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Archive for the ‘Music Law’ Category

OUT WITH THE OLD

After over 18 years of service to the organization, Harold Bradley is no longer president of Nashville’s Local 257 chapter of the American Federation of Musicians.  Dave Pomeroy was elected president last week by a vote of 675 to 449.  Out of it’s 2620 members, 1165 votes were cast in this election, which is more than double the number of votes cast in the 2005 election. 

This is most certainly the end of an era for Harold Bradley, for whom Harold I have a great deal of respect and admiration.  He began his long services as president of Local 257 on January 1, 1991 and later became the International Vice President serving the AFM’s International Executive Board, a position he will likely retain until 2010.  He received the AFM’s Lifetime Achievement Award in 2006, the same year he was inducted into the Country Music Hall of Fame.  Bradley was also the first president of the Nashville chapter of NARAS and continues to serve as a member of the Grammy organization’s Board of Governors.

Harold and his brother, Owen, built Nashville’s earliest recording facility, Castle Recording Studio, in the early 40’s. As the architect of the Nashville Sound, Harold was part of Nashville’s original “Nashville Cats,” the A-Team, which included such notables as Boots Randolph, Floyd Cramer, Hargus “Pig” Robbins, Buddy Harman and The Jordanaires. 

He is one of the most recorded guitarist in the world, and has been pickin’ on country albums for over 60 years, including work on such classics as Bobby Helms’ Jingle Bell Rock, Brenda Lee’s I’m Sorry, Roy Orbison’s Only the Lonely, Patsy Cline’s Crazy, Roger Miller’s King of the Road, Tammy Wynette’s Stand By Your Man, Eddy Arnold’s Make the World Go Away, and Loretta Lynn’s Coal Miner’s Daughter, just to name a few.

Harold Bradley will always be considered a formidable force in Nashville’s music industry. 

IN WITH THE NEW

Bradley’s replacement, Dave Pomeroy, is a well known and seasoned musician as well, having played electric and acoustic bass on more than 500 albums during his 34 years in the music industry.  Dave has played with artists including Emmylou Harris, Alan Jackson, Elton John, Peter Frampton and Chet Atkins, including work on 6 Grammy-winning projects.  Dave is also an independent producer and has produced numerous projects which can be found on website.

Pomeroy issued the following statement after winning the election:

"I am humbled to be elected to the office President by the members of Local 257. Thanks to everyone who voted and all those who volunteered to help my campaign.

On behalf of all members past and present, I thank Harold Bradley for his many years of dedication and service to this Local and the AFM. I am honored to be carrying on the historic tradition of leading Local 257 as we move into a rapidly changing future.

We have one of the most dynamic, versatile, and innovative music communities on earth, and I look forward to representing the best interests of all Nashville musicians, both here at home and around the world."

Pomeroy will begin his three-year term effective January 1, 2009.

In the same election, Craig Krampf defeated Billy Linneman for Secretary-Treasurer by a vote of 570 to 539.  Re-elected to the Executive Board were Bruce Bouton, Bobby Ogdin, Andy Reiss, Laura Ross, and Denis Solee, who were joined by new members Duncan Mullins and Jimmy Capps.

THE CONTROVERY

There is much controversy surrounding the election, which is viewed by some as “revolutionary.”  The scuttlebutt is that a riff has been developing since 2001 between the leadership of the AFM’s International Executive Board and AFM members who were also members of the Recording Musicians Association, the local chapter of which Pomeroy is president.   The RMA, a player conference sanctioned by the AFM, is a 1400-member organization of studio musicians with chapters in Los Angeles, New York and Nashville,  It is arguably one of the most active conferences in the AFM.

Bradley and Linneman, for better or worse, threw their support behind resolution put forth by Thomas F. Lee, the IEB President, and passed by the IEB in Las Vegas in June 2008, which threatened to “de-conference” the RMA at its September conference. 

Lee’s opposition to the RMA derived from stemmed from his promotion of a deal which eliminated so-called backend new usage “buyouts” of musical scores used in video games, something which the AFM was reluctant to do in the past.  Read more about his in this Variety article.

The lines of battle were thusly drawn, and the Local 257 uprising has been building ever since, with tempers flaring on both sides of the disagreement.  (A detailed, though somewhat biased, historical trail can found on the “Sounds” blog).  As a result of the June vote, Pomeroy and over 150 other local members of the AFM presented a resolution at the executive board meeting of Local 257 calling on the members to censor Bradley for his support of the anti-RMA resolution, which Bradley described as “ridiculous” and to which he responded:

This resolution, submitted by RMA President David Pomeroy, is intended to influence my vote! I will continue to vote my conscience (based on the facts before me), and I resent this attempt to force me to vote otherwise.

This statement appeared in an open letter to Local 257 in the July-September 2008 edition of the Nashville Musician, the Local’s newsletter.  This exchange ultimately led to the controversial election of last week.

The waves of discontent were also felt in Los Angeles, where RMA member Vince Trombetta was elected as Local 47’s president earlier this month, also in an apparent backlash against Tom Lee’s anti-RMA leanings.

The principals of democracy are certainly at work in the AFM, just as they were in the presidential elections this year!

SUMMARY

I know Dave Pomeroy and I  believe he will be a caring and effective leader for the AFM.  I congratulate him and wish him the best in the new endeavor, knowing full well that he has some difficult struggles ahead in leading the opposition. 

I also know and respect Harold Bradley.  Harold is a Nashville icon who has been an effective leader of Local 257 for almost two decades.  I believe he wanted what he thought was best for the musicians and I know that he always had the musicians’ interests at heart.  I thank him for his service to the industry.

But no one is perfect.  While I do not intend to take either side in this debate, I will note that perhaps it was indeed time for a revolution.  There is no doubt now that new leadership is the order of the day. Nashville’s musicians are the backbone of our industry and they deserve adequate compensation and representation.  The majority of them now feel that Dave will do that and I commend their choice.  While no one really likes it when it comes, change is often a good thing.   I hope that at least in the Local 257, egos can deflate to normal and tempests can subside, and harmony can once again return to the organization that is at the heart of Music City.

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For those reLORiPhoneaders sporting new iPhones, Blackberrys, Windows Mobile smartphones or even for those diehard Palm fans who own Treos, Law on the Row is extremely pleased to announce that it is going mobile!  The new mobile version loads faster on smaller devices with more limited web browsers.  Just type in the following URL on your mobile device:  http://lawontherow.mofuse.mobi.  You enjoy the same great content, without some of the photos and links.  It’s a great way to keep up with articles on the road.  Enjoy!

By the way, for fellow bloggers, you can create your own mobile website using your RSS feed at www.mofuse.com.

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On August 7th, a lawsuit was filed by Kristen Alison Hall, former member of the country band, Sugarland, against the remaining original members of the band, Jennifer Nettles and Kristian Bush.   A copy of the complaint can be viewed here.Sugarland

Essentially, the lawsuit alleges that Nettles and Bush breached a partnership agreement between the three members, breached their fiduciary duty to Hall, and failed to account to her for partnership profits.  Among other facts alleged, Hall claims that she contributed the trademark, “Sugarland” to the partnership.  A search of the trademark database at www.uspto.gov shows that the partnership owns two marks:  a service mark for live performances, Reg. No. 2747326, and a trademark for merchandise, Reg. No. 3250679.  All three original members, Hall, Nettles and Bush, are identified as the registrants on these marks.

More about the lawsuit can be gleened from this article in the Atlanta Journal-Constitution, written by entertainment journalist Shane Harrison, with contributions by Rodney Ho.  Yours truly is cited as a resource in the article.

This lawsuit provides a dramatic visual aid as to why it is so important for musical groups to plan in advance with regard to issues such as who owns the band name in the event of a dispute.  Either a band partnership agreement, or a  properly established limited liability company or corporation, can effectively provide for what happens to the name in the event a member leaves.  One method I commonly use is to establish a limited liability company and assign the trademark and trade name to the company.  Provisions for what happens to a member that leaves the LLC are then incorporated into the Operating Agreement which set forth the procedure for valuing the company’s assets in that instance.  Such a structure could have eliminated the need for a lawsuit such as the one that Hall filed against the other two members of Sugarland.

If your band does not have a written document dealing with this issue, you should consider retaining an entertainment attorney for such purposes, particular if your band is starting to generate significant income.

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On August 4, 2008, the Second Circuit court of appeals overturned a lower courts opinion that Cablevision’s Remote Storage” Digital Video Recorder (“RS-DVR”) system violated the Copyright Act by infringing plaintiffs’ exclusive rights of reproduction and public perfCartoon Network ormance.  The full 44-page opinion is available at Cartoon Network, LLP, et al. v. Cablevision.  In my humble yet fully animated opinion, the Second Circuit’s opinion was not at all well reasoned nor, for that matter, even common sense — I believe it misinterprets at three very important areas of the Copyright Act and interpretation thereof:

When is a work “Fixed” According to Section 101

Through a system of buffers, Cablevision’s RS-DVR will allow customers who do not own stand alone DVR’s to record programming, which resides on Cablevision’s servers, and “time-shift” it to view it at a later date.  Certainly a great concept, but one which, in my opinion, should require authorization from the owners of the copyrights. 

In arriving at its conclusion, the court determined that the buffer used to process the steam of data only “copies” the data for a duration of 1.2 seconds, before transferring it to another buffer used to reconstruct a copy of the program for any customer who has asked to view it at a later time.  The court concluded that this “embodiment,” i.e. the copy, was transitory in duration and therefore not “fixed” pursuant to Section 101 of the Copyright Act.  Therefore, the copyright owners’ right of reproduction was not violated.  This is clearly erroneous reasoning:

The definition of “fixed” in Section 101 of the Copyright Act states, in its entirety:

A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.

In arriving at its determination, the Second Circuit focused on its condensed version of the definition, i.e. a work is “fixed” when its embodiment “. . . sufficiently permanent or stable to permit it to be . . . reproduced . . . for a period of more than transitory duration.”  The court concluded, based on this shortened version of the definition, that the “language plainly imposes two distinct but related requirements, i.e. an “embodiment requirement” and a “duration requirement.”

The Second Circuit’s error is grammatical in nature:  it misinterprets the language of the definition of “fixed” by assuming that the phrase “for a period of more than transitory duration” modifies the words “permanent or stable” when in fact it actually modifies the antecedent phrase “permit it to be perceived, reproduced or otherwise communicated.”  This is certainly the case with regard to the RS-DVR – it fixes the copies for in sufficiently permanent state in one buffer (i.e. the 1.2 seconds) to permit them to be reproduced in another buffer for a period of more than transitory duration.  Thus, the court got it wrong.

Without getting into too much detail, the court also incorrectly analyzes a 9th Circuit cases, MAI Systems and its progeny which correctly apply the definition of fixed to a copy of a work created in RAM memory for a period of minutes.  The effect of this misinterpretation is to put legal practitioners in the precarious position of trying to determine at what point between 1.2 seconds and 2 minutes does a reproduction arrive at a “more than transitory” state.

Ironically, the Second Circuit ignores the U.S. Copyright Office’s analysis of this precise issue in its 2001 report on the Digital Millennium Copyright Act which elaborated that a work was fixed “unless a reproduction manifests itself so fleetingly that it cannot be copied, perceived or communicated.”  This clarification is in line with my earlier interpretation that the phrase “more than transitory in duration” modifies the communication or perception, not the embodiment itself.  The Second Circuit stated that, in its mind, the U.S. Copyright Office’s interpretation “reads the ‘transitory duration’ language out of the statute.”  To the contrary, however, it is the correct interpretation in that it incorporates the transitory duration requirement into the appropriate section of the definition.

Finally, the Second Circuit completely ignores the last sentence of the definition, to wit:  A work . . . is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.”  In this instance, the court readily admitted that an unauthorized copy of the work was stored, i.e. “fixed” on Cablevision’s servers simultaneously with its transmission.

When is an infringer not an infringer?

In extending recent trends by some circuits to weaken the strict liability component of the Copyright Act, the Second Court refused to find that Cablevision was a direct infringer.  Instead, it rules that the customer is the direct infringer in this instance of digital recording, showing his or her intent to make a copy when he or she presses the record button on the remote.  The court reasons as follows:

In this case . . . the core of the dispute is over the authorship of the infringing conduct.  After an RS-DVR subscriber selects a program to record, and that program airs, a copy of the program–a copyrighted work–resides on
the hard disks of Cablevision’s Arroyo Server, its creation unauthorized by the copyright holder. The question is who made  this copy. If it is Cablevision, plaintiffs’ theory of direct infringement succeeds; if it is the customer, plaintiffs’ theory fails because Cablevision would then face, at most, secondary liability, a theory of liability expressly disavowed by plaintiffs.

Emphasis mine.  The first thing to note about the court’s conclusion is that it realizes, right off the bat, that the copy created on the servers of Cablevision is an infringement.  In its mind, however, the only question is who made the copy.  Now, that, of course, flies directly in the face of a host of copyright concepts which I will not address here, but suffice it to say that this is problematic.

But, for the moment, let’s just examine how the court ultimately determines who had the “volition” to infringe in this specific case:

There are only two instances of volitional conduct in this case: Cablevision’s conduct in designing, housing, and maintaining a system that exists only to produce a copy, and a customer’s conduct in ordering that system to produce a copy of a specific program. In the case of a VCR, it seems  clear–and we know of no case holding otherwise–that the operator of the VCR, the person who actually presses the button to make the recording, supplies the necessary element of volition, not the person who manufactures, maintains, or, if distinct from the operator, owns the machine. We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer’s command.

The court then continues its analysis by example, offering the examples of a retailer who owns a photocopier and rents it out to the public as reinforcement of its conclusion, finding that because the retailer would not be liable for infringement, neither should Cablevision.   Despite the fact that there is case law holding that such a retailer WOULD, in fact, be liable for infringement, the Second Circuit errs in failing to see the difference between a VCR in the analog world, a single, stand-alone device used express by the customer, and a process devised by a company which makes infringement as simple as pressing my record button on my remote.  The court does not find this a “sufficient” distinction.  The court’s error in logic is apparent in this prose when it examines a 6th Circuit case on the issue:

In determining who actually “makes” a copy, a significant difference
exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.

Is this 2001 Space Odyssey?  Did H.A.L. take over when I wasn’t looking?  Who programmed the system?  

If this were not enough, the Second Circuit then performs a great deal of legal gymnastics to support its finding:  First, it examines the video on demand process to illustrate that Cablevision does not have control over the transmissions being recorded by theCablevision subscribers in the RS-VCR system.  Are they for real?  Ever heard of apples and oranges.  The VOD system is a fully licensed process which is, dare we say it, nothing like the RS-VCR system.  Secondly, the Second Circuit uses the distinction between “active” and “passive” infringement under the Patent Act to jump to the almost humorous, if it weren’t so wrong, conclusion that:

If Congress had meant to assign direct liability to both the person who actually commits a copyright-infringing act and any person who actively induces that infringement, the Patent Act tells us that it knew how to draft a statute that would have this effect.

Every intellectual property attorney worth his or her salt knows that the Copyright Act and the Patent Act are very limited in their usefulness for purposes of using one to interpret the other.  That’s why it’s said that the Copyright Act is a strict liability statute, whereas, the Patent Act is not so much.

When is work “publicly performed”?

The final error committed by the court is in its analysis of whether the buffered copy delivered to individual customers was “publicly performed.” In this regard, the Second Circuit concluded:

under the transmit clause, we must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is “to the public.” And because the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber, we believe that the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission.

Again, the Second Circuit has to do a hatchet job on the definition of “public performance” in order to arrive at this convoluted conclusion.  The definition of “public performance” in the Copyright Act is actually found in the “publication” definition of Section 101.  It states, in its entirety:

To perform or display a work “publicly” means — 

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Emphasis mine.  Whereas the Second Circuit zeroed in on the phrase “to the public” in making its determination, the definition clearly intends to define public performance as any process that allows the public, in general, the ability to receive the transmission, whether or not it is in the same place or the same time.  Its not very difficult to see the fallacy of the Second Circuit’s reasoning.   The Cablevision RS-DVR clearly does precisely what the definition anticipates, it creates multiple copies stored in the buffers for individual subscribers in multiple places, who then view the (buffered) transmissions at different times. 

While this seems simple, the Second Circuit jumps through numerous irrational hoops to arrive at the idea that:

the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons “capable of receiving” it, to determine whether that transmission is made “to the public.”

Nothing in the statute dictates this conclusion, to the contrary, the legislators probably thought that the word “public” was generic enough to not need interpretation. 

The effect of this ruling, at least for now, is that anyone can make digital copies of any copyrighted work on their servers for purposes of transmitting to an individual customer, so long as that individual customer makes a request for it, and there is no implication of the performance rights.

This is a fine example of a court “reasoning” the meaning completely out of a statute. 

Conclusion

If it is not obvious by now, I think this is one of the most poorly reasoned and drafted opinions by a Circuit Court that I have read in a long time.  If there is a bright side, it is that the effect of this decision is primarily that it overturns the grant of a summary judgement by the lower court.  From a broader perspective, however, and the more unfortunate result is that, because of the concept of stare decisis, this reasoning can now be cited in other cases in other jurisdictions across the country as good law.  So, unfortunately, we entertainment attorneys will be dealing with the negative impact of this decision for some time to come, until perhaps some higher court, in this case the Supremes, decides to rectify it.

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When is the last time you heard of someone getting a really “big break” in the music industry through any contest, other than perhaps American Idol?  That’s because most artists and songwriters are not discovered through contests, they are discovered through relationships in the industry. 

Yet, there are literally hundreds of such contests out there promising thousands of dollars in prizes or a opening slot for a well-known band, or a recording label or songwriting deal — everything but the kitchen sink! 

I don not, by any means, mean to say that all contests are rip-offs.  There are, in fact, many legitimate contestsSongwriters_And_Poets_Critique in which songwriters and entertainers may participate.  I do mean to recommend, however, that you do a bit of research and exercise some good judgment prior to sending your submission off into the digital divide.

First, there are some very simple questions to ask yourself initially as you examine these “one in a lifetime opportunities.  Look at the source or sponsor of the contest.  Often times, their reputation proceeds them.  Have you ever personally heard of the contest sponsor?  What are the credentials of the sponsoring entity?  Have you read about them in any public forum such as a magazine, news article, or online resource?  What successes have they achieved in songwriting and/or the music industry, if any?  Who are the judges?  What are their credentials.  Are there any major advertising sponsorships associated with the contests?   What are the prizes?  Are they substantial?  Answers to most, if not all, of these questions can be derived through a simple online search.

Let’s say you’ve done all of the above research and determined that the contest is sponsored by none other than MTV?  To most songwriters and artists, there could be no greater sponsor than MTV, correct?  But before acting too hastily, let’s move into the second phase of analysis, i.e., taking a look at the RULES.

Now, assume that you determined that since MTV was the sponsor, it must be a great opportunity, so you jump right in with both feet, or in this case, your best demo tape!  A chance to open for a great headline act is waiting for the lucky winner!  Unfortunately, if you did not read the fine print, you just agreed to the following:

release and hold harmless Sponsor Entities against any and all claims, injury or damage arising out of or relating to participation in this Contest and/or the use or misuse or redemption of a Grand Prize and for any claims based on publicity rights, defamation, invasion of privacy, copyright infringement, trademark infringement or any other intellectual property related cause of action. . . . (emphasis added)

This language comes straight from the rules and regulations in a ongoing “Rock the Revolution” contest sponsored by mtv2.com.  See the Rules and Regulation page.  This is typical hold harmless clause, which effectively negates any rights or claims you may have otherwise had to bring a civil action against MTV in the event that you are injured as a result of the contest.

In addition, MTV also states in their terms of agreement that:

The approximate retail value (the “ARV”) of the Grand Prize is $150.00. Any difference between the ARV and the actual value, if any, will not be rewarded. If, for any reason, the Grand Prize related event is delayed, cancelled or postponed, MTV reserves the right, but is not obligated, to cancel or modify the Contest in its discretion and may award a substitute prize of equal or greater value.

This effectively means that you could end up getting only $150 as the “grand prize winner” if the concert is canceled for any reason by the headlining act.  A corollary effect  net effect is that, at most, your damages in a civil lawsuit probably would be limited to $150, the agreed retail value (i.e., by agreeing to their terms, you and MTV agreed to this amount).

Finally, by simply clicking the “I Agree” button on your web browser without first reading the fine print, you also agreed to grant MTV a non-exclusive right, among other things, to record your submission by virtue of the fact that you are a finalist?  See this clause from a real contest:

Finalists and Winner agree that by entering into this Contest they are granting  MTVN. . . the non-exclusive, irrevocable right and license to exhibit, broadcast, copy, reproduce, encode, compress, encrypt, incorporate data into, edit, rebroadcast, transmit, record, publicly perform, create derivative works of, and distribute and synchronize in timed relation to visual elements, the Submission Materials and/or any portions or excerpts thereof, in any manner, an unlimited number of times, in any and all media, now known or hereafter devised, throughout the world, in perpetuity. . . .

While this is non-exclusive license, meaning that you can issue other non-exclusive licenses to third parties, it does give MTV pretty broad rights to use your submission in almost any form they want.  This doesn’t necessarily mean that you shouldn’t participate in this contest, it is just something you should certainly understand and use in weighing your decision.

Believe it or not, this grant is pretty tame compared to the language of other contests I have reviewed for clients.  I’ve seen situations where a contestant ostensibly assigns the copyright in a song submitted for a contest to the sponsor.  So beware.  Make sure there is something in the rules that indicates that you are not transferring any rights or licenses in the submission.

These are just few examples of some of the lawyerly devices that can be utilized in the rules and regulations of a contest, particularly an online contest which a “click agreement” in place.  Before you submit your intellectual property, it is probably worth the money to pay a few hundred dollars to an entertainment attorney to advise you as to what the legal ramification are for you and/or your band.

 

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A major debate is being spawned by a recent article entitled “Should You Invest in the Long Tail,”  written by Anita Elberse, an Associate Professor of Business Administration at Harvard Business School.  The debate concerns the accuracy of Chris Anderson’s long tail theory, set out in great detail in his 2006 book, The Long Tail:  Why the Future of Business is Selling Less of More.  

A summary of the debate is given in this analysis by Glenn Peoples of Coolfer.com.  Mr. Anderson’s initial response to Elberse’s criticism’s can be found here and then her subsequent response here.

The long tail theory is an idea that contrasts with the “blockbuster strategy” of marketing, which Elberse accurately describes as “age-old,” i.e. that the limited retail shelf space for media and entertainment product dictates that retailers should maximize their profits by focusing their marketing efforts on the relatively small number of “best sellers.”  This is, of course, best exemplified in today’s economy by the Wal-Mart approach.   It is, of course, the marketing philosophy that has been used by the major entertainment conglomerates for their entire history of existence.  The “blockbuster” product is at the peak of a bell curve, where the demand exists, the trailing end of which has long been described by the economic phrase “long-tail.”  See Elberse’s illustration below:

 

Long Tail

The basic idea behind Anderson’s long tail theory is that the Internet has changed the way consumers look for media and entertainment product.  Now that a music consumer can find and afford products more closely tailored to their individual “niche” tastes, i.e., further down the long tail, they will migrate away from the homogenized “blockbuster” hits. Anderson argues that the future of online retail demands a focus that shifts away from blockbusters centers on the long tail—niche offerings that cannot profitably be provided through brick-and-mortar channels. (See Elberse’s sidebar “The Long-Tail Theory in Short.”).  Elberse seeks to refute the idea that the long tail is being “fattened” by the online availability of more obscure and less marketed products.

If you are in the music industry, it is well worth following this debate.  While I will not attempt an in-depth analysis of Elberse’s criticisms here – I’ll leave that to the capable Mr. Anderson — I do desire to point out what I believe is a very obvious weakness in Elberse’s comments:

To support her conclusion that the long tail is “long but extremely flat—and, as online retailers expand their assortments, increasingly so,” Elberse states that she relies on Nielson SoundScan data.  She concludes: 

The Nielsen data cover multiple retailers, multiple channels, and multiple years, offering a wealth of material to test aspects of Anderson’s long-tail theory. What emerges is not a rosy picture of the fate of long-tail products: the tail increasingly consists of titles that rarely sell and that are produced by smaller-scale players.

See The Long Tail Debate: A Response to Chris Anderson.

These assumptions about the SoundScan are flawed, I believe.  While Elberse is correct in her assessment that the “data cover multiple retailers, multiple channels and multiple years,” I believe it overlooks the fact that SoundScan data is ONLY collected via POS, i.e. “point of sale” collection points.  This means cash registers and/or UPC bar code scanners.  The UPC code is the series of black and white lines appearing over a numeric code, which appears on virtually everything on the market today. 

That is how the “Scan” portion of the name “SoundScan” is derived.  When a UPC code on a product is scanned for sale, that UPC data is collected and a stored in a text file, which is delivered to Nielson on a weekly basis.  Nielson then collates and formats the data into what we know as the Billboard charts.  While the data may include some online retailers, its predominant focus is still on the physical product that sits on the shelves in retail outlets and warehouse all across America.  In other words, SoundScan’s predominant purpose – the reason it was created – is to track physical sales which, it turns out, is only the product that falls into the “head” of the long tail.  SoundScan’s focus is indubitably not on digital downloads, even though it has obviously made attempts to incorporate the trend in its charting scheme.

Naturally, if a person focuses primarily on the product that exists in the head of the tail, the conclusions reached by that person about what exists in the long tail are going to be slightly skewed. 

Elberse might counter this assertion by claiming that she also relied on the Rhapsody data to determine what obscure music was selling in the long tail.  Her use of this data is understandable, since Mr. Anderson also relied heavily on the Rhapsody data in drawing many of his conclusions in The Long Tail.  I think this reliance on Rhapsody data falsely assumes that what Rhapsody is selling is indicative of what is selling across the entire spectrum of the Internet.  Last time I checked, however, Rhapsody had about a 3-4% share of the entire music download market! 

This, I believe, is a fatal foundation for many analyses of the digital music revolution and, consequently, of the validity of the long tail.  I’m not aware of any comprehensive analysis that includes data from not only the mega online powerhouse, such as iTunes of course, which has about a 70% share of the digital download market, but also retailers of independent, less market-driven music, such as eMusic — which, by the way, has a respectable 10% of the market share of digital downloads.  It is the success of the later that, in my humble opinion, deserves more consideration in any analysis of the viability of the long tail approach to today’s digital market.  I can only speak for myself – I buy more music from eMusic than I do from iTunes, Zune, Amazon and Rhapsody combined.  So, to all of you researchers out there, please incorporate some serious data from the long tail!  Until that type of analysis is done, the conclusions drawn by Elberse must be viewed as somewhat suspect or, at the very least, only applicable to the specific subset of data she analyzed, i.e., not extrapolated to the entire music download market as a whole, but limited to SoundScan and Rhapsody.

 

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I was surfing around yesterday and discovered that my interview with DigiMusicTV.com, recorded in 2007, was recently posted on brightcove.  Here it is in all it’s glory:

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There is a great deal of talk these days about the concept of “freeconomics,” spurned by the fact that most teenagers and college students are still ripping music and sharing it online.  Most recently, the major record labels commissioned a study from two think tanks, The Leading Question and Music Ally, which resulted in a five recommendations for the music industry, including “bundling” of product.  Another of the points was “Free doesn’t mean no money.”  How original.  And oh, by the way, IT DOES ACTUALLY MEAN THAT!  You can read the full article about the study here.

Dollar Bill Let me start out by observing an old adage, which still holds true in life, that you tend to “get what you pay for.”  I’ve always believed in that adage.  There is generally a direct correlation in the amount of sawbucks you shell out to the quality of the product you receive.   When I cook, for example, I use the freshest ingredients.  I spare little expense.  Sure, I try to find bargains, but if you skimp on the quality of your ingredients, you always skimp on taste.  I have always resisted the impulse to buy meat on clearance!

What about “free” goods?  Just think about how many junk e-mails you receive every day offering you a “free” iPhone, or a “free” laptop, or a free whatever. . . the list goes on and on.  Don’t you automatically just delete those?  Of course you do — because everyone knows these types of things are given out for free:  first, someone is actually paying for those goods; secondly, you have to subscribe to a certain number of paying offers in order to actually receive the “free” iPhone or laptop.  There is another adage:  nothing is life is free.   Fact of the matter is, if I wanted an iPhone, I’d go out and buy it.

Now, let’s turn our attention to “freeconomics” and honestly call it what it really is:  freakenomics!  Again, nothing in life is free. 

Nonetheless, we are lead by these researchers to examine Google and its model of giving out free software as an example of how the music industry can give away music and still achieve a profit.  This analogy is wrong on so many levels, but I’ll just point out one basic incongruity:  the software developers that are writing software for Google work for the conglomerate under a work for hire agreement – Google does not have to compensate multiple rights owners.  It owns the entire product. 

This is not so with a musical composition/sound recording combination.  That is bundle that is not so readily united.  The record label generally owns the sound recording of a musical composition, but does not always own the underlying music compositions.  There may be multiple owners of the underlying compositions which have to be compensated – multiple songwriters and multiple publishers.  The producer also must be compensated.  The musicians who play on the record have to be compensated, not to mention their union fees and retirement fund.  The engineers who work on the project are compensated. The artist has to be compensated for their performance.  The people who master the product must be compensated. 

What the simplistic – dare I say naive – five point plan laid out by the record “think tank” overlooks is that in order to accomplish the equivalent of something like a Google in the music industry, one has to completely rewrite the industry.  While this is not a new idea, it is also not an idea that can be accomplished in today’s copyright structure nor within the current orientation of the music industry.  Hundreds of years of practice have to be completed abolished for the Google model to work in the music industry.

Let’s look an entity that has actually tried to make such a paradigm shift:  MySpace.  It is most definitely the place where independent artists go to get their music heard.  The music is generally free.  How many artists have you listened to on MySpace in the last month?  I’m in the industry, and I have listened to maybe two, but only because I received a specific request to do so. 

How many artists on MySpace actually make a lucrative living doing what they are doing there?  Again, the music is free isn’t it?  Freecomonics will get us something akin to the quality of music that you find on MySpace in general.  There is no realistic way to sift the wheat from the chaff. 

The instant you stop rewarding the songwriters and artists that create the music — removing a real incentive for creating their art full time — the sooner you’ll find a void in the really high quality music.  Yes, there are some who say that artists will produce art regardless of whether they receive compensation, because that is what they do.  However, this is not historically accurate in music or any of the arts.  If you find an artist who is thriving, you will generally find a source of money, whether it be selling the artwork to a famous benefactor or having financial muscle behind him or her. 

In music, the major labels have historically been the finders and funders of the talent.  They spend a lot of money discovering, developing and marketing the talent.  For the most part, it is the major label product that gets traded on the P2P networks.  That is one factor that is often overlooked.  What the general public wants to hear, and shares on P2P, is generally the music that is marketed heavily – generally by the major labels.  That will not change until someone constructs a better way to get music heard by the public in general. 

So, I believe if you remove the economic component of music, you will ultimately eliminate the talent altogether.  Otherwise, the talented will have to get day jobs to support their art and the art will most certainly diminish and/or suffer.

Let’s turn to some of the other suggestions made by The Leading Question and Music Ally:

(1)  Music needs to be bundled with other products and entertainment packages.  They conclude that “music needs to move away from per unit sales and become more of a service than a product.”  Can we say YAWN class?  The record labels cannot break themselves of the idea that people want a package deal.  We don’t.  We want ala carte!  The sooner that the industry comes to this realization, the better off they will be.  Isn’t this what the labels have been feeding us for years?  This is but the “record album” in another iteration.  Buy this collection of 10 songs, 2 of which are what you actually want and 8 of which bite!  Come on guys, hasn’t the digital revolution taught you anything?  Wake up and smell the single downloads.  That IS what the consumer wants.  Build a model that incorporates the single download.  Don’t build a model that ignores it.

(2)  Labels needs to experiment with new release schedules and formats.  Seriously?  Again, the think tanks suggest that “single . . . releases have run [their] course.”  Ditto what I said above.  Check out the success of iTunes, emusic, Amazon, etc. etc.  Check out what happens on P2P networks when a new digital single is released.  The single is NOT a thing of the past.  Now, granted, I agree that digital only releases and new pricing models are going to be part of the new model — couldn’t any fourth graders could tell you that?  But again, people want their music ala carte.  They want good music.  They don’t want the bundles, the fillers, the parasitical crap that the industry wants to latch onto what they really want.

(3)  Change the charts.  Yes, people actually get paid to say this stuff!  The conclusion is that the charts don’t make sense anymore because fewer people are buying music.  In fairness, I understand this one to some degree. But, has anyone noticed that Billboard already tracks digital downloads?  Has anyone noticed any of the other p2p tracking devices, such as Big Champagne, just to name one.  Sure they have and so have the major labels.  In fact, that is in part where many of the researchers get their data.  No doubt, the tracking of general overall consumption should be an important factor in consideration.  While we are at it, why not pay more attention to the portion of the market called baby boomers.  The older generation that buys music, but rarely gets consulted when discussing these issues.

(4)  Trust the DJ.  Next to the CD format, the other big thing the record industry has a hard time letting go of is the radio format.  The record industry likes to control the advise given about music so that they control what the listener “wants” to hear.  The think tanks concludes that “the instant and massive availability of music on demand means you need a trusted guide like John Peel more than ever.”  I disagree with this conclusion because I believe that this “advisor model” is antiquated.   These days, most people rely more on social networking – either virtual or real — and trending algorythms to determine what music they enjoy.  I don’t know of any teenager that listens to terrestrial radio any more.  For them, a DJ is someone at a wedding reception and they are not likely to take advise from that person. 

Yet, the file sharing continues and, more importantly, so does the need for change.  Now that I have ranted a little about the suggestions made by these industry think tanks, let me say that I do, in fact, appreciate their efforts to come up with solutions to the declining music industry.  I wholly agree with what the managing director of Music Ally, Paul Brindley says in the article, that the

“business models need to change radically if the music business is to stand any chance of halting the current decline in sales.”  Without a doubt, something truly has to be done or the industry will fail.

As I heard one venture capitalist put it, for him to consider an investment in the music industry, it must be a paradigm shifting, industry changing business model.  These suggestions by The Leading Question and Music Ally just don’t quite rise to that level, in my humble opinion.  In my opinion, the ultimate solution will be a fair priced – but not free – digital download model.  The most important component that is missing thus far, and that is critical, is a means of getting the music heard by the general population.  We have many services which may be close, but as of yet, we are not quite there.

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You say you want a revolution

Well, you know
We all want to change the world . . .

 
You say you’ve got a real solution

Well, you know
We’d all love to see the plan
You ask me for a contribution
Well, you know
We are doing what we can

 
But if you want money
for people with minds that hate
All I can tell is, brother, you’ll have to wait
 
Don’t you know it’s gonna be alright?
 
-John Lennon

Perhaps John Lennon said it best:  if you push people hard enough and long enough, they will revolt.  The question is, has the RIAA gone too far for too long? A recent motion filed in their case against students at the University of Maine may very well answer that question.

The RIAA named numerous “John Doe” students in their complaint in Arista Records v. Does 1-27, as is their practice in all of their lawsuits.   The RIAA’s purpose of naming the John Doe defendants is so that they may obtain an ex parte (i.e., without the other party being notified) order from the Judge requiring the targeted university to provide the various students’ name, address, and, particularly, their IP address.

Student lawyers at the University school of law Cumberland Legal Clinic have filed a motion for Rule 11 sanctions against the RIAA claiming that this practice improperly seeks to circumvent the student’s rights under the Family Educational Rights and Privacy Act, §1232g(b)(2)(B) (“FERPA”), gain publicity for its cause, and coerce students into settling for “nominal” amounts in the $3-5000 range.

Rule 11 of the Federal Rules of Civil Procedure allows sanctions against an attorney who signs a pleading without properly investigating the facts and the law and does so with an improper purpose.

The motion also questions whether the joinder of plaintiffs and defendants under the RIAA-type lawsuits is proper because the actions do not, in fact, arise out of the same transaction.  Rule 20 of the Federal Rules of Procedure provides that multiple plaintiffs can join in one action if “they assert any right to relief jointly, severally, or in the alternative with respect or arising out of the same transaction, occurrence, or series of transactions or occurrences…and any question of law or fact common to all plaintiffs will arise in the action.” Fed. R. Civ. P. 20(a).  Similarly, multiple defendants can be joined in one action if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transaction or occurrences . . . and any question of law or fact common to all defendants will arise in the action.” Id.  The student motion alleges that the RIAA does not, in fact, believe that all of these copyright infringements arise out of the same facts, but join together against multiple defendants for the sole purpose of trimming litigation and discovery costs.

In this case, the student lawyers are seeking more than just monetary damages under this Rule 11 motion:  they also seek dismissal of the complaint and a permanent injunction preventing the RIAA from filing “fishing expedition” type complaints against “unconnected” defendants in the future.  These types of injunctions may be applied in jurisdictions other than the one in which it was issued, so in theory such an order may be applied to thwart lawsuits in other Federal courts across the country.

This in one ruling that should be very interesting.

 

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The concept of “fair use” is a very misunderstood concept.  The first common misunderstanding that people espouse is that the concept of “fair use” is a right or privilege granted by copyright law.  It is not.  Secondly, many people mistakenly believe that so long as they do not make any money from an infringing use of copyrighted material, then the use is a fair use.  This is also an incorrect assumption. 

Fair use is not a right or a privilege to be exercised at one’s whim.  Rather, the doctrine is an “equitable rule of reason” that may be used as an affirmative d

efense in a copyright infringement action.  The purpose of the rule is to balance the equities between the desire to protect and therefore encourage the creation of new ideas and the desire to encourage the free exchange of speech in the marketplace of ideas.  The tension was described by Justice Souter as “simultaneously protect[ing] copyrighted material and allow[ing] others to build upon it.”  Nonetheless, the thing to remember is that application of the fair use defense is declared by judicial fiat in the context of a copyright infringement action.  It is applied on a case-by-case analysis of the factual situation.  Thus, fair use is not a presumptive right or privilege that may be exercised by the infringing party.

There are four factors weighed by the Supreme Court in making a determination of whether a derivative work constitutes a “fair use.”  These factors are (1) the nature of the work itself; (2) whether or not the work is commercial in nature; (3) the amount of the copyright work that is used; and (4) the effect of the use on the potential market or value of the copyright at issue. Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass. 1841), codified at §107 of the 1976 Copyright Act.

The nature of the work refers to the “nature” of the unauthorized derivative work, not the original copyright work.  In order for such an unauthorized use of copyrighted material to be entitled to the“fair use” defense, the new creation must transform the original copyrighted material.  A “transformative work” is defined by the U.S. Supreme Court as one that “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.”  See, Campbell v. Acuff Rose Music, Inc., 510 U.S. 569 (1994).   While all factors must be considered, this is perhaps one of the more critical factors in the analysis.  Merely modulating the pitch of a song or inverting the sequence of a chord progression would probably not be considered transformative.   A very good example of a derivative work that is transformative in nature is Alice Randall’s The Wind Done Gone, the same story as Margaret Mitchell’s Gone with the Wind, but told from the perspective of a mulatto slave who is the half-sister of Scarlet O’Hara, the main character in the original work.  See Suntrust v. Houghton Mifflin Co., 252 F.3d 1165 (11th Cir 2001) per curiam, opinion at 268 F.3d 1257.  In that case, the Eleventh Circuit extended the protection of a musical parody in Acuff Rose to the novel.

With regard to the second factor as to whether a use is commercial in nature, it should be noted that this does not necessarily mean that the new creation has to generate profits.  If the new work create a significant fan, donor and/or advertiser base, those factors tend to lead to a conclusion that it is commercial in nature.  A person simply does not have the “right” to use copyrighted works in any manner as long as no profit is generated from the use.   It is also evident that this factor does not mean that simply because a derivative use does in fact generate profits, that it is by default not a fair use.  In Acuff Rose, 2 Live Crew’s parody version of Roy Orbison’s Oh Pretty Woman had sold over 250,000 copies, yet was still considered a “fair use.”  The thing to be remembered is that this is but one of the factors.

The third factor is fairly easy to evaluate: the more material “borrowed” from the copyrighted source, the less likely the infringer is to have a “fair use” defense.  Again, another misconception is that there is a bright line test for fair use:  that a few measures of a song, a couple of lines from a poem, a few hundred words of a paragraph, or a few paragraphs from a book, are considered fair use.  This misconception has no basis in either the Copyright Act or the case law interpreting it.  It is merely folklore.  The factor, as used by the courts, is more of a sliding scale based, again, on the quantity of the material used from the copyrighted work as compared to the total material.

Finally, the last factor weighs the impact on the infringing use on the potential market and value of the copyright.  This was an integral part of the Supreme Court’s ruling in Acuff Rose that 2 Live Crew’s parody of Roy Orbison’s Oh Pretty Woman did not impact the potential market for the original.   The more a derivative work negatively impacts the potential market for and value of the copyright, the less likely it will a “fair use.”

In summary, as you may have noticed, the fair use doctrine is by no means a bright line test.  Each “fair use” defense is, by its very nature, evaluated on a case by case analysis in the context of a copyright infringement action.  Fair use is not something to be relied on as a presumptive right.

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