There should be no question that recording artists, songwriters and composers are eligible to terminate transferred copyrights after 35 years under Section 203. Unfortunately, this statutory right is often muddied by major labels that want us to believe that sound recordings are somehow not part of the provisions laid out by Congress in the 1976 Act. While it is true that the Act exempts certain categories of works, it is absurd to think that Congress intended to exclude recording artists from this fundamental right.

FMC’s Casey Rae, testifying in the latest House Judiciary Subcommittee on copyright.

Full recap here

Licensing Costs Alone Didn’t Doom East Village Radio

In yesterday’s congressional hearing on music licensing, Chris HarrisonVP of Business Affairs atPandora, expressed concern for the viability of internet radio, making reference to popular internet broadcaster East Village Radio having shut down its operations last month, “because they couldn’t afford the [royalty] rates.” As fans of EVR’s wildly eclectic programming, we were saddened to hear that the station was closing down. But Harrison’s account of the reasons behind the closure isn’t the full picture.

Harrison wasn’t alone in making the erroneous oversimplification. When the shutdown announcement came down from East Village Radio, several media outlets were quick to point the finger at high royalty rates, painting a picture of a backwards-thinking music industry that would rather nickel and dime internet broadcasters than enjoy the benefits of a community-minded station eager to introduce music to new audiences. But that narrative was confusing to us, mostly because we remember the negotiations of 2007-2009 which led to lower rates intended to help make these kinds of stations be more sustainable.

Earlier this month, we decided to get in touch directly with EVR station director Peter Ferraro who cleared up the confusion for us. Ferraro cautioned against “getting hung up on the licensing issue,” which was “only one of many factors” that added up to a high cost of doing business. “We were in a break even scenario at the end of 2014 and wouldn’t have been able to grow the business in the way of staffing and infrastructure in order to get us to the next level.” Among those other factors: bandwidth and internet costs unrelated to licensing, payroll, office space and other overhead costs.

Indeed Ferraro and EVR founder Frank Prisinzano said just this in a powerful guest post for Billboard:

”…we kept getting close to putting the infrastructure we needed in place to achieve our goals. Then the reality of that same infrastructure’s cost — payroll, Internet, server and licensing — would saddle us and set us back again and again.

We had opportunities for investors, but we didn’t think we’d be given the autonomy to continue on the path we were on. There was never any discussion of selling out. It was always: “Run it properly or shut it down.”

In our conversation, Ferarro further clarified that to the extent licensing was an issue, it was “less about the rates we were currently paying” and more about ambiguity about how rates might be structured in the future (a ruling by the Copyright Royalty Board is expected by the end of 2015 and will cover the years 2016-2020).

Because they didn’t run advertising, some observers were surprised to learn that EVR wasn’t a nonprofit organization. Ferraro explained that EVR explored the nonprofit option early on, but ultimately chose not to go that route. The station operated in a kind of middle ground occupied by many grassroots arts organizations: not following the typical commercial business model, not principally motivated by profit, but also not operating within the 501(c)(3) federally-recognized non-profit paradigm. They default to the structure of a standard business, and thus they paid the same licensing rates as most commercial webcasters. Still, sponsorship was an important source of revenue for EVR, and they did run advertising on their webpage. Had the station obtained nonprofit status, they could likely have cut their licensing costs by paying the non-comm rates established by the Webcaster Settlement Act. But again, licensing costs, while “definitely a factor” were not the only issue: “working seven days a week, 12-15 hour days was not going to fly going into the second half of this year and into next year.”

Read more

Do Major Labels Really “RESPECT” Older Artists?

Yesterday (June 25, 2014), the House Subcommittee on Courts, Intellectual Property and the Internetheld yet another hearing in its ongoing review of existing copyright law. (We’ll post a full recap shortly; check out our previous coverage here.) Today, we’ll focus on one particular topic that has come up repeatedly in Congress and elsewhere: the lack of federal copyright protections for recordings made before February 15, 1972.

FMC is on record in support of the full federalization of “pre-‘72” recordings, because we think it’s the best way to protect older recording artists who have contributed so much to American musical culture. We stand with the United States Copyright Office in our call to close this loophole, and appreciate the Office’s recommendations on how best to do so. But believe it or not, there are still some who want only limited protections, or none at all.

And who might that be? Why, the major labels.

A few years ago, the Copyright Office sought stakeholder input on how to fix this problem, and FMC was part of those discussions. At the time, we were struck by the major labels’ adamance about preseving the status quo. The labels not only opposed full federalization—they also rejected any stopgap measure to compensate artists for certain uses, such as Internet radio play.

The major labels have since changed their tune on a limited performance right for pre-’72s for Internet and satellite radio, but they remain wishy-washy about full federalization. Why might that be? One reason the labels cite are the “administrative challenges” in bringing these older recordings under federal protections. But we think there’s probably more to it. Major labels can be very cagey about what they do and don’t own, because a proper accounting of their copyrights likely means a proper accounting of what they owe artists. The labels also want to reserve the right to sue services for high damages under the patchwork of state laws covering some—but nowhere near all—legacy works. Meanwhile, the lack of full federal protetctionsfrustrates artist compensation, rights recapture, copyright enforcement and leaves music services open to liability.

At the hearing, RIAA boss Cary Sherman backpedaled a bit, suggesting that federalization is a goal, but one probably best left for another day. “The music business has reinvented itself, but our work is not done,” he remarked. While we admire the major labels’ newfound commitment to protecting legacy artists, we find this new position hard to reconcile with their earlier opposition.

Proposed legislation called the RESPECT Act would address the issue of Internet and satellite performances of pre-’72s. It’s a step in the right direction, but as we’ve previously noted, it doesn’t go far enough. Older artists deserve full protections under law, and Congress is the only body in the land that can make it happen.

Observers of politics are no doubt familiar with the concept of “strange bedfellows.” In this instance, you’ve got services like Pandora, artist advocates, copyright maximalists, academics, libraries, archivists, reissuers and more calling for full protections. Only the major labels seem resistant.

We think that the big labels should join the rest of the music community in urging Congress to adopt full federalization of pre-‘72 copyrights as part of any update to existing laws. If the majors are serious about the fair treatment of recording artists, it’s the least they can do.

And they are serious about that, right?

Canada Scraps Work Permit Requirements for Touring Musicians

This week, the Canadian government opted to dramatically change the labor regulations placed on non-Canadian acts touring in Canada. The decision essentially reverses last summer’s decision that drew the ire of the American Association of Independent Musicians (A2IM) and the Canadian Independent Music Association (CIMA) among others.

Last year’s legislation created Labor Market Opinion fees for foreign artists playing at small clubs, bars and other unrecognized music venues in Canada. The established fee was $275 per band member, which, when compounded with the work permit fee of $150 for an individual musician or $450 for a band, meant that a musical act would pay a minimum of $325 to perform, and bands with six or more members would pay upwards of $2,000. Given the size of the venues that are affected by these fees and the costs of travel, lodging and food costs to the fees, these fees made touring in Canada financially risky at best and ultimately impossible for many independent artists. Unsurprisingly, the fees faced opposition from touring musicians and Canadian citizens alike who launched a change.org petition to amend the regulations to exempt bars and small clubs that garnered over 140,000 signatures.

Yesterday’s decision not only eliminated the LMO fee, it also did away with the work permit fee for touring acts. Lifting these fees provides much greater incentive for foreign acts to tour in Canada. It will be interesting to see if increased touring grows the live music market creates more opportunities for small Canadian acts to perform, ultimately leading to a bolstered Canadian music scene.

For now, foreign performers who had opted out of performing in Canada or who were forced to find dates in non-bar/restaurant venues may be looking to schedule some last minute tour dates up north to escape the summer heat.

New NEA Chair (Finally!) Gets to Work

After a long delay, on Thursday, June 2, Dr. Jane Chu was confirmed by the Senate as the 11thchairperson of the National Endowment for the Arts. Chu, who succeeds acting chair Joan Shigekawa, was nominated for the position by President Obama in February after a vacancy of more than a year following former chair Rocco Landesman’s departure. This week, she’ll make her first public appearance as Chair on Friday morning’s National Council on the Arts meeting.  

Chu comes to the position with a wealth of knowledge in both the arts and philanthropy, and we were delighted to learn that she’s a musician herself—in this interview for the Art Works podcast, she tells of learning to play the piano at age 8.  She holds bachelors and masters degrees in music education, a masters of business administration and a PhD in philanthropic studies. Prior to her nomination, Chu served as CEO of the Kauffman Center for the Performing Arts in Kansas City, MO. During her tenure asCEO, Chu, who has been praised for her abilities as a fundraiser, oversaw the campaign to build the center, which is now home to the Kansas City Ballet, Symphony Orchestra and the Lyric Opera of Kansas City. The center also hosts a variety of performances in music, dance and theater by artists from around the world, and as the Washington Post noted, “That the Kauffman Center was built during the recession in a moderate-sized city surprised and impressed many in the arts-management field.”

In these tough economic times, the NEA has been woefully underfunded, at $146 million in FY 2014, down from a peak of $167 million in 2010; by comparison, the Canada Council For the Arts serves our neighbors to the north with a budget of roughly equivalent size, despite having only a tenth of the population. Nonetheless, the agency has played a key role in encouraging innovative thinking toward new and better ways of supporting artists and arts organizations in diverse local communities. Recent years have seen strong moves towards recognizing the full diversity of American musical traditions, and more interagency collaboration to better integrate the arts into more areas of civic life.  We congratulate Dr. Chu on her confirmation and can’t wait to see what she does in her new post.

T-Mobile: “Uncarrier” or Plain Unhelpful

T-Mobile markets itself as a great liberator within the mobile phone industry through its “UnCarrier” initiatives. But is the company really all that different from other powerful carriers and Internet Service Providers? 

On June 18, T-Mobile announced UnCarrier 6.0, which includes new “partnerships” with streaming services such as PandoraSpotify, iTunes RadioiHeartRadioSlackerRhapsody and Milk Music. Under the UnCarrier 6.0 provisions, T-Mobile will not count music streamed on the aforementioned services against their subscribers’ data caps. Using any other online music service—say, Bandcamp orNoisetrade—will result in slowed speeds and potentially, overages.

This move is worrisome for a number of reasons.

As our former Policy Fellow Rachel Allen described in her look at data caps, innovation and creativity, such restrictions aren’t great for users and artists, and they aren’t particularly innovation-friendly. T-Mobile’s new initiative shows that data caps aren’t just a technique to manage congestion and make extra money from subscribers—they can also be used to discourage competition and limit choice for artists and fans.

The ironically titled “Music Freedom” initiative effectively shoehorns T-Mobile customers into using pre-approved services, some of which may not be the artists’ top preference. You may find yourself asking, “but isn’t this a violation of net neutrality?” If only. The most recent attempts at preserving a level online playing field did not apply to mobile. And most of those rules were tossed out by a federal court late last year. We need to fix this. Now is the time for musicians and all Internet users to tell the FCC that we need the strongest net neutrality rules possible, and that they must apply to mobile. Anyone can file! Make it happen!

Back to T-Mobile. What we’re seeing is a carrier potentially impacting innovation while limiting consumer choice. There’s no doubt that streaming on mobile devices is becoming a central way for fans to access music. Still, many artists have mixed feelings about compensation and leverage on mainstream streaming services. There are alternatives, but how are these and future platforms supposed to gain traction if the game is rigged?

We think “Music Freedom” sets a bad precedent. UnCarrier 6.0 (so far) only applies to streaming music services, but there’s nothing stopping T-Mobile or other (un?)carriers from doing this with other apps. Hang on to your handsets—the slope just got a lot more slippery.  

On a more minor note, UnCarrier 6.0 also includes a function for users to vote for other platforms to include in T-Mobile’s data subsidy. A nice thought, we suppose. Interestingly, one of the services in consideration is Grooveshark—a company that many feel is not on the up-and-up with artists and rightsholders. Is that the kind of company that T-Mobile really wants to keep?

All of the above, along with the probelematic statements made by T-Mobile CEO John Legere about the launch make us think that T-Mobile is more unhelpful than “UnCarrier.” 

A letter to the FCC

The Honorable Tom Wheeler
Federal Communications Commission
12TH ST SW
Washington, DC 20554

May 13, 2014

Dear Chairman Wheeler:

The open Internet has powered the creative community’s pursuits and offerings in the 21st century. As members of this community, we urge the Federal Communications Commission to protect the open Internet as a vehicle for free expression and collaboration.

The Internet is the communications medium of our era. Serving as a platform to anyone with an idea, the open Internet empowers freedom of speech and freedom of expression.But the FCC is now proposing rules that would kill — rather than protect — Net Neutrality and allow rampant discrimination online.

Under these rules, telecom giants like AT&T, Comcast and Verizon would be able to pick winners and losers online and discriminate against online content and applications.

The open Internet’s impact on the creative community cannot be overstated. The Internet has enabled artists to connect directly with each other and with audiences. It has eliminated the barriers of geography and taken collaborations to new levels. And it has allowed people— not corporations — to seek out the film, music and art that moves them.

Allowing broadband providers to control this once-open platform shifts power away from individual artists and creators and interferes with freedom of speech and expression. Unless the Commission restores strong nondiscrimination protections based on a solid legal framework, creativity, cultural commerce and free expression will suffer.

Your proposed path would open the door to widespread discrimination online. It would give Internet service providers the green light to implement pay-for-priority schemes that would be disastrous for startups, nonprofits and everyday Internet users who cannot afford these unnecessary tolls. We urge you to scrap these proposed rules and instead restore the principle of online nondiscrimination by reclassifying broadband as a telecommunications service.

Signed,

Anti-Flag
Fred Armisen
Geoff Bailey
Jello Biafra
Sarah Browning (poet)
Neko Case
Staceyann Chin
Kimya Dawson: The Moldy Peaches, Antsy Pants, The Bundles, The Uncluded
Davey D
Michael Ealy
Fat Wreck Chords
Fugazi
Jonny 5: Flobots
Judah Friedlander
Merrill Garbus: Tune-Yards
Rebecca Gates
Hank Green
Harry and the Potters
Mark Kates: Artist Manager, Fenway Recordings
Allison Kilkenny & Jamie Kilstein: Citizen Radio
Hari Kondabolu
Wayne Kramer: MC5, Jail Guitar Doors USA
Kronos Quartet
The Last Internationale
Evangeline Lilly: actor
David Lowery: Cracker/Camper Van Beethoven
Jeff Mangum & Astra Taylor: Neutral Milk Hotel
Mirah
Scott McCaughey: Young Fresh Fellows, Minus 5
Erin McKeown
Tom Morello
Thao Nguyen: Thao & the Get Down Stay Down
OK Go
Alec Ounsworth: Clap Your Hands Say Yeah
Ozomatli
Martín Perna: Antibalas
Joe Perry: Aerosmith
Billie Perry
Boots Riley
Rich Robinson: The Black Crowes
Benji Rogers: Founder of Pledge Music
Mark Ruffalo
James Schamus
Wallace Shawn
Jill Sobule
Charlie Starr: Blackberry Smoke
Michael Stipe: R.E.M.
Oliver Stone
Jimmy Tamborello: Postal Service, Dntel, Figurine
Jonathan B. Tucker (poet)
Corin Tucker: Sleater-Kinney
Nick Urata: DeVotchKa
Eddie Vedder: Pearl Jam
Roger Waters: Pink Floyd
Greg Wells
Alex Winter
Alicia Witt
YACHT

Is streaming forcing independents to behave more like major labels?

It’s been funny watching the “Sleepify” story go viral this week.  It’s not hard to understand why—it’s one of those feel-good stick-it-to-the-man-at-least-symbolically stories. (Though: technically the band isn’t exactly drawing revenue that wouldn’t otherwise go to artists.  Payouts are a percentage of revenue, so Spotify isn’t paying out any more than they otherwise would.  They’re just paying more to that band rather than to other artists who made actual music.  The only harm to Spotify is a bit of embarrassment.)

But here’s a story that got way less notice and arguably is going to be way more important to understanding how music gets consumed in the future.

“If you’re not happy with your interactive streaming music payout, blame your record label.”

“Wait till more people start using the format, then rates will get better.”

These are frequent responses when musicians have raised concerns about paltry payouts from interactive streaming services. But those responses are called into question by a new interview in Billboard where label boss Martin Millsreveals that his Beggars Group—representing an assortment of popular indie labels such as Matador and 4ADexplains that he is actually reducing the percentage of revenues paid to artists from services like Spotify and Beats Music. The stated reason? The economics of streaming mean Beggars can’t afford more. 

Now, if you’ve been watching streaming music debates closely, you know that equitable artist/label splits is a topic where even noted streaming critic David Byrne and frequent streaming defender Billy Bragg find themselves in agreement. This new development suggests the debate about interactive streaming services and artist compensation is far from over.  (read the rest)