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In What World Is Having Three Judges Set The Price Of Streaming Music 'Free Market Capitalism'?

from the just-wondering dept

Greg Sandoval over at The Verge has an interesting post about “Pandora’s PR problem” concerning its attempt to get out from under ridiculously draconian royalty rates that are clearly unsustainable. I agree that Pandora has failed on almost every aspect of the PR front, though the article seems seriously one-sided on a few points. First, it compares Pandora’s situation to Spotify’s, where Spotify has also been criticized for its royalty rates at times, and yet its reputation isn’t quite as bad. Recently Spotify has signed some “big” name artists to publicly support its platform. Of course, the way it did so was to throw a ton of money at those artists. And there’s a strong argument that Spotify’s current royalty rates are even more unsustainable than Pandora’s — it’s just that Spotify has a long runway and is choosing to put off the eventual day of reckoning it’s going to have to face over royalty rates for internet music. Furthermore, the article seems to ignore the fact that much of the “controversy” and PR failures by Pandora are actually the result of a coordinated campaign, set up by a RIAA front group, focused on flat out lies and bogus attacks.

Of course, Pandora isn’t blameless in all of this, but I put a lot of blame on Pandora’s stupid decision back in 2009 to agree to the ridiculous rates it now realizes are impossible to sustain (something that many people pointed out at the time). But, the craziest part of the article is the claim that Pandora’s attempt to lower rates somehow goes against free market capitalism. Sandoval mentions this argument twice. First, in noting that some “conservative” groups made this argument:

Citizens Against Government Waste, a conservative think tank, accused Pandora of trying to undermine the free market.

And then again in quoting an analyst who makes the same argument:

Michael Pachter, a research analyst with Wedbush Securities, believes Pandora will eventually thrive but that its attempt to legislate lower costs is misguided. “The bill is idiotic,” Pachter said. “It’s insulting to Congress to say you want regulation to lower your costs at the expense of artists. Did you see who was on stage with Obama helping him campaign? Jay-Z and Bruce Springsteen. That’s the Democrats, and how many Republicans are going to want to legislate against capitalism and the free market?”

But neither of those claims makes any sense at all. When it comes to royalty rates for web streaming there is no free market. In fact, the status quo is so far away from the free market or capitalism as to be laughable, and it seems like anyone claiming that it represents some sort of free market is either being purposely misleading or is totally uninformed.

The rates for web streaming sites like Pandora fall under what’s called “non-interactive digital music streaming” — and the rates for those are set by a three judge board, known as the Copyright Royalty Board. If someone can explain to me how a selection of three judges flat out setting prices is a “free market,” that would be good to know, because last I checked, the government setting prices is kind of the opposite of a free market. Of course, the last time the CRB set those rates, they set them so high that it was impossible for anyone to pay those rates. That’s how completely clueless the CRB tends to be. So, in response, Pandora and other webcasters did negotiate lower rates, but those rates were still impossibly high. Some might argue since Pandora’s current rates are those “negotiated” rates, it is a free market, but that’s clearly not true either. The “fallback” that the record labels had in those negotiations was “fuck you, here’s what the CRB says the rates are, pay up or go out of business.” When they have those CRB rates as the fallback, their negotiating position is obviously quite strong, and the results are obvious. The “negotiated” rates are impossibly high. Pandora’s big mistake was agreeing to those rates (even though it felt it needed to if it wanted to actually live to fight another day).

No matter how you look at it, that’s not free market capitalism. Coming up with a way to change those rates may not be free market capitalism either, but to argue that moving away from the existing rates goes against free market capitalism makes no sense. So, if either Citizens Against Government Waste or Michael Pachter can explain how three out of touch judges with no market experience setting the official rates is “free market capitalism,” it seems like, perhaps, they shouldn’t argue that Pandora is trying to “legislate against capitalism and the free market.”

Filed Under: capitalism, copyright royalty board, economics, free market, michael pachter, music, royalties, streaming
Companies: citizens against government waste, musicfirst, pandora, riaa, soundexchange, spotify

Lobbying Group Issues Takedown For Parody Political Ads By Student Group

from the hello,-fair-use dept

Well, we’re just about done with election season, but there’s still plenty of time for more bogus DMCA takedowns. The latest comes from a lobbying group called “Citizens Against Government Waste.” As you can expect with most groups that call themselves “Citizens Against” something, the group tends to focus on issues that favor corporations, rather than citizens. Anyway, they put together a somewhat silly advertisement for the election that not only mocked the US for its stimulus spending, but suggested that smug Chinese people would mock us in 20 years because of it. Here’s the original ad:

Another group, called Campus Progress, which is (actually) a student political group took the CAGW video, which involves a guy speaking Mandarin, and put different subtitles on it, parodying the original commercial to have it pretend to say something entirely the opposite of the original message. You can see it here:

Now, Campus Progress had originally posted the video on YouTube, but CAGW issued a DMCA takedown notice over it claiming it was copyright infringement. Amazingly, a spokesperson for CAGW told Politico that they totally understand parody, but this isn’t parody:

“We love parody as much as anyone (I was a huge fan of the Downfall series myself), but what Campus Progress did was not ‘parody,'” she emails. “They basically hijacked the and adulterated it to help raise money for themselves. We have already asked YouTube to remove it b/c it is a copyright violation.”

Uh, huh? Say what? First of all, this video is even more of a parody than the Downfall videos, which don’t even comment on the original video. The Campus Progress video is clearly commenting on the original video and is obviously parody (what else would it be?). To claim that it’s a copyright violation is also ridiculous. They put this video out as an advertisement. It’s not like someone is going to see the second ad and decide that it’s a suitable substitute for the first. There’s no competent reason to issue a takedown except that CAGW doesn’t like what Campus Progress has to say. Now, I don’t care where you stand on this political debate (personally, I think both are over-exaggerating and over-simplifying a complex issue); it’s pretty ridiculous to use copyright law in this manner.

Of course, it’s also totally backfiring on CAGW in that this bogus DMCA takedown is of course only serving to drive that much more attention to the parody they don’t want people to see.

Filed Under: copyright, dmca, free spech, parody, political ads, takedown
Companies: campus progress, citizens against government waste