Tuesday, July 16, 2019

Australia's APRA AMCOS and PPCA create a single licensing body for public performances

By Emmanuel Legrand

Australia's two rights societies Australasian Performing Right Association and Australasian Mechanical Copyright Owners Society (APRA AMCOS) and the Phonographic Performance Company of Australia (PPCA) have joined forces to offer a single licensing entity for the public performance of sound recordings.

  OneMusic Australia, which launched on July 1, 2019, will replace the decades-old two-license system into a one-license system, affecting over 140,000 businesses in the country. The new scheme mirrors the one already existing for the past five years in New Zealand, with OneMusic New Zealand combining APRA AMCOS and PPNZ

  OneMusic said that some 25 license schemes will be rolled out across the next financial year and that all sectors have a customised scheme. “At its simplest, OneMusic Australia provides a one-stop license for businesses to play music,” OneMusic Australia CEO Dan Rosen wrote in a blogpost. “Be it a restaurant, pub, hairdresser, cinema or café – this is what music users have been asking for. Where previously these businesses may have needed to speak to both APRA AMCOS and PPCA to meet their music licensing needs, OneMusic Australia will now provide a single, simpler interface.”

Deliver transparency

  Rosen added that the new system will “deliver increased transparency, save businesses time and reduce the burden of compliance.” Dean Ormston, CEO of APRA AMCOS, said: “It’s a win for businesses using music, and a win for music creators – songwriters, composers, recording artists, publishers and labels.”

  APRA AMCOS collects rights on behalf of composers, lyricists and music publishers, while PPCA collects neighbouring rights for the use of sound recordings on behalf of recording artists and labels. PPCA represents over 45,000 record labels and recording artists, and APRA AMCOS has over 100,000 songwriter and publisher members.

  While the OneMusic Australia initiative concerns public performance licensing for businesses, both APRA AMCOS and PPCA will continue to manage their other licensing arrangements – such as broadcasting and online services – independently. APRA AMCOS will trade as OneMusic Australia, while PPCA has sub-licensed its public performance rights to the society as part of the OneMusic Australia initiative.

Report suggests to change the licensing framework for sound recordings

By Emmanuel Legrand

The licensing framework for sound recordings is in need of an overhaul to allow more autonomy for rights holders to negotiate fairer deals at market rates, according to a report penned by Mark Schultz, Professor at the Southern Illinois University School of Law and President of the Institute for IP Research.

  The report, titled 'The Market for Performance Rights in Sound Recordings: Bargaining in the Shadow of Compulsory Licensing', received financial support from the Geneva Network, which is funded by from a range of public sector, non-governmental and private sector organisations, including the recording industry. 

  In the executive summary, Schultz noted that the music business “is, in some respects, more regulated than most other industries. For instance, most countries essentially impose a compulsory license on the owners of rights to sound recordings, requiring them to license the right to broadcast and publicly play their recordings to all who are willing to pay a standard rate. They cannot refuse to license; they cannot do exclusive deals; and, importantly, they cannot set their own prices.”

Market-driven rate-setting

  For Schultz, the compulsory licensing regime limits the owners of sound recording rights to essentially receive “equitable remuneration” for the broadcasting and public performance of their recordings, with rates set by courts, regulators, or legislatures rather than markets. "This institutional arrangement is quite unusual," he explained.

“Society usually leaves price setting to the market for good reasons. Regulators and courts simply cannot set 'correct' prices, as they have neither the access to information nor the capacity to process it that millions of market participants do collectively. Moreover, non-market pricing violates important non-economic values such as self-determination and autonomy,” wrote Schultz.

  To address these issues, Schultz makes the following recommendations:
• Restore injunctions as a remedy and negotiating tool.
• Approach rate-setting “with the understanding that courts and regulators are unlikely to have enough knowledge to determine the right rate, with awareness that the institutional setting skews bargaining power in favor of the licensee.”
• Courts and regulators should thoroughly assess current and changing economic conditions before fixing rates.
• Shorten negotiating windows for licensees to “rebalance bargaining power and avoid unnecessary litigation” by making new rates retroactive to the date of the first offer from licensor; awarding a higher interest rate, accounting for the internal rate of return of the licensee; and adding penalties or pre-established damages for bad faith delay.
• Restructure licenses to allow for exclusivity and windowing in order to promote competition and diversity in business models.
• Consider streaming service royalties as a compelling comparable transaction.

  Concludes Schultz: “These changes would rebalance a market long-distorted by an extraordinary institutional arrangement that deprives copyright owners of control of their property. If the example of television serves well, the results would likely create more dynamism and diversity in industry business models and content,with consumers the ultimate beneficiaries.”

Sunday, July 7, 2019

Masters and servants

By Emmanuel Legrand

Regardless of what you think about who's right and who's wrong in the Taylor Swift v. Scott Borchetta/Scooter Braun family feud, Swift has put in the open one of the key issues for creators the digital era: Artists want to own their recording masters (and the rights attached to them!).

  Swift's claim is not new. Over a decade ago, at Midem, Chuck D from Public Enemy was asked what he would say to Jay-Z who had just been appointed President of Dej Jam. "Give me back my masters," was the answer.
  So far, most labels have rejected such requests. It's not hard to see why. One of the arguments is that they have helped finance these works and therefore, by virtue of who pays owns, they own the masters and it's the rights to masters that brings value to their companies. However, a more subtle approach would be to say that labels and artists are joint shareholders in the venture, since it was artists' creative endeavours that made these works exist in the first place.

  Labels often argue that since most artists have not been able to recoup the investments made by labels, it is normal that said labels hold on to these masters to recoup their investments. Putting aside creative accounting, this is a short-term view. If you have not been able to recoup your investments in 20 years, what makes you think that you ever will?
Artists want their masters

  I remember speaking to a veteran executive who used to work for a major company and was trying to help artists he signed to the major in the 70s to reclaim their masters. And the answer was, without exception, 'We don't do that'. It did not matter to them that the recordings were not even available for streaming or download and that they had no plans to make them available. The answer was always no.

  He mentioned the case of a specific Nashville-based artist that I happened to like but could not find on any streaming platform -- save for YouTube -- who wanted to re-claim some momentum by re-releasing his recordings on vinyl and make them available to streaming platforms, but there too, the answer was no (the recordings are still unavailable, except on YouTube).

  For artists this has become a crucial point of friction with labels. Masters are part of who they are, it's their music DNA, and they want to control their destinies, in addition to be able to earn more than their (recoupable) artist share. 
A fair measure

  Labels should treat artists like adults in the room and acknowledge their contribution to the value of the companies they have recorded for. And build a different relationship. Imagine the attractiveness of contracts that would say from the outset that after 20 or 25 years of exploitation by the label (or even less), the rights to the masters would be handed back to the artists. Many of the new music companies actually have such clauses. It's a fair measure and it also make economic sense in that they provide a real incentive for the artists.

  The other option, which would be like an atomic option, would be to legislate. Take Canada: As part of the copyright review this year, Bryan "Run To You" Adams, made a deposition before a House of Commons committee asking for a 25-year reversion clause to be added to the country's copyright law. WIPO's Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations from 1961 could also be amended to include a clause stating that creators will own their recordings after 25 year of exploitation. 

  There is also another issue that Miss Swift did not raise but would have been perfectly within her rights to do: If Big Machine, her former label, is worth $300 million, how much of that value is owed to Swift's recordings? A big deal I suspect. And how much did Swift get from the transaction? Zero, indeed.
Bring artists to the table

  Sounds fair? Probably does in the land of the free market, but at a time when valuations and transactions are multiplying, it is still striking that the economic agents who have contributed to bringing value to music companies in the first place -- the creators -- do not have a seat at the table when the companies they have recorded for or published with get sold.

  When Sony/ATV acquired EMI Music Publishing, Sony/ATV's top executives shared $200 million as a post-transaction bonus. How much of that money went back to the songwriters who "built" the value of EMI Music Publishing? Yes, zero!

  Time for a fairer music eco-system.

US Copyright Office designates MLCI and DLC to administer mechanical rights

By Emmanuel Legrand

The US Copyright Office (USCO) has designated on July 5 the two entities that will operate the Mechanical Licensing Collective (MLC) and the Digital Licensee Coordinator (DLC) to license and administer mechanical rights in the United States under the Orrin G. Hatch-Bob Goodlatte Music Modernisation Act.

  The MLC was assigned to the Mechanical Licensing Collective, Inc. (identified by the USCO as MLCI), a project that had received wide industry backing and was proposed by the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI), and the Songwriters of North America (SONA). 

  The other project, known as American Mechanical Licensing Collective (or AMLC), which was backed by Audiam Founder Jeff Price, Songwriters Guild of America's President Rick Carnes, and drummer Stewart Copeland, among others, did not make the cut.

  The DLC was awarded to the single proposal from Digital Licensee Coordinator, Inc. which was backed by the Digital Media Association that represents the main operators of digital services (Amazon, Apple, Google, Microsoft, Napster, Pandora, Spotify, YouTube).

A historic law
  “The MMA is the most significant piece of copyright legislation in decades,” said Register of Copyrights Karyn A. Temple. “Music plays an important role in creating our common culture and history. This law will help ensure musical work owners are paid when their work is used. Designating the mechanical licensing collective and the digital licensee coordinator will help make that happen. We look forward to working with the entire music community to further implement and conduct outreach on this historic law.” 

  The USCO said the decision was taken after "an extensive public inquiry soliciting proposals from entities seeking to be designated as the MLC or DLC, as well as input from interested members of the public" and and that it was
"based on the record and statutory selection criteria."

  In an 88-page
document, co-signed by Temple and Librarian of Congress Carla Hayden, the USCO elaborates on the reason for its choice. The three main statutory requirements for designation of MLC were: i) organisation, board and committee composition, and governance; ii) endorsement and substantial support from musical work copyright owners; and iii) administrative and technological capabilities.

Meeting statutory criteria

  The Office concluded "that while both candidates meet the statutory criteria to be a nonprofit created to carry out its statutory responsibilities, only MLCI satisfies the endorsement criteria, and MLCI also has made a better showing as to its prospective administrative and technological capabilities."

  The USCO noted that the AMLC proposal focused "more specifically on matching unidentified songwriters to their compositions for payment purposes" and provided "less information on the mechanics of its board and committee selection processes." 

  The MMA has tasked the MLC to negotiate mechanical licenses with digital service providers, that will operate under a blanket license as of January 1, 2021. The new blanket license will allow digital music providers "to reproduce a
nd distribute musical works as digital phonorecord deliveries, including permanent downloads, limited downloads, and interactive streams," according to the USCO.

  Before that date, the USCO said it would "continue to work on implementing the MMA" by conducting "additional rule-makings on the requirements for notices of license and non-blanket activity, and access and interoperability of the MLC database, among others." Additionally, the USCO will "engage in public outreach and education to help songwriters navigate the new system, and will conduct a study on unclaimed royalties."

Negotiating a budget

  The NMPA, NSAI and SONA welcomed the decision by the USCO, and said that from now on the focus will be to establish the MLC and be operational by 2021. "Now that the consensus MLC has been selected, the group will formally begin operations," said the three organisations in a statement. "This will include the negotiation of a budget with the digital streaming services who, by law, must fund the collective. It will also include partnering with a vendor to provide administration and matching services and development of a user portal through which publishers and songwriters will be able to manage rights and royalties."

  Several companies are
on the ranks to become the vendor providing administration and matching services, including Washington, DC-based SoundExchange, which has through its subsidiary CMRRA a composition database in addition to its own recordings database. Los Angeles-based Music Reports is understood to be in discussions with the MLCI, while Canada's performance rights society SOCAN, which also administers mechanical rights, is not in contention.

  On the issue of funding, rights holders and DSPs must find an agreement. If a funding agreement cannot be voluntarily determined, the MLC and the digital services will go before the Copyright Royalty Board which will set the MLC's budget through an assessment proceeding. 

  The Board of the designated MLC includes chairman Alisa Coleman (ABKCO) and directors Jeff Brabec (BMG), Peter Brodsky (Sony/ATV), Bob Bruderman (Kobalt), Tim Cohan (peermusic), Scott Cutler (Pulse Music Group), Paul Kahn (Warner/Chappell Music), David Kokakis (UMPG), Mike Molinar (Big Machine Music), Evelyn Paglinawan (Concord Music), Kara DioGuardi (Songs by KDG), Oak Felder (Crow’s Tree Publishing), Kevin Kadish (We Are Made of Music), and Tim Nichols (THiS Music). Non-voting members include NMPA EVP & GC Danielle Aguirre and NSAI Executive Director Bart Herbison. A third non-voting member will be designated by the DLC.

Industry reactions to the designation of the MLC and DLC:

> David Israelite, President & CEO, NMPA: “This has been a long, deliberative process and we are pleased with the result. The Copyright Office set a high bar and the team behind the MLC submission was transparent, thorough and representative of the entire music publishing and songwriting community. We look forward to seeing the benefits of the Music Modernisation Act come to fruition. As we now move to the funding phase, it is critical that the digital services commit to supporting the MLC properly and become more transparent, starting with disclosing the amount of unmatched money currently at their companies.”

Steve Bogard, songwriter and President, NSAI: “American songwriters have looked forward to this advance in music licensing for years. The MLC creates a number of historic gains for songwriters including participation in the governance of a mechanical rights agency on both board and committee levels and being guaranteed an activity-based share of unclaimed funds. We have an opportunity now to work with streaming companies to significantly advance digital mechanical licensing efficiency and transparency.”

> Michelle Lewis, Executive Director, SONA: “SONA will remain committed to being a guardian of the MMA, which we and other stakeholders worked so hard to pass. We intend to work with this MLC to help educate all songwriters on the importance of accurate registration and to ensure that a state of the art database be built, serving all entitled parties to receive the royalties they have rightfully earned."

> Teri Nelson-Carpenter, National Chair and Los Angeles Chapter President, Association of Independent Music Publishers (AIMP); Alisa Coleman, AIMP New York Chapter President; and John Ozier, AIMP Nashville Chapter President: “We have worked closely with these organisations to provide guidance on the MLC’s Board of Directors and various committees, and are glad to see that independent music publishers will have a strong voice in the implementation of the MMA and beyond. With the majority of the 14-member MLC Board consisting of independent publishers and songwriters, as well as all the AIMP members on MLC committees, we are in the best position to stand up for the rights of independent publishers, songwriters, and other rights-holders.”

> Garrett Levin, CEO, DiMA: “DiMA’s member companies have extensive experience with the challenges posed in collecting and processing the data needed to connect songwriters with their royalties. We look forward to sharing that knowledge and working collaboratively with MLC Inc. to establish a comprehensive, effective and cost-efficient mechanical licensing system that is governed by specific and measurable success metrics as intended by the MMA…. The success of the MLC is important to all of us within the music industry, and ensuring we have an effective, comprehensive and cost-efficient mechanical licensing system will benefit the entire music ecosystem. Vigilant oversight and accountability will be critical to ensuring the success of the MLC, and we look forward to continued collaboration with Congress, the Copyright Office and all stakeholders to help the MLC reach its goals.”

Monday, July 1, 2019

Deadlock at SGAE as general assembly fails to vote in favour of reform proposals

by Emmanuel Legrand
SGAE's crisis reached a tipping point after the struggling Spanish rights society's general assembly failed to endorse on June 24 the proposed changes to its statutes that would have made the organisation compliant with European Union regulations and in conformity with the requirements asked by the International Confederation of Societies of Authors and Composers (CISAC).
  Members of SGAE participating in the AGM did not deliver the votes necessary to ratify the changes proposed by proposed by SGAE President Pilar Jurado, who was elected in February 2019. SGAE said there were 24.691 voters who took part in the process, with 15,502 (62,8%) who supported the changes, 8,907 (36%) who voted against and 282 (1,1%) who abstained. The reforms and changes in statutes required a qualified majority of 66.6% to be adopted.
  The negative vote seems to have come mostly from SGAE's Madrid representatives as regional assemblies voting on the new statutes in the week before the June 24 assembly have backed the proposals put forward by SGAE's management with an 86% approval of the proposed text. (The same assembly voted in favour of the accounts presented by the leadership by a 59.6% majority. SGAE collected €1314.4 million in 2017, up 18.2% over 2016, and distributed €302.2m.)
Finding solutions
  SGAE was temporarily expelled by CISAC at the organisation's AGM at the end of May, and the June 24 meeting was seen as the last opportunity for SGAE to adopt reforms that would keep the Spanish government at bay and start a process that would have seen the society comply with the requirements contained in the CRM Directive and CISAC's demands.
  The lack of majority in favour of the reforms puts SGAE to a situation that could require the intervention of the Spanish government. Minister of Culture José Guirao had previously said that failure to makes changes could trigger the need to put SGAE under government supervision, or have its administrative license being revoked. Following the vote from the assembly, the Ministry of Culture urged the various stakeholders to find a solution.
  On June 25, Jurado to invited music publishers and authors to "start a dialogue with SGAE on the reforms needed to take the society out of its current situation." SGAE said it reached out to Juan Ignacio Alonso, from Sony/ATV and Santiago Menéndez Pidal, from Warner Chapel (sic) to join the "dialogue table."
Coordinated action
  In a June 27 statement, SGAE said that Jurado had "hoped that the joint dialogue with stakeholders that form a blocking minority to the resolution of the approval of the new statutes, which have the support of most of the authors, would have come to fruition." The statement continues: "Unfortunately, multinational publishers have been trying to pressure the entity in many ways for a long time so that the entire author community gave in to its claims."
  SGAE doubled down on June 28 by accusing the music publishing affiliates of multinational companies of conducting "a coordinated action" to "pressure" authors to leave SGAE. "This mouvement organised by multinational companies Warner, Sony, Universal, BMG and Peermusic, regrouped in the Professional Organisation of Music Publishers (OPEM), has been supported by some of the authors of the entity, who are subject to the position of power that these large companies exercise, contractually, on the market," said SGAE. According to news agency EFE, some 100 authors are understood to have expressed the desire to leave SGAE.

US Register of Copyrights backs small claims tribunal

By Emmanuel Legrand

The US Register of Copyright Karyn Temple has strongly endorsed the the possibility of a small claims tribunal within the Copyright Office (USCO) during her testimony at a hearing before the Committee on the Judiciary at the House of Representatives on June 26.

  Temple said that the the USCO has been looking at the possibility to create an alternative forum for individual creators and small businesses for already some time. She added that because of the high costs of litigation, many individual artists and small businesses are often precluded from getting into federal court to protect their rights.

  Temple explained in her written testimony that the median cost to litigate a copyright infringement suit with less than $1 million at stake was estimated at $200,000. Temple added that this situation meant that "low‐dollar but still valuable copyrighted works often may be infringed with impunity."

Need for remedies

  "Having a right without a remedy means that you have no right at all," she said during her testimony, noting that the costs were way above what most creators or small businesses could afford. "That's why we strongly support the creation of a copyright claims for it," said Temple.

  Temple said the small claims tribunal should sit within the USCO, with officers recommended by the Register of Copyrights and appointed by the Librarian of Congress. Participation to the tribunal should be voluntary and with a streamlined discovery process. Damages should be capped at $30,000 per claim, with a sub-limit of $15,000 per work. Judiciary Committee Ranking Member Doug Collins said such endeavour should be "do-able and that's something that would really work."

  Temple was also questioned by the Chair of the Committee, Rep. Jerry Nadler, about the issue of unclaimed royalties, which is one of the key challenges that the Music Modernisation Act is supposed to fix. "The most important aspect of MMA is that songwriters and publishers get paid for their work," said Temple who added that she was "very pleased" that both submissions to operate the Music Licensing Collective to manage mechanical rights have made this issue "one of their priorities."

Identifying best practices

  Temple said that right after the designation on July 8 of the entity operating the MLC, the USCO will start working on a report on best practices that will be given to Congress and to the MLC in July 2021. "[The MLC] is expected to follow the best practices that the Copyright Office provides in that report," said Temple. 

She added, "Additionally, we were pleased that both the entities that want to be designated as the MLC have agreed that the first distribution of unclaimed royalties cannot occur until 2023. This will give the designated entity an opportunity to ensure that they have good practices in place to make sure they can distribute to the most people and that they have the less amount of unclaimed funds."

DASHBOARD Act plans to give data control back to US consumers

By Emmanuel Legrand

Sen. Mark R. Warner (D-VA) and Sen. Josh Hawley (R-MO) have introduced in the US Senate the Designing Accounting Safeguards to Help Broader Oversight and Regulations on Data (DASHBOARD) Act that will require digital platforms to disclose to consumers how their data is used, whose third parties it is being shared with, and how much is their data worth to the platform.

  Both Warner and Hawley are pushing for tech giants to be regulated. Hawley has recently introduced a bill that would remove Big Tech’s immunity from liability for users’ content on their platforms under Section 230 of the Communications Decency Act of 1996.

  “When a big tech company says its product is free, consumers are the ones being sold,” said Sen. Hawley. "These 'free' products track everything we do so tech companies can sell our information to the highest bidder and use it to target us with creepy ads. Even worse, tech companies do their best to hide how much consumer data is worth and to whom it is sold. This bipartisan legislation gives consumers control of their data and will show them how much these 'free' services actually cost.”

Calculating data value

  The legislation would apply to commercial data operators that reach over 100 million monthly users, in particular companies like Facebook, Google, Twitter, among others. Commercial data operators will have the obligation to to file an annual report on the aggregate value of user data they’ve collected and disclosed all the contracts they have with third parties involving data collection. Users should have the opportunity to delete all, or individual fields, of data collected by commercial data operators.

  The DASHBOARD Act would also give the task to the Securities and Exchange Commission to “develop methodologies for calculating data value, while encouraging the agency to facilitate flexibility to enable businesses to adopt methodologies that reflect the different uses, sectors, and business models.”

  "These companies take enormous, enormous amounts of data about us... If you're an avid Facebook user, chances are Facebook knows more about you than the U.S. government knows about you. People don't realise one, how much data is being collected; and two, they don't realise how much that data is worth,"
said Sen. Warner on 'Axios on HBO'.

Resistance from tech companies

  There are no indications at this stage if the bill will be reviewed by a Senate committee or if the Act will be voted on the floor in the near future. However, the current climate on the Hill has changed since the Obama administration, with an increasing number of members of Congress being vocal about regulating Big Tech. 

  The tech sector, individually or through its lobbying arm, the Internet Association, has been resisting attempts to be regulated, aside from Facebook's founder Mark Zuckerberg, who has been asking for "a common legal framework" for tech companies to operate under.

  A Facebook spokesperson commented: “We look forward to continuing our ongoing conversations with the bill’s sponsors."