value gap – Techdirt (original) (raw)

from the oh-come-on dept

Oh Canada. Not satisfied with a ridiculous plan to fine social media companies for ill-defined “fake news,” a Canadian Parliamentary Committee has come out with one of the most laughable copyright reform papers I’ve ever seen. And I’ve seen some crazy ones. I’d post the whole report here, but the report itself warns that doing so might violate its copyright, and really, how could the Parliament be incentivized to create fantasy stories masquerading as copyright reform proposals without copyright?

Michael Geist provides the bizarre background on the origination of this report:

The Canadian government announced its plans for a copyright review in December 2017, tasking the Standing Committee on Industry, Science and Technology with the review. That report has been in the drafting stage for several months and is expected before the summer. In an effort to dampen concerns that Canadian Heritage would play a diminished role in the review, the responsible ministers asked the Industry committee to ask the Heritage committee to conduct a review on remuneration models for artists and creative industries. The formal request asked the Standing Committee on Canadian Heritage to ?call upon the expertise of a broad range of stakeholders impacted by copyright to ensure a holistic understanding of the issues at play.?

Rather than providing the recommendations directly to the Industry committee as requested, the Heritage committee and chair Julie Dabrusin, a Liberal MP, chose instead to release its full report today. The report, which utterly failed to comply with the request to call on a broad range of stakeholders, is the most one-sided Canadian copyright report issued in the past 15 years, largely mirroring the approach of the discredited 2004 Bulte report that was subsequently rejected by the government.

The report is crazier than even I expected upon hearing the details. It doesn’t even pretend that there might be some downsides to over-extending copyright law, or that there should be any exploration of the trade offs of various proposals at all. Instead, it insists that we NEED MORE COPYRIGHT in basically every possible place. As if to prove how laughable the entire report is… it actually recommends extending copyright terms — something that even American copyright maximalists have mostly given up on (and whom, in quiet, will admit that perhaps copyright terms are already too long). But, that view is not even suggested in Dabrusin’s dubious analysis of copyright. Indeed, the report admits that it didn’t talk to a single person who didn’t think extending copyright was a grand idea:

No witnesses expressed outright opposition to extending of the copyright term from 50 to 70 years after death.

If that’s the case, you, uh, did not speak to very many witnesses at all — and you certainly did not abide by your mandate to talk with a “broad range of stakeholders.” Incredibly, the report quotes a musician — uncritically — who is flat out admitting that she just wants more money for work she did in the past:

Artist Miranda Mulholland said that extending the copyright term would be a ?legacy move? that would give artists like herself ?the ability to leverage their success.?

Existing copyright law in Canada allows Mulholland and her heirs to “leverage her success” for 50 years past her death. And she wants more? Come on. And, remember, copyright is supposed to be about an incentive to create. If life+50 was good enough for her to create when she did, why should she get extra benefits (by taking away from the public domain) afterwards? That makes no sense at all. But the report reflects none of that.

The report is also laughably credulous about the debunked concept of the “value gap”, which is a meaningless phrase invented by the legacy record labels to mean “internet companies figured out how to innovate, while we just sued our best customers, and why aren’t they handing us more money?!?” But, according to this report, it’s a real problem that absolutely must be dealt with:

Witnesses from the creative industries spoke about a disparity between the value of creative content enjoyed by consumers and the revenues that are received by artists and creative industries. According to many witnesses, this disparity, which is known as the ?value gap,? is growing.

According to Graham Henderson, President and Chief Executive Officer of Music Canada, the origins of the value gap extend back more than two decades. As creative industries shifted with the advent of the internet, copyright policy and protections became outdated and ineffective. Miranda Mulholland, artist and entrepreneur, aptly described, ?the biggest reason for [the value gap] is that the laws in place today reflect a time of home phones, of scrunchies, and of buying a CD at a music store instead of today’s world of streaming.?

That’s silly. Canada went through major copyright reform in 2012. The idea that the laws reflect the 1980s is just silly. And wrong. So is the idea of a value gap.

The report falsely claims that there has been a “decline in the artistic middle class.” This is absolutely laughable. As we showed in our recent Sky Is Rising report, the internet has enabled a massive new artistic middle class by allowing them to go direct to fans, and not rely on a single gatekeeper. Instead, there are lots of tools to create, to reach new fans, and to make money — and all of the data suggests that’s happening. What’s telling is that nowhere in the report do they cite any actual statistics around this, but merely anecdotes. It’s incredible.

The entire report is based solely on anecdotes and quotes from legacy industry insiders, who might have just a wee bit of bias in telling the Canadian government that it needs to force internet companies to pay more. Not surprisingly, this report endorses the approach the EU has taken with its new copyright laws: put all the liability on the platforms. Again, there isn’t even an attempt to show why this might create problems or trade-offs — just quotes in support:

Another approach to combatting piracy that witnesses raised is to involve the intermediaries in content distribution such as Internet service providers (ISPs). Witnesses described different methods to do so. For the Association nationale des editeurs de livres, ISPs ought to ?inform their subscribers about copyright? and ?[withdraw] access from non-compliers.? For representatives from the music and the film and television industries, the courts ought to be allowed to force ISPs to block access to the websites that allow piracy.

To further curb illegal copying or streaming, it was suggested profiting from the theft and sharing of rights holders’ exclusive and copyrighted content on illegal streaming services be deemed a criminal offence.

Many witnesses also asked for modifications to the safe harbour provisions related to digital intermediaries and ISPs. The Committee heard that these provisions ought to be reviewed to ensure that these online services are held accountable for their role in diffusing content. The recommendation is linked to the theme of Canadian content previously discussed. Witnesses told the Committee that the Internet should not be seen as a set of ?dumb pipes? and, rather, that ISPs ?enjoy and greatly benefit from access to the music they give their clients.?

The whole report is an utter joke. It seems clear that it was written by someone who not only heard from one tiny set of views, but who is either woefully ignorant of the myriad views on copyright and its impact, or who purposefully tried to hide that. Either way, it makes this report not worthy of consideration by any legitimate legislative body.

Filed Under: canada, canadian heritage, copyright, julie dabrusin, middle class musicians, safe harbors, term extension, value gap

from the maybe-think-on-that-a-bit-more dept

Last week we wrote a critical analysis of Elizabeth Warren’s big plan to break up “big tech.” As we noted, there was a lot in the plan that was nonsensical, unsupported by the facts or just plain confused. We’ll be talking more about some of these ideas a lot over the next few years I imagine (stay tuned), but there was one line in Warren’s plan that deserved a separate post: it appears that a part of Warren’s big attack on big tech… is to give a massive handout to Hollywood. Here’s the line:

We must help America?s content creators???from local newspapers and national magazines to comedians and musicians???keep more of the value their content generates, rather than seeing it scooped up by companies like Google and Facebook.

That may sound rather basic and lacking any details, but what’s notable about it is that the language reflects — almost exactly — the language used in the EU in support of the absolute worst parts of the EU Copyright Directive (specifically, Article 11 and Article 13). For example, this Q & A page by the Legislative Affairs Committee of the EU Parliament uses quite similar language:

The draft directive intends to oblige giant internet platforms and news aggregators (like YouTube or GoogleNews) to pay content creators (artists/musicians/actors and news houses and their journalists) what they truly owe them;

Why, that sounds quite familiar. Indeed, Warren’s announcement even uses “keep more of the value their content generates,” which appears to be a reference to the completely made up notion of a “value gap” between what internet platforms make and what they should be paying artists.

It’s no secret, of course, that those pushing strongest for Articles 11 and 13 plan to bring them to the US as soon as possible. Indeed, that’s why we pointed out that it is quite important for Americans to pay attention to what’s happening there — as it’s likely to follow across the Atlantic before too long. The fact that a leading Presidential candidate is already mimicking the language of such controversial European legislation is quite amazing, and suggests a Warren campaign that is very out of touch with what people actually want from their internet.

It’s also kind of odd for someone who paints themselves as a “progressive politician” who will stand up “against big business” to be hinting at policies that are obviously designed solely as a wealth transfer mechanism to the giant Hollywood studios, major record labels, and large newspaper publishers. It’s difficult to square that position with helping the little guy.

Similarly, one of our big concerns with Articles 11 and 13 is that, by their very nature, they will increase the monopoly issue. They are rules that only make sense if you have a few giant companies on each side negotiating with one another — rather than a large number of competitors, and a wide variety of independent creators. So, it’s doubly bizarre that Warren would include this suggestion in her big post about how terrible monopolies are and how she needs to break up big tech. Copyright-directive style proposals won’t do that. They’ll simply reinforce the dominant position of the big companies by making it nearly impossible for startups to even enter the market.

Filed Under: antitrust, article 11, article 13, artists, break up big tech, content creators, copyright, elizabeth warren, journalists, value gap
Companies: facebook, google

RIAA Still Pushing Its Bogus Message Of A 'Value Gap' And 'Fair Compensation'

from the can-we-review-some-history dept

The RIAA is not exactly known for being the most honest of organizations out there, but in an interview given by the organization’s General Counsel, Steve Marks, the level of blatant dishonesty is taken to incredible new levels. I’m going to take just one paragraph and break down what a load of total bullshit it is, and hopefully it will demonstrate, yet again, why the RIAA should never be taken seriously in its claims. It’s the final question in a short interview with the Hollywood Reporter, and the question is at the top:

What changes do you foresee in the landscape of music law over the next five years?

Issues like the ?value gap? and obligations of intermediaries will continue to dominate the legal landscape. Ideally, the Byzantine legal structure today would give way to a system where creators are fairly compensated and competitors are on equal footing. Those who have an interest in music could come together to figure out solutions. While litigation can be an important tool, it often takes a long time and the results are unclear. Solutions between business and industry partners can clear a path through thorny legal issues. The combination of partnership and technology can go a long way to ensuring a healthy music ecosystem.

Let’s take this bit by bit.

Issues like the “value gap”….

The “value gap” is a completely made up concept by the RIAA and friends, arguing that internet platforms aren’t paying the record labels (not the artists) enough. It’s based on a series of out and out lies, including the simply false claim that artists make more from vinyl record sales than from online streaming.

The “value gap” is the RIAA cherry picking misleading numbers to argue that internet platforms aren’t paying them enough. Note that they don’t make any effort to improve what they’re doing — they’re just demanding more money from platforms… just because.

And, really, that’s the same issue with the rest of that sentence:

… obligations of intermediaries will continue to dominate the legal landscape.

“Obligations of intermediaries.” That’s legal speak for “we want everyone else to act as our private police force, and they should automatically block infringing material or we should be able to sue them for billions of dollars.” Never mind the fact that the industry can’t even keep track of its own copyrights, and has been known to sue over authorized works or that the RIAA itself has a history of falsely claiming infringement on works that were actually authorized — even in cases that resulted in the bogus takedown of a site that was sent promotional works to post. And yet it expects “intermediaries” (read: Google) to magically know which works are authorized and which are not — and to face billions of dollars in possible judgments if it guesses wrong.

Ideally, the Byzantine legal structure today…

The reason copyright’s legal structure today is so “Byzantine” is because of lobbying by the RIAA and its friends at the MPAA. Every time a new technology comes along, the RIAA flips out and demands a patchwork of add-ons to copyright law to protect its gatekeeper powers, allowing it to extract monopoly rents.

Of course, the “Byzantine legal structure” Marks is whining about here is actually the very one that the RIAA itself lobbies heavily for with the DMCA’s 512 notice-and-takedown provisions. The RIAA wanted a way to censor the internet via copyright law, and the DMCA was the trick. The fact that the RIAA no longer likes the deal that it fought for is just a bad joke.

And, let’s not even get into the “Byzantine” structure of RIAA label contracts designed to keep artists from actually getting paid… Or, wait, let’s dig right into that following the next bit of insanity from Marks.

… give way to a system where creators are fairly compensated…

Wait. The RIAA is asking for “creators” to be “fairly compensated”? Hahahahahahaha. Oh, that’s a good one. This is the same RIAA who has worked incredibly hard to screw over artists time and time again to make sure they are not fairly compensated? The same RIAA whose member labels create contracts where artists routinely note that they made $0 in royalties, because the label contracts make it so impossible to recoup the advance that when you ask for an “accounting” of how much money an album has made, the labels just make shit up to avoid paying.

These would also be the very same RIAA member labels who take the vast majority of the revenue from new platforms, leaving just a pittance for artists — and then whine that it’s the platforms not giving them a fair deal. The very same labels that make sure that artists get close to nothing of any money coming in to the label. And, yes, the very same labels who for years pretended that digital music was classified as the same as a CD sale — with much lower royalty rates than “licensed” music, leading numerous artists to sue just to get what they were clearly owed. The very same labels that many artists have had to sue, just to get a proper accounting of what is owed.

So, I’m sorry, but what a load of bullshit for the RIAA, of all organizations, to claim that it’s fighting for “fair compensation” for artists. The RIAA has a decades-long history of screwing over actual artists at basically every opportunity.

… competitors are on equal footing…

Another completely ridiculous claim. The “equal footing” that the RIAA is talking about here is forcing online platforms to all conform to one particular business model — a totally unsustainable one where an insane percentage of revenue all flows back to the labels (not the artists) despite the fact that the labels fought these platforms and did absolutely nothing to help make them a success. The whole “equal footing” or “level playing field” is really just the RIAA demanding a particular business model and saying that any innovation in business models (even if they’re better for actual artists) should not be allowed, unless the RIAA gives its okay. It’s basically the “we don’t want any innovation” stance.

Those who have an interest in music could come together to figure out solutions.

This is hilarious. For decades, the RIAA has been the major obstructionist party here. It was the internet industry that dragged the RIAA kicking and screaming into the 21st century while people like Marks focused on suing music fans. To now claim that he just wants to “come together to figure out solutions” is laughable. The only “solutions” the RIAA wants are ones where it does none of the work, and it gets all of the money.

While litigation can be an important tool, it often takes a long time and the results are unclear.

Translation: we sued a bunch of fans and that made everyone hate us. Also, we sued a bunch of platforms and lost badly because the law isn’t actually what we want it to be.

Solutions between business and industry partners can clear a path through thorny legal issues. The combination of partnership and technology can go a long way to ensuring a healthy music ecosystem.

This is just a repeat of the opening line, basically. It’s the RIAA saying that the internet industry needs to solve all of its problems, and what it means is that the recording industry doesn’t want to budge an inch, doesn’t want to do anything, and just wants the internet companies to give tons of money to the labels and to wave a magic wand and make piracy disappear.

Filed Under: copyright, dmca, dmca 512, fair compensation, intermediary liability, safe harbors, steve marks, value gap
Companies: riaa

Legacy Recording Industry To Trump: Please Tell Tech Companies To Nerd Harder To Censor The Internet

from the feeding-right-into-the-program dept

Last week, we wrote about the ridiculous suggestion from the former Newspaper Association of America (now called the News Media Alliance) that President Donald Trump should scale back fair use because newspapers still don’t like Google. As we noted, at a time when Trump has been strongly endorsing censoring newspapers, for those very newspapers to tell Trump to undermine a key cog in protecting free speech was absolutely ridiculous.

And, of course, now we can add the legacy recording industry to this same “shoot foot” brigade. Upon hearing about Trump’s meeting with the heads of a bunch of top tech companies, the RIAA and a bunch of related recording industry associations (including ASCAP, BMI, A2IM, NMPA, SoundExchange and more… ) have sent a letter to Trump (found via Variety), asking him to force the internet companies to nerd harder to find better ways to censor the internet. This is fairly incredible, seeing as the traditional recording industry wasn’t exactly a major Trump supporter. For them to now reach out to Trump and urge him to increase censorship of the internet is fairly astounding and sickening. Basically, to the RIAA and friends, hatred of Google and the internet is more important than concepts like free expression or holding our elected officials accountable.

Of course, the legacy recording industry doesn’t come out and directly say “censor the internet,” but that’s exactly what they’re asking for here (though watch the blog posts from defenders of the industry howl about me making this intent obvious):

Surely the world?s most sophisticated technology corporations can do better ? by helping to prevent illegal access and paying fair market value for music with prices set by or based on the free market.

Strong protection for intellectual property rights will assure growth in both creativity and technology, benefiting the American economy as a whole.

We hope you will lead the effort to assure American creativity is encouraged, invested in, protected and fairly compensated in a manner that carries out the exclusive rights guaranteed in the Constitution to those who, with the genius of their mind, form the cultural identity of our great nation.

The call for censorship is in “preventing access” which means blocking what you can do online. The hilarious part is the “prices set based on the free market” because that’s exactly what the industry is protesting. The whole “value gap” bullshit is basically the industry saying “we do not like what price the free market is setting, and therefore we need the government to artificially inflate prices through monopolies.

Just to be clear, if you’re whining about not getting “fair compensation” you’re clearly saying “I’m upset about the price the free market has set.”

But the bigger issue here is the censorship piece. I shouldn’t have to detail here how many times we’ve shown that copyright is abused for censorship purposes (including by governments). The call to hold platforms more accountable and putting the onus on them to “nerd harder” is a call to ramp up tools for censorship-via-copyright. This is pretty ridiculous — and one hopes that musicians who have spoken out against Trump will also speak out against this demand to give him and his friends more power to censor parts of the internet.

Filed Under: copyright, donald trump, nerd harder, recording industry, value gap
Companies: a2im, ascap, bmi, google, nmpa, riaa, soundexchange

The Ridiculous Concept Of The 'Value Gap' In Music Services… And How It Could Harm Both The Tech Industry And The Music Industry

from the be-careful-what-you-wish-for dept

Over the past few months, the legacy recording industry has coalesced around a new talking point — a so-called “value gap” between different kinds of music services. In particular, the phrase is used to attack YouTube and to claim that it’s somehow unfair that the ad rates and money made from the ad supported YouTube is much lower than purely subscription services. This has lead to the repeated false claim from the RIAA and others that revenue from vinyl records is more than from ad supported streaming.

Unfortunately, this value gap phrase has caught on in certain circles — including over in Europe where the European Commission has mentioned it as it puts in place plans for copyright reform. Tragically, and incorrectly, EU officials have started referring to reasonable intermediary liability protections and other things as a “loophole” within copyright law that somehow allows platforms to “unfairly benefit.” It allows them to claim that they’re just trying to “level the playing field” when that actually means tilting the playing field heavily in one direction.

Maud Sacquet, from CCIA and Project Disco, has a good blog post about why this concept of the value gap is so problematic. As she rightly points out, differentiated pricing in music is not a new concept:

The claim that this difference is ?unjustified? or somehow ?unfair? should be challenged. The music industry?s revenues have always differed depending on the sources (i.e. the sales of sheet music and phonograms, live performances, radio and TV broadcasts). Online services have become additional sources of revenue, with different business models and technologies generating different incomes ? reflecting the current situation in the offline world.

And that’s true, but even that underplays the reality of the situation — which is that there are good reasons for differentiation here. It’s not just about differences in sources, but differences in how people consume music and the money that changes hands reflects that. Terrestrial radio is free and ad supported — and it’s an easy low-barrier entry point for people who aren’t necessarily huge music fans. Then as you travel up the ladder of musical fandom, and people get more committed, they may use a subscription service, or have their own locally stored music.

Sacquet further points out how the ideas that the EU is apparently considering would create a massive disaster for internet services that provide platforms for music:

Among the potentially very harmful measures considered by European policymakers to solve this ?value gap? is the ?clarification? of the right of ?communication to the public? ? i.e. both user and online hosting services would be ?communicating to the public? each time a user is uploading a content online. Online platforms, today only indirectly liable for copyright infringement, would become directly liable. All online hosting services would de facto fall outside of the scope of the liability protection regime of the E-Commerce Directive.

Such a measure would have far reaching consequences.

Firstly, it could cause online services to shut down their upload and sharing services, thereby chilling innovation.

Secondly, this would severely restrict users? freedom to impart and receive information, something that policymakers have struggled to grapple with in the past.

Thirdly, it could cripple the growth of the digital economy ? when the purpose of the Digital Single Market is the exact opposite.

But, perhaps even more importantly, is that it would end up harming the very musicians clamoring for such a solution. We’re still in the very early days of figuring out how music services should best work online. The whole concept of the “value gap” and “leveling the playing field” really are all about deciding that there is “one true business model” for all music services to live under, and EU technocrats (heavily pressured by the legacy recording industry) are going to tell the world what that is. That’s a recipe for disaster not just for the tech sector, but the very musicians who rely on these services to make money today.

completely lose out on the differentiated ways in which fans enter the music ecosystem. When you have a one-size-fits-all model, it pushes towards a world where the vast majority of casual music fans are left out, in a misguided effort to try to force more money out of stronger music fans. Years ago, music economist Will Page pointed out that the industry was wrongly focusing on share of wallet that they were able to extract from people, rather than trying to expand the population that was listening to music and contributing to the music ecosystem in some way. That is, there’s a large percentage of the population that doesn’t support the music ecosystem in any way. They don’t subscribe to anything. They don’t go to concerts. They’re casual music listeners at best. And there’s a real opportunity to offer low barrier entry points to those people, allowing them to “move up the ladder” to become bigger and bigger music fans.

But you lose all of that with a forced “level playing field.” The “value gap” is not a value gap at all. It’s simply showing differentiated pricing to help bring in more casual music fans and create new opportunities going forward. So the end result here would be not just harming technology companies and leading to fewer services with less innovation, but, even worse, a significantly smaller population of music fans who are willing to support the industry — and the ones who remain will be getting squeezed harder and harder by the industry, eventually probably shoving many of them out of the market as well.

The talk of a “value gap” is not only misleading and wrong, but it’s dangerous. And it’s dangerous to both internet services and musicians — which shouldn’t be a surprise because, despite all the rhetoric, the two are pretty closely aligned in their overall interests.

Filed Under: copyright, music industry, piracy, price differentiation, streaming, value gap