Thursday, February 28, 2008

NAB Still Trying to Deceive

Unbelievable - Radio Ink reported yesterday on the National Association of Broadcaster's (NAB) new ad that is scheduled to run in several Capitol Hill publications. According to the article, the ad includes:
Free local radio provides valuable exposure and promotion to record labels and artists simply by playing their songs ... for free. But what are the artists getting from their record labels? Not much, according to a recent lawsuit filed by more than a dozen artists against the world's largest label, Universal Music.
Talking about misdirection bordering on negligent manipulation. Puffery, such as the allegations that the "performance tax" will put some radio stations out of business, is to be expected from an activist group. However, for the love of all things, what in the world does an artist's record royalty have to do with a performance royalty?! If anything, this is an argument in support of performance royalties, i.e., we can't trust labels to properly account to their artists for record sales, so recording artists should get paid a performance royalty from third-party organizations just like their songwriting counterparts (and like recording artists themselves get from online radio).

The NAB illustrates the lunacy of their position every time they talk about it. They, the representatives of a highly consolidated industry with a reprehensible record, are trying to play a sympathy card. They portray radio conglomerates as a social good because they don't charge the public to listen to their stations, but NAB fails to mention the billions of dollars made off of advertisements. They also fail to mention how insignificant a sound recording royalty would likely be to most operators' bottom lines.

I hope Congress doesn't let Clear Channel, Cumulus and their cohorts convince them that terrestrial radio (still) deserves special consideration; if the arguments that are gaining traction in Washington are as ridiculous as those in NAB's ad, the artists are going to be in serious trouble.

Tuesday, February 19, 2008

Universal Sued for Failure to Properly Account to Artists

AP says Universal is getting hit with a $6.07 million lawsuit for failure to properly account to a host of artists. According to the article, plaintiffs include Patti Page, and the estates of Count Basie, Sarah Vaughan, Woody Herman, Les Brown, Benny Goodman and the Mills Brothers.

Could It Be Comcast?

A couple of days ago, I wrote about the major labels' desire to employ internet service providers as their own private police force. For its part, Comcast no longer denies its throttling of internet traffic of suspected file sharers, and has come out to say that it has a duty to help cut off the flow of file sharing (though its justification is that file-sharing hogs the pipes and reduces transfer speeds for other customers).

This was in the back of my mind when I went to PirateBay to look for Windows Media Center (I promise, I only wanted to test it to see if it was any better than Nero, which I already have, for use in a home theater PC - damn, I'm a hypocrite). However, I noticed that it took a painfully long time for the main page to load. Once I refreshed, it came up pretty quickly. I then executed a search, and it hung again for about a minute. After a refresh, it seemed to load fine. These and several other problems got me to thinking - was Comcast trying to block all traffic with the domain, Whatever was going on, it was enough to make me give up and go to bed. I'm sticking with Nero.

I've certainly made no secret of my disdain for companies who profit by giving away the creative works of others and while my sympathies are stronger with the music industry, I feel some for the software community as well (though programmers can always get a day job working their craft, while an artist's day job generally involves uttering the words, "Smoking or non-smoking?"). However, I totally disagree with any enforcement action against average citizens, which is precisely what Comcast is doing.

It would truly be freakish if an ISP could act as an all-seeing, all-knowing gatekeeper, preventing average joes from walking into that burlesque house of trading. We've been willing to lose some anonymity by taking our lives online but I'm not so sure that anyone is ready to be told where they can and cannot go, especially by a private corporation.

For some reason, it would "feel" better if lawmakers were to devise a way to make the torrent trackers go away through some legislative remedy - if officials shut a file sharer down, a lot of people would be upset, but eventually they'd get over it and either abandon the practice or hit the new spot. However, to be denied access to something just because an ISP says you can't go there leaves one feeling a bit screwed.

Friday, February 15, 2008

Another Morning Show Profanity "Slip"

Jane Fonda used the "C-word," as reported by Broadcasting & Cable, when describing her participation in The Vagina Monologues on NBC's Today show. There are some rumblings as to whether the FCC will take enforcement action against NBC.

B&C quoted Tim Winter, a former NBC employee and current president of the Parents Television Council (otherwise affectionately known as the Puritanical Tyrants Committee), as saying: "If an NBC employee used the ‘C-word’ to another employee, that employee would be suspended or even fired . . . While NBC’s apology is helpful, it is not enough -- millions of families were indeed offended."

So, according to Mr. Winter, an NBC employee's use of the C-word would get that employee fired? Really? Maybe, if they used it to describe a superior to his or her face, it could result in being terminated. However, when used in this context, I would imagine that several non-sanctioned dirty words might also lead to one's unemployment. For instance, if used with equal fervor, one might find herself looking for a new job if she told her boss, "You are such a butt muncher!" or, "You tampon!" or, "You Puritanical Tyrant!"

Alternatively, I could also see a dismissal for C-word usage if uttered in a sexually discriminating or harassing way but, in those same contexts, the more medically acceptable "vagina" would probably lead to a similar result.

Absent such use of the C-word, I highly doubt that any NBC employee would be fired for their language alone. Moreover, I doubt that "millions of families" were offended by Fonda's slip of tongue. Children whom are watching the show likely have no idea what "vagina" means, much less the socially unacceptable nicknames for the female anatomy. I also doubt that any alert parent would allow their children to continue watching a show where The Vagina Monologues were the topic of discussion (What were these conservative parents doing watching an interview with the wholly unpatriotic Jane Fonda, anyway? You know, the ones who still think she fights for the North Vietnamese?). Even if they were offended, are there not far more disturbing topics being discussed on a morning news show, like school shootings or wars or warrantless wire taps?

I know it's the PTA's mission to root out all instances of "profanity" on TV and bring the evil-speakers to justice, though I can't help but think that they could spend their time on a more worthwhile cause.

Wednesday, February 13, 2008

Using ISPs to Control File Sharing

Digital Music News reports today that the major labels might be gaining some traction in their bid to require internet service providers to play a role in stemming file sharing:
According to information surfacing Tuesday, British legislators are now proposing measures that would force ISPs to monitor their traffic, and restrict access for repeat offenders. An early-stage consultation paper outlines a three-strikes policy, though details are still being developed.
Once again, the majors and their legislative counterparts are taking the wrong-headed approach. Rather than focusing on the source, and perhaps finding new and creative ways to stop major sources of file sharing, they are going after the users employing the services. True, if some joe in Thailand is making tens of thousands of songs readily available to millions of people, they might want to shut that "user" down. However, it's really the commercial enterprises that enable the joe who should be pursued.

The problem with using ISPs as deputies in the file sharing battle is that they will necessarily monitor the traffic of all users to find the bad guys. This is akin to the U.S. government tapping AT&T to monitor all telephone calls and internet traffic to track terrorists - making everyone a suspect for the sake of catching a handful of evil-doers.

This approach also will presumably require some investigation into the files actually being transferred, since countless people will be moving large files for legitimate purposes. In my legal practice, for instance, we routinely accept and transmit legitimate copies of music files, trademark specimens, copyright deposit material, etc., and all of this could be viewed as suspect without context (even if they new the file types, we might still draw a red flag).

For a file sharing enterprise to be successful, people must know about it. If people know about it, law enforcement should not have a problem investigating it and gathering evidence specific to that enterprise sufficient to bring criminal charges in whatever jurisdiction necessary. Enlisting the help of ISPs is a simpleton approach and fraught with far more problems than solutions.

Tuesday, February 12, 2008

Radio Conglomerate Relief Act Gains Momentum

Radio Ink reports that there are now 148 House members signed on to the Local Radio Freedom Act, aka the Radio Conglomerate Relief Act. The purpose of this Act is to prevent imposition of a performance royalty for sound recordings, which is a recognized right throughout the industrialized world. Congress saw fit to impose a sound recording performance royalty on internet radio, yet apparently are set to refuse the same requirement of terrestrial radio. Are the two methods of delivery so different? They are in one crucial respect: Terrestrial radio enjoys one of the more powerful lobbies this nation has ever seen.

Among some of the preambles to the Act:

  • The U.S. radio and record industries "are the envy of the world, due to the symbioitic relationship that has existed among these industries for decades." Actually, most nations look at our radio industry as archaic and unfair for the very issue under consideration - no performance royalty for recording artists.
  • For 80 years, Congress has rejected calls to impose a "performance fee on local radio stations for simply playing music on the radio and upsetting the mutually beneficial relationship between local radio and the recording industry." Use of language, as I pointed out in an earlier post about this same topic, is critical. Notice that a royalty is described as a fee, two references to "local" radio when in reality we're concerned with major media companies, what is described as a mutually beneficial relationship when really it is radio who benefits by getting to play the music for free, which creates an audience, which in turn allows them to generate profits from advertising.
  • "Local radio stations provide free publicity and promotion to the recording industry and performers of music." True, though this also ignores the fact that the revenues generated by "local" radio stations like Clear Channel enabled it to build the single largest concert promotion company, which in turn used the power of its radio holdings to force artists into unfavorable tour deals.
  • "Congress found that 'the sale of many sound recordings and the careers of many performers benefited considerably from airplay and other promotional activities provided by both noncommercial and advertiser-supported, free over-the-air broadcasting.'" Sure it did, but what does this have to do with whether radio should pay a fee for its use of sound recordings? If recording artists benefit from radio, so have songwriters, and since the dawn of radio Congress saw fit to require radio to pay a royalty to them - why should recording artists be any different?
  • "Local radio broadcasters provide tens of thousands of hours of essential local news and weather information during times of national emergencies and natural disasters, such as September 11, and Hurricanes Katrina and Rita, as well as public affairs programming . . . all of which are jeopardized if local radio stations are forced to divert revenues to pay for a new performance fee." This is my favorite, considering the major proponents of this bill are those who consolidated the industry, and as a result of their consolidation, ensured that most of the Gulf Coast was left in the terrestrial dark after the storm, leaving low-powered stations as the only source of information for tens of thousands of residents (the same low-powered stations that the conglomerates have fought very hard to push off of the dial). These same companies have also been criticized repeatedly for their failure and inability to address local emergencies as a result of the consolidation.
  • "Many thousands of local radio stations will suffer severe economic hardship if any new performance fee is imposed, as will many other small businesses that play music including bars, restaurants, retail establishments." Again with the language, painting a picture of poor mom & pop radio stations having to shut down because of this fee, and of all the other businesses that will be impacted. This is no doubt drawing an analogy to songwriter performance royalties, which are required of all businesses performing music. However, the rules could always be written to only pertain to commercial radio and not an across-the-board performance royalty. There could also be a small, reasonable fee for secondary users like bars and restaurants, and an earnings floor so that small radio isn't unduly burdened. These seem to be far more reasonable solutions than to allow the conglomerates to ride the coattails of the small business struggle.
  • "The hardship that would result from a new performance fee would hurt American businesses, and ultimately the American consumers who rely on local radio for news, weather, and entertainment; and such a performance fee is not justified when the current system has produced the most prolific and innovative broadcasting, music, and sound recording industries in the world." The first part of this is completely bogus, as the conglomerates have already inflicted the damage they complain of through consolidation, i.e., local business have been shuttered and the American public largely has been robbed of the benefits of local radio. The second part is perhaps the most accurate and honest statement in this whole Act: Don't rock the boat.
The meat and potatoes of this Act is the following:

Resolved by the House of Representatives (the Senate concurring, That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.
It can't be clear enough - a performance royalty on sound recordings is one thing that would benefit the artist just as much (if not more) than the labels or any other non-creative industry participant. Songwriters earn performance royalties and are paid these royalties from third-party performing right organizations. These royalties are almost never subject to recoupment by publishers. Recording artists would similarly be paid performing royalties from a third party, likely SoundExchange (yes, it's an arm of the RIAA but still pays directly to artists), and labels wouldn't be able to recoup advances and recording costs from these royalties, meaning the money goes directly into the pockets of artists.

While I'm no fan of finding new ways to feed the major labels' hunger for profit (even when they are running in the red), it is far more desirable to see them earn more revenue from recorded music as opposed to striking the new "360" deals that are becoming more prevalent. Rather than letting the majors dip even further into the artist's pocket, why not let radio start paying its fair share? In the end, it's always the artist who gets screwed, so why not encourage Congress to do what it hasn't done in our industry . . . ever. Stand up for the little guy. Stop protecting major corporations at the expense of those who are responsible for creating the music from which everyone but the creators seem to profit.

Consider this an informal call to arms - write your lawmakers and tell them to oppose the Radio Conglomerate Relief Act.

Friday, February 08, 2008

Does Providing Access to One's Own Computer Files Raise Self-Incrimination Concerns?

USA Today reports on a case concerning computer passwords and an individual's Fifth Amendment right against self-incrimination. Sebastien Boucher was crossing the U.S.-Canada border when he was stopped and searched by agents. He consented to the search and initially gave access to his computer.

Among the files reviewed by the agents was child pornography. Mr. Boucher was arrested and, following his arrest, officers attempted to access an area of the hard drive that was password protected. Mr. Boucher refused to provide the password and is defending his position by relying on the Fifth Amendment.

The USA Today article points to a couple previous cases that are somewhat related. In a federal court case concerning the search of a man's laptop in the LA airport, the federal judge suppressed the evidence gathered, ruling that electronic storage devices are extensions of the human memory and should not be opened to inspection without cause.

In Mr. Boucher's case, federal Magistrate Jerome Niedermeier followed a similar logic. According to a quote in the USA, Niedermeier held that, "Producing the password, as if it were a key to a locked container, forces Boucher to produce the contents of his laptop. . . . The password is not a physical thing. If Boucher knows the password, it only exists in his mind."

I'm no champion of law enforcement's rights of search and seizure and am generally opposed to several currently permissible searches (e.g., abuses of probable cause in traffic stop situations, overly broad searches incident to arrest, etc). I also strongly oppose the use of certain invasive search techniques for investigative purposes, such as key-stroke recorders and data communication monitoring.

However, I fail to see the correlation between the right against self-incrimination and providing access to a password. The court makes too much of the intellectual nature of a password - that the password only exists in Boucher's mind is far less important than what the password is. I also fail to see the logic behind a sweeping statement that electronic storage is an extension of the human memory. Both of these positions warrant certain judicial consideration, but not in Boucher's case.

First, a password is nothing more than a key. It is itself not incriminating unless the mere knowledge of that password could implicate someone in a crime. For instance, knowing the password to a secure server that was used for an unlawful purpose could in itself be evidence of the crime. Requiring this admission should be scrutinized under the Fifth Amendment.

The mere knowledge of the password in Boucher's case, however, has nothing to do with the crime for which he is charged. He might as well have the key to an indestructible bank safe that is believed to contain a murder weapon. His lawful possession of the key is immaterial, as it is the contents of the safe that are sought. We would have no problem compelling him to produce that key. Why should its intangible counterpart be any different?

The status of electronic storage as an extension of the human memory could be a closer call but is nonetheless inapplicable to Boucher. It could be argued that electronic documents authored by the defendant are essentially his own thoughts and recollections and can be self-incriminating. However, they are also no different than private notes or papers written by the defendant in pen and ink. If any such handwritten materials could be produced at a trial, their digital equivalent should have no greater (nor any less) protection.

In Boucher's case, the question is not one of personally authored material, or at least we should hope not. What the authorities seek is evidence of the crime itself, not his mental state. Possession of child pornography is not a crime of intent so there is no value (other than perhaps to determine length of sentence) to uncovering data concerning whether he intentionally obtained the child pornography. Along the same line, if in fact the authorities believe they might find evidence of Boucher being the author of child pornography, the discovery of those files would be no more self-incriminating since the tapes themselves are the evidence of the crime.

Rather than advocate for a wholesale ban on requiring disclosure of passwords, I hope privacy advocates will focus their attention on more acute questions of self-incrimination by drawing fair and reasonable lines between handing over the keys to a locked location and a disclosure that in itself would constitute (or be evidence of) a crime. I also hope that whatever resources are saved in narrowing their focus will be invested in fighting far more intrusive electronic investigative techniques, which pose a greater threat to a host of Constitutional rights.

Wednesday, February 06, 2008

Mechanical Licenses

Last week, William Patry wrote on his participation in the royalty rate setting hearings going on in DC. Today, articles from Digital Music News and Billboard discuss the same issue.

The National Music Publishers Association ("NMPA") continues to argue that, not only should users pay a performance royalty for the stream, they should also pay a mechanical license fee for the reproduction. Most people would call this "double dipping."

Admittedly, these questions arise because a liberal amount of duct tape has been applied to an antiquated copyright system that hardly made sense before the new technologies emerged. Rather than applying more bogus fixes, we should instead take a step back and look at the fundamentals of the desired result. Namely, how can we ensure writers and publishers are fairly compensated for uses of their works without unduly burdening the user?

In order to do this, we have to look at how the music is provided, how the provider is being compensated, and how the user consumes the music. There are a couple of clear cases - pure downloads (DRM'ed or unencrypted) are virtually identical to CDs and records. A copy is made that can be performed at will by the user, and the user is paying for that particular copy.

Non-interactive streams are also identical to their predecessor in that when the music is performed is dictated by the provider, not the user. Whether the provider earns income from advertisers or subscription is, for all practical purposes, immaterial because that income is not directly attributable to any single performance or single song. The whole of their income can be fairly attributed to the whole of the music performed. Therefore, it is impractical to levy a license fee strictly on a per-use basis.

The NMPA has been selective in how it would like to see certain uses be treated based on what would create the most wealth for its members, even if its position is contrary to logic or the common good. For instance, in 2006, it sought to have the Register of Copyrights find that ringtones were not digital phonograph deliveries ("DPD") but were in fact performances and, therefore, did not qualify for the statutory mechanical license. It went further to argue that these performances were unlicensed derivative works.

The Register issued her findings on October 16, 2006, and after a thoughtful analysis, concluded that ringtones were DPDs and qualified for a mechanical license under Section 115. The Register observed the definition of a DPD, namely, "each individual delivery of a phonorecord by digital transmission of a sound recording which results in a specifically identifiable reproduction by or for any transmission recipient of a phonorecord of that sound recording."

A ringtone, like a download, CD, or record, results in the same thing: a specific copy of the composition on a sound recording that is controlled by the user. The NMPA tried to argue against this by pointing out that ringtones are not played at the will of the user but instead are only performed when the phone rings. It further argued that because the performance could be perceived by others in public, it constituted a public performance.

A couple months after the Register's opinion was published, I asked the head of the NMPA whether this meant that publishers would stop insisting on a performance license for ringtones, since the Register made it clear that ringtones were DPDs. My presumption was that mechanical licenses for DPDs compensate the "mechanical" performance of music, while a "public performance" license compensates for "live" performances. In other words, the two are mutually exclusive - like sedans and pick-up trucks are both automobiles but no sedan can be a pick-up (El Caminos notwithstanding).

The NMPA took advantage of the Register's opinion and muddied the waters even further. The response to my question was that the NMPA did not agree that ringtones were DPDs but so long as that was the Register's opinion, they would insist on a mechanical license. The NMPA also did not agree with me that public performances and DPDs are mutually exclusive and pointed out that the Register did not say that ringtones weren't public performances, only that they were DPDs. Therefore, the NMPA's position was (and as far as I know, still is) that a ringtone requires both licenses.

Such far-fetched arguments are precisely why the debate has gotten to where it is today, and these same types of arguments are why the copyrights system was already flawed.

Now the NMPA is using its ringtone-based logic to maintain that interactive streams require two licenses and two fees. On the other side, digital radio services attempted to have the Register issue a ruling as to whether on-demand streams require a mechanical license at all. The royalty board refused to submit the question to the Register, finding that it was an issue of fact and not law.

The semantics are getting in the way of reaching a real solution. We should stop trying to put square pegs into round holes and look at what is really going on. Unlike ringtones, which are clearly and undeniably a DPD and DPD only, on-demand streams are a hybrid because users are getting to perform the music when they want, but yet never take title to a tangible medium that embodies the work. However, their use is limited like that of radio because they must be connected to the service in order to play the music, thus limiting their ability to perform the music. They must also continue paying a subscription fee (presuming there is one) and once they stop paying, they no longer have access to the music.

As much as I dislike the ASCAP and BMI royalty models, perhaps it is best to suggest a third, wholly distinct class of uses akin to their licenses. After all, our "mechanical" license owes its origin to the player piano, and it's name is indicative of what it permitted - the mechanical performance of music. A third class of use could shed the shortcomings of both performance licenses and mechanical licenses. It could be designed specifically for what it is intended to authorize.

This third class would include any use that allows users to select their performance but stops short of providing them with a permanent copy. The licenses for these uses could be set on a scale, the cost for which depends on these factors:

(1) the degree of access, i.e., unlimited performances versus a single performance per user, and/or the availability to the user (must user be connected to the service?);

(2) the duration of access, i.e., virtually indefinite versus a short time; and

(3) the payment method, i.e., free to the user and/or ad-supported, one-time fee, or a monthly subscription.

Considering each one of these factors will likely account for all the possible delivery methods and will allow enough flexibility so that the license system may grow. They are all relative to the same two extremes and where they fall in that continuum will determine what rate is appropriate.

No matter what happens, I hope that all parties involved stop thinking solely with their wallets and start focusing only on what is right and fair.