reservoir-signed MØ, or Jess Glynne's Hold My Hand, and co-written by Norwegian singer/songwriter Ina Wroldsen, and Drake's Drake's 2015 album If You’re Reading This It’s Too Late which features three Reservoir cuts written by Scott Storch.

When I look back at the past year,” says the founder and President of Reservoir, “we spent the first half of year focusing on our catalogue and growing our catalogue, and the second half focused entirely on new signings and future deals. It is interesting how the year has divided and it reinforces the fact that you have to build both parts of this business in parallel. You cannot grow if do not excel in both aspects.”

From Teheran to Toronto
Entrepreneurship is part of the family ethos. Khosrowshahi's parents fled Iran in November 1978, just before the Shah left, and settled in Toronto where they build a retail business, later sold to Best Buy. “My father then bought a company called Drug Royalty Corp. that invested in [US Federal Drug Agency] FDA-approved markets, drugs and devices,” explains Khosrowshahi. The business centres on extracting value on IP in health care and in the pharmaceutical field. This company, now known as DRI Capital, manages in excess of $3bn in assets.

Reservoir's Khosrowshahi
Khosrowshahi says that she was intrigued by the nature of her father's business and that she started looking at similar businesses. “To our surprise we found that the music industry is very similar to that model,” she says. With her advertising background, Khosrowshahi had been involved with music issues and started doing her due diligence and looking for investment opportunities in publishing. “I had a long history with music, so for me it was a logical step,” she explains.

The company launched in 2007 with a small number of people and zero catalogue. “I started putting the team together and we started buying catalogues,” she says. “And we knew from the outset that in this business, to be relevant you have to be participating in the contemporary space, so we started signing songwriters.”

Recent additions to the catalogue included R&B label Philly Sound, the recordings and publishing of seminal Southern rock band MollyHatchet. New signings included Julian Nixon, Lucy Rose, Mike Campbell (who penned Say Something for A Great Big World, Esthero, rapper Joey Bada$$, among others. And at the start of the year, Reservoir secured a representation deal with Norwegian band a-ha, covering six of their albums.

Says Khosrowshahi, “2015 was our best year yet because it was the year when we started to reap the fruits of those investments. We probably never had a year with such strong presence on the charts, across the board in different genres, R&B, pop, dance, which is quite positive.”

Team spirit
The company is based in Toronto and NYC, its main office with 12 people, with an affiliate in the UK employing six people, and many back office functions in Vancouver. Khosrowshahi lives in Toronto where her family is based and commutes to New York. “We never had everything centralised,” she says. “And it has worked for us and it is efficient, thanks really to a good team.”

Central to Reservoir's expansion is a nucleus of top executives who have helped build the company as it is today: Rell Lafargue, COO, who joined in 2008 from TVT; Faith Newman, SVP, Creative & Business Development, who worked at Def Jam Recordings and at Columbia where she signed rapper Nas; Annette Barrett, who runs the UK operations; and Hussain "Spek" Yoosuf , SVP, Creative and A&R, who joined in January 2015.

Reservoir's Lafargue
Lafargue, whose TVT connections eventually led Reservoir to make its first major acquisition (TVT's publishing catalogue), was the architect in setting up the administration side of the business (royalties, copyright registration system) and helped building a network of sub-publishers around the world. “Golnar had seen what we did at TVT and asked me to join,” recalls Lafargue. “She had done a couple of deals and we had about 2,000 songs. TVT was a landmark acquisition that took us into the pop world and brought us some great songs performed by artists like Beyoncé, Chris Brown or Christina Aguilera. Usher's Yeah! Is still one of our top songs.”

The second major acquisition was Reverb in the UK in 2012 (see sidebar), which Lafargue credits for bringing scale and a wider scope of music genre into Reservoir's fold (as well as seasonned executive Annette Barrett, who still runs the UK operations). “It was a transformative point for us,” says Lafargue. “Overnight we passed 30,000 copyrights and it brought in an international layer.”

Khosrowshahi and Lafargue both state that the acquisitions are based on financials considerations as well as on strategic needs, in order to cover all music genres. Oftentimes, like for Philly, the deal includes publishing and recording rights, which Khosrowshahi describe as for syncs in order to own 100% of the songs licensed.

Major acquisitions
Another key acquisition for Reservoir was the 26,000-song catalogue of First State Media Group in 2014, described by Lafargue as “the biggest transaction we've done in the history of the company.” Today, Reservoir catalogues includes works from country heritage act John Denver, seminal jazz composer Billy Strayhorn, film score composer Hans Zimmer, electronic duo SOS, British composer and performer Nitin Sawhney, among others.

What sums up our approach is passionate about music and dispassionate about investments,” says Khosrowshahi. “We invest our own equity so that's the best test on how much diligence we do. We have seen transactions trading at multiples that we feel are not in line with what we would pay, but there are still deals to be done. This is a business where the economics become more attractive the biggest it is. If you have 1000 or 100,000 copyright, you need the same overhead, so we need scale.”

Reservoir's Newman
We needed scale. Once we had scale, we started investing in our own creative capacities,” adds Lafargue. “We try to keep a healthy balance between catalogue and new songwriters. We've closed six or seven deals in the past few months. We now have over 80,000 songs and our sync team have a wide range of music to pitch.” Lafargue claims “to know every one of our songs and we'll try to continue to keep it that way.”

Over the years, catalogues acquired by Reservoir include that of the late R&B songwriter/producer Allan Felder, which complemented the acquisition in 2012 of recordings from Philly Groove Records, a deal supervised by Newman. “I have been talking to Felder's widow for two years and she thought we could do a good job at protecting his legacy,” says Newman.

Creative opportunities
 Alongside Lafargue, Barrett and Spek, Newman is tasked with finding creative opportunities for Reservoir. “I have a soft spot for looking at historic catalogues. And I go back and forth between what is current and new and historic catalogues. I love signing stuff that was written when I was one year old,” says Newman, who also brought rapper Joey Bada$$ into the Reservoir fold as well as US writing/producing team WatchTheDuck. “I've known him since he was 17 and we waited until he was ready. I approach A&R from a very organic perspective. I look for talent that can grow. And I look at people who can appeal anywhere.”

In the field of A&R, the newly arrived Spek also takes a panoramic views, not least because of his background. As an artist, he was part of Canadian combo Dream Warriors and also worked with US3. He then moved to the UK, where he got signed to a publishing deal with Annette Barrett, and eventually relocated to Dubai to launch Fairwood Music and PopArabia, an entity that now represents the biggest publishing catalogues in the Middle-East. Two years ago, Spek met with Barrett in London who connected him with Lafargue. “Annette is my favourite person in the music business,” says Spek. “And when she started mentioning the Reservoir opportunity I was interested, of course.”

Reservoir's Spek
He adds, “Being a songwriter myself, this puts me on a different footing than others: I wrote songs, I did recordings, I toured, I produced albums, I did videos. But because I had a lot of success early in my life I approach things with humility. This gives me a better understanding of the needs of our songwriters. It is never about throwing opportunities at the wall and see what sticks. Our approach is more methodical and thoughtful.” Acts signed by Spek include Esthero, Mike Campbell, and Julian Nixon of Best Kept Secret.

Setting the right environment
Lafargue says that building the right environment for artists to thrive is crucial to attract most creative talent. “Whenever we focus on things that we like, we may not win on price, but the more and more we get into this the more we see that A&R is not dead and ears matter. Songwriters do not always look for the big cheque, they are looking for services and attention to creative issues.”

When asked about the future, Lafargue jokes: “Unfortunately, we have no exit plan and that is a refreshing place to be.” More seriously, his goal is to double the size of the company both in terms of works and in revenues. “And we want to have the infrastructure in place to absorb more and more works and songwriters. We want to be one of the biggest indies but we always want to focus on quality and not jam things through the pipeline. We believe we can try to keep the boutique feel and find ways to increase scale. In any case, we'll continue to focus on quality.”

As a privately-held company, Reservoir does not disclose its financial results, but Khosrowshahi is keen to say that the company is profitable. Looking back, she measures the progress made over less than a decade, from starting the company to becoming a company courted leading songwriters and catalogue owners. As a sign that Reservoir is now fully part of the music publishing establishment, Khosrowshahi was elected in 2015 to the board of directors of the National Music Publishers’ Association (NMPA), and she also sits on NMPA’s SONGS Foundation board of directors.

The NMPA, under the outstanding leadership of [President/CEO] David Israelite, did id a lot of things for the business that made us more relevant and a serious player as an industry,” says Khosrowshahi. “They gave us a front row seat in what happens in this business and advocate for songwriters. I am proud to be part of this impressive group of people.”

So what's in for 2016? “Our No.1 priority is continuing to build our creative services for all of our active, forward-looking songwriters,” says Khosrowshahi . “It is great to do these deals but the day we close a deal is the day we start working. Our writers need creative services behind them so that we make the best of all the opportunities to make sure that our songwriters become successful. We will continue to focus on catalogue growth. We run our forecasts with conservative scenarios so it is important to have catalogue. And we will be actively looking for deals. Our third strategic priority is technology-related investments. We spent time looking at different targets or ways to invest in technologies related to our business in order to collect with more efficiency, and also tracking and monitoring. We are very busy and dedicated to growing the company. We want to be a top independent music group.”

She adds, “We've enjoyed ourselves the whole time. We're still learning but I do do think that coinciding with our ten years [in 2017], there will be greater stability in our business and we are very much looking forward to enjoy that stability.”

Reverb brings European talent to Reservoir

By Emmanuel Legrand

One of the turning points in Reservoir's growth strategy was the acquisition in August 2012 of London-based music company Reverb Music, founded by former Virgin Music and Warner/Chappell Music executive Annette Barrett. Not only did Reservoir acquire a significant catalogue, but it also created a European outpost for a company that so far had been North American-centric. And in the person of Barrett gained a seasoned executive with a wealth of knowledge of the industry and a wide network of contacts.

Reservoir/Reverb's Barrett
Reverb was build with a focus on creators, writers, producers,” says Barrett. “That has not changed. We complement North American operations from a creative side.” Barrett adds that the ethos of her company has always been to provide creative support to creators and strong administration service to its clients, and Reservoir helped strengthen both aspects of the company. “Reservoir and Reverb got to know each other very well before we did the sale and knew we were on the same page,” she explains.

Some acquisitions are done to get assets, but in this case we wanted a footprint in Europe and we wanted Annette there,” confirms Khosrowshahi. “She came with tens of thousands copyrights, and the kind of assets we did not have in our catalogue, such as pop contemporary songwriters, with inroads in different parts of Europe, especially Scandinavia. Annette's relationship with these writers is very important. It was definitely a long-term decision.”

Dealing with creatives is the aspect of the job Barrett prefers the most. “We are very much talking to writers, developing , meeting with A&R, management people, and we are in constant contact with NY office,” she says. “Spek and I go back a long way.”

From London, Barrett overseas the signing of acts from the ULK and the rest of Europe, exemplified by the recent signing of a representation deal with a-ha, whom she got to know during her Warner days. Reservoir/Reverb also recently signed a new partnership with Budde Music in Germany, which resulted in the co-signing of British singer-songwriter Kelvin Jones, whose debut album Stop The Moment is released through a joint venture between Sony Music in Germany (out last October) in the and UK (out on Epic in UK on March 26).

Barrett also recently signed Lucy Rose, who has a recording deal with Columbia, but also writes for others, such as with US rapper Logic for the cut Innermission in the album The Incredible True Story, which went to No.1 in US hip hop charts. “When I look at writers and signings, I've always looked at where they can fit and what their key strength are, knowing the different markets,” says Barrett. “You have to play to the strength. At Reverb, in early days that was key part of how we looked at things.”

She concludes, “We are not going to be growing the company just for the sake of it. We are growing organically and creatively. They are looking at developing into a major creative independent publishing company. We are all involved in signings and have a passion for it. We all agree it is something really worthwhile and we can make a difference to. It is fantastic to have the support system that Reservoir allows. It's taken Reverb to another level and that's great. I think I was lucky and they are very good people to work with. I am just enjoying it.”