Guest Post

Tuning Up: Tackling the Ever-Growing Complexity of Music Rights

The fragmented and often opaque ownership of musical works and sound recordings has confounded industry participants and would-be licensees for decades. But according to a recent study by rights administration services provider Music Reports, Inc., the most decade has seen a rapid acceleration in that fragmentation, as new genres, new formats, and new distribution channels have spurred new modes of songwriting and opened new avenues for artists. We asked Music Report’s vice president and general counsel Bill Colitre to share his insights into what’s behind the recent spike in the complexity of music rights.

Bill Colitre

Music Reports recently performed an analysis of Billboard’s top 10 hits from the 1960s through to the present using the Songdex® database, and published a press release about the project. The analysis revealed a marked increase in the number of both composers and publishers involved in hit songs over time, especially since the 1990s.  Notably, the number of publishers associated with these hit songs increased faster than the number of composers, such that the average song now has about six publishers and four composers.

The release sparked some interesting discussion on various comment boards. Some commenters made note of often repeated anecdotes about ‘non-songwriters’ being granted songwriting credit undeservingly. Although there is undoubtedly truth to some of these anecdotes, there are also a number of more common explanations for the increase, many resulting from the evolution of popular music genres and business practices in the last three decades.

The 1990s, for example, saw at least two significant developments that contributed to the complexity of modern song credits. First, hip hop became a mainstream genre—one in which musical works often incorporated samples from earlier works.

Commonly in these cases, the publishers of the sampled works have agreed with the creators of the newer songs on shared ownership of the resulting works. When this happens, the rights structure incorporates the composers and publishers of the sampled song along with those of the newer work.

The other important development in the ‘90s was a resurgence of pop, after two decades dominated by artists who largely performed their own works.

Pop music has a long and celebrated tradition of collaborative songwriting. But whereas in earlier eras it tended to be practiced by famous duos (from Gilbert & Sullivan down through Goffin & King), who tended to work for a single publisher, from the 1990s onward it has been practiced by an increasingly cross-pollinated group of professional songwriters working in various combinations, often with contributions from the superstar performing artists with whom they work regularly.

Moreover, regardless of genre, recent decades have also seen an increase in the prevalence of “co-publishing” agreements. In these arrangements, a songwriter may be represented by a large publishing administrator who owns a portion of the writer’s work, while the writer also owns a piece of her work through her own music publishing entity.

This second entity is typically also administered by, but legally separate from, the first publishing administrator, which manages both catalogs together. All of these entities add to the number of “publishers” who may be associated with a single song.

To add to the complexity, those distinct entities may share a common licensing administrator (i.e., the person responsible for granting the license), yet have separate arrangements for where to account (e.g., in the publishing administrator’s case to the administrator, while in the songwriter’s case, to her own publishing company). And each entity may have a different “care of” address for payment (e.g., the specific address for the administrator, on the one hand, and the address of the writer’s business manager, on the other hand).

To this common arrangement we can also add similar arrangements resulting from 360 label deals, so-called “creative joint venture” arrangements, and of course producer deals involving songwriting credit.

Infinite Variety

As if all of these horizontal sharing arrangements didn’t create enough fragmentation, the so-called “bundle of copyrights” is almost infinitely divisible by law, such that different territories may be managed by different publishers or “sub publishers” and different rights types may also have alternative administrative arrangements.

For example, print rights may be administered by one party, while performance rights are managed by another, and mechanical rights by a third. Just emerging now is an even narrower fragmentation of specific rights types.

For example, whereas ‘mechanical rights’ might have historically been handled by one administrator as a class, now we are beginning to see one administrator claiming ‘traditional mechanical rights’, while a second administrator claims those mechanical rights associated with ‘internet streaming and limited downloads’.

A similar fault line is appearing between ‘traditional synchronization rights’ and so-called “UGC streaming” synchronization rights.

In short, the music publishing business has evolved a truly phenomenal degree of complexity, and the reasons for this complexity are widely varied (some better than others).

It is easy to be frustrated by this Gordian Knot of a problem.  But while newer (and perhaps simpler) solutions are sought for future works, there is no responsible way to slice through the world’s great repertoire as it currently exists.

The efficient licensing of, and accounting for, the music being enjoyed by listeners today can only be accomplished by honoring the choices made by today’s rights owners through careful attention to the rights structures they have agreed among themselves.  At the same time, care must be taken to vet the reported claims of those rights owners, which sometimes conflict (and more often by mistake than from fraudulent intent).

As difficult as all this may be, happily there are already common sense solutions in the market.  Modern relational database systems like Songdex, curated by teams of dedicated musicologists and technologists, are able to manage all of the dimensions of complexity called for by this music industry, and do so at scale.

Rapidly ingesting direct, electronic feeds from every publisher able to deliver them, accepting any file format for letters of direction and related repertoire updates from those who cannot, and making available the world’s most effective online song registry and claiming system for unmatched sound recordings, Songdex is at the forefront of this effort.

As a comprehensive, neutral registry combined with a licensing transaction and payment settlement platform, Music Reports currently manages the task of tracking billions of transactions a day across more than a hundred million sound recordings embodying tens of millions of compositions, through the coordinated efforts of at least six organizational departments of humans, and a dozen supporting IT systems. As we often say here, it’s not the database, but the organization that meets the challenge.

To conclude, the modern profession of songwriting and the administration of musical composition rights are growing in complexity. There are more composers contributing to compositions (both together and across time, through sampling). Their publishers are creating new and more intricate methodologies for maximizing returns across an increasingly global marketplace that is adding wholly new channels of distribution almost every year.

One day the business may return to a less fragmented state through technology. Until then it should be no surprise that a complex business requires complex data management solutions.

Music Reports is a member of the RightsTech Project. Both Colitre and vice president of IT business development Michael Shanely are scheduled to speak at the RightsTech Summit on September 27th in New York. Click here for information on registration

Token of My Success

Earlier this month, blockchain solutions provider Tokenly introduced token.FM, a direct-to-fan blockchain-based music platform. Tokenly plans to launch an initial trial of the new platform in early May, along with an Series A fundraising round. The first artist to make her music available on token.FM is singer/songwriter Tatiana Moroz, who introduced the first blockchain-based artist token, Tatiana Coin, in 2014. We asked Tatiana to share her personal story of how she came to embrace blockchain and cryptocurrencies, and how she got involved with Tokenly.

By Tatiana Moroz
Entrepreneurship and managing your career can be a problem that many musicians struggle with. As an independent artist, I know I have. Upon graduation from Berklee, I felt prepared to make my way into the industry, especially with the advent of the DIY tools offered by the internet age. However, what I found was that even though we had taken some steps forward, there was a long way to go to true artistic autonomy.

It wasn’t just the overwhelming amount of work that had to go into creating a career, the new (and unpaid) full time job I was given as master of my own fate, the decision fatigue, and the standard frustrations of a highly competitive industry. The main problems I saw were the industry’s many walled gardens and difficulty accessing financial resources. I also felt that music like the 60’s and 70’s revolution folk that had inspired me, no longer had a place in the world of boy bands and porno pop.

Still, I persevered. Finding my niche, I performed around the country doing political events. Yet I found the DC world to be divisive and fruitless and was quickly disillusioned.

There was a light at the end of the tunnel though, and a technology I fell in love with. I became involved with Bitcoin in 2012, and immersed myself in the space by 2013. In early 2014, I looked at how this technology could be adapted for artists.

By June 2014, with help from Adam B. Levine, host of Let’s Talk Bitcoin and now CEO of Tokenly, I created the first ever artist cryptocurrency Tatiana Coin. The goal was to create an artist specific, personally branded token that would function a bit like a collectible item, but also like a digital gift certificate.

These coins were like flexible rewards. You received a digital token that you could trade, rent, sell, and use at any time. If you wanted to send $5 worth of TC to your friends, there was nothing stopping you. It was also a great way to onboard people into the admittedly challenging cryptocurrency world.

After the initial launch, I put the funds we raised toward recording my new album, “Keep the Faith,” which I put out in March. While the recording part was easy, we wanted to use this technological model for others, and that was the tricky part. It was a little like having a car but without roads or a roadmap. So while I was speaking and singing at conferences and sharing my story, a team assembled under Adam’s leadership, and Tokenly and Token.fm were born.

One of the innovations we have created helps bring scarcity back to the digital space through the creation of tokenized albums. Traditionally, if you buy a record on iTunes, you can’t share it or resell it. However, tokenization of records allows for sharing, trading, and selling of digital music, which gives true ownership back to the fan. Artists can also set their licensing parameters, include their songwriting splits, and automate the sales of their music and merch for retail, commercial, and wholesale use.

Blockchain technology is not just for artists though. It is something the whole music industry should get behind. I have many colleagues who work in music businesses and are frustrated that, instead of helping artists reach their audiences and create meaningful connections, they get bogged down with a costly and time intensive administrative process. Blockchain could change all of that.

Crowdfunding artists via blockchain would allow record-label resources to be focused on growth rather than publishing administration and tracking payments. It would also take pressure off the labels and allow them be more risky and experimental with the acts they sign.

With Adam and the Tokenly team, we are now working toward becoming protocol agnostic. It was important to me that artists have control, and not get locked into another platform. That’s the beauty of crypto though, once someone has your coin, you are forever bound together (till they get rid of the coin anyway), regardless of the platform. So, while we don’t know which blockchain will be the winner, we’ve created an ecosystem where artists can thrive as entrepreneurs and build stronger bonds with their audience.

I think that’s what’s so compelling about Bitcoin and blockchain: the ability to retain control over what is yours, and at the same time, be truly linked to anyone in the world with an internet connection. It is less likely to be corrupted by the touch of man, as math is unyielding in its dependability. It’s more secure, it’s censorship resistant, and more transparent.  I hope that it also allows for more freedom and diversity in music messages.

When artists supported by their fans, and are able to reflect the place they come from, they can offer a real and genuine experience, and that leads to better art. On a personal note, I hope that more liberty in creativity will push our world toward a more peaceful direction.

Tatiana Moroz is an independent singer-songwriter and Founder/CEO of CryptoMediaHub. Her latest album, “Keep the Faith” is available for download from Tokenly and iTunes, and can be streamed from Soundcloud

Courts, Congress Put Spotlight on Copyright Office (Updated)

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.

Maria Pallante

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.

What Facebook Can Learn from YouTube: Facebook, Video, and Rights Manager (Guest Post)

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.

Mike Pusateri, Founder & CEO, BentPixels

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 Delivers Scathing Message to Copyright Office, Urging Reform: ‘Our Culture Is At Stake’ 

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,”

Source: T Bone Burnett Delivers Scathing Message to Copyright Office, Urging Reform: ‘Our Culture Is At Stake’ | Billboard

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