THE COPYKAT

US Copyright Law Applies to the Content Created Overseas

Can the US copyright law apply to the content which although created overseas is made available to the US viewers in violation of the rights of the US rightholders? That was the question the U.S. Court of Appeals for the D.C. Circuit Has recently faced in the dispute between Spanski Enterprises v. Telewizja Polska.

The case which is in them making for over two decades concerns Poland’s public national broadcaster, Telewizja Polska (TVP), granting an exclusive right to Spanski Enterprise (SEI), a Canadian company, to distribute TVP’s content in North and South America for the period of 25 years. It was agreed between the parties that TVP will use geo-blocking technology for its streamed content on the VOD platform, in order to protect SEI’s exclusive licence to share the content on the US soil. Nevertheless, SEI has discovered that the programmes still could be streamed in one of their US offices in New York as the geo-location technology was allegedly disabled. At the first instance, the US District Court for the District of Columbia held in December 2016 that SEI’s exclusive right of public performance has been violated and awarded damages of $3.06 million against TVP. 

TVP in its appeal claimed that “[a]cts committed abroad, even if they would be actionable if performed in the U.S., cannot form the basis for a U.S. copyright infringement suit” and that the US Copyright Law does not apply extraterritorially. Contrary, the US Government in its amicus brief has submitted that “a copyright owner’s exclusive right to control the public performance of the work in the United States is infringed just as clearly when the transmission comprising the unauthorized performance originates overseas”.  In its view the liability should be imposed on TVP despite the performances being initiated abroad, as the events occurred in the US and the unauthorised performances were addressed towards the American public.  

The case is important from the perspective of the US Government as it “implicates the ability of the Department of Justice to prosecute large-scale criminal piracy of copyrighted works by entities located abroad that stream copyrighted works over the Internet to viewers in the United States”. TVP has also raised a second argument saying that “the company may be held liable for direct copyright infringement only if its conduct was ‘volitional’”. Given that TVP has owned the copyright in its content which has been lawfully uploaded to its VOD platform, according to them there was no such conduct. 

The Court of Appeals in its judgment has rejected TVP’s appeal confirming that the automated services, where the user selects the content to view (here VOD platform) are not protected from liability in such cases. According to Circuit Judge Tatel “Congress had good reason to allow domestic copyright holders to enforce their rights against foreign broadcasters who direct infringing performances” into the US territory. Furthermore, with the ease of internet transmission across the world, lack of protection of copyright holders would enable widespread infringement “rendering copyright in works capable of online transmission largely nugatory”.

Football and Music Right Holders were the Most Frequent Claimants in the High Court in 2017

The new research published by RPC shows that music and football right holders bring the most cases to the London's High Court. The rise in the number of claims is a result of rightholders aiming to fight illegal streaming on the internet. The most frequent Claimant in 2017 was PPL (Phonographic Performance Limited), which has brought 88 cases to the High Court. The second most active claimant was Football Association bringing the total amount of 36 cases. Among the top 10 claimants filing the copyright cases are also Sky and BT with 12 and 11 cases respectively. As noted by Paul Joseph, Partner and Editor of RPC’s Copyright Guide “[p]rotecting copyright continues to be a top priority for those holding the rights to music and football.” Given that “the value of football broadcast rights has ballooned over the last two decades, so has the importance to rights holders of protecting their intellectual property.” Football rightholders are now more encouraged to go to the Court following a successful claim in Football Association Premier League Ltd v British Telecommunications plc [2017] EWHC 480, where Arnold J has granted an order to requiring six major internet service providers (ISPs) to block access to streaming servers giving unauthorised access to copyright footage. [as previously reported on IPKat]

With the Internet changing the traditional business model in music industry, it also became important for the rightsholders to pursue “any possible source of revenue from businesses using their material”. Therefore, it is more common for music rightsholders to litigate, in order to maximise their revenues from the copyrighted materials. By filing a number of claims to the High Court, football and music industry companies must hope that their actions will deter potential infringers.  

Belgian Rightholder and ISPs Cooperate in Blocking Websites Infringing Copyright

The process of a group of rightholders applying to the Court for orders requiring Internet Service Providers (ISPs) to block access to the websites infringing copyright has also been widespread in other parts of Europe. Knowing that the process requires both parties to spend a lot of money and with the knowledge that injunctions requiring ISPs to block websites infringing content are now more likely to be granted in the European courts, recently rightholders and ISPs decided to take collaborative approach. Belgian Entertainment Association (BEA) and ISPs Proximus, Telenet and VOO in order to avoid complex and costly legal proceedings have decided to jointly present a list of 33 websites and 450 domain names to a judge, together with claims that “they facilitate the illegal downloading of copyrighted material”. With the possibility given in the European legislation to the national judges to order injunctions requiring ISPs to block access the Commercial Court of Brussels will now assess the list of sites and domains “to determine whether they’re acting illegally”. As explained by Benoît Michaux, lawyer for the Belgian Entertainment Association, this “joint request is a little unusual, things are changing, there is a certain maturation of minds, we realize, from all sides, that we must tackle the problem of piracy by blocking measures. There is a common vision on what to do and how to handle piracy”. As reported by L’Echo with potential concerns of ISPs of possible breach of E-Commerce Directive, ISPs are not willing to take any action against websites without any order from the Court. The Court is expected to render its judgment within a month.

They want you, they want you, 

They want you as a new recruit

US Navy Sued for Copyright Infringement

Bitmanagement, German software company, has brought a claim against US Government in connection with the US Navy installing its software on hundreds of devices without obtaining the necessary licence and therefore infringing their copyright: As reported by Torrentfreak, in 2011 and 2012 the US Navy initially bought licences of 3D virtual reality application for the use on 38 devices. However, as it was soon discovered the application was installed on 100,000 devices without any additional compensation.

Following its Federal Claims Court complaint, Bitmanagement  found out that the number of computes on which software has been installed amounted to at least 429,604. Therefore, after both parties have conducted discovery, Germany software company has requested for partial summary judgment against the US Government for copyright infringement. As stated by the company in their motion “it became clear that the Navy had no intention to pay Bitmanagement for the software it had copied without authorization, as it declined to execute any license on a scale commensurate with what it took”. In response, the US Government claimed that it bought concurrent-use licences that allowed them to install the software across the Navy network and that the authorisation was implied. Both arguments were however rejected by Bitmanagement. The damages according to the software company can amount up to $600 million.

Miley Cyrus Sued for $300 million for Copyright Infringement in her ‘We Can’t Stop’ Song

A Jamaican songwriter Michel May (performing as Flourgon) has brought a $300 million claim against Miley Cyrus for infringement, alleging that her 2013 song ‘We Can’t Stop’ [listen here] too closely resembles a song that he released in 1988 and was a No 1 in Jamaica ‘We Run Things’ [listen here].  According to May about 50 percent of Cyrus’ song comes from his ‘We Run Things’ hit. He claims that Cyrus and RCA Record have misappropriated his material by using the phrase “We run things. Things no run we,” which she sings as “We run things. Things don’t run we.”. Additionally, in his view Cyrus’ hit “owes the basis of its chart-topping popularity to and its highly-lucrative success to plaintiff May’s protected, unique, creative and original content.” Apart from seeking damages, ‘Flourgon’ in his complaint filed with the U.S. District Court in Manhattan also requested the Court to a halt to further sales and performances of 'We Can’t Stop’. In the wake of the Blurred Lines decision, and the more recent Taylor Swift decision over the alleged copying in the lyrics of 'Shake It Off', this could be one to watch. 

This CopyKat by Mateusz Rachubka 

The CopyKat dips a paw into the fast flowing stream

In China. the the National Copyright Administration has updated its policies on music streaming, updating saying online streaming services must stop providing unlicensed music to users. Service providers were required to remove unlicensed music by the end of July . The NCA said in a stament that the move was in line with China's copyright law and regulations. Those who do not follow the order will be 'seriously punished'. Duan Yuping, an official from the NCA, said the violation of copyright is common in China. “(Music streaming providers) infringed the rights of royalty holders, disturbed the order of the online music market, and also impacted the development of our music industry” - the latter being a common thread amongst comments with artistes, record labels and music industry executives supporting the fight against piracy. 

And Jack Ma’s e-commerce giant Alibaba is launching a music division to join its existing film and video units in China. Ali Music Group will be run by singer-songwriter and TV host Gao Xiaosong, who serves as chairman, and Song Ke, a former Warner Music executive, as CEO. Alibaba already has a number of licensing deals in place with the likes of BMG, Rock Records and HIM Records for their content to play on its platforms. 

In the UK, The Intellectual Property Office (IPO) has released data that shows that the number of UK consumers accessing digital content through legal download or streaming platforms has risen 10% since 2013 - but one in five consumers continues to access music, movie, TV or gaming goodies from unlicensed sources online. The IPO survey says that 15.6 million UK internet users now access music online, with twelve million streaming and 10.5 million downloading - confirming the rise of the streams in recent years whic has been a common thread amionst recent figures from the recorded music sector showing streaming income rising at a very fast rate. whilst Spotify and Amazon are amongst the most use streaming music platforms in the UK, 54% of online music was consumed via YouTube - which whilst a licensed service certainly for songs via its licence with PRS for Music - its not seen as a primary revenue source by record labels and music publishers.  10 million UK internet users have accessed films online. Netflix, Amazon and YouTube were the top platforms for film downloads and streaming with Netflix responsible for 44 per cent of all activity. With TV, 15 million UK internet users have accessed a TV programme online. BBC iPlayer, You Tube and ITV Player were the top platforms for accessing TV programmes online with BBC iPlayer responsible for 62 per cent of activity. 21 per cent of users accessed some content illegally. The IPO survey highlighted 62% of internet users in the UK have downloaded or streamed music, TV shows, films, computer software, videogames or e-books. This is up from 56% in 2013. The survey showed that there was a 10% increase in UK consumers accessing content through legal services. One in five consumers still access some content illegally. The survey was published in parallel with research in Australia and shows that while British and Australian users consumed online media at similar rates, illegal downloading for UK consumers was half the rate of their Australian counterparts. 

Last week representatives from the UK’s creative industries, supported by the UK government confirmed the agencies that will help to deliver a major multi-media education campaign aimed at encouraging consumers to do the right thing and access content from a wide range of legal services as part of the Creative Content UK initiative.  The education programme will target 16-24 year-olds, their parents, those responsible for household internet connections, as well as others who influence young people’s attitudes to accessing content. A second part of the initiative will be a subscriber alerts programme that will be co-managed and co-funded by ISPs and content creators and due to begin at a later date.  Participating ISPs will alert and advise subscribers when their accounts are believed to have been used to infringe copyright. The four largest ISPs in the UK- BT, Sky Broadband, TalkTalk and Virgin Media are partnering with Creative Content UK: other partners include the BBC, the Independent Film & Television Alliance (IFTA), the Musicians’ Union and UK Music. 

And YouTube's dominance has prompted the major labels (Universal, Sony and Warner) to start to explore ways to loosen YouTube’s grip on free ad-supported music videos - not least by supporting rival sites like Vessel and Snapchat. The New York Post says that separately, the labels are weighing going nuclear — "potentially yanking rights to the Web’s most valuable and highly trafficked content" with one industry source telling the Post "They are not serious about monetizing music on behalf of creators and, as a result, music companies are realizing they have to reset the current relationship,” The labels are far keener on subscription streaming services such as Spotify's top tier. Industry body RIAA says ad-supported streaming services (both visual and audio) contributed just $295 million in 2014 to the US record industry — with YouTube’s contribution estimated to be about half of that sum. Google has said that YouTube has paid out billions of dollars to the music industry over the last few years and that partner revenue has increased 50 percent year on year the last three years in a row. More on Music Busines Worldwide here.

And Recent statistics explain why the record labels are so focussed: The income of Germany's recorded music market grew 4.4% year-on-year in the first half of 2015. That was mainly driven by a whopping 87% rise in streaming subscription revenues, which easily offset a decline in CD album sales. Download sales also increased. Germany’s record industry, the world’s third-biggest music territory behind the US and Japan, accrued €686m in the first half of 2015. The income of Sweden's recorded music market rose 4.2% in the first six months of 2015 - with streaming growing once again to claim 83.9% of revenues. According to new data from IFPI Sweden analysed by MBW, the market's recorded music turnover in Jan-June this year stood at 507.5m SEK (€54.6m), up from 486.9m SEK in H1 2014 (€52.4m).
And the income of the Italian recorded music market jumped up 22% in the first half of 2015, according to new figures published by Deloitte. The total revenues of the region stood at €65.55m, compared to €53.61m in H1 2014. A strong release schedule by local pop artists helped lift the total physical market by 22% to €37.3 million. Digital revenues increased 37% to €21.18m, with download sales up by 6% to €10.82m. Streaming, increased its year-on-year H1 income by 37%, up to €17.36m.

The Russian government's top Internet regulator has officially warned YouTube that it could be added to the Kremlin's Internet blacklist unless it removes unauthorised copies of Russian TV shows. It's the second time the agency has warned YouTube about the shows in question, and now the video streaming site must comply in a matter of days. A Moscow city court ruled on April 7th that YouTube was violating Russian copyright law by hosting copies of “Chernobyl” and “Fizruk.” YouTube removed the offending cntent but the shows have been uploaded again since, along with another 137 illegal videos. YouTube has until July 27 to remove the URLs in question or be included on the Russian RuNet blacklist, according to Global Voices Online, which tracks Russian media freedom.

The pit at Glastonbury (Denis O'Regan)

ImageRights International has announced the first "fully automated copyright registration service" designed specifically for the needs of professional photographers, "revolutionizing the process for registering photographs with the United States Copyright Office (USCO)". To be clear - ImageRights is a business - not a government or a free service - but makes the point that they have statistics that show that the time, cost, and complexity of registration has deterred 97% of US professional photographers from registering their work with the USCO, potentially losing out on "hundreds of thousands of dollars" in licence fees and indeed statutory damages from copyright infringement claims. There is a cost of course, but any interested (and unregistered) photographers can find out more here.

Oracle has asked a U.S. judge for permission to update its copyright lawsuit against Google Inc to include the Android operating system's current market dominance - Google's Android operating system is now the world's best-selling smartphone platform.  Oracle said it wants to update the copyright lawsuit, filed in October 2010, to add that Google continues its copyright infringement through updated versions of Android in both existing and new markets and this is resulting in harm to Oracle and (of course!)  benefit to Google. More here.  In June the US Supreme Court denied Google's writ of certiorari to re-examine the 2014 decision of the Court of Appeals for the Federal Circuit in favor of Oracle which held that application programming interfaces (APIs) in Java were subject to copyright protection. The next stop for these two companies is back to the trial court to determine whether Google has a defense to copyright infringement under the doctrine of  “fair use.” 

And finally a couple of technology updates - and sorry I have drifted into patents - not the CopyKat's field at all - but fascinating for all lovers of copyright too:

First up, Techcrunch tells us that "Researchers at the University of Cambridge have linked musical taste to thinking style, with possible implications for how future algorithms might better tailor music recommendations. Not to mention the flip side: how music streaming services could psychologically classify their users based on what they like to listen to".

And Mashable says that Apple has filed a fingerprnt sensitive patent application posted to the U.S. Patent and Trademark Office's website on Thursday -  "Apple detailed technology for a specialized TV remote control which could be used to access a person's TV preferences, bypass passcodes for services such as Netflix, enable child proofing and even control smart products in the home, such as garage doors and thermostats." 

The CopyKat - tickling Wednesday's whiskers

Live video streaming is nothing new – services have been around since the early 2000s – but Meerkat and Periscope have made it easier to broadcast our lives on the go and shifted the appeal near to the mainstream as our earlier blog about the potential loss to broadcasters incliuding HBO and Showtime from the Floyd Mayweather and Manny Pacquiqao fight explained. Ever since they launched, however, speculation has followed over the potential legal liability for content delivered on their platforms .... and the Guardian has taken te time to speculate.

its all here http://www.theguardian.com/technology/2015/may/11/periscope-meerkat-broadcast-copyright-premier-league

Rightscorp and their clients Warner Bros and BMG Rights Management have escaped a claim that they abused the U.S. DMCA legal process by exploiting subpoenas. The class action lawsuit attacked "Defendants’ right to petition courts in the Ninth Circuit to issue DMCA subpoenas to identify copyright infringers" accprding to the rihts owners, and District Judge Dale Fischer agreed that there was no abuse of process saying "The first fatal deficiency in Plaintiff’s abuse of process claim is that Plaintiff raises no ulterior motive in Defendants’ use of the subpoenas" adding  "Whether or not § 512(h) subpoenas should validly be issued under the circumstances in which Defendants sought them, there is no allegation and no evidence that Defendants sought to do anything other than what their subpoena requests indicated — identify potential copyright infringers for the purpose of pursuing Defendants’ rights under the Copyright Act." More from the Hollywood Reporter here.

However a small U.S. ISP by the name of Birch Communications has issued a press release which says that the U.S. District Court for the Northern District of Georgia has sided with the ISP and quashed Rightscorp's latest DMCA subpoeana for user information. “Our first order of business when anyone requests access to a customer’s private information is to refuse, absent a valid subpoena or court order, which we then scrutinize as we did with Rightscorp’s illegal subpoena in this matter," said Christopher Bunce, Senior Vice President and General Counsel for Birch. "Rightscorp’s attempt to gain access to our customers’ data was in essence a piracy fishing expedition.”

Universal had posted an 8% rise in digital music income in the first quarter of this year (Q1 2015) to €459m. UMG said recorded music revenues grew 2.4%  and the growth in subscription and streaming revenues more than offset a decline in both digital download sales and physical sales. Music publishing revenues (at UMPG) grew 3% (13% in actual terms) to €184m, also driven by ‘increasing subscription and streaming revenues’. UMG’s overall revenues – across recorded music, publishing, merchandise and more – were up 11.6% year-on-year in Q1 to €1.1bn.

Interestingly given the news that Apple has allegedly been pushing the major labels to clamp down on 'freemium' streaming services - Warner Music Group’s CEO Stephen Cooper (pictured, right) broke ranks with Sony and UMG to encourage the recorded music industry to exercise caution when it comes to dismissing the value of ad-funded music services saying "First of all, there are a lot of models out there, and all of those models — ad-based, subscription-based, or with both — are better than piracy" addng “You know to be crystal clear, piracy is zero revenue, it’s the theft of intellectual property, and it’s not good for anyone. So all of these models are better than piracy, that’s number one" and “Number two, the freemium models, if they encourage the adoption of subscribers… form ad-based [paths] to subscription-based models over time. We at Warner believe that’s good news". Cooper went on to say he would like to see the move from ad based streaming to subscriptions models to be 'turbo charged'. 

The UK has a new Culture Secretary in the person of John Whittingdale MP. The new Secretary Of State For Culture, Media And Sport has been the long-term chair of Parliament's Culture, Media And Sport Select Committee, and he has been supportive of the creative industries in the past, and pushed for the provisions to prevent illegal file-sharing to be included in the 2010 Digital Economy Act. However, its no secret he is not a big fan of the BBC, with the Telegraph leading with "Tories 'declare war on BBC' with John Whittingdale appointment" and the Guardian noted "In October, he described the BBC licence fee as “worse than poll tax” and said the £145.50 charge was unsustainable in the long term." He has said that the licence fee does need to be “tweaked” to take into account of on-demand viewing via the BBC’s iPlayer, and he has said that licence fee evasion should be decriminalised. Record industry trade group the BPI welcomed the appointment of Whittingdale and tahat of his predecessor Sajid Javid MP who becomes Business Secretary in David Cameron's new government.

The CopyKat - A spliffing new case for Mr Prince!

Photographer Donald Graham has sent cease-and-desist letters to the 'appropriation' artist Richard Prince and the Gagosian Gallery, requesting that they stop displaying or disseminating any artworks or other materials that include Mr. Graham’s images. 1709 readers will remember Mr Prince from the 2013 U.S. case of Cariou v Prince where Mr Prince largely succeeded with his fair use defence after 'transforming' Mr Cariou's photographs of Rastafarians in Jamaica. The new complaint, which was first reported by the website Hyperallergic, stems from a work shown last Autumn at Gagosian in the exhibit “New Portraits” (see image) which featured ink jet prints of images that Mr. Prince had taken from Instagram. The work shows Mr. Graham’s photograph “Rastafarian Smoking a Joint, Jamaica” as it appeared on the Instagram feed of a third party, with the comment “Canal Zinian da lam jam” added by Mr. Prince as a caption. Yes, he added a caption to an Instagram grab. In Prince's earlier case, the US Court of Appeals for the 2nd Circuit broadly supported Mr Prince's transformations, saying "Here, our observation of Prince's artworks themselves convinces us of the transformative nature of all but five, which we discuss separately below. These twenty-five of Prince's artworks manifest an entirely different aesthetic from Cariou's photographs. Where Cariou's serene and deliberately composed portraits and landscape photographs depict the natural beauty of Rastafarians and their surrounding environs, Prince's crude and jarring works, on the other hand, are hectic and provocative." Could the same apply on these facts? The CopyKat thinks not - but it's all good publicity! More on Artsbeat here. 

PPL, the UK collection society which licenses use of recorded music on behalf of performers and record companies, brought 230 High Court cases against operators of leisure establishments for alleged copyright infringements in 2014, an increase of 10% on last year, according to analysis by the City law firm RPC. As this Blog has previously noted, The Football Association Premier League also increased the number of High Court cases it launched in 2014. It brought 36 cases, compared with five in 2013, as FAPL and Sky focussed pubs allegedly infringing copyright by broadcasting matches without an appropriate licence. More here.

BRICS (Brazil, Russia, India, China) countries accounted for only 5% of global copyright license revenue for authors and composers in 2013, according to a report from the International Confederation of Societies of Authors & Composers (CISAC). The CISAC Global Collections Report also quotes industry data estimating the Chinese advertising market as one of the fastest growing in the world. Advertising revenue is a key reference indicator in determining collective licensing tariffs. Much of the growth in advertising revenue comes from online advertising, with the China Internet Network Information Center (CNNIC) separately reporting that China now has 649 million Internet subscribers.

Swedish songwriters have joined their UK counterparts in criticising the way in which the digital streaming pie is currently shared out, pointing out the unfair and unsustainable way in which royalties stemming from streaming services are being shared between different stakeholders - in particular the large share taken by record labels on their own behalf, and on behalf of recording artistes. Earlier this month Marty Bandier, head of Sony/ATV Music Publishing, used the Grammy's to argue that songwriters and publishers have been given an unpalatably small portion of the digital music pie, and the British Academy Of Songwriters, Composers And Authors (BASCA) launched a campaign called The Day The Music Died which stated that as the recorded music industry has shifted from CDs to downloads to streams, "songwriters and composers are now finding their livelihoods under dire threat". This view is now echoed by 133 Swedish writers who say the returns from the likes of Spotify and Deezer mean ""very few songwriters will be able to afford to create music other than as a hobby". CMU Daily estimated that in a typical business model, 30% of the income from subscription and advertising revenues are taken by the streaming service to cover non royalty costs, overheads and its own profit, record labels take 55-60% of gross revenues, leaving at the most 10-15% for songwriters and publishers - if that - with one report backed by CISAC saying the songwriting share can be as little as 3% and recommending upping the revenues shared by rights holders to 80% and rebalancing the shares taken for recorded music and the songs to an equal footing. More on the Guardian Blog by songwriter Helienne Lindvall and on potential US reforms here.

So what to do? Well here's a solution (maybe .......): Qtrax, which at one time looked like being a leader in the digital music market only to see its much lauded bubble, launched at the MIDEM conference in 2008, well and truly burst as the major labels refused to deal, is back!  Qtrax is an advert-supported music player that "for the first time allows the users to download, stream and create a personalised radio channel all from one place" - and, crucially, all for free - that is relaunching at the end of the quarter with the twin aims of cracking down on music piracy and - yes, here's the twist - ensuring artists get paid for their work.  The all new Qtrax will launch the Artist Manifesto and 30% of equity in the company will be set aside for an 'Artists Trust', while  an additional 10% of royalties will be paid directly to artists and songwriters whose content is available on the service with Qtrax boss Allan Klepfisz telling The Telegraph: "There is something very wrong with the current model. The current economic structure is not likely to ever compensate the artist... But it's not that difficult for a paradigm shift to occur. Traditionally the record companies get equity in digital services, but no one has asked on behalf of the artists. This could become a de facto way of doing business".

The CopyKat may not be able to look at the Queen - but the Kat can look at royalties

So - streaming is the future of the music industry is it? Well, hot on the heels of Apple's itune's announcing a 14% drop in revenues from global download sales in the first half of 2014 and the continuing and decade long year on year decline in CD sales - it may well be. A recent survey [1] said that Dutch music fans spend just half of what they spent in 2003 on recorded music - but they spend more than twice as much on live music as on recorded music. That sai, the study by streaming service Spotify this year said that in 2013 and for the first time in 13 years there was a slight increase in revenues from recorded music, and figures from the record label's trade body the IFPI supported this position with 39% of global recorded music revenues now from digital channels and 7% from performance rijghts. So - things are on the up - yes? Well  maybe - but, and its a big but - who gets what from the share of the streaming pie is big news indeed at the moment with artists, composers, record labels, music publishers, collection societies and the operators and investors for both subscription and so called freemium (ad funded) platforms all looking for their share of that pie. So, with that in mind, this weekend the CopyKat is all about royalties and who gets what -with a selection of recent posts from around the globe.

Irving Azoff

First off - the big stars flex their muscles. Some 20,000 works composed by popular musicians including The Eagles, Pharrell Williams, Boston, Foreigner, John Lennon, Smokey Robinson, Chris Cornell, and George and Ira Gershwin could soon be removed from YouTube - just as the Google streaming giant launches it's YouTube Music Key, it's much-anticipated music subscription service that will compete with Spotify and Pandora. Why? Well band manager, ex Live Nation chief and now boss of  Global Music Rights (GMR) Irving Azoff (right) has told The Hollywood Reporter that he is prepared to take 42 of his clients away from YouTube. Azoff had already fired a shot accross the bows of the two big US music collection societies BMI and ASCAP saying "The way fans listen to music is evolving daily" adding "GMR is going to give songwriters and publishers an opportunity to engage in meaningful licensing for their intellectual property. The trampling of writers' rights in the digital marketplace without any regard to their contribution to the creative process will no longer be tolerated."

Azoff's announcement followed hot on the heels of the news that Taylor Swift and her record label Big Machine had  pulled her entire catalogue from 'freemium' streaming services - most noticably Spotify and Deezer. Swift's view seems to be this: why let eager fans have something for nothing - when they would happily buy her album in physical form or as a download? And indeed in the first week of Swift's Spotify free album release her album 1989 sold 1.287 million copies in the US, debuting at No 1 in the Billboard 200 albums chart.  "If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, 'Why did you pay for it? It's free on Spotify', we're being completely disrespectful to that superfan who wants to invest", said Big Machine's Scott Borchetta.

Indeed the the recorded music industry may be gearing up to cut down on free music. The Wall Street Journal reported that many of Universal Music’s current licensing deals with streaming partners are expiring at the end of this year, and UMG boss Lucian Grainge recently said “ad-funded is not a sustainable business model”. The WSJ says Universal "planned to experiment with price and membership terms, possibly offering subscribers everything from interaction with artists to access to live events" with Grainge saying "But the third phase" is “going to be accelerating paid subscription and experimentation ....  with an enormous, high-margin, regular, recurring prize at the end of it.” Is that right? Ek thinks freemiu drives subscription and - no freemium - do the piracy rates start to soar again?

Next the British Academy of Songwriters, Composers and Authors has extended the debate by pointing to the relative inequality in payments from streaming made to songwriters when comparied to recording artists and labels. Gary Osborne, who chairs BASCA's Ivor Novello Awards, said this of streaming royalties: "No matter how bad it is for the [recording] artists it's a whole lot worse for the writers! People don't understand the difference between the writer and the act, but artists receive a far higher income from streaming than the people who write the songs. This is because deals were done first with the record labels that represent the artists, after which a few scraps seem to have been tossed to the songwriters and their publishers as an afterthought". BASCA Chairman Simon Darlow added: "The Fair Trade Music study just published by North American and Canadian composer organisations reveals that the label/ publisher split is, on average, around 95/5 in the label's favour - this cannot be justified". And BASCA's CEO Vick Bain added "BASCA totally supports the principle that authors should have control over the distribution of their music. The rates received by composers from the streaming services - especially YouTube - are so dismal that very few of the people who create the incredible songs that drive and support the music industry can make a decent living in the digital environment".

Foo Fighters

Ex Nirvana drummer and Foo Fighter's front man Dave Grohl added to the debate - sort of: when asked about streaming royaties and Swift's decision to pull her music - saying ""Me personally? I don't fucking care" adding "That's just me, because I'm playing two nights at Wembley next summer" and "I want people to hear our music, I don't care if you pay $1 or fucking $20 for it, just listen to the fucking song" and underpinned his economic model by saying "You want people to f**king listen to your music? Give them your music. And then go play a show. They like hearing your music? They'll go see a show. To me it's that simple, and I think it used to work that way" although he did temper his critique of Swift's stance by adding "But I can 
understand how other people would object to that".

And High Flying Birds and ex Oasis man Noel Gallagher managed to somehow get coffee into the royalties debate telling Noisey "It infuriates me that people are more willing to sit in a coffee shop and spend a tenner on two coffees, talking about the weather with their friends, and that coffee will last 45 minutes, yet they will physically get angry at you for asking them to buy an album for a tenner that will last a lifetime and might tell you about yourself and might even change your life. It's a strange moment we're in where people are willing to spend money on shit".

Back to the big debate: Spotify's Daniel Ek responded to Taylor Swift and other critics in a lengthy blog post reigniting the debate prompted by Swift pulling her recorded music catalogue from free (freemium) streaming services. Ek begins by saying "Taylor Swift is absolutely right" (referring to remarks the singer made in a Wall Street Journal  and Yahoo interview) adding "Music is art, art has real value, and artists deserve to be paid for it. We started Spotify because we love music and piracy was killing it. So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time". Ek then detailed how the Spotify payment model works and revealed that Spotify has now paid out $2 billion to the music industry since launching in 2008, $1 billion of that in the last year and that Spotify now has 50 million active users, 12.5 million of whom are paying subscribers - an increase of ten million and 2.5 million respectively since the last lot of official figures released back in May of this year. However Ek somewhat failed to address why a relatively small share of these streaming royalties are shared out to recording artists once the money has left Spotify's bank account, not least as the labels who seem to be keeping the lions share of streaming revenues are key partners in his business, both as content providers and shareholders. Ek added "The music industry is changing - and we're proud of our part in that change - but lots of problems that have plagued the industry since its inception continue to exist" ading "As I said, we've already paid more than $2 billion in royalties to the music industry and if that money is not flowing to the creative community in a timely and transparent way, that's a big problem. We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans - that's our responsibility as a leader in this industry; and it's the right thing to do". In December 2013, the company launched a new website, "Spotify for Artists", that revealed its business model and revenue data. Spotify pays “rights holders” royalties for all the music streamed on the application. The company pays 70% of their total revenue and retains 30%

Ek also points out that, while consumers can access music at this level for free, the artist does still earn a royalty from each play their music receives a stream and compared that  to terrestrial US radio station where labels and recording artists earn nothing for a play (although songwriter earns a royalty from American radio.). In other countries such as the UK both PPL (for labels and recording artists) and PRS (music publishers and songwriters) collect from radio stations. Undeterred Ek continues  "Here's the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid", noting that Spotify's main competitors are radio, YouTube and piracy. "If we want to drive people to pay for music, we have to compete with free to get their attention in the first place". Spotify's free tier is vital to driving people to pay, he continues, saying: "More than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no $2 billion" - not least with a 14% global decline in download sales so far in 2014." Spotify as has many paying subscribers as the other main streaming services pu together - Deezer has 5 million, Rhapsody/Napster 2 million and no figures published for Rdio or Beats in the US.

Thom Yorke 

According to a recent study by UK communications regulator Ofcom, the number of illegally downloaded tracks fell by around a third last year, dropping from 301 million in March 2012 to just 199 million in March 2013. This was attributed in part to the growth of legal music streaming services. But these streaming services have come under fire in recent months for paying relatively low royalty rates, compared to the royalties that musicians receive from traditional CD sales and legal downloads. In July 2013, Over a year before Swift's move, Radiohead and Atoms for Peace frontman Thom Yorke withdrew his independent work from Spotify, later describing the music streaming service as “the last desperate fart of a dying corpse”. In September 2011, US independent label Projekt Records entered a public disagreement with Spotify, stating "In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept. In May 2012, British Theatre vocalist and Biffy Clyro touring guitarist Mike Vennart noted, "I'd sooner people stole my work than stream it from [Spotify]. They pay the artists virtually nothing. Literally pennies per month. Yet they make a killing. They've forced the sales way down in certain territories, which wouldn't be so bad if the bands actually got paid." Yorke's colleague, Radiohead producer Nigel Godrich, noting that both Universal and Sony were shareholders in Spotify, added "The big labels did secret deals with Spotify and the like in return for favourable royalty rates.The massive amount of catalogue being streamed guarantees that they get the big massive slice of the pie (that $500 million) and the smaller producers and labels get pittance for their comparitavely few streams. Back in 2009 Spotify's shareholders included Sony BMG 5,8%, Universal Music 4.8%, Warner Music 3,8%, EMI (now Universal) 1.9% and indie label body Merlin had 1%. With estimates of Spotify's value anything between $1 and $3 billion - that's a nice profit!

And finally the UK's Music Managers Forum followed this by issuing a statement saying that the organisation is a "big supporter of streaming services", and suggesting Taylor Swift and her label  are taking a short-sightedness for pulling her content from Spotify, although the MMF also hit out ar Non Disclosure Agreements that hide the deals between streaming services and the major labels. "Few markets are perfect and yes the 'low rate issue' has conflicted many, but above all, streaming services are a fabulous tool that connects artists and creators with fans", the statement reads. "No longer restricted by physical barriers, streaming gives a voice to those that want to be heard and a platform from which to build multi-revenue businesses that cross borders. There are no guarantees of success but the opportunity is there for all that want to give it a shot".  Finally, the statement concludes: "Non Disclosure Agreements hide how the major music corporations license streaming services and we have grave concerns that the deals contain stipulations that both significantly reduce the amount artists ultimately get attributed and damage the growth of the streaming economy. The real fight is more likely between opacity and transparency, and we call on all major music corporations to take note and react in the best interest of their artists and shareholders". Legendary record label boss Morris Levy reportedly more than told a leading recording artist "You say you want royalties. Then you should try Buckingham Palace" [2]. I don't hear many artists laughing. U2 frontman Bono told the Web Summit conference “The real enemy is not between digital downloads or streaming. The real enemy, the real fight, is between opacity and transparency. The music business has historically involved itself in quite considerable deceit,” [3]

There will be more to come as the jousting continues. Spotify is yet to make a profit as a global business: in 2011, when the music service made its US debut after years of popularity in Europe, Spotify brought in about $252 million in revenues, according to the New York Times. In 2012, revenues jumped to $576.5 million but losses  had grown from $60 million in 2011 to $77 million in 2012, largely due to increased licensing fees. And those licensing fees from Spotify drove a large part of the 75% jump Universal Music Group achieved in 2013 in subscription and streaming revenues to $618 million. Globally Spotify now has 50 million plus users, and Spotify’s UK business was profitable for the first time in 2013, Spotify Ltd’s revenues rose 41.8% from £92.6m in 2012 to £131.4m in 2013, helping the company’s UK arm to move from an £11m net loss in 2012 to a £2.6m net profit in 2013. “This growth can be attributed to a 42% year on year growth in UK subscriptions and also to an increase in advertising revenue,” a Spotify spokesperson told the Guardian. In 2013, Spotify Ltd’s cost of sales – which includes royalties paid to music labels and publishers – were £96.2m, accounting for 73.2% of its revenues. And that's just the UK - the service operates in North and South America, mainland Europe and Australasia - so we are looking at A LOT of money from a global streaming market from just this one player - explaining that $1 billion figure Ek had trumpeted. 


But who gets what from this growing pot has yet to be decided: there are numerous ongoing lawsuits between artist's and their record labels about their respective share of the digital pie - some settled, some not; clearly songwriters feel that recording artist and record labels are getting an unhealthy share of revenues; The collection societies face the threat of being pushed out by direct deals between the major labels and music publishers and services such as Pandora and Spotify - and squeezed by new entrants such as GMR; small labels and independent artists feels they are disadvataged because of the shareholdings held by the major labels in Spotify and 'secret deals' between streaming service and the labels; are the likes Spotify keeping too much of the pie anhyway? And what happens to the revenues from shareholdings in Spotify if it lists on a stock market? Questions, questions, questions! As streaming rapdidly moves into the audio-visual media with services such as Netflix and NOWTV rapidly gathering subscribers and new competition from both Google and Amazon - there will be more quesxtions, debate, arguements and no doubt failures and it will be fascinating to see how this all develops - until the next 'big' technology takes over!


[1] IQ Magazine Issue 56 Nov 2014 based on data from BUMA/NVPI/GfK Netherlands/Mojo Concerts 

[2] The Life and Crimes of the Music Biz  by Simon Napier-Bell Observer Music Magazine, January 2008

[3] http://www.theguardian.com/music/2014/nov/15/taylor-swift-music-spotify

Pie chart image by Jan Burch https://www.flickr.com/photos/53149458@N08/14124697651/

More on Spotify here http://en.wikipedia.org/wiki/Spotify

The CopyKat - the pain in Spain means no blocking - again

A  court in Spain has overturned a previous ruling that had led to the blocking for a number of file-sharing sites. Back in May this year the anti-piracy group FAP secured injunctions in court forcing internet service providers in the country to block various file-sharing set-ups, including SpanishTracker, PCTorrent.com, NewPCT.com, PCTestrenos.com, Descargaya.es and TumejorTV.com - but in a blow to the content industries - who had celebrated the earlier ruling - an appeals judge in the wonderfully named Court of Instruction No.10 (well that's according to TorrentFreak)  has said there are "insufficient grounds" for blocking the offending sites in order to protect intellectual property rights - although thus will no doubt prompt fresh calls to extend or revise the so called Law Sinde in Spain which was meant to have allowed web blocking as a remedy against internet piracy from March 2012. 

It seems Amazon is trialling a 'Spotify' type service which will allow Kindle users to subscribe for ebooks - paying $9.99 a month to have access to 640,000 books and nearly 7,000 audio books. Richard Mollet, the Chief Executive of the Publishers Association in the UK has said that it is essential that any subscription service properly rewards writers and publishers. Kindle Unlimited joins Scribd, EnTitle and Oyster - but with the potential a far far bigger library of books available to subscribers - although no books from any of the 'big five' publishing houses (Penguin Random House, Simon & Schusterm, Harper Collins, Hachette and Macmillan are featured in the prootional video which had been seen by Gigam - although Lord of The Rings, books from the Harry Potter series and Life of Pi were apparently seen in the video.

And Google is possibly experimenting with a new system that would see adverts for legitimate content platforms positioned at the top of searches for unlicensed movies or music. Google has been widely criticised by the music and movie industries for not doing enough to steer web-users to legitimate rather than illegal sources of content.

Bornstein & Bornstein, a firm of attorneys in San Francisco are being accused of censorship after reportedly using a DMCA copyright takedown notice to remove a controversial and secretly filmed video from YouTube. A certain Jackson West had attended one of the firm's sessions  on how to progress local evictions of longterm tenants, and video taped people protesting at a seminar given by the lawfirm . However you can still see the video via Vimeo - for now - from a link on TechDirt.

US fashion and make up blogger and YouTube star is facing a copyright infringement action from Ultra Records and Ultra International Music Publishing, home of Calvin Harris and Deasmau5. The case, filed in the United States District Court in Los Angeles, makes it clear the label has only begun its search of Phan’s many online productions, but has so far uncovered dozens of infringements, according to the complaint. Those videos have been viewed more than 150 million times, the plaintiffs said. However at lest one Ultra artist, Kaskade, the globally renowned US DJ who was nominated for a Grammy last year, is not happy with his label's stance tweeting "Copyright law is a dinosaur, ill-suited for the landscape of today’s media.”   “I’m not suing @MichellePhan + Ultra Records isn’t my lap dog. I can’t do much about the lawsuit except voice my support for her.".

And finally, Malibu Media, perhaps wrongly accused of being a copyright troll, has succeeded in an infringement action against Don Bui, an immigrant from Vietnam who is now a naturalized US citizen, after the judge in the case gave short shrift to his explanation that the reason he downloaded and kept 57 Malibu Media porn movies from Kickass Torrents was because he had no idea how torrents work - and saw nothing wrong in "ordering movies" from Kickass Torrents. The erotic film studio has filed thousands of lawsuits against "John Doe" defendants in the U.S., in many cases "collecting a couple of thousands of dollars from "scared file sharers who do not want to go to court." US District Judge Robert Jonker reportedly said this "Defendant has some quarrels with the details of how BitTorrent works, but nothing that the Court sees as a fundamental or material issue of fact. Even as Defendant describes the facts, using BitTorrent technology, he ultimately winds up with 57 unauthorized copies of Plaintiff's works--copies that did not exist until Defendant himself engaged the technology to create new and unauthorized copies with a swarm of other users. True enough, the process is not identical to the peer-to-peer file sharing program in Grokster. It is, however, functionally indistinguishable from the perspective of both the copyright holder and the ultimate consumer of the infringed work. In both situations, the end user participates in creating a new and unauthorized digital copy of a protected work. It makes no difference from a copyright perspective whether the infringing copy is created in a single wholesale file transfer using a peer-to-peer protocol or in a swarm of fragmented transfers that are eventually reassembled into the new infringing copy." Bui's attorney also suggested his client was a "poor immigrant" who didn't understand English very well" - that argument was shot down as well. More on TechDirt.