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Music Business JournalVolume 7, Issue 1 October 2011

Berklee College of Music

Inside This Issue

Mission Statement

The Music Business Journal, published at Berklee College of Music, is a student publication that serves as a forum for intel-lectual discussion and research into the var-ious aspects of the music business. The goal is to inform and educate aspiring music pro-fessionals, connect them with the industry, and raise the academic level and interest in-side and outside the Berklee Community.

(Continued on Page 3)

In 2008, the Department of Commerce urged Congress to expand the statutory royalty scheme for digital music streaming to include terrestrial radio transmissions, arguing that this would: (1) level the playing field between satel-lite, Internet, and terrestrial broadcasters, (2) in-crease the incentives for performers and record companies to produce new recordings, and (3) make it possible for U.S. record producers and performers to receive substantial amounts of foreign performance royalties that have previ-ously been held back by foreign PROs. Public performance royalties would also replace some of the mechanical royalties that record produc-ers and performers have lost due to the prolif-eration of unauthorized downloads.

The Obama Administration’s support for performance rights in sound recordings is consistent with the position that the Copyright Office has argued for decades. However, op-position from the broadcasting industry has consistently scuttled legislation designed to achieve this goal. Until the U.S. enacts a broad-er public performance right for sound record-

ings, domestic performers and record com-panies will be unable to claim their share of foreign performance royalties (a share which probably exceeds $100 million per year), be-cause most countries (or their collecting soci-eties) impose a reciprocity requirement which U.S. law does not satisfy. It is ironic that the country that produces the most popular sound recordings in the world is unable to collect the royalties from those overseas performances.

The Performance Rights Act

The 2010 Performance Rights Act (PRA) would have been a large step in the right direction. At the congressional hearings, musicians and record company executives testified in favor of the bill, while represen-tatives of the broadcasting industry opposed it. Although both the House and Senate Judi-ciary Committees approved the bill, it never proceeded to a floor vote. There is a good chance that some version of this legislation will be re-introduced in the 112th Congress.

The House ScenePage 4

Spotify BluesPage 8

A Global Register of Songs0

Facebook F8, 2011Page 5

Reversion of Copyrights, 2013Page 11

U.S. Performance RightsIn Sound Recordings

By Mary LaFrance

Table of Contents

Business Articles

Money, Drugs, and Electronica...............4Facebook’s New Network.......................5Spotty Spotify..........................................8BMG and Bug Music..............................9Summer Music Factoids........................13

Law Section

US Performance Rights Reappraised.....1The Protect IP Bill..................................6WIPO’s Global Song Database.............10Armageddon, 2013................................11

Music and SocietyTaking Issue with the World Artist.......12

MBJ Editorial

Mission Statement...................................1Editor’s Note...........................................2Upcoming Topics...................................16

Sponsorship

Berklee Media....................................... 15

Editor’s Note

Volume 7, Issue 1 Music Business Journal

It gives me great satisfaction to be able to present this issue to our readers as the new Editor-In-Chief. I think it is special, and for many reasons.

Firstly, we have received an academic submission from Professor Mary La France, winner of the best paper at the Rethink Music Conference in Boston earlier this year. Her paper suggests that the US is lagging behind Europe in the recognition of performance rights in sound recordings.

Secondly, courtesy of Professor Serona Elton, at the University of Miami, we are publishing two pieces by UM JD students Michelle Ozog and Brenton Williams. Both cover themes at the intersec-tion of business and society. Ozog writes about underground music and Williams ponders the mean-ing of artistry. Of course, we invite readers to continue considering us for quality contributions.

Thirdly, the team at the MBJ welcomed a slew of new faces to its ranks. Among them, are first-time contributors Zosia Boczanowski, Frédéric Casimir, Megan Graney, and Jeremy Moccia. Bocza-nowski’s article focuses on Spotify, the latest in streaming services available to American consumers, and questions whether or not Spotify is a sustainable business model. Casimir’s piece reminds us that income from live music is vibrant, and that the summer is always a hot festival and touring time. Graney’s article discusses BMG’s recent acquisition of Bug Music, while Moccia shines a spotlight on Facebook’s new partnerships with streaming services Spotify, Mog, Rdio, and Rhapsody.

Finally, I had the pleasure of working again with longstanding contributors Luiz Buff and Fred Choquette. Both have written for this issue. Buff’s article discusses the difficulty of keeping track of rights’ holders at a global level--and a recent WIPO initiative to deal with the problem. Choquette’s article highlights the conflict between talent and the labels over the reversion of master rights to artists by 2013. I have contributed my own piece on a potentially important piece of legislation to protect intellectual property, the Protect IP Act.

I hope you enjoy this issue. Thanks for reading!

Aaron Gottlieb, Editor-in-Chief

Errata: In her article on Lady Gaga (MBJ, August 2011), Vanessa Martinez pointed out that Amazon lost on the Gaga’s 99ç album sale since it had to pay a “statutory rate to Universal, of approximately $7.40 per sale.” A statutory rate, of course, would be less then a dollar for a full album and would be paid to the publisher and songwriter, not the distributor. We apologize for the error.

Contributors Editor’s Note.................................................................................................................................................................. Aaron Gottlieb Business Articles................................................ Zosia Boczanowski, Fred Casimir, Megan Graney, Jeremy Moccia, Michelle Ozog Law Section..........................................................................Luiz Augusto Buff, Frederic Choquette, Aaron Gottlieb, Mary LaFrance Music and Society........................................................................................................................................................Brenton Williams Staff.......................................................................................................................Haven Belke, Ed Da Hyun Jeong, Bartosz Mrugacz Staff (cont)........................................................................................................................Sarah Luzietti, Oliver Monaco, Ben Scudder

2 www.thembj.org October 2011

Management Editor-in-Chief................................................................................................................................................................Aaron Gottlieb Content Editor.........................................................................................................................................................Zosia Boczanowski Webmaster............................................................................................................................Itay Shahar Rahat and Ed Da Hyun Jeong Faculty Advisor and Finance.....................................................................................................................................Dr. Peter Alhadeff Layout Editor..................................................................................................................................................................Lau Meng Wai

October 2011 www.thembj.org 3

Law Section

which recordings were performed or how often – information which is necessary to en-able the AFM/AFTRA fund to allocate roy-alties to nonfeatured performers. Thus, the burden falls on the record companies and the performers to determine these allocations. This increases costs, and reduces the funds actually distributed to performers. While the PRA’s new allocation scheme would im-prove on current law (under which nonfea-tured performers typically receive nothing), it does not guarantee that nonfeatured per-formers will collect their full legal share.

The absence of recordkeeping re-quirements in the PRA would also affect the allocation of the new statutory (i.e., non-ne-gotiable) royalty for terrestrial radio broad-casts of sound recordings. Although the PRA would give both featured and nonfeatured performers, as well as record companies, a share of this royalty, it would not assist them in tracking those broadcasts so that the roy-alties could be accurately disbursed. Under current law, digital audio transmissions are eligible for statutory licensing only if they are “accompanied, if technically feasible, by the information encoded on that sound record-ing,” which identifies the title of the sound recording, the featured recording artist, and “related information, including information concerning the underlying musical work and its writer.” Because terrestrial radio broad-casts do not carry digital encoding, record companies and performers will need some other way to determine which recordings are being played, and how often. Unfortunately, neither the House nor the Senate version of the PRA would impose any duty on terres-trial broadcasters to maintain records of this information.

To monitor usage, radio stations should be required to maintain logs of their musical transmissions and deliver these re-cords to the parties charged with allocating the royalty. This requirement may be burden-

some, especially on smaller stations. How-ever, radio stations are already required to maintain logs — at least periodically — un-der their blanket licensing arrangements with ASCAP and BMI. If ASCAP and BMI are willing to cooperate with SoundExchange, it may only be necessary to add additional information to those logs, identifying the particular sound recordings (as opposed to merely the musical compositions). Although some of the burden of tracking usage may in-evitably fall on the recording industry, other countries (including Canada) have imposed rigorous recordkeeping requirements on ra-dio broadcasters. While the Canadian ap-proach may be too burdensome, surely some compromise is possible.

Beyond the PRA

While the PRA would be a tremen-dous improvement over current law, it would not give musicians and record companies a full public performance right equivalent to the right enjoyed by songwriters and music publishers. The PRA would not give musi-cians and record companies a right to receive royalties from performances of recorded music in public venues such as clubs, res-taurants, bars, retail stores, or other business establishments. Thus, even if the PRA is en-acted, public performances of sound record-ings in these venues will continue to generate royalties only for songwriters and publishers. While this type of limited progress is typical of incremental legislative reform, there is no principled justification for continuing to ex-empt these businesses, and eventually they, too, should be required to pay for the use of these recordings.

With respect to recordkeeping, however, the expansion of the performance right to public venues will be even more problematic than its expansion to terrestrial radio. In order to allocate royalties (whether compulsory or negotiated) among the vari-ous rights holders, the agent in charge of col-lecting and disbursing those royalties (Soun-dExchange or a similar entity) will need to determine which recordings have been played, and how often. If this burden falls on the rights holders, this will be even more difficult than the task of monitoring radio broadcasts. It is impossible to monitor thou-sands of individual venues, geographically disparate, with widely varying music usage (e.g., dance clubs versus grocery stores). How, then, will royalties be allocated?

If enacted, the PRA would dramati-cally change the rights of musicians and re-cord companies by giving them the right to receive royalties from public performances of their sound recordings on terrestrial radio. In contrast, current law grants public per-formance rights only with respect to digital transmissions of those recordings – e.g., sat-ellite radio and webcasting.

Recognizing that the new per-formance royalty will increase the cost of broadcasting –the chief objection raised by broadcasters -- the PRA would provide re-lief to smaller radio stations as well as public broadcasters, giving them the option to pay, in lieu of the statutory royalty, an annual flat fee determined by their gross revenues. For the lowest-grossing broadcasters, the annual fee was as low as $100 in the Senate ver-sion ($500 in the House version). This relief should help niche broadcasters, such as col-lege radio, to continue to bring diversity to the airwaves, and to offer a platform for new and emerging artists. In the next iteration of the PRA, it would be helpful to extend this relief to small webcasters as well, since they, too, can foster diversity and help new artists find an audience.

The PRA would also improve the royalty rights of the nonfeatured performers on sound recordings (both vocalists and mu-sicians). Under current law, when a statutory royalty applies to a digital audio performance, a specific portion of that royalty is set aside for nonfeatured performers. However, some digital performances (e.g., Rhapsody and Spotify) are not eligible for the statutory roy-alty, because they are “interactive” – mean-ing that the user determines which recordings will be played. The royalty for these interac-tive transmissions is negotiated by the record company and the company that provides the streaming service. A nonfeatured performer receives no share of these negotiated royal-ties unless the performer’s contract with the record company so provides; as a result, most nonfeatured performers receive no payments at all. In contrast, the PRA would require the record company to deposit 1% of the negoti-ated royalty for each recording into the AFM/AFTRA Intellectual Property Rights Distri-bution Fund, to be distributed 50/50 between the nonfeatured vocalists and musicians. Thus, under the PRA, nonfeatured perform-ers will be entitled to at least a small share of the negotiated performance royalties.

Unfortunately, the bill does not re-quire the licensee to inform record companies

U.S. Performance Rights (cont.)




Business Articles


House Music: A Commercial UndergroundBy Michelle Ozog

The popularity of Deejay’s (DJ’s), house music, and rave-like parties has grown substantially over the recent years. Never since the late-eighties to early-nineties has house music been so prevalent in the lives of America’s young generations. Unfortunately, consumers have closely linked it to drug us-age. It is frightening that this dangerous com-bination may have come back into “style”. Why is house music involuntarily connected to drug usage, and what does that mean for the younger generations who have become inter-ested in house music and DJ’s?

House music has been alive for a relatively short time compared to other genres of music. What began as a counter-culture has now become mainstream. House music origi-nated in Chicago in the mid-eighties. The rev-olution began at the original Comiskey Park, where a rave-like party was thrown for people to burn their disco records. During these years an “underground scene had already stepped off and was beginning to develop a new mu-sic style that was deeper, rawer and more designed to make people dance”. By 1985, the movement was spreading throughout Chi-cago, New York City, and Europe where DJ’s were becoming popular and producing their own records. Sub-genres of house music in-cluding deep house, techno and acid house began emerging in each city where specific DJ’s would have their own specialty. By 1988, house music had a strong underground follow-ing and in Brooklyn, a young man, Todd Ter-ry, brought sampling into house music for the

first time. In 1989, “house music fused into raves, especially in London…” There, “orga-nizers would pass out bags of MDMA tablets and throw dance parties that lasted more than thirty-six hours.”

Accordingly, with the rise of raves and house, the subsequent rise of drug us-age followed. One of the most prominent drugs in the house music scene was MDMA, more commonly known as “ecstasy”. Be-cause house music so heavily relies on all-night dancing and light shows that stimulate the senses, MDMA was the drug of choice for ravers. “People who use MDMA in clubs and at raves emphasize its sensual and stimulant properties, the way it enhances music and dancing. But they also talk about a sense of connectedness, especially at raves.” Another user describes MDMA and house music as “peanut butter and chocolate.” It is clear that since the beginning of house, the sub-culture who embraced this new style of music was also well aware of the enhancing effects of MDMA, LSD, and mushrooms and made sure to take advantage of these drugs.

As the late-90’s passed and the new millennium settled in, the addictive beats be-gan evading into the more commercial music world. Industry men and women realized that there was money to be made in the un-derground rave world. “Dealing with permits and insurance and zoning laws” were all lu-crative avenues for those looking to cash in on the movement. “So broke the dawn of the first commercial parties and, on their heels, the inevitable oxymoron of a ‘commercial underground club’”. As soon as money was discovered in the business of house music, it exploded.

It is incredible how popular house music has become amongst today’s younger generation. The crowds flocking to these house music festivals and concerts are getting younger and larger. DJs, such as Avicii, Girl Talk, Afrojack and Kaskade are now celebri-ties to this generation. Top 40 radio stations now play house music regularly. DJs are now also signing to major record labels, like David Guetta on EMI. House music has truly in-vaded the music industry and the young gen-eration has latched on. It is no longer an un-derground scene, but now it is the scene to be involved in. In 2011, Ultra Music Festival in Miami sold out 150,000 tickets, hosting one of the largest crowds for their annual electronic

music festival. There is no doubt that it will only grow this upcoming year.

Perhaps one of the main reasons our younger generations are so drawn to house music is the fact that we as a cul-ture need immediate gratification. Teens and twenty-somethings have grown up in a world where access to any sort of in-formation or person is at their fingertips. This young generation becomes “bored” quickly and at least house music provides that constant change and newness that we now expect in all other aspects of our lives. With house music, many DJs, being audio-virtuosos, are able to be on the cutting edge. With this new popularity of house music, however, comes the same drug usage that occurred in the 80’s and 90’s. As younger and younger teens turn to electronic music festivals and concerts, they are being ex-posed earlier and earlier to addictive and harmful drugs. Unfortunately, according to many teens, MDMA seems to be required in order to enjoy the full effect of house music. This partnership has proven lethal at times and is clearly dangerous.

Whether drugs are involved in this music culture or not, it seems as though house music is here to stay. It rose from humble beginnings in the Midwest and now is a global phenomenon that has reached all types of people. What was once an under-ground movement is now a worldwide busi-ness that is growing and eolving by the day.

Sources

1) “Breaking: Ultra Music Festival 2011 Sells Out,” Big Shot Magazine, February 18, 2011, accessed Sep-tember 30, 2011, http://newsflash.bigshotmag.com/news/us-news/13625/.2) David Holthouse, “Rave Review,” Phoenix New Times, December 21, 1995, accessed September 27, 2011 http://www.phoenixnewtimes.com/1995-12-21/news/rave-review.3) Jacob Sullum, “Sex, Drugs and Techno Music,” Reason, January 2002, accessed September 28, 2011, http://reason.com/archives/2002/01/01/sex-drugs-and-techno-music/singlepage.“The History of House,” last modified March 5, 2004, http://www.house-keeping.com/2004/03/05/the-histo-ry-of-house.4)“The History of House Music,” last modified 2011, http://www.trugroovez.com/history-of-house-music.htm.

Michelle Ozog is a J.D candidate at the University of Miami.


Business Articles

October 2011

Facebook Mines Music

Facebook announced it’s highly anticipated integration of a variety of media services at its F8 conference last month, put-ting to rest months of speculation as to what Facebook was building behind the scenes. Though the offerings include watching mov-ies and TV shows with friends, the incorpora-tion of various music services such as Spotify, Rdio, MOG and Rhapsody is the main crux of Facebook CEO Mark Zuckerberg’s inten-tion to “rethink a lot of industries at the same time.” At the conference, Spotify’s CEO Daniel Ek took the stage to announce the partnership of Spotify and Facebook relat-ing the discovery of music to the inclusion of friends. Music is a social experience, and with Facebook’s 800 million users, that expe-rience is now ubiquitous. Do not mistake this for a new music offering; Facebook did not launch a music service. Instead, the company decided to partner with a number of streaming music based services to create new features of Facebook that make music more discoverable and more easily shared.

Spotify, MOG, Rdio, and Rhapsody are all streaming music services, allowing their subscribers to stream any song at any time. They don’t offer ownership, rather the ability to gain access to a personalized collec-tion of music from virtually anywhere. Spo-tify, however, has emerged at the forefront of these services by offering free music to its more than 10 million subscribers worldwide. Pair that with the social offerings of Facebook, and it creates a new world of opportunity for free music appreciators everywhere. More importantly, it opens the world of Facebook to the subscription based business model of Spotify, Rdio, MOG, and Rhapsody, and the potential for hundreds of millions new paying subscribers plus the aggregation of incredibly large amounts of consumer data.

Music and Social Networking

The idea behind this incorporation of services is not only to digitalize the social experience of music, but to take the advent of “free-music” and seamlessly turn it into “pay a little, get a lot” without bifurcating the two. Facebook CEO, Mark Zuckerberg, explained it as helping “discover so many songs, that you end up buying even more content than you ever would have otherwise.” It’s a con-cept that has worked for Spotify, as over two

By Jeremy Moccia

million of its ten million subscribers are pay-ing a monthly fee for premium services that offer more content and accessibility. The key behind this model is offering the ability to discover as much music as possible by giving users an extensive catalogue available to them instantly, as well as having a massive user base. Users will accumulate such an exten-sive collection of music that it would theoreti-cally make it easier to pay a small monthly fee to keep and expand access to that music than attempt to buy and rediscover their already available compilation.

Discovery, exploration, and ac-cess are all concepts Facebook is more than familiar with. This marriage of music and social networking seems long overdue, so how extensive is the integration? There are a number of features being added, some in-tuitive, others noticeably absent. The feature that sets the foundation of the assimilation of these services is the ability to instantly listen to whatever music a user’s friends may be listening to. When a song is being played, a notification will appear indicating what song that friend is listening to. By clicking on the notification, the song will launch and the so-cial experience is born. In addition to show-ing the song being played, the notification will display what service the song is being played on. This is important, as the one feature that is noticeably absent is the cross-platform ability to listen to songs regardless of what service a user is subscribed to. For instance, if a user listens to music through Spotify, then the only music that that the user will be able to listen to through Facebook will be that of any other friends using Spotify as well. This is a disap-pointing omission, as it limits the simplicity of being able to hear and discover more mu-sic. However, it is helpful for competition as it gives the companies the ability to monitor growth and understand how their service and music is being adopted. This feature, or lack thereof, explains why services such as MOG

and Rdio are fast tracking their introduction of a free music plan akin to Spotify’s. If Face-book users now have the ability to instantly listen to music and sign up for a music service, they would prefer a free service instead of a paid one--and right now Spotify has the only free offering. Expect the competition to heat up when Rdio and MOG jump on that band-wagon later this year.

Not only are music services such as Spotify, Rdio and MOG on board with this new music and social integration, but a number of progressive music executives are as well, including Lady Gaga’s manager Troy Carter. “What we’re looking to do is not just about selling the CD or the digital file. It’s how many people can we get the music to. How many people can experience it?” Har-kening to the new music integration in Face-book, he seems to agree with the idea that in this day and age it is no longer about restrict-ing access to music through sales, but about opening every avenue available to get music in to as many hands as possible. “If it was up to me, I’d give away the next album and put it on every handset that I can put it on, to get that scale” he says, and with Lady Gaga being one of the biggest stars in the world, its hard to argue with him. Not only will the new Face-book features allow even more people to ac-cess an artists music, but will offer new ways to stay connected with them as well.

Facebook recently launched a new feature known as “subscribe”, allowing any-one, regardless of being a friend or not, to “subscribe” to a users channel. The user then has control over what content is shared with “subscribers” and what isn’t. This, paired with the new music offerings, opens an entire new world of connectivity between fans and artists. Now, instead of having to “Like” a page, or be friends with an artist, users can get direct updates from them and artists can now tailor those updates to them as “subscribers”. This, along with new ticketing options being offered on fan pages and the new music in-tegration makes Facebook an incredibly valu-able resource for artists.

iTunes ushered in a new era for the business over seven years ago, and since then services have been refined, not innovated. With Facebook bringing the social music ex-perience to the Internet we may be entering a new stage.

Law Section



likely the reasons why Senator Ron Wyden (D-OR) blocked it before it could come to a vote.

COICA had two further provisions, however, and neither created much contro-versy. It would have enabled the US Attorney General to both stop credit card companies and online advertisers from doing business with targeted websites. This would take out two main streams of revenue from infringing sites, so the two provisions could be effective in the fight against piracy.

The Proposed Legislation

Protect IP is a more memorably named and improved upon successor of CO-ICA. It was approved by the Senate Judiciary Committee on May 26 and was last revised on September 17. The bill makes no mention of domestic domain name seizures but includes measures intending to alter the DNS system to block Americans’ access to infringing foreign sites. It also gives copyright holders the ability to get court orders that would prevent financial transaction providers and online advertisement services from doing business with such sites. Wyden has again become one of the more out-spoken publicly elected officials to dispute the bill. He is particularly concerned that the bill relies too much on the already-questionable existing seizure laws combined with the fact that access to foreign sites could be blocked. Wyden’s main reason for disputing the bill is the fact that it leaves no opportunity for a targeted site to defend itself. Wyden further argues that certain provisions in the bill would

Protect IP: A Dramatic Step In

give the government the ability to stifle free speech at will, basically allowing the govern-ment to act as both judge and jury.

Visa, Google, Copyrights and Trademarks

Despite these points of contention, Protect IP shows promise. Almost every site that offers copyright infringing media to Inter-net users generates revenue through subscrip-tions, selling advertising space on their page, or a combination thereof. Visa and other pay-ment processors along with companies such as eBay and Google are already involved with voluntary efforts to deal with online infringe-ment. These companies have adopted a set of “Best Practices for Voluntary Measures in Ad-dressing the Sale of Counterfeits on the Inter-net.”

Visa, for example maintains a pro-gram that allows for right-holders to lodge a complaint if an infringing website is accepting Visa payments for counterfeit goods, or (not included in the joint agreement) pirated me-dia. During a six-month period however, the program only received a total of 30 inquiries worldwide. Other participating companies have also experienced a lack of complaints from intellectual property owners. In a tes-timony given at a hearing to the Senate Judi-ciary Committee in February of this year, a Visa attorney stated: “Other payment systems have shared similar experiences. Intellectual property owners have not explained their re-luctance to report instances of online infringe-ment to us.” Reticence on the part of the right-

The Protect IP Act (Senate Bill S968), short for Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property, is the US Government’s latest attempt to enforce online copyright and trademark protection. The bill aims to com-bat piracy and the sale of counterfeited goods by using the already existing Domain Name System. It also takes a no-nonsense financial approach.

Precedent

The Domain Name System has been the focus of recent debates over on-line intellectual property protection. This is the mechanism that gives memorable names to various Internet servers, and helps users browse for content online more easily. Web-based content is stored on servers, and every server has a dedicated IP (Internet Protocol) address. Berklee College of Music’s web site, for example is hosted at the IP address 192.136.22.15. This set of numbers would be difficult for most to remember, while a domain name such as Berklee.edu is much easier for the user to comprehend.

A previous bill, The Combating Online Infringement and Counterfeits Act or COICA, was nearly passed by the Senate. It aimed to expand the list of circumstances under which it would be appropriate for law enforcement agencies to alter the configura-tion of a domain name that was found to be infringing upon trademarks and copyrights. Usually, users seeking content from such a domain would see a government warning in place of the site that was previously there.

COICA had encountered--as has the existing law--strong dissent from com-puter scientists, civil liberties groups, po-litical action coalitions, and law professors. The scope of COICA would have extended to foreign domains. While the seizure of any foreign domain would be clearly outside of the jurisdiction of the US Government, the bill also sought to block US citizens’ ability to visit foreign sites hosted at those domain names by giving the US Attorney General power to force American service providers to ignore attempts to visit a targeted foreign site. COICA’s domain name provisions garnered most of the public criticism, and were most

By Aaron Gottlieb


US Anti-Piracy Legislation



Law Section

holder might be attributed to a lack of knowing that such programs exist. More importantly, such reticence might be caused by the fact that there is no coordinated effort of enforce-ment. If a single avenue of payment was shut down—Visa payments, for example—the in-fringing site is still able to accept other credit cards. Furthermore, credit card companies “cannot permanently eliminate the problem when unlawful merchants hide behind mul-tiple shell companies that enter into contracts with multiple banks to accept credit cards un-der false pretenses.” The need for legislation is apparent.

Internet advertising networks are also taking similar steps voluntarily. Google does not allow its clients to advertise coun-terfeit or trademark infringing goods. Google also claims that it works to “prevent its adver-tising products from being used to monetize material that infringes copyright.” Ironically, one can plainly access plenty of infringing tor-rent sites after initiating a simple search.

Although Google receives a lot of complaints from right-holders about trademark infringement (when ads show up for counterfeit or infringing goods), the com-pany “receives very few complaints from brand owners ” about its advertising being used to turn infringement into a profit. This greatly reflects the difference between trade-mark holders and copyright holders. Where a trademark is concerned, typically infringers profit from the sale of tangible goods. It would not be worthwhile financially for an infringer to give away bogus goods without earning a profit. In the context of copyright however, illegal duplicates of picture, video, and music files are easily given away at such a low cost—sometimes for free even—advertising is many times the sole method that a site of this nature can use to generate revenue. While trademark holders pursue the sellers of counterfeit goods, it makes more sense for copyright holders to go after the source of income of the copyright-infringing site. Copyright holders most likely believe that the sheer volume of ad networks is so great that it would not be worth trying to prosecute each infringing site individually on a case-by-case basis. Again, the need for legislation is apparent.

Google has been one of the more outspoken critics, most likely because it stands to lose revenues from its advertising service should such legislation ever become law. Google’s executive chairman, Eric Schmidt, is wary that government plans to block access to illicit websites through the DNS system could set a “disastrous precedent” for freedom of speech. Schmidt stated that even if the bill

were passed into legislation, Google would still attempt to fight it.

Musicians and the Law

The bill has received the support of former presidential candidates, Senators John McCain (R-Arizona) and Joseph Lieberman (D-Connecticut). Several associations in the entertainment industry have also expressed their support for the bill, including: The Na-tional Music Publishers Association, Nashville Songwriters Guild, US Chamber of Commerce, Viacom, and NBCUniversal. Individuals such as First Amendment expert Floyd Abrams and Don Henley of the Eagles have also been vocal in their support of the bill. Henley, in an edito-rial piece for USA Today, warns of the dangers of a free Internet. He cites the ease with which children can access stolen, harmful, and inap-propriate goods online. He furthermore goes on to argue that the stealing of American enter-tainment products and counterfeit goods is not simply a federal crime—it threatens the finan-cial stability of American businesses. Henley furthers his point by saying: “There is no First Amendment right to infringe intellectual prop-erty rights.”

Overall, there seems to be a signifi-cant mass of support for the Protect IP Act, es-pecially from musicians. Certainly, altering the Domain Name System and restricting access to websites might prove to be a complicated step to take for the government, as legitimate e-commerce startups would be threatened if they were found to be infringing on intellectual property in any unknown way. So too would existing Internet-dependent businesses, and neither would have much recourse in the law. Yet the financial provisions in the Protect IP Act are strong and relatively uncontroversial. That is where the power of the new legislation is likely to bite with abandon.

Sources

1 ) h t t p : / / w w w. g o v t r a c k . u s / c o n g r e s s / b i l l t e x t .xpd?bill=s112-968

2) International Trademark Association, Addressing the Sale of Counterfeits on the Internet, Sept. 2009 3) Testimony of Kent Walker, Senior VP and General Coun-sel, Google, April 6 Senate hearing

4)http://www.guardian.co.uk/technology/2011/may/18/google-eric-schmidt-piracy

5)http://www.billboard.biz/bbbiz/industry/digital-and-mo-bile/business-matters-u-s-senate-s-protect-ip-1005353342.story

6)http://www.usatoday.com/news/opinion/forum/2011-08-21-counterfeit-copyright-protect-ip-act_n.htm

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Business Articles

Spotify: Not Out Of The Woods Yet

Spotify could be in danger of be-coming just another flash in the pan music ser-vice. Information about it is hard to track and inconsistent, and the company’s constant press releases are arguably a source of confusion. Many users find the catalog selection insuf-ficient. Besides, there is little evidence that a critical mass of listeners will be willing to pay to stream music. And if more people pay for a subscription to avoid the ads, the service could become less attractive to potential advertisers--a weakness in the business model. Also, the more ads it runs, the less attractive it becomes to music lovers. In fact, granting free access to users in the hope of attracting larger pools of subscribers is probably unsustainable, as advertising in the ‘free’ version is unlikely to cover costs. Finally, even though the company may be generating money for Sony, EMI, War-ner Music Group, and Universal, its long-term benefits for artists and independent labels are less clear.

History and the US Market

Spotify is a Swedish-founded, UK-headquartered, music service offering stream-ing of selected music from a range of major and independent record labels. Pirate Bay, a Swedish website that provided peer-to-peer

By Zosia Boczanowski

content, was the predecessor of Spotify and allowed resources to be referenced without the need for a continuously available host—which made enforcement of copyright protec-tion difficult. While Pirate Bay was involved in a number of lawsuits, and eventually found guilty of abetting copyright infringement, Eu-ropeans have seen Spotify, which started in October 2008, as offering a legal way forward.

In July 2011, Spotify launched its US service after delays and years of negotiation with the four major record companies. Music can be browsed by artist, album, record label, genre, or playlist as well as by track name. Users can register either for free accounts, supported by visual and radio-style advertis-ing, or for paid subscriptions without ads and with a range of extra features such as higher bit rate streams and offline access to music. Spotify is funded by paid subscriptions, pop up advertisements for non-subscribers, and music purchases from partner retailers.

Currently, there are three Spotify account types: Spotify Open, Spotify Unlim-ited, and Spotify Premium. The different paid subscriptions are free of ads and for the first 6 months the listening time is unlimited. How-ever, they only allow 10 hours of listening

time per month after that. A paid “Premium” subscrip-tion of $9.99 per month is the only account type that allows users to access Spo-tify on mobile devices.

Rival services Rhapsody and Grooveshark are no pushover. Spotify’s search engine seems to be lacklus-ter and the availability of all songs on an album is, for now, arguably inconsistent and spotty . In comparison, Rhapsody has a stronger search by genre and key art-ists, and also recommends similar talent for discovery. Spotify requires download-ing an application to ac-cess their music library, while Grooveshark allows streaming directly from a variety of browsers. A free Spotify account will peri-odically interrupt a playl-ist with an audio ad, while

Grooveshark has just visual ads. On the other hand, Rhapsody does not have a free account version and does not work in existing iTunes libraries, while Spotify has a higher stream-ing quality of 320k (compared to Rhapsody’s 128k).

Facebook and Song Selection

One of the reasons behind Spotify’s growth and success in Europe has been its strategic deals with ISPs. Spotify is currently the second largest source of digital music rev-enue in Europe after iTunes and is the largest digital music retailer in Sweden and Norway. Digital music revenues grew by 20 percent in Europe in 2010 (though physical revenues still account for about four-fifths of total sales). Spotify’s success was noted by the business and paved the way for a US startup and a part-nership with Facebook.

The Facebook partnership is note-worthy. The idea is that members that listen to music from Spotify can share a constantly updated playlist of tracks. Facebook friends who have access to the same music service can also play this music simply by clicking on a link to the track. New Spotify members re-


quire Facebook accounts to log in and access the service. Although it is early to judge the impact of this partnership on listeners, Spo-tify has brought Facebook squarely into the music business. Spotify is arguably going to become a significant music distributor, and will be in a position to make demands from music companies as well as promote particu-lar labels, artists, and publishers to millions of Facebook users. Facebook has more than 800 million active users and Spotify can add ten million registered users across seven countries in Europe, including the US. In the meantime, social media continues to grow in importance for the record industry.

Spotify might be the right service for tech-savvy listeners. However, Spotify’s logo “All the music. All the time.” is not ac-curate. Well-known artists such as The Bea-tles, Metallica, Pink Floyd, AC/DC and Led Zeppelin are absent from the service. When compared to other streaming music sites, the pattern of omissions seems perplexing. In a recent interview, Adele’s label called Spotify one of their top digital partners globally by revenue. But Adele’s album ‘21’ is not avail-able, while Rdio, MOG, and Rhapsody have it. Moreover, out of the fifteen mil-lion tracks that make up Spotify’s catalog, the majority of the tracks seem to be unusual takes of known songs. There is a plethora of instrumental karaoke versions of popular songs, and many misspelled original artists’ names and track titles. Recently, the heavy metal/hardcore label Century Media, in partnership with InsideOutMusic, Superball-music, Ain’t no Grave Records, Hollywood Waste and People Like You, said it will be pulling all its music form Spotify to protect its artists. Another independent metal label, Prosthetic Records, has made similar threats; according to its label head, the income from the streaming music service is just pennies.

In fact, Spotify may give way to a new battle line between major and indepen-dent record labels in the US. Most majors can likely press for better terms and, indeed, Spotify has focused primarily on them for the US launch. Suspicion will not be assuaged by the knowledge that company has already sold small ownership stakes to the majors in Europe.

Business Articles



(From Page 8)

BMG Rights ManagementMakes Inroads (In America)

By Megan Graney

The publishing business is vital in protecting, valuing, and developing new mu-sic. Publishers are responsible for the business side. They seek to maximize copyright protec-tion and collections for their clients and search for music from composers and songwriters. They act as a foundation to nurture artists, composers and songwriters in their creative process. Two of the leading publishers in the music world, albeit very different, are BMG and Bug Music.

Bug Music, which was founded in 1975, has a varied music catalog that allows music supervisors and ad agencies to procure usage rights around the world quickly and eas-ily. This independent music publisher, one of the largest, owns and/or manages copyrights of such mega-hits as “Fever”, “I Walk The Line”, and “The Real Slim Shady”. Some of their cli-ents include: Johnny Cash, Willie Dixon, Del Shannon, Muddy Waters, Stevie Ray Vaughn, Woody Guthrie and contemporary stars such as Jamie Foxx, Iggy Pop, The Guess Who, Ryan Adams, Pete Townshend, and Kings of Leon. Their catalog holds more than 250,000 titles from the Top 40 of Indie, Hard Rock, Electronica, Pop, Hip-Hop, Jazz, and Country. They primarily represent independent record labels and artist-owned masters in the US and are able to license, account and pay all me-chanical royalties and collect synchronization, print, and performing licenses. They can make any recordings available to all digital stores safely and legally such as iTunes, subscriptions services like Rhapsody, ringtone providers, and mobile music stores. Above all, they are known for being especially good at marketing the music of their selective talent roster.

BMG Publishing, a mega-publish-er long established in the business, was re-founded in 2008, after BMG Records exited the record business and bailed out from its partnership with Sony Music. It counts two

hundred employees world-wide (compared to Bug Music’s seventy-five) and represents the rights of song recordings by Cross-town Songs, Cherry Lane Music Publishing, Stage Three Music, Evergreen Copyrights, and Chrysa-lis group. BMG is a joint venture between German media giant Bertelsmann

and U.S. private equity group Kohlberg Kra-vis Roberts. During the week of Bug’s pur-chase, BMG was the number one publisher on the U.S., U.K., and German charts. The deal between BMG and Bug Music was worth an estimated $300 million, with BMG looking to bolster its catalog and taking advantage of a drop in Bug Music’s selling price. They beat rival bidders includ-ing pop idol Simon Fuller, creator of Ameri-can Idol, and Sony/ATV, which is a joint ven-ture between Sony and Michael Jackson’s estate, and Ole Music. Financial terms of the transaction are expected to close by October. After the purchase, BMG now controls rights of more than 300,000 song recordings. The industry estimates that revenue for the com-pany in 2011 will be around $272 million. “With the acquisition of Bug Music and its vast collection of evergreen and contempo-rary compositions, BMG further establishes itself as a leading music rights-management company,” said Hartwig Masuch, CEO of BMG Rights Management.

This is a story of bigger and bet-ter, and BMG’s interest in the US market, where Bug Music’s presence is strongest. The Bertlesmann family’s stake in recorded music may no longer be what it was in the 1990s and the early millennium. But much of the business knows that publishing monies are still going strong (in spite of the drop in collections from mechanical rights), and this is where the new BMG group wants to head. Tom McGrath, Senior Managing Director of Crosstown Songs, another American music publisher bought by BMG in 2009, points to the “next generation of music publishers who can marshal global resources to develop new writers, showcase the works of estab-lished writers, and nurture the legacy of…long term clients and historic catalogs.” In-deed.



Law Section

WIPO Tallies Song Credits Worldwide

Considering the vast array of music services that were launched this year, including Amazon Cloud Drive, Spotify, and Google Mu-sic, it seems a new order for the consumption of music is taking shape. Indeed, legislation is be-ing reformulated to facilitate new forms of mu-sic consumption, with consumers substituting piracy practices and moving to legal services. However, the existing music rights manage-ment architecture is being challenged. The dif-ficulty is to know exactly who all the copyright owners of a song really are--and where they can be located. Transactions for the appropriate li-censes cannot happen without this knowledge.

For each song recorded there are two copyrights involved: one for the composition itself and one for the sound recording. The first one is owned and controlled by different song-writers and publishers, while the other is usually owned by record labels and performing artists. When each of those rights are owned by a sig-nificant large group of people, someone needs to locate all of them in order to obtain licenses that need to be negotiated on a case-by-case ba-sis. Additionally, many popular artists are now emerging outside traditional corporate struc-tures, and not having them in the current data-bases of copyright ownership impedes the legal consumption of music. Two recent examples are Choruss and SoundExchange. Choruss, an ex-periment meant to allow college students across the country to download an unlimited amount of music in exchange for a small fee built into the their tuition, was not able to gain traction because of the difficulty in finding out exactly

who it had to com-pensate. Sound-Exchange, a Per-formance Rights Organization cre-ated to collect roy-alties from digital music services, has had millions of dollars stuck in its accounts for some time now because it simply cannot find the appropri-ate right owner.

Jim Griffin, founder of Cho-russ, is a former label executive that now is channeling his efforts to tack-le this situation.

As he recently pointed to Billboard, “[the] big problem we ended up facing…is that we couldn’t find at least half the rights holders.” He advised that an extensive global registry of copyright owners be created to facilitate the licensing process across borders.

Such an ambitious plan started to be brainstormed at the end of 2010 and took form as the International Music Registry (IMR), cur-rently functioning under the auspices of World Intellectual Property Organization (WIPO), an agency of the UN. In order to be viable, the organization needed representation of all the stakeholders involved in the process of licens-ing. Indeed, its first Consultative Committee included Jim Griffin and brought together a wide variety of players in the music industry. In its initial planning stage, the IMR will be an internationally transparent global regis-try of all rights and right holders sharing all the necessary information needed to ease the process of multi-territorial licenses. “This”, it said “will preserve the public good [character of music] both [for] culture and commerce.”

The system is designed to be an inclusive platform, creating a single point of access for multiple databases already in exis-tence around the globe, tying the information together and diminishing overlapping efforts and conflicting information. In fact, critics of IMR argue that there are a number of similar initiatives trying to achieve the same goal, such as the Global Repertoire Database being developed in Europe.

By Luiz Augusto Buff

However, WIPO has advantages over other entities in creating and main-taining a successful global registry. Being an agency of the United Nations ensures worldwide involvement in the project. Fur-thermore, the agency already developed and runs established global registries in other in-tellectual property fields such as patents and trademarks. WIPO generates most of their income through the operation of these sys-tems, but also counts on contributions from member states. Due to its public character, the agency is free of antitrust regulations and can focus on developing such a system with-out being concerned on an immediate return on investment – which would usually hinder the major music companies.

The IMR wishes for a comprehen-sive geographical representation in order to facilitate a truly global dialogue. The idea is to not only focus on the most powerful countries, but to enforce the inclusion of the BRICS (Brazil, Russia, Indonesia, China, South Africa) and other fast developing re-gions. Brazil for instance was one of the few music markets that showed growth last year, despite the fact that it lacks download stores such as iTunes and streaming services. The structure and organization that IMR will pro-vide will be essential to the development of new services in these countries, shifting the audience to legal services and therefore re-energizing the music market globally. (Still, how fees will be collected, be it by individu-al entry or by subscription, is yet unclear.)

Overall, the development of this comprehensive database is a long process that depends significantly on compromise. Skeptics will be afraid of losing control over their information, fearing that data that was private may go public. A good balance has to be found between what data will remain confidential, and thus not hurt licensors and licensees, and what data can be made readily available to promote what really is an ailing music trade. It is not an entirely new problem for the business. Record industry organiza-tions, like the RIAA in the US, have long tallied rival company recorded music sales promising confidentiality to the individual labels. Back in the day, trust was good for business. The hope is that the same will hap-pen with the International Music Registry.


Law Section


Artists And Their Masters: Looming Conflict In 2013By Frederic Choquette

2013 will be a defining year for many artists, record labels, and the recording industry as a whole. With the clause in the 1978 Copy-right Act, an author may reclaim ownership of his work after 35 years. We are on the verge of witnessing a clash of the titans between major labels and superstar artists. This rever-sion of rights debate is of major importance as it threatens to either redefine copyright law or allow artists to fully control what they believe to be rightfully theirs, and deliver a potentially fatal blow to record labels across America.

The 1978 Copyright Act states that authors of a specific work may reclaim owner-ship after 35 years of its creation. Publishing deals have noted this with little controversy. However, the Copyright Act also claims that this reversion of rights does not apply to works made for hire. There is a specific list of limi-tations that the work must fall under in order to be accepted as a work made for hire. These conditions state that in order to be considered as such, there must be either an employer/em-ployee relationship, or the work must fall into nine specific categories, none of which include sound recordings.

The debate stems from the labels’ claim that artists, when recording their albums, acted as employees of the record label, which would therefore qualify the masters as works for hire. However, in order to be an employee, it is generally thought that the recipient must receive a specified salary, which most artists don’t. Instead, the large majority musicians re-ceive cash advances that become fully recoup-able against artist royalties. Record labels also crafted contractual clauses specifically stating that the masters were in fact works for hire. The problem with these clauses is that sound recordings do not fall into the specific limita-tions of works for hire, rendering the language in these articles legally unsound.

In order to avoid the upcoming con-flict, the RIAA secretively passed a bill in 1999 stating that sound recordings were once and for all to be considered works made for hire. This immediately created conflict with the popula-tion of songwriters, including the Recording Artists’ Coalition, who lobbied successfully for the bill’s cancellation.

The record labels have long been por-trayed as large, soulless corporations, which has lead the public to perceive this upcoming battle as a way for artists to regain ownership

of what is rightfully theirs. But it is important to gauge the consequences of such legal action before jumping to any conclusions. The mu-sic industry is already in a load of trouble, and further hindering the labels’ business could be bad for everyone.

An interesting article by Moses Ava-lon discusses a few popular alternatives that could leave both parties happy without dam-aging our industry [1].Of these solutions, the most attractive encourages labels and song-writers to use this threat as an initiative to renegotiate royalty percentages on masters. This could end up being far less costly than a never-ending legal battle. In addition to saving money, artist rights would still be protected by the labels’ ability to seek out and pursue copy-right infringers, an activity many artists may not have the resources to become involved in. Furthermore, certain clauses in the recent extension of copyright protection for masters in the E.U. could be used as a model for solving the 2013 debate. Just a few months ago, the E.U. extended its copyright protection from 50 years to 70 years after the creation of a master. Although major European corpora-tions mostly backed this change, the new law includes a few extremely beneficial clauses for artists, including the E.U. directive that it is “a requirement for labels to ensure all recordings are commercially available, failing which the artist will be entitled to release their recordings themselves.”[2] If such a clause were to be in-cluded in a 2013 rights reversion compromise, it would allow artists whose masters have been withheld to release their material and poten-tially revive their careers.

Many proponents of the reversion of masters to its original creators believe that the impact on the labels will be minimal. This reasoning is backed by the fact that the only masters whose rights will be reverted in 2013 will be the ones recorded in 1978. Each year, labels would only lose the rights to masters re-corded 35 years prior. This means that as long as a label continues recording artists, its cata-log should continue to thrive, losing the rights to only a small part of its sound recordings collection each year. Although such reason-ing may seem logically sound, we must not assume that all masters are equally profitable. The consequences could be disastrous if a la-bel were to lose the rights to one of its “gold-mine” masters.

Another interesting complication that arises from this debate is the actual own-ership of the masters. In the eyes of the law, the proprietor(s) of a sound recording could be any combination of people having contributed to its creation. This dilemma would include a multitude of parties, ranging from songwriters, featured artists, producers, session players, en-gineers, etc., all of whom contributed in some way to the production of a master. Adding all these people to the already complex dispute could turn this case into a legal nightmare with multiple parties fighting each other for partial ownership.

It is important to remember that the rebuilding of a successful industry requires the cooperation of all parties involved. Although tempting, a long, costly legal battle may actu-ally hinder the recording industry’s ability to successfully navigate through the traitorous waters it already faces. The legal conundrum that will erupt in 2013 will most definitely re-shape our industry; let us only hope that it will be for the best.

Souces

1. http://www.mosesavalon.com/mosesblog/2.http://www.billboard.biz/bbbiz/industry/publishing/eu-extends-copyright-term-to-70-years-1005348552.story


Music And Society


By Brenton J. Williams

public relations machine, “artists” don’t have to be skilled. Couple this with the viral video and social networking craze almost anyonecan stake their claim to fame. This has pro-duced a crop of recording artists who cannotsing, write songs, or play a single musical in-strument. They simply possess that “it”factor that for whatever reason garners the at-tention which generates sales. Now, therarities are the child singer we watched prog-ress or the café singer who got a lucky break.A career in the music industry is now an op-tion for every celebrity and public personality regardless of singing ability.

When one thinks of an artist, one immediately thinks of the ability to create. When it comes to recording artist, we expect them to create a sound and persona that willentertain us. In short, we expect them to be able to sing or play and do it well! So if we are seeing individuals with the inability to do so being labeled as artists, one must ask: Who is doing the creating? Who is responsible for the voices and people now populating the mu-sic industry?

Not surprisingly, the answer is the industry itself. Once relegated to the role of supporting and enabling those who have nat-ural talent, the music industry hastaken on the task of creating it. Many music artists are now completely crafted byhighly trained teams of producers, image con-sultants, managers, coaches, and handlers. These people even go as far as to feed them everything from who theyare to what they believe. So by the time the consumer finally receives the finishedproduct, it is very rarely an honest reflection of the individual performer.

Another growing black eye on the industry is the unabashed abuse of Auto-Tune. It has given the industry the ability to create perfectly pitched singing, no matter the performer’s ability. This radically lessened the mark of what being a viably successful vocalist required. It has allowed the industry to mass recruit and mass produce the artists we see flooding the market today. It has even expanded into the celebrity singer fad. In the past it wasn’t very common for entertainers and public personalities to venture into the music business. Outside of Broadway, most actors shied away from the recording booth. Now, every Real Housewife and reality show star can successfully cross over into “pop star-

dom”. It has become a very attractive quick money scheme to the industry, as these peo-ple already come with the notoriety that is needed to make them marketable. Just get a skilled team of producers and writers on it and run whatever “vocals” you can get through the box. They get to add another “talent” to their resume and record compa-nies get more revenue. With these practices in place, we find ourselves inundated with songs that sound good, instead of singers who do.

The usurping of artistry from the individual to the industry is also made clear when it comes to the issue of artistic control. It is extremely uncommon for any music artist to have majority or full artistic control. The market created by those who run the music industry is clearly one based on the exchange of artistic control for ac-cess to opportunity. The industry has made it a primary goal to maintain and exert a tre-mendous amount of power over any “artist” it produces. It is often said that “more mon-ey equals less control”. Record labels are less willing to invest in a product they have less control of. That is why this desire is a major factor when it comes to the selection and progression of the performers who the music industry chooses to put its weight be-hind. The largest contracts are often award-ed to those willing to accept equity deals in which they almost completely surrender all control to producers, promoters, marketing people, and managers. Artists who desire to be independent and exercise more creative freedom are often undesired or languish at a low level of success, no matter how talent-ed. It has created a situation where the often less talented and more malleable rocket to stardom.

Examples of fabrication are not hard to find either. We can look at the “Dream Girls” technique that has been repeatedly used to dismantle groups in fa-vor of the more acquiescent “star”, or the “American Idol” method of picking win-ners. When so-called artists are minted, sold, and replaced systematically, the true artist, in short, is the music industry.

Brenton J. Williams is a J.D candidate at the University of Miami.

Artists are one of the fundamental parts of the music industry. So much sothey are the chicken to the egg of the busi-ness itself; no one knows which came first.This exact question or rather confusion has crafted the current climate of music today. Who is the artist? The term itself is styled in such a cursory manner that anyone who walks within five feet of any medium is in danger of being titled so. No industry is more subject to this phenomenon than the music industry. We live in an age of instant fame, where attract-ing tabloids supplements talent more so than garnering admiration for their craft. It seems that “artists” are now those who create a buzz as opposed to creating anything substantive. It’s for that very reason the music industry has become complicit in the dilution of the term artistry and its function.

In the past, the term artist held enormous weight to a musician. No matter what genre, anyone who dared to take up that mantel had to prove themselves worthy. That was made especially clear when it came to the music industry. To be an artist, one had to be undeniably gifted. Although those who simply performed had similar functions, those deemed “artists” provided the rare glimpse of vocal and musical perfection that all others sought in their craft. The likes of Edith Piaf, Frank Sinatra, Shirley Bassey, and The Beatles set the standard for the art-istry we revere in the likes of Anita Baker, Elton John, Prince, and Celine Dion. There is no doubt that these people have actively em-bodied and expressed a unique and individu-al talent. The music industry served to foster and amplify these artists. There was no seri-ous need to augment, manipulate, or create the perception of talent through production. This is not to say that the industry did not have any direct impact on the development of their talent, but it was a tangible product that was easily ready for distribution.

Being informed of the historical markers of true artistry, how have we found ourselves in this current predicament? The title of “artist” is doled out almost indiscrimi-nately. It very well seems that anyone who so chooses can be an “artist”. The music in-dustry recognized the desire of the masses to be uniquely creative as an untapped market. It shifted its model from promoting ‘excep-tionalism’ to feigning accessibility. With the use of advanced technology and a well-oiled

Usurping Artistry



Business Articles

Reminiscent of the evolution and survival of life, the music business transforms and adapts to its environment. Dealing with ever thinning returns, the music industry shifts towards investments on profitable alter-natives other than recordings. Pop artists, now especially from the female gender, push music into ever more theatrical boundaries, and time and money are spent on visual mediums that give listeners a fuller sensorial experience.

Music Festivals in summer 2011 mirrored this trend onstage, although to a lesser extent. Lollapalooza, Austin City Lim-its Fest, iHeartRadio Fest, and Blue Note Jazz Festival magnetized music lovers. And , for the first time, YouTube carried live streaming of Lollapalooza and ACL. Of course, musi-cians and some superstar acts saw opportunity to broaden their fan base and support their livelihood. Still, even then the two top fes-tivals, Loolapalooza and Austin City Limits, did not gross together more than U2 collected between May 11-24, when it played in Mexico City, Denver and Salt Lake City.

Lollapalooza (Mid-August) is a yearly three-day festival showcasing popular rock, metal, punk, hip hop, indie bands, dance music, comedy and craft booths. The festival also bestows platforms for non-profit orga-nizations and political groups. Lollapalooza takes place at Grant Park of Chicago, Illinois and helped expose artists such as Arcade Fire, Metallica, Red Hot Chili Peppers, Lady Gaga, Foo Fighters, Green Day and other superstar

acts. This summer, 270,000 fans attended the festival and more than 140 acts performed on eight stages. Sponsors included Google+, BMI, Bud Light, Music Unlimited, and Play-station. Lollapalooza featured greater names such as Coldplay, Muse, Girl Talk, Christina Perri, Eminem, Cee Lo, Deadmau5 and Foo Fighters and rising acts such as Julia Easter-lin, Big Bang Boom, L1ght and Happiness Club. The festival grossed $17 million this year.

Austin City Limits Music Festi-val (Mid-September) is a yearly three-day festival that comes to light in Austin, Texas at the city’s central public park, Zilker Park. ACL Fest gathers 130+ acts from the do-mestic and international scene. These artists perform rock, indie, and electronic music on eight stages. Sponsors include Google+, Bud Light, BMI, and Honda. More than 210,000 fans are present at ACL and attract vendors of food, art and other local merchants. This year was highlighted by performances from Kanye West, Colplay, Stevie Wonder, My Morning Jacket, Cee Lo Green, Arcade Fire and Manu Chao. Austin City Limits Music Festival grossed $15 million.

iHeartRadio Music Festival (Mid-September) is supported by iHeartRadio, the interactive media social networking platform outlet. iHeartRadio was crafted by Clear Channel Radio in order to amass local radi-os, personalities and on-demand materials in one smart-phone streaming application. This

In The Summertime, When The Weather Is HotBy Frédéric Casimir

company is supported by BlackBerry, iPhone & iPod Touch, Android, webOS and Windows Phone 7 technologies. As a promotional tool, iHeartRadio network fashioned a music festi-val in Las Vegas and gave away hundreds of trips and tickets to the event. IHR Fest was held at the MGM Garden Arena for its inaugu-ration. Inviting the biggest performers of the music industry such as Jay-Z, The Black Eyed Peas, Kelly Clarkson, Bruno Mars, Carrie Un-derwood, Coldplay, Alicia Keys, Sting, Lady Gaga, Kenney Chesney, David Guetta, and so forth, the tickets sold out within 10 minutes of being on sale to the general public. Ryan Seacrest and Elvis Duran hosted the inaugural event. More than 10 million fans viewed the festival through the iHeartRadio website.

Blue Note Jazz Festival (June 1st- 30th) is an extension of the Blue Note Jazz Club, inaugurated in 1981. As a tribute for its 30th anniversary this summer, the club kicked off a festival featuring a variety of prestigious acts such as Dave Brubeck, Chris Botti, Nancy Wilson, Roberta Flack, Bobby McFerrin, Cha-ka Khan, Brian Wilson and many more in Cen-tral Park and other venues in New York City. These venues included the Blue Note, Beacon Theatre, Town Hall, B.B. King Blues Club & Grill, Le Poisson Rouge, and Rose Hall.

Country Music Association Music Festival (Early-June) was held at LP Field in Nashville, Tennessee for four days. It was in-augurated in 1972 and now casts more than 400 artist and celebrities. This summer, more than 250,000 people attended ticketed shows, auto-graph sessions and free concerts. Visitors from forty one countries and all fifty states were present at the CMA Fest. Country performers such as Alabama, Sheryl Crow, Kid Rock, Lady Antebellum, Martina McBride, Shania Twain, Reba McEntire, Keith Urban and many more performed at the LP field Stadium. Taylor Swift closed the festival with her hits “You Belong with Me”, “Love Story”, “Mean”, and “Fear-less”.

The following tour highlights are noted, in the US and abroad:

U2 Grossed $32,559,712; May 11-24, Estadio Azteca, Mexico City (3 times sold out), INVESCO Field at Mile High, Denver (sold out) Rice-Eccles Stadium, Salt Lake City (sold out) 408,606 tickets sold




Law Section

(From Page 3)

ASCAP and BMI do not require ven-ue operators to maintain records of the music they play, relying instead on radio airplay and other proxies to estimate frequency of perfor-mance. As noted earlier, however, the PRA would not require terrestrial broadcasters to maintain records of the specific recordings they play. Thus, the convenient “radio proxy” would not be available for sound recordings. This is another reason why future versions of the PRA should require radio stations to engage in some degree of recordkeeping. In addition, operators of large commercial venues (or the music ser-vices with which they have contracts) could be subject to a limited recordkeeping requirement — perhaps only for a few days per year — and these records could be used as proxies for the smaller venues.

Under their blanket licensing ar-rangements with ASCAP, BMI, and SESAC, public venue operators normally pay a license fee that reflects their revenues as well as the nature of their business, because music plays a greater role in some businesses than others. If the statutory license for public performances of sound recordings is extended to public venues, then the Copyright Office will need to take sim-ilar factors into consideration. The statutory licensing scheme for digital audio services, and the proposed extension to terrestrial radio, dis-tinguishes between services only on the basis of revenues and audience size; this approach sim-ply will not work for public venues as varied as dance clubs and grocery stores.

Fortunately, collecting societies out-side the United States have already developed methods for estimating usage of sound record-ings by public venues as well as broadcasters, and these methods could serve as useful models for the United States.

Rate-setting will present another challenge if the performance right is extended to public venues. To what extent should the government play a role in establishing the roy-alty rate? Should public venues be subject to a statutory license, with the rate set by the Copy-right Office, or should the rate be negotiated by the parties? Should the royalty scheme be modeled after ASCAP and BMI performance licenses for musical compositions, with a col-lecting society (such as SoundExchange) set-ting a blanket license rate, subject to judicial or administrative oversight?

There are precedents for both ap-proaches in other countries, and their models

can offer helpful guidance. If there is no gov-ernment oversight at all, an impasse in negotia-tions could harm songwriters and publishers, whose royalty income depends to a great extent on public performances of sound recordings. In contrast, if the license is statutory, or if it is privately negotiated but subject to government oversight, this would avoid the bottleneck problem, but it would also mean that the gov-ernment entity charged with setting the royalty rates would have to consider the cumulative ef-fect of the sound recording royalty combined with the songwriters’ and publishers’ royalty. If the cumulative royalty is too high, venues will cut back on the amount of recorded music they play; some will stop playing music alto-gether. Ideally, rate-setting authorities should ensure that the cumulative burden on music services and broadcasters is reasonable and not subject to major fluctuations over time. Thus, the government will need the authority to re-duce the ASCAP, BMI, and SESAC licensing fees – an outcome which songwriters and pub-lishers have vehemently opposed. Indeed, both the current statute on sound recording perfor-mance royalties and the PRA contain language that precludes the government from reducing songwriters’ and publishers’ royalties in order to make room for sound recording royalties.

Clearly, there are substantial obsta-cles on the road to a full performance right in sound recordings. These obstacles are routed in the long-standing perception that the cre-ative work of performers and record producers does not deserve the same degree of copyright protection as the creative work of composers and publishers. This discrimination has been known to create strife among band members, some of whom receive substantial songwriter royalties while others must settle for the lesser stream of income generated by performing. The rest of the world grants performers and re-cord producers a public performance right far superior to that of the U.S. If other countries can overcome the obstacles to a full perfor-mance right, then the U.S. can do so as well.

Mary LaFrance is IGT Professor of Intellec-tual Property Law, William S. Boyd School of Law, University of Nevada, Las Vegas. For the author’s more detailed treatment of this topic, see “From Whether to How: The Challenge of Implementing a Full Public Performance Right in Sound Recordings”, Harvard Journal of Sports and Entertainment Law 221 (2011).

U.S. Performance Rights (From Page 13)

Summertime (cont.)

Enrique Iglesias Grossed $5,305,202; July 23-28 Acer Arena, Sydney (sold out)Brisbane Entertainment Centre, Brisbane (sold out),Rod Laver Arena, Melbourne (2 times sold out), 37,598 tickets sold

Sade Grossed $4,711,593; Aug. 19-21, Staples Center, Los Angeles (3 times sold out), 40,810 tickets sold

Katy Perry Grossed $2,332,319; Aug. 13-21; Santa Barbara Bowl, Santa Barbara, Calif. (2 times sold out),Sprint Center, Kansas City (sold out), Bridgestone Arena, Nashville (sold out), Scottrade Center, St. Louis (sold out), Allstate Arena, Rosemont, Ill. (sold out), 60,437 tickets sold

Keith Urban Grossed $3,090,932; July 28-Aug. 16, Verizon Center, Washington, D.C., Arena at Gwinnett Center, Duluth, Ga. (2 shows) , Bridgestone Arena, Nashville (sold out) U.S. Bank Arena, Cincinnati, Thompson-Bol-ing Arena, Knoxville, Tenn., INTRUST Bank Arena, Wichita, Kan. (sold out), 60,783 tickets sold.

________________All the information in this article is from Bill-board’s Boxscore and Pollstar.

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