RightsTech Summit

EU Poised to Rewrite Rules on Uploaded Content, Aggregation

The European Union’s controversial Copyright Reform Directive took a major step toward becoming law across the continent Wednesday as the European Parliament’s Legal Affairs Committee voted narrowly to approve the measure. The vote establishes the Parliament’s official position on the proposed new rules ahead of final negotiations with the European Commission and the member states, although opponents of the measure on the committee could still force a vote by the full Parliament before those negotiations could begin.

The proposal has been the object of intense lobbying over the past two years both by copyright owners and technology companies, particularly regarding the directive’s Article 13, Article 11, and Article 3.

Article 13 requires “online content sharing service provider[s]” to obtain a license for any copyrighted material uploaded by their users or face liability for copyright infringement. As a practical matter, critics of the measure argue, online platforms would be forced to implement sophisticated and expensive content recognition and filtering technologies, similar to YouTube’s Content ID system, as it would be impossible to obtain all of the licenses they might potentially need.

Supporters counter that the provision is tailored to target platforms such as YouTube and Facebook, whose business models are based in part on profiting directly from the presence of unlicensed copyright content, such as by selling advertising against it. Online services operating in a non-commercial capacity, “such as online encyclopaedia, and providers of online services where the content is uploaded with the authorisation of all concerned rightholders, such as educational or scientific repositories,” are exempt from the new requirements, as are services providing cloud-based hosting of content that is not made directly available to the public.

Article 11 creates a new neighboring right for news publishers that would require search engines and aggregators to obtain a license before displaying snippets of articles. Unlike similar “link tax” laws in Germany and Spain, which failed to boost the profits of publishers, the new rules would apply EU-wide, making it difficult for aggregators to circumvent them by obtaining the content from other countries.

Article 3 would put limits on the use of text and data-mining software where the content being mined is not owned or licensed by whoever is doing the mining (The Next Web has a useful summary of the arguments for and against the three provisions).

This week’s vote comes on the heels of the EU’s General Data Protection Regulation (GDPR) taking effect, which was similarly targeted at reigning in the power of major online platforms. Although GDPR rules legally apply only within the EU, their imposition has had a global effect since many non-EU based services collect data on and from EU citizens, forcing millions of websites around the world to retrofit their data collection and privacy policies or face exclusion from EU countries, making the EU the de facto global standard-setter for data collection and privacy practices (see our updated policy here).

The new Copyright Directive, if fully enacted, could have a similar global effect. The new EU rules could give impetus to investment in and development of more sophisticated content recognition technologies, as well as more efficient, automated systems for obtaining licenses and paying rights owners.

In addition to being a boon for rights-tech companies, the development and successful deployment of such technologies could give rights owners outside the EU much stronger grounds to argue that the means to effectively police user-uploaded content and obtain licenses are available and should be deployed globally.

That could shift the terms of the debates currently underway in the U.S. and elsewhere over the proper scope of the copyright safe harbors afforded online services and platforms.

The potential impact of the EU Copyright Reform Directive, as well as the Music Modernization and Copyright Alternative in Small-Claims Enforcement (CASE) acts in the U.S. will be among the topics of discussion at the RightsTech Summit on October 5th in New York. Click here for information on to register for the conference.

 

Face Off: Studios Battle SAG-AFTRA Over ‘Digital Replicas’

Digital technology has given rise to a host of novel questions concerning the authorship, ownership, and exploitation of creative works, from the right to re-sell digital copies to the copyright status of works produced by artificial-intelligence agents. But a new legislative skirmish in New York State could take the debate beyond the realm of copyright into the realm of privacy and the right of publicity.

Cage, Nick Cage

Assembly bill A.8155B would create a new right of publicity for individuals concerning the use of their likeness in a “digital replica.” In what is believed to be the first such legislative effort by a state, the bill is meant to prohibit the use of “face-swapping” artificial intelligence technology to overlay an individual’s face onto another actor’s body without the individual’s consent, particularly for pornographic purposes.

According to the bill, “Use of a digital replica of an individual shall constitute a violation if done without the consent of the individual if the use is in an audiovisual pornographic work in a manner that is intended to create and that does create the impression that the individual represented by the digital replica is performing.”

The bill is strongly backed by the Screen Actors Guild-American Federation of TV and Radio Actors (SAG-AFTRA), which claims it is necessary to combat the growing scourge of “deep fake” videos, in which well-known individual are made to appear to be performing pornographic scenes.

“Individuals turn to image rights to sue corporations that use social media accounts or publicly available images to promote products or services without consent or compensation. These rights will also provide individuals, often women, relief if they are inserted into commercialized Deepfake sex scenes.,” SAG-AFTRA said in a statement supporting the measure.

With time in the legislative session running out, however, the major studios and the Motion Picture Association of America (MPAA) have mounted an all-hands effort to block the bill, according to the Hollywood Reporter, claiming the bill’s imprecise language could limit the production of biographical films of real-life individuals and chill technology innovation.

“If adopted, this legislation would interfere with the right and ability of companies like ours to tell stories about real people and events,” the Walt Disney Co. wrote in a letter the bill’s author. “Unfortunately, the proposed bill would transform New York from a jurisdiction that is friendly to and protective of such expressive endeavors to one in which they become encumbered by uncertainty and risk.”

In a separate memorandum, NBCUniversal warned, “The bill creates an unprecedented new category of protection for “digital replicas” of
living or deceased individuals. These provisions have potentially far-reaching implications, yet there is scant time left in the session for New York’s legislators to explore and consider them.”

The bill is still pending and it’s fate is uncertain at this point. Either way, though, it’s unlikely to be the last word in the debate over the uses (and misuses) of face-swapping technology and other forms of artificial intelligence in the creation of media content.

We’ll tackle some of those questions at the upcoming RightsTech Summit , at a panel titled What to Make of Machine-Made Art? Click here for more information on the summit, and for information on how to register.

 

The Copyright Turing Test

As a formal matter, the litigation in People for the Ethical Treatment of Animals v. David Slater, the “monkey-selfie case” is now over. Although the parties nominally settled the lawsuit last year, the U.S. Ninth Circuit Court of Appeals put an exclamation point on it last month by issuing a formal ruling and opinion anyway upholding the district court’s ruling in favor of the human photographer Slater that was under appeal at the time of the settlement.

Naruto

While the court conceded that, under the Ninth Circuit’s peculiar precedent in Cetacean Community v. Bush, animals like Naruto, the crested macaque who took the famous photos and on whose behalf PETA nominally had brought the case, may have standing to bring a lawsuit in human courts, they do not have statutory standing under the Copyright Act to bring an action for infringement:

We must determine whether a monkey may sue humans, corporations, and companies for damages and injunctive relief arising from claims of copyright infringement…Our court’s precedent requires us to conclude that the monkey’s claim has standing under Article III of the United States Constitution. Nonetheless, we conclude that this monkey — and all animals, since they are not human — lacks statutory standing under the Copyright Act. We but therefore affirm the judgment of the district court.

So, case closed.

Yet as some legal experts have pointed out, the Ninth Circuit didn’t really settle the question of who does own the copyright in the photos at issue if not the monkey. Under the settlement between the parties, Slater, whose camera Naruto borrowed for his self-portrait, is free to license their use on the stipulation that he donate a portion of the earnings to a fund to protect crested macaque habitat — a sort of professional tip of the hat to Naruto — neither the district court nor the Ninth Circuit explicitly determined the copyright to be his. Each ruled on the issue of standing, but neither reached ruling reached the merits of the infringement claim.

Slater set up his equipment in the Indonesian forest where Naruto and his fellow macaques live and left it unattended to see how the monkeys might respond to it. But beyond that, he didn’t have any particular creative input to the photos they took. So on what basis would his copyright in them rest? Is mere ownership of the equipment sufficient? Was providing the opportunity for the monkeys to take the photos by leaving the camera unattended a necessary step? We don’t really know.

Another question not directly addressed by the litigation is what made the monkey selfie so compelling in the first place? Had Naruto managed merely to take a random photo of his foot, or the sky, it’s doubtful anyone would have bothered litigating its authorship.

What made the monkey selfie so compelling, I think, was its seemingly human-like intention. Serendipitously well-framed in the shot, Naruto seems to exhibit human-like self-awareness as he appears to smile into the camera, an effect Slater himself recognized  in titling the book in which it first appear Wildlife Personalities.

The whole case, in effect, functioned as a sort of photographic Turing test: Was the photo a creative act of original expression if perceived that way by humans, even if the law does not recognize its proximate creator? If so, how should the law regard it? Who, if anyone, should have an exclusive right to exploit it commercially, and on what would that claim rest?

While the issue may appear abstract and theoretical, those questions are getting less theoretical by the day, as researchers develop ever more machine-based systems capable of producing Turing-sufficient works of expression. Like monkeys, machines would likely lack standing to bring a claim under copyright law. But that doesn’t mean they can’t produce works that humans perceive as expressive.

In a paper published last month, researchers from Microsoft and Kyoto University describe how they trained a neural net to produce original poems, one of which was accepted for publication by the human editors of a literary journal based on a blind, online submission.

Last year, researchers from Google published a paper describing how they taught a neural net to recognize the aesthetic elements of photography. The artificial intelligence system then produced original works of landscape photography that professional photographers had trouble distinguishing from similar works produced by humans (take that, Naruto!).

Computer scientists as Italy’s Politecnico di Milano, last month submitted a paper describing how they used a two-stage artificial intelligence system to create new levels of video game play on the fly that even other A.I. systems could not distinguish from human-created levels.

Copyright law is designed to incentive creativity by giving legal force to the author’s claim on its economic value. Our systems of commercial licensing of creative works rest on exploiting the exclusive rights of authors spelled out in the Copyright Act.

But as the monkey selfie case has shown, works can have considerable economic value even where there is no obvious or legally recognized author.

How that value is to be realized through our existing author-based licensing systems, and how disputes over that value are to be adjudicated within our author-centric copyright law are questions we’re only beginning to grapple with. We’ll be grappling with some of them at the 2018 RightsTech Summit in New York.

Anyone interested in addressing them can contact me at paul@concurrentmedia.com.

 

Creative Ghosts in the Machine

One of the highlights of last month’s RightsTech Summit was the riveting debate between Ed Klaris of KlarisIP and Drew Silverstein of Amper Music over who (or what?) should own the copyright on musical works produced autonomously by a computer powered by artificial intelligence software.

Ed Klaris, left, and Drew Silverstein at the RightsTech Summit

Klaris was clear that whoever owns the rights, it’s not the machine. Even the most autonomous of A.I. agents, he argued, by definition cannot exercise the sort of creativity and originality that U.S. copyright law requires without human input. Therefore, any originality in the work, the sine qua non of copyright, comes from humans and the copyright belongs to some human entity, whether individual or corporate.

Silverstein, whose company markets an A.I.-based music composer and performer, argued for a more expansive view of machine-made music. Claims being advanced on, or on the behalf of software output are inevitable, he proposed  and it is too soon to take a categorical position on their merits.

The 30-minute debate, fascinating as it was, obviously didn’t settle the argument, which is really just getting underway. U.S. copyright law is clear on the need for a human author. It’s goal, after all, is to incentivize human creativity. But the line between man and machine is only likely to get fuzzier as technologies like artificial intelligence, machine learning, and virtual reality advance. How and where to draw that line is bound to become contentious.

The Hollywood Reporter Esq. columnist Eriq Gardner flags a fascinating case involving an infringement claim brought by the maker of MOVA, a computer-based system that captures human facial expressions and uses them to create photo-realistic graphic effects, against several Hollywood studios that used a an allegedly purloined version of MOVA to create effects in blockbuster movies, including Guardians of the GalaxyAvengers: Age of UltronDeadpool, and The Curious Case of Benjamin Button, among others.

The plaintiff in the case, MOVA inventor Rearden LLC, makes a number of patent and trademark claims related to the studios’ use of an allegedly stolen version of MOVA. But it also makes the jaw-dropping claim that any originality in the creative output of the MOVA system is the result not of any human input but to the design of the system itself, and therefore Rearden owns the copyright on that output.

Rearden was founded in 1999 by Silicon Valley inventor Steve Perlman, who claims to own the MOVA software. In 2012, Perlman transferred the MOVA assets to a second company, OnLive Inc. At that point, Perlman alleges, two of his then-employees secretly formed another company and negotiated the acquisition of OnLive and the MOVA assets. In 2013 those assets were sold to Chinese investors, who transferred them around among multiple corporate entities. At the same time, the MOVA technology was licensed in the U.S. exclusively to effects-house Digital Domain 3.0, which used the technology to produce graphics work for the studio defendants.

Rearden, meanwhile, sued the Chinese companies and last year won an injunction that bars Digital Domain from continuing to use the MOVA technology.

The studio defendants, Disney, Fox and Paramount, do not dispute that the MOVA technology may have been stolen. But they strongly reject the claim that the owner of MOVA, whether Rearden or someone else, also owns the copyright on the work it produces. What show up on the screen, they claim, is chiefly the result of human inputs, from the film’s direction, the performances of the actors, and the photography of the cinematographer. To argue that the owner of the effects software also owns its output, the studios say, makes no more sense than arguing that Microsoft owns the copyright on any work produced using Word, or Adobe any work produced in Photoshop.

Rearden is having none of it, and here is the nut of its argument as spelled out in the complaint:

[H]ere, the work at issue is the program’s output, in particular, the three-dimensional Captured Surface and Tracking Mesh. The MOVA Contour system takes two-dimensional camera captures as input, and the program then synthesizes them into three-dimensional outputs with subtlety and artistry, based on creative choices made by its programmers and embodied in its copyrighted software instructions…[D]uring MOVA Contour performance capture, the director cannot choose camera angles because the cameras are fixed in the MOVA Contour rigging; there can be no “selecting and arranging the costume, draperies, and other various accessories,” because the capture is of only the random patterns on the actor’s face and neck; and there can be no “arranging and disposing the light and shade,” because the lighting is also fixed in the rigging, and a random pattern of glowing makeup applied to the actor’s skin eliminates shadows for an evenly-lit random pattern.

Similarly, defendants’ argument that Rearden’s claim is analogous to Microsoft claiming a copyright in a book by an author who used Word to write it, or Adobe claiming a copyright in the artwork by an artist who used Photoshop to create it are equally inapt. Generally, an author writes a book by typing every word into a Word document, and an artist creates a work of art by deciding on specific treatment of every pixel in a Photoshop file. But in neither case does their work provide input to software that synthesizes an original expression that is distinct from the author’s or artist’s input. Here, neither the actor nor the director create a Captured Surface or Tracking Mesh output. The actor performs, and a director may direct the performance, and two-dimensional glowing random patterns are captured. But the works at issue here are not the two-dimensional captures; rather, the works at issue are the MOVA Contour program’s output, in particular, the three dimensional Captured Surface and Tracking Mesh created entirely by the MOVA Contour program.

It’s a bold argument, and there’s no telling at this point how a court might ultimately rule on it. The argument over whether the tool maker or the tool user is the author of what the tool helps create may be settled as a matter of law. But as the tools grow ever more sophisticated, the debate over how to tell the difference is far from over.

Featured image: Google DeepDream

Art World Looks to Blockchain to Pump Up Online Sales

Global sales of art works amount to roughly $45 billion a year, but in 2016 only $3.75 billion of that — less than 10 percent of the total — was transacted online, according to the Hiscox Online Art Report, making the art and collectibles trade a laggard in the world of e-commerce.

A big part of the reason for the lack of a more robust online marketplace is the high potential for fraud — already a $6 billion a year problem in the art world — when buying artworks sight-unseen except in digital form. Copies and knockoffs can be passed off as originals, “limited” editions can overstep their limits, certificates of authenticity can forged.

Verisart CEO Robert Norton

Several startups have have launched in recent years to tackle that problem, including Verisart, ascribe, and Tagsmart, by providing artists the means to assert their authorship and issue time-stamped, digitally signed certificates of authenticity (COAs) by registering the information on a blockchain. But online sales have yet to scale using that artist-by-artist, piece-meal approach.

Now, Burbank, Calif.-based Verisart is looking to go the wholesale route through a partner certification program and API for online sellers and galleries. Last week, it announced its first such partnership, with online gallery Avant Arte.

Under the deal, Avant Arte will apply Verisart’s certification standards across all its represented artists and sales of limited edition artworks. Each certificate will be optimized for both physical and digital use with a unique QR code, blockchain timestamp and web address.

Speaking at the RightsTech Summit in New York last week, Verisart CEO Robert Norton said, “As online retailers and galleries look to improve certification standards, we’re seeing increasing demand for blockchain enabled certificates and we’re delighted to work with Avant Arte as our first limited edition print partner.”

Added Avant Arte ATO Nico Veenman, “By partnering with Verisart, we’re applying two factor validation of ownership by combining a physical ownership certificate and a digital certificate on the blockchain including immutable and authorized information about the artwork edition.”

Avant Arte is the first company to use the Verisart’s partner API allowing bulk transfer of data and certificate customization.

(Cover image: Wikimedia Commons)

RightsTech Summit Kicks Off September 27th

The curtain will be going up next week on the second annual RightsTech Summit. Part of the two-day New York Media Festival the Summit will feature over 40 speakers from around the world and will bring together rights owners, creators, technology developers, policymakers and investors from across the full range of media sectors, for a unique, high-level discussion focused on technology innovation around the registration, management, licensing,

Jim McKelvey

and tracking of media rights and royalties on digital platforms.

Featured topics will include:

  • Machine-to-machine rights management
  • Metadata standards and repositories
  • Automated licensing platforms
  • Rights registries
  • Copyright reform
  • Blockchain and cryptocurrencies
  • Artificial intelligence and intellectual property rights
  • Mashups, re-mixes and user-generated content
  • Investing in rights and royalties

Robert Kasunic

The Summit will also feature special keynote conversations with Jim McKelvey, the artist and entrepreneur who went on to disrupt the system of credit-card payments by co-founding Square; and Robert Kasunic, Associate Register of Copyrights and Director of Registration Policy and Practice at the U.S. Copyright Office.

The full agenda for the Summit can be found here. The full list of speakers is available here.

The agendas for all four conferences that make up the New York Media Festival can be found here.

Both the Festival and the Summit will be held at the Museum of Jewish History at 36 Battery Place in Lower Manhattan.

For information on how to register click here.

See you in New York!

 

From Monkey Business to Machine-Made Music

With the long-running litigation between People for the Ethical Treatment of Animals (PETA) and photographer David Slater over the now world famous “monkey selfie” still pending before the U.S. Ninth Circuit Court of Appeals, the two sides have agreed to settle the case and have asked the court to dismiss the appeal, according to a joint statement put out by the parties.

But the settlement of the lawsuit isn’t likely to end the debate over how courts and the law should regard works created by non-human authors. In fact, the debate may only be getting started.

For one thing, as The Hollywood Reporter’s legal columnist Eriq Gardner notes, the “settlement” between PETA and Slater doesn’t fully settle the case between them. In their joint motion to the court to dismiss the appeal, the parties also ask that the original lower-court ruling that monkeys do not have standing to enforce claims under the Copyright Act. If granted, that would presumably leave the door open for PETA or someone else to bring a future claim with a different set of facts.

“PETA contends it would be just and proper to not bind Plaintiff Naruto [the monkey] by the judgment of the district court in light of the dispute concerning PETA’s status to file the complaint which resulted in that judgment,” the complaint says.

In a footnote, Slater’s side demurs, “Pursuant to the terms of the parties’ settlement agreement, Defendants also join PETA’s request for vacatur, without joining or taking any position as to the bases for that request.”

Moreover, the statement released by the parties does not say whether they have in fact agreed on who actually owns the copyright in the photographs taken by the Naruto. According to the statement, Slater has agreed to “donate 25% of future gross revenue from the Monkey Selfie photographs to charitable organizations dedicated to protecting and improving the welfare and habitat of Naruto and crested black macaques in Indonesia.”

Does that mean he has agreed to some sort of shared, or split ownership of the copyright between himself and some other entity on behalf of Naruto? Does PETA, or someone else, have the right to an accounting of Slater’s earnings from the photographs? Who will have standing to bring claims against future unlicensed uses? The statement doesn’t say.

Since the case was settled, whatever provisions the parties may have made with respect to those questions will remain private, and do not establish any sort of legal precedent. Yet, while monkeys may not be rushing to set up Instagram accounts to show off their selfies, works created through machine-learning processes and artificial intelligence are becoming more common. And the question of how (or whether) to fit works created by non-human agents into existing licensing structures is only likely to grow more urgent.

A.I. researchers researchers at Google, for instance, have taught an artificial neural network called Creatism to take aesthetically sophisticated photographs that in A/B tests many professional photographers were unable to distinguish from human-made shots.

Google arXiv

Music composed by artificial-intelligence agents is increasingly finding its way into the soundtracks of advertisements, videogames, apps, and other contexts where suitable human-authored works are either not available or too costly.

It may not be long before A.I.-composed pop tunes start turning up in Spotify playlists alongside the works of anonymous or pseudonymous artists already popping up there.

Those questions will be the focus of two special presentations at this month’s RightsTech Summit in New York.

In one, Edward Klaris, managing partner in the media and intellectual property law firm KlarisIP will offer a global perspective on artificial intelligence and copyright protections.

A second, roundtable presentation, will focus on the specific case of machine-made music. It will feature Drew Silverstein, founder and CEO of Amper Music, an A.I. composer, performer and producer for creating music for soundtracks, and Arnaud Decker of Luxembourg-based Aiva Technologies, which has developed the first A.I. agent to be registered with a collective rights management organization.

The RightsTech Summit will be held on September 27th at the Museum of Jewish Heritage in lower-Manhattan as part of the 2-day New York Media Festival.  Click here for a full list of speakers at this year’s summit. Click here for information on how to register for the RightsTech Summit and the full NY Media Festival.

 

Carrying the Flag for Collective Rights Management

In an age when new technology platforms, politics, and changing consumer behavior are posing existential challenges to the music publishing industry’s long-standing practices of collective rights management and blanket licensing, Paris-based Armonia Online is fighting to preserve the collective.

Formed in 2013 in response to the increasing fragmentation of the European licensing landscape — an unintended consequence of a European Union directive meant to encourage multi-territorial licenses — Armonia is an alliance of collective management organizations (CMOs) that offers one-stop, multi-territory licenses to digital service providers (DSPs) while preserving what it views as the important benefits to rights owners of collective management.

To achieve that goal, Armonia built a collaborative back-office technology platform that allows its member CMOs to harmonize their music-usage data processing and metadata management while preserving their own, proprietary payment arrangements with the songwriters and publishers they represent. The alliance now includes 9 CMOs and 3 mandates, representing over 13 million tracks.

In 2017, Armonia became a charter member of the RightsTech Project, and its CEO, Virginie Berger, will be speaking at the RightsTech Summit on September 27th in New York. We a recent Q&A with RightsTech, Berger discussed Armonia’s formation, its goals, and its views on the evolving role of collective rights management in a time of fragmenting markets.

RightsTech Project: What was the impetus for the formation of Armonia Online? What issue in the market are you trying to address?

Virginie Berger

Armonia Online In 2005, a Recommendation from the European Commission encouraged rights holders to grant multi-territorial licenses directly to digital service providers (DSPs) outside the scope of reciprocal agreements between author societies. This prompted many of the biggest publishers to withdraw mechanical rights from the authority of CMOs (Collective Management Organizations) on the Anglo-American works they represent (as well as some Latin-American and Asian works), in favour of direct licensing in European territories.

As a consequence of this repertoire fragmentation, the local CMOs cannot provide licenses with multi-territorial cover and the DSP has to contact the CMOs in all EU-member states as well as those rights holders that have withdrawn their rights. This poses major problems for all aspects of the licensing process such as identifying the repertoire which requires an additional license and the right holders associated with it.

Armonia Online was created to re-aggregate repertoires in Europe and to facilitate the grant of multi-territorial licenses, by acting as a one-stop shop for online music services wishing to enter Europe. Founded in 2013 by the Italian, Spanish and French collective societies (SIAE, SGAE and SACEM), the hub was joined since by SABAM (Belgium), Artisjus (Hungary), SUISA (Switzerland), SPA (Portugal) and AKM (Austria) and also represents the repertoires of three mandating entities: Universal Music Publishing International, Wixen Music, and SOCAN, for a total repertoire of 13 million musical works.

RTP: How has Armonia addressed that issue? What processes and capabilities did you have to put in place to meet your goals?

AO: The first challenge for our members was to organize themselves into a consortium at a time when the overall licensing market was getting more competitive. In the first place, the European collective societies had paradoxically to structure themselves together within a more competitive environment. In the mono-repertoire licensing system resulting from the fragmentation, smaller collective societies feared a loss of value of their repertoire as well as a leak of their members to the benefit of societies having bilateral agreements with the big publishers.

Armonia’s strength is that it maintains the value for all CMOs’ repertoires, since there is a single agreement on rates and tariffs with DSPs. This is mainly what Armonia has been working on during its first years of operation: how to streamline and harmonize processes within the member societies in order to facilitate and accelerate the granting of pan-European licenses for online services and music technologies. Thanks to these efforts, Armonia has signed deals with Deezer, YouTube, Google Play, Beatport, Guvera, or more recently with 7 Digital and Recisio.

Today Armonia is still working to de-mystify pan-European licensing, but the music rights industry is such a complex business that it takes a very long time to educate the market and the players, especially when they come from outside of the EU – and specifically from the US where the rules are completely different.

Finally, Armonia had to put in place a common initiative which resulted in the creation of a collaborative back office platform to process data and ensure a better identification of rights owners’ works.

RTP: Were you able to use existing technology to build your platform or did you need to develop new technologies/applications, etc.?

AO: To answer the challenges associated with the overwhelming volumes of data to process (around 0.5 TB of data in hundreds of files are sent every month by DSPs) and to avoid the redundancy of processes among the different societies, the Armonia members decided in the very early stages of their alliance to initiate a common back office system. In 2014, Armonia chose the Spanish start up BMAT to build this collaborative service platform for sales reports processing, acting as a trusted and neutral third-party.

The service platform built with BMAT takes the best and appropriate technologies available in the market and is fully scalable. As a first step, the technology enabled Armonia to have a common quality check of DSPs’ sales reports, a single repository with 10-year archive of sales reports as well as a mutualisation of business analysis. Then, Armonia developed metadata cleaning and enrichment to improve reports quality and automated matching, resulting in a faster and more accurate identification of works.

Today, the Armonia back office platform is processing at a speed of 2GB per minute and 72 billion of elements are transacted every month. We keep improving our technologies and developing our tools to improve the accuracy and timing of financial streams for rights-owners royalties’ payouts.

RTP: What are Armonia’s principal long-term goals, and how far along do you believe you are in reaching them? Where did you see Armonia Online ultimately fitting within the music licensing system?

AO: Armonia’s main goal is to sustain collective management of rights in an environment where its relevance tends to get undermined, despite being more crucial than ever for protecting authors’ rights.

Indeed, some entrepreneurs claim authors can bypass CMOs and have their rights managed more efficiently by some new innovative players. Yet CMOs are constantly investing in new ways and technologies to improve their processes. Often, the processing of the data for a given digital service cost more than the revenues it actually generates.

The CMOs within Armonia are not-for-profit and their one and only reason for doing business is to get more revenues to distribute to their members. SACEM for example, the French collective society, has never distributed as much money as it did in 2016. And CMOs always are at the forefront of battles with non-paying players such as piracy platforms or web and TV giants.

Armonia ultimately aims at expanding into a strong international community of societies fighting for the protection of authors’ rights and helping them to make a living from their creations. To that end, we have put in place strong licensing agreements with major DSPs to ensure maximum revenues for the authors.

RTP: How would you assess the current state of the music licensing system? Is the industry moving in fast enough to develop the capabilities needed to sustain a healthy music economy? Is if falling behind? Where are we on the learning curve?

AO: The traditional players from the music licensing system took a long time to fully embrace the new consumption habits in the digital realm and to adapt to them. It’s only very recently that we have seen technology initiatives emerge among those traditional players. However, transparency in royalty pay-outs remains a major challenge among all of those new privately-owned technology structures, whereas CMOs must comply with ever-stricter transparency guidelines.

What has been interesting lately, is how the traditional industry has begun to join forces to build common initiatives in the fields of tech and innovations: the ASCAP/BMI joint song database plan, the SACEM/PRS/ASCAP blockchain project, the R&D initiative of the Nordic music copyright societies ‘Polaris Future Lab’, ASCAP/PRS/STIM partnership with the Swedish startup Auddly… CMOs know they cannot move fast enough to adapt if they are on their own: cooperation and exchanges of expertise are keys.

Yet there is still work to be done and processes to be improved since the digital storm is far to be over. New models are emerging every year, regarding both financing structures and types of contents, that do not fit in the boxes of traditional licensing schemes. It is always about finding the right balance between what is fair for artists without asphyxiating the service: a startup still in its infancy today could be the Spotify of tomorrow, and overwhelming licensing fees or advanced payments could nip it in the bud and prevent from significant revenues in the future.

RTP: What are the main challenges the industry still needs to address with respect to licensing, and how effectively are they being addressed?

AO: The number one challenge in the licensing system today is the identification of works. Collective societies rely on metadata to identify works, but very often, the information available is not qualitative enough to properly match a work with its rights owners. Moreover, the international licensing system relies on two types of information: the sound recording data, associated with the International Standard Recording Codes (ISRCs) and the publishing data, associated with the International Standard Work Codes (ISWCs). Today, there is no industry-wide system in place to reconcile the two, and third-party tech providers often don’t have access to it.

Technologies like audio fingerprinting, metadata enrichment or blockchains have been developed to reduce, over time, the number of unidentified works. Still, thousands of new works are added every day to the thousands of music work already in databases within the publishing industry, making the task very complex.

Another very interesting challenge the music rights industry will have to tackle in the very near future is Artificial Intelligence in the many possible ways it could impact our organizations. How could machine learning change the composition of music? When an AI creates a piece of music, who owns the rights to it? And who is liable for copyright infringement in such event? These are questions the industry has to address today if it wants to remain relevant tomorrow.

 

Square Co-Founder Jim McKelvey to Keynote RightsTech Summit

In 2009 Jim McKelvey was a practitioner and teacher of the art of glassblowing and author of a leading textbook on the subject, The Art of Fire. Frustrated by his inability to complete a $2,000 sale of his glass faucets and fittings because he could not accept credit cards he approached his friend, Jack Dorsey, the co-founder of Twitter.

From that collaboration, Square, Inc., was born, which revolutionized the world of payment processing by turning any smartphone and tablet into a credit card reader and cash register.

That nexus, between artistry and innovation, is the core of the RightsTech Revolution, and will be the focus of McKelvey’s keynote fireside chat at the RightsTech Summit in New York on September 27th.

In addition to Square, McKelvey is the co-founder of the Third Degree Glass Factory in St. Louis, and a partner in Cultivation Capital, an early-stage investment fund.

He also sits on the board of directors of Calpian  Inc., which offers mobile money solutions through its Indian subsidiary MoneyOnMobile, and is an independent director of the St. Louis Federal Reserve.

His latest venture, LaunchCode, is a non-profit organization that aims to grow new talent and create pathways to on-the-job training and employment.

Jim will discuss his evolution from artist to entrepreneur, his strategies for building and growing companies, and the ongoing evolution of the Square Payments Platform.

For information on how to register for the summit click here.

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

Get the latest RightsTech news and analysis delivered directly in your inbox every week
We respect your privacy.