Hipgnosis’s bi-annual reports to investors provide the best snapshots of the new business model in an industry short on publicly available details. Not quite a traditional music publisher, not a passive investor, Hipgnosis Songs Fund is a shell company incorporated in Guernsey and listed on the London Stock Exchange. To raise equity on the LSE, Hipgnosis became the first company to create a new asset class in music, the royalty fund.
The major Hollywood studios have put a lot of effort into making their content available online. There’s an abundance of streaming options and more content than ever before. Still, despite this progress, many international fans of popular TV-shows are still driven to pirate sites, as legal options are abruptly taken away. Why?
The 2010s, among other things, were a decade of profound, rapid and often gob-smacking change in the media industries and their intersection with other industries, particularly technology and the internet. So, as we look ahead to a new year and a new decade, what should we expect?
This post originally appeared on Concurrent Media.
The federal Ninth Circuit Court of Appeals handed broadcasters a major win this week in their long-running legal battle with Aereo-clone Film On. A unanimous three-judge panel overturned a lower court ruling, which had held that FilmOn was eligible for the compulsory license under Section 111 of the Copyright Act that allows “cable systems” to retransmit copyrighted programming contained in broadcast signals without needing to get permission from the copyright holders.
In overturning that ruling, the circuit court closed an apparent loophole created by the Supreme Court in its 2014 ruling against Aereo, in which it held that Aereo was infringing broadcasters’ public performance right by retransmitting broadcast signals over the internet. In addressing whether Aereo was “transmitting” broadcast signals as defined in the statute, Justice Stephen Breyer reasoned that Aereo was acting, for all intents and purposes, like a cable system, which unambiguously “transmits” a signal, and therefore Aereo required a license under the statute’s Transmit Clause.
FilmOn seized on that reasoning to argue in its defense against a lawsuit brought by Fox, that it should be treated as a cable system for purposes of the compulsory license, which is a related but legally separate issue under the law. Several courts rejected that argument (FilmOn was sued in multiple jurisdictions) but one judge, U.S. District Court Judge George Wu, accepted it, ruling in Aereo’s favor, which led to Fox’s appeal to the Ninth Circuit.
While the Ninth Circuit’s ruling is an important victory for the networks, how the court reached its conclusion could turn out to be important in ways that go beyond its legal ramifications.
Writing for the court, judge Diarmuid O’Scannlain did not accept either Fox’s or FilmOn’s argument in full, acknowledging that the statutory language is ambiguous enough that could plausibly be reach the way each side would have the court read it, but that neither interpretation was compelled by either the language or the legislative history. To resolve the question, therefore, O’Scannlain defers to the interpretation of the provision offered by the U.S. Copyright Office, which favored Fox’s view.
In doing so, however, O’Scannlain felt compelled to establish the legal foundation for such deference.
“Because the statute does not speak clearly to the precise question before us, we must decide how much weight to give the views of the Copyright Office,” O’Scannlain writes. ” The first question is whether Chevron or Skidmore provides the proper framework to structure our analysis.”
O’Scannlain then goes on, in a footnote, to lay out the basic legal distinction between the two standards. Broadly speaking, under the Chevron standard (from Chevron U.S.A. Inc. v. Natural Res. Def. Council), courts should defer to an agency’s construction of a statute it has been tasked by Congress to administer where the language of the statute is ambiguous as to the precise question at hand, so long as that construction is “reasonable.”
Under Skidmore, (Skidmore v. Swift & Co.) the weight given to an agency’s interpretation “will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”
O’Scannlain then ups the stakes.
“To resolve this issue,” he writes, “we would be required to rule on constitutional questions that could have outsized consequences relative to this case—such as determining whether the Library of Congress is a legislative or executive agency.” If the latter, presumably, the Copyright Office would have a better claim on Chevron deference; if the former, it might only be due Skidmore.
Then comes this footnote:
The Copyright Office is housed within the Library of Congress, and it is not clear whether the Library of Congress is part of the executive or legislative branch. Compare U.S. v. Brooks, 945 F. Supp. 830, 834 (E.D. Pa. 1996) (“[T]he Copyright Office is part of the legislative branch.”), with Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 684 F.3d 1332, 1341–42 (D.C. Cir. 2012) (discussing why the Library of Congress “is undoubtedly a ‘component of the Executive Branch’”). If the Library of Congress is part of the legislative branch, then the Librarian’s “power to appoint all of the officers who execute the copyright laws” may run afoul of the Appointments Clause of the Constitution.
As it happens, the legal status of the U.S. Copyright Office is very much a live controversy in Washington right now. The Office is currently leaderless, thanks to the abrupt removal of its previous head, Register of Copyrights Maria Pallante, in October at the hands of recently installed Librarian of Congress Dr. Carla Hayden. While theories abound as to the “real reason” behind Pallante’s removal, seen as a blow to copyright owners who viewed her as an ally, one factor appears to have been her outspoken advocacy for separating the Copyright Office from the Library and making it a standalone, executive branch agency, with a presidentially appointed register and its own rulemaking authority — a position Hayden strongly opposes.
Members of both the House and Senate Judiciary committees, many of whom are sympathetic to Pallante’s mission to separate the Office from the Library, expressed bi-partisan dismay over her defenestration, creating a rare rift between the Library of Congress and Congress. Pallante had worked closely with the House Judiciary Committee as it conducted a two-year review of U.S. copyright law with an eye toward reforms, including giving the Copyright Office a measure of independence from the Library.
At a meeting earlier this month, leaders of both the House and Senate committees urged Hayden to hold off on naming a new Register, according to a Wall Street Journal report. But in a letter to the committees following the meeting Hayden stuck to her position and reiterated her intention to make the appointment herself.
The chairman and ranking member of the House Judiciary Committee, respectively, Rep. Bob Goodlatte (R-Va.) and Rep. John Conyers (D-Mich.), struck back this week, introducing the Register of Copyrights Selection and Accountability Act of 2017, which would make the Register of Copyrights a presidentially appointed position with a fixed, 10-year term.
In his opinion in the FilmOn case, Judge O’Scannlain side-stepped the question of the Copyright Office’s status by ruling that even under the less-deferential Skidmore standard the Office’s reading of Section 111 was persuasive, and that internet services like FilmOn and Aereo are distinguishable from “cable systems” and therefore not entitled to the compulsory license.
While that might settle the matter as far as FilmOn is concerned, Judge O’Scannlain’s highlighting of the question of the Copyright Office’s status neatly illustrates what’s at stake in the tug-of-war between Congress and the Librarian over control of the office and the appointment of the Register. Courts have disagreed over the years as to how much deference to give the Copyright Office’s interpretations, particularly in close cases involving the application of an old statute to new technologies.
Clarifying the Copyright Office’s legal status could go a long way toward resolving the question of deference, which could impact cases far beyond Fox v. FilmOn.
Update: On Wednesday (3/29), the House Judiciary Committee approved the Register of Copyrights Selection and Accountability Act (HR1695), which would make the Register a presidentially appointed position but leave the Copyright Office within the legislative branch. The bill now goes to the full House.
Mike Pusateri is Founder and CEO of BentPixels
It’s an open secret that advertisers, content creators, and the ecosystem around them have been waiting eagerly for the true potential of Facebook Video to unfold. Naturally, the recent announcement that Facebook is moving forward with video monetization at increasing scale is a big moment for that constituency.
My team is no different. We’ve been engaged in digital rights management of video content for over five years: making claims, monetizing, and issuing takedowns on behalf of brands and leading content creators using YouTube’s Content ID. We’ve watched the evolution of Content ID, over time, into the pre-eminent anti-piracy system on any video platform. Keep in mind that YouTube has had years to fine-tune this system: time and iterations and a large team of excellent engineers. The changes that have made the biggest difference, mind you, are not solely technology tweaks: they’re policy refinements, changes to process and to user experience. By contrast, Facebook is at a disadvantage in that it didn’t begin life as a video platform.
One thing’s for sure: both YouTube and Facebook will always have to guard against pirates who are creative about new ways to beat the system. Because of our experience with video rights management, we have a few suggestions for Facebook as it rolls out what CEO Mark Zuckerberg has acknowledged is a video-centric future.
Our team has put together a comparison of Facebook’s Rights Manager and YouTube’s Content ID. Here are four factors we think should be addressed:
Refine the Rights Manager User Interface: We’d like to see Facebook prioritize developing a more sophisticated user interface for uploading video, as well as for checking stats and analytics. Users will benefit from increased information about matches and claims, for example which percentage of a video is a match and whether other claims have been placed on that video or a portion of the video. Setting up a strong system of reference files as matchable assets, like Content ID, and allowing the user to set up customized policies around matches will go far to improve the claiming experience.
In addition, copyright holders should have the ability to register a DRM provider as an approved rights manager (no pun intended) for their content or brand. The provider can then act on behalf of that client, or multiple clients, as a third-party content owner. There is frankly too much ripped content out there for an individual rights holder with popular content to track efficiently.
Create a Strike System and Robust Appeals Process: Currently, the takedown process is easier in Rights Manager than Content ID, because you can execute claims in bulk. Advantage: Facebook. However, there is no obvious strike system in place for repeat offenders with serious consequences like there is on YouTube. Nor is there an appeal process if an error has occurred.
Unfortunately, it’s possible to get locked out of the Rights Manager uploading system entirely, with no clear recourse, if the system misunderstands your rights to the content or believes it conflicts with another user’s claims. The potential punishment — being indefinitely barred from uploading content without a human override option — poses major difficulties for individual creators.
Crowdsource Copyright Policing: While automation is crucial for the scalability of a system like Rights Manager, having a crowd-sourced enforcement measure would allow Facebook to gather more data on how videos are sidestepping the content protection system. This is a great way to figure out which adjustments must be made to combat the latest in pirate strategy. YouTube has adopted a crowdsourcing system for its own purposes, but much later in the Content ID life cycle.
While Facebook is a younger video platform, it can take greater advantage of its built-in social tools to deputize power users and prevent the spread of freebooting. YouTube is working on ways to incentivize this process, but Facebook has built-in opportunities with its social network: potentially it could offer various advertising credits and temporary boosts to power user pages, allowing creators (er, concerned citizens) to actually benefit from following and enforcing the rules on the platform.
Embrace Monetization: Rights Manager currently has flexibility in determining what types of videos you would like to pursue or block over others, and that’s a good thing. Keep in mind the purpose of such a system is not rights management alone, but a way of fairly distributing funds generated by uploads to their rightful owner(s).
There are of course major content brands, individual creators, and perhaps Facebook itself (through its upcoming original content initiative) that view the platform as the next frontier for generating revenue online. The more creators and entities that can monetize content, the better to round out the ecosystem. Facebook seems determined to add video monetization opportunities gradually, as of this writing to page owners using live video, influencers, and publishers meeting certain criteria (a few involving on-demand rather than live video).
Mid-roll advertising makes total sense for certain types of videos — especially livestreaming, which is a priority according to the latest announcement — however, until it’s broadened this will restrict the amount that creators can ultimately generate on the platform. We’d like to see diversified monetization in time. It won’t be easy. The typical Facebook user has been spoiled by the lack of non-native advertising seen on Facebook, and complaining about Facebook changes can be a popular sport for even the most devoted users.
Tweak the Serving Mechanism: For most channels currently on YouTube, knowing how to reach their subscribers is paramount. YouTube’s algorithm, which has been so successful at building watch time on the platform (over a billion hours a day, at last count), can also make or break creators. You don’t always know if your subscribed audience will actually see the videos that you post; similarly, creators don’t necessarily know how the Facebook News Feed algorithm will affect them.
Facebook has certainly indicated that the new Video tab is a key portal for promoting long-form content, with shorter video remaining on the News Feed. Hopefully in this way, Facebook will promote video from individuals as much as possible. When creators post original content, it’s not the same as paying to run advertising and ideally won’t be prioritized in the same fashion.
Facebook is on the verge of hosting an incredible array of video content, and boasts an engaged (even captive) audience ready to consume. It’s a really exciting time, and Rights Manager has the underpinnings of a strong solution. We can’t wait to see Facebook Video, and the mechanisms for claiming and monetizing it, mature and provide more value for creators, advertisers, and brands.
T Bone Burnett today submitted a five minute video to the U.S. Copyright Office that issued a scathing critique of current copyright laws, taking aim at “mega corporations and web moguls” that “are enriching themselves off the artistic, cultural and economic value everyone else creates,”