I am a Nashville based performing songwriter, bioinformaticist and digital music strategist. I am also the director of a hands-on, immersive digital music educational experience called Rock Your Net. Rock Your Net teaches artists, musicians, songwriters and other music business professionals how to leverage the ‘Net to market and promote music.
I grew up in a country where filtering and blocking web sites was not unusual. This was especially true if the "offending" site espoused ideas and thoughts contrary to that of the government’s. Due process could also be a problem if the authorities deemed your activities illegal. As hard as it is to believe my home country is a constitutional democracy. You should also know that I am a recently naturalized US citizen.
Living in Nashville, I have many friends in the mainstream music business. I love and support them in whatever form that makes sense. I work with them on almost a daily basis. However as an independent musician and music technology entrepreneur I sometimes find the approach of the mainstream music establishment to music business problems archaic and obsolete.
Some of my friends within the major label infrastructure share the same frustrations. But sometimes it’s hard to speak truth to power and everybody needs to put food on their table.
This fall some members of Congress introduced the Stop Online Piracy Act (SOPA). The bill is being pushed by the RIAA & the MPAA.
My friend and strategic partner, Alex Curtis of The Creators Freedom Project (started by Public Knowledge) asked me if I would go to Washington, DC to speak about my own experiences as an independent musician and music business entrepreneur. After reading much of it at Open Congress (follow the money trail), I decided that this bill was a bad idea and bad policy.
So I joined forces with a small but dedicated group of artists and tech innovators to work against this bill. One of the first things we heard from folks on the other side was how we don’t represent artists and creatives. I’m not sure who gets to decide who does or doesn’t represent any particular segment in the halls of Congress. But, I’m pretty sure the entities espousing this bill on behalf of artists, songwriters and creatives don’t represent my views and those of forward thinking artists. Just ask Janis Ian.
The Stop Online Piracy Act (SOPA), also known as H.R. 3261, is the House version of a bill in Congress meant to give law enforcement tools to go after offshore web sites that are alleged to have infringing intellectual property (IP) content and/or dedicated to intellectual property theft. The bill covers music, movies, software and even other forms of IP that are vulnerable to counterfeiting such as clothes or fashion items.
The bill could also enable the US Department of Justice (DOJ) to seek court orders preventing payment processors and ad networks from facilitating transactions on these sites. The DOJ can also order that these sites be blocked, filtered and/or removed from the Domain Name Registry, an international directory service of sites on the internet. DOJ can also prevent these sites from appearing in search engine results. Further, Internet Service Providers (ISPs) can be asked to block their users from these alleged infringing sites. Indeed, would be held liable if their network passively enabled the download of infringing content.
And lastly, it enables a particularly virulent form of private right of action against "alleged infringing sites."
(Public Knowledge’s information packet on SOPA for the lay person)
In 1999/2000, Napster came into prominence and was subsequently sued into oblivion by the recording industry. Prior to going out of business, Napster reportedly offered US$1 Billion to license music from the majors. The industry at that time was a $14 Billion industry.
The demise of Napster resulted in a slew of other P2P services. History has shown that the music biz screwed up. Geoff Taylor of the British Phonographic Industry (BPI) and Hilary Rosen who was the CEO of the RIAA at the time, both now wish the industry had embraced Napster.
Here are telling quotes from Ms. Rosen in a 2009 Billboard interview about Napster and the music industry:
"I’ve been quoted as saying the record companies should have jumped off the cliff and signed a deal. I thought it at the time. It was well documented that I privately urged that. But it would have been jumping off a cliff, and people have to understand that."
"The lessons of Napster, of rapid fire adoption, have been too quickly forgotten. The industry has moved a little too slow and have not benefited as much as they might have by the benefits of technology."
"I think the RIAA became the central organizing vehicle for people’s anger. But they don’t work for the consumers. They work for the industry. It’s the business leaders in the industry that are calling the shots there."
Shortly thereafter the music business began losing revenue. The industry has attributed most or all of this loss of revenue to piracy and illegal downloading. Consequently they have focussed their energies on legal and legislative efforts, as opposed to, a commitment to innovative and consumer friendly initiatives and services.
SOPA, from this musician’s perspective, represents another legislative maneuver in the repertoire of the RIAA and their ilk to exercise control over the channels of distribution.
The music industry via the RIAA has claimed for a decade now that most or all of the loss of revenue in the music business has been due to piracy. The problem that SOPA is supposed to fix is piracy and counterfeiting.
From the RIAA web site:
In the decade since peer-to-peer (p2p) file-sharing site Napster emerged in 1999, music sales in the U.S. have dropped 47 percent, from $14.6 billion to $7.7 billion.
Here is a graphic from TechDirt that shows how much majors made/lost in that period:
There have also been independent empirical academic studies on just this very issue and the following papers had this to say about the correlation between downloading and piracy/sales.
At the end of 2010, a pro industry/anti-piracy research group surveyed Public BT – a public torrent tracker service site and came up with this summary represented here in this graphic, published by Ars Technica. Note how music is only the 6th most popular type of media downloaded. No. 1 and 2 is video (pornography and non-pornographic TV/Film Content). At the time of this study, 10 music albums were in the Top 100.
source: Ars Technica/Envisional Study
(By the way, the pornography industry has managed to out maneuver some of the effects of piracy. I think there are some lessons for the music industry here. Look for a blog post in the future about how the music industry can adopt these strategies. No, seriously ;-} )
In a 2003 & 2004 study, researchers at the Univ. of Pennsylvania found that downloaders spent $25 (or 20%) less ($101) than non downloaders ($126). Predicting 10-20% loss in sales in downloaders. But also noting that it was difficult to extrapolate because objective data was scarce. (FYI – $25 in 2004 is $28.61 in 2010 dollars)
A 2007 Study commissioned by Industry Canada, the equivalent of the Canadian Dept of Economic Development, and performed by the University of London suggests that for every one CD downloaded, 0.44 of a CD equivalent is purchased. This study provides evidence that P2P file sharing actually has a positive effect on music purchases and little to no effect in the segment of the population aged 15 and over.
A British study in 2009 by think tank, Demos (outsourced to iPSos) found that downloaders buy more or the same amount of music as those who do not illegally file share. Ars Technica summarized the results.
Of those that buy more music after downloading, 93% bought CDs/vinyl or paid downloads. 78% bought CDs/vinyl and 54% bought paid downloads (source: Demos data). The Industry Canada study also suggests that the real reason for lower revenues is the conversion of music consumers from the album format to the singles format.
A more recent analysis by Michael DeGusta using some of the numbers of the RIAA but corrected for population and market categories seems to indicate the same finding.
How Music Industry Makes It’s Money
What People Are Buying Now
The Era of the Single
Finally the US Government Accounting Office (GAO) released a 2010 report that supports the above findings in some form or another. But most importantly they stress that "industry numbers" (see the RIAA, MPAA et. al.) assume a 1:1 substitution rate for piracy to predicted purchases. The substitution rate determines what percentage of pirated downloads would convert to paid downloads if piracy was eliminated. The RIAA claims the conversion would be 100% or a 1:1 substitution rate. The GAO also confirms that the assumed substitution rate is inaccurate and that it is "difficult, if not impossible, to quantify the economy-wide impacts."
Greg Sandoval reviews this report on CNET.
So as we can see, the actual effects of piracy on recorded music though not negligible or minimal, are nowhere near what is claimed by the RIAA. In fact there seems to be at least an 80% net effect discrepancy in the RIAA’s report vs other independent, objective analyses.
Bandcamp, an online music marketing platform heavily used by indie musicians, has new data that supports the thesis:
a) if you give fans an easy way to support the artist; and
b) if you offer them a great user experience.
You can shortcircuit a potential act of piracy into a real purchase.
It’s also worth noting that while the RIAA and everyone in their camp have been complaining about piracy and declining music sales, CD Baby and TuneCore the main aggregators for digital music distribution used by indie artists are reporting sales in excess of $350 Million dollars in just the last 3 years. In each of those cases, there was no "down" year.
One of the organizations that purports to rights of content creators, at least in the music space, is the Recording Industry Association of America (RIAA). However as Ms. Rosen points out in the above Billboard interview, the RIAA doesn’t represent content creators. It represents the content rights owners and exploiters. Sometimes at the expense of artists and creatives.
The following examples illustrate the RIAA’s unscrupulous tactics.
A chief counsel for the Congressional copyright subcomittee sneaked in a midnight amendment in the 1999 Satellite Home Viewer Improvement Act which effectively rendered all future recordings by label artists as "works for hire" thereby rendering them ineligibile for copyright recapture in 2013.
That counsel was Mitch Glazier – who upon being caught on trying to get this amendment inserted – left for the RIAA. He got a pay raise from $80,000 to almost $600,000/yr. Mr. Glazier was subsequently promoted to Executive Senior VP at the RIAA.
The Artists Coalition led by Don Henley, Sheryl Crow and great investigative reporting by Billboard, managed to get that amendment repealed.
The congressman for whom Glazier worked at the time, Rep, Howard Coble, even resorted to petty criticism of Don Henley. Refusing to acknowledge that a member of his own staff made a conscious effort to hurt artists intellectual property. Yet, here he is now supporting SOPA.
It should be noted here, that some label heads were reportedly against this amendment but the RIAA went ahead and requested Mr. Glazier to insert the amendment. Which incidentally he had no authority to do.
The RIAA’s answer to piracy, their "investment" in education by litigation (a quote attributed to Mitch Bainwol at a Leadership Music Digital Summit event) effort yielded the following results:
Between 2006-2008, the RIAA spent $64M to recover $1.4M in damages. This is a 2% return.
In 2008 alone, they spent $17.6M to get $391,000. This is a 0.02% return.
By any objective measure, this is a failing grade for any kind of investment. Let alone efforts to fight privacy. In the real world, this normally results in people losing their jobs. If a fraction of that $64M was invested in innovation and legitimate educational efforts as opposed to litigation, the industry may be so much further ahead in terms of developing a better business model.
In recent history the RIAA has also fought to lower the royalty rate for music recordings from 9 cents to 5 cents and also even more recently argued that most recordings are not eligible for copyright recapture. (see above)
So their claim that the RIAA is for artist and songwriter rights is disingenuous to say the least.
Even without SOPA, laws already in place such as the Digital Millenium Copyright Act (DMCA) and the PRO-IP Act of 2008 have potential for huge abuses. These abuses are aptly demonstrated by the dajaz1 and MegaUpload cases. The dajaz1 site was in limbo for a year. MegaUpload’s video was reinstated by YouTube & a district court judge without a coherent explanation from UMG’s counsel.
This bill has very little to do with protecting IP and everything to do with power and keeping a stranglehold on the channels of distribution. Loss of control of channels of consumption for the old school music business means loss of revenue from traditional income streams that feed an obsolete business infrastructure.
Artists who have learned to leverage free and open forms of communication now find themselves in a position of power. But traditional power brokers who have gotten used to being in charge want to keep it that way.
The tenor of the entire bill is one of "shoot first, ask questions later." Besides some concerns of censorship, the bill presents these troubling issues.
An Infringing Site
What is an infringing site?
Apparently almost any site can fall under this definition. Also .edu and .gov sites are not exempt. But .us, .net and .org are exempt from the application of this law. This makes no sense.
Section 102 reads:
Operated in a manner that would, if it were a domestic Internet site, subject it (or its associated domain name) to:
Seizure or forfeiture in the U.S. in an action brought by the Attorney General, by reason of an act prohibited by sections 2318, 2319, 2319A, 2319B, or 2320, or chapter 90, of 18 U.S.C.; or
Prosecution by the Attorney General under sections 1204 of title 17, United States Code, by reason of a violation of section 1201 of such title.
Any illegal act such as smoking pot or failing to pay your taxes makes you potentially subject to "seizure & forfeiture" in the US.
The amendment’s modified definition of sites that can be targeted for suits by the Attorney General remains entirely open-ended. Any site is subject to prosecution as an “infringement site” if its domain name, were it domestic, would be eligible for seizure. Seizure law allows for seizure of any property that is used “in any manner or part” to commit or facilitate illegal activity. That means a website with 99% lawful activity and no bad intent can qualify as an infringement site based on a small amount of infringing activity by users.
End result: The A.G. would have carte blanche to go after virtually any user-generated content site, whenever it wants to. They are all punishable as “infringement sites” by the terms of this bill.
This also puts sites like ReverbNation & SoundCloud (a German service) squarely in the DOJ’s sites. Why? Because eventhough they are dot coms, their "content delivery networks" (cdns) may exist outside of the United States. There are also cloud services that utilize servers outside of the US that are properties or contractors of US based companies.
Other possible targets of action:
Internet search engines & Service Providers & Payment Network providers and Ad services.
- prevent site from showing up in search reports (ie. censorship)
- prevent resolving to the foreign infringing site domain name’s IP address (DNS filtering)
- halt payment processing
Embedded media requires an HTML5 browser
What is a site dedicated theft?
The definition looks a lot narrower and cleaner. But it turns out when you read further down in the doc, even infringing sites can be defined as "sites dedicated to theft." Which now makes .coms, .orgs vulnerable.
Site is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by operator or another acting in concert with that operator primarily for use in, offering goods or services in violation of sections 501 or 1201 of title 17 or certain provisions of the Lanham Act OR the operator of the site operates the site with the object of promoting, or has promoted, its use to carry out acts that constitute a violation of section 501 or 1201 of title 17, as shown by clear expression or other affirmative steps taken to foster such violation.
Again from the CDT:
By including a private right of action, the amendment still undermines the predictable legal environment that the DMCA sought to create for online services.
Under current law, a site that complies with section 512 of the DMCA gets safe harbor protection against copyright suits seeking monetary damages.
But under SOPA, that same site could still face lawsuits seeking to cut off its sources of revenue. In effect, a litigious rights holder gets a second bite at the apple, this time without having to worry about that pesky safe harbor. That’s bad for online innovation, as it gives rights holders a powerful club with which to threaten emerging online services.
That risk might be reduced if the private right of action were strictly limited to foreign entities that would otherwise be outside U.S. jurisdiction. But the bill would allow suits against any website registered to a non-U.S. domain name, even if the parent company is U.S.-based. So U.S. Internet companies with sites registered in foreign country domains would be fair game. That’s evident from the fact that the bill, in both sections 102 and 103, talks about “in personam” actions – it envisions actions against parties that are fully subject to U.S. jurisdiction, even though such parties are already subject to strong legal tools to address infringement.
In Section 105, a private rights holder can notify an ISP, web provider, advertiser or payment processor that a site is an infringing site or dedicated to theft. If the ISP or advertiser or payment processor is convinced there is "reasonable belief" (what is reasonable?), they can shut off or shutdown the site pre-emptively without any repercussions. Thereby granting the ISP/provider/payment processor immunity from prosecution. This circumvents due process.
The site owner would have no recourse.
"No cause of action shall lie in any Federal or State court or administrative agency against, no person may rely in any claim or cause of action against, and no liability for damages to any person shall be granted against, (providers) for taking any action described in section 102(c)(2), section 103(d)(2), or section 103(b) with respect to an Internet site, or otherwise voluntarily blocking access to or ending financial affiliation with an Internet site, in the reasonable belief that–
(1) the Internet site is a foreign infringing site or is an Internet site dedicated to theft of U.S. property; and"
Stewart Baker former NSA analyst and advisor to the President on national security issues is against SOPA. Even in version 2.0. In order to implement SOPA, would require that IPS bypass or circumvent a security protocol in network technology called DNSSEC. DNSSEC verifies the identities of a web site or domain name. DNSSEC is designed to protect networks from forged Domain Name Service(DNS) data or DNS cache poisoning. The DNS data then becomes unreliable, corrupt or poisoned and rapidly proliferates throughout the Internet. Ironically, in it’s desire to neutralize IP piracy, SOPA could enable DNS or network piracy.
DNS filtering or rerouting is the most egregious form of censorship proposed in SOPA. Here is an explanation of why DNS filtering and blocking is bad.
When you block, filter and reroute net traffic, you control what the public gets to see and hear online. The Stanford Law Review published a position paper on this. Read their take:
Piracy is bad. Censorship is worse. The above by the way is an analysis of rev 2 of the bill. Which is the "less bad" version of the bill.
The bill also seems to confine the Internet and it’s related networks to pre-defined geographical borders. The Internet though subject to the regulation of a central body and the laws of it’s specific countries, is essentially a decentralized system. There seems to be a fundamental lack of understanding of how the Internet works within the Judiciary Committee.
If all of this is confusing and anxiety provoking to you, you are not alone. This is the same Attorney General who has been involved with The Fast and The Furious controversy. This Congress also recently approved the indefinite detention of American citizens if they are suspected of terrorist activities.
Giving the judiciary an entirely overbroad and so powerful a tool to enforce copyright is probably not a good idea.
I believe piracy is a real problem. No question.
However, the extent to which it has singularly affected the music industry is open to debate. The data seems to indicate that the problem is nowhere near as extensive as the RIAA seems to suggest. A roughly 30% piracy rate (according to even the industry’s own research initiatives) seems more reasonable. This would account for about a $2 Billion revenue loss over 7 years. Given the state of the world economy in recent years that doesn’t seem too outrageous a loss to expect. Roughly prorated that is a just under 15% per annum loss of revenue.
Piracy will never be completely eradicated. Expending an obscene amount of resources to fight piracy seems ridiculous to this observer. Seems we would be better served investing those resources in a better experience for the music consumer and for a more efficient distribution service for the content creator.
Those of us looking at innovations in the music industry believe piracy is mostly a service problem. Not a criminal one. We believe a lot of illegal behavior, at least in music, can be solved with better consumer services for music. This was the finding of even the industry sponsored Envisional/NBC study.
To some extent Spotify seems to be one such solution. Certainly it is a great consumer experience. But for indie musicians it has been an awful platform for monetizing musical assets. This, however, has to more to do with inequities within the creative culture of the United States. The folks from Spotify licensed music from the majors with a huge upfront payment. Independents saw very little or none of those monies.
To those who say, "Well, we have to do something! They’re stealing our stuff…" Beginning with the DMCA in 1999, there have been a whole lot of "somethings" that have been implemented by the copyright police in the pursuit of trying to shut down piracy. As of yet, they have not solved the problem. Now we are chasing after "foreign rogue" web sites.
Some of the laws enacted to stop piracy
Creating and enforcing laws to protect intellectual property is important. But how we go about doing this is just as important. If not these legal instruments become tools of oppressions. Trust me, I know…
When things are bad, it’s nice to point to a bogeyman to fault for our own shortcomings. Piracy has become this bogeyman for the music industry. Independents as a whole would be better served trying to find out where they have the most impressions globally. Services like Big Champagne can help get you some of that data. As Bandcamp has demonstrated – a potential "pirate" can turn into a consumer.
As an independent, if you are not making your music available and marketing direct to fan (DTF), you are missing a huge opportunity.
To quote Tim O’Reilly: "Obscurity is a far greater threat to authors and creative artists than piracy."
I have a lot of respect for some of the individuals who are for SOPA. They are well intentioned folks who believe this legislation will be the magic bullet the music industry so badly needs to build a vibrant future. However at this point, SOPA has been hijacked by special interests. The music industry has been slow to adapt to changes in technology and the new realities of dealing in a contemporary music market. They are now experiencing the consequences of ignoring this reality.
The entrenched old guard want SOPA because they feel major labels and middlemen need to control distribution. In turn indies are denied an equitable market share. If anything this year has proven that indies need to be awarded more opportunities Not less. A larger segment of the listening public deserve the right to listen to indie based music. Even on commercial radio stations in primary markets.
The inherent danger SOPA presents is that in the process of "protecting" corporate interests, the distribution, access & discovery platforms the Internet provides for independent artists, musicians and songwriters will be crippled or obliterated.
The present copyright and music business laws are woefully inadequate to deal with the new music business. I believe it is time to undertake universal copyright and artistic rights reform legislation in this country.
In the coming weeks, I shall propose some ideas and initiatives that may be of interest to folks interested in moving this discussion forward.
I really want to encourage an honest and open discussion about SOPA. Feel free to comment below. I recognize this is an emotional topic. It’s fine to be angry and upset. But I do insist that the dialogue here be civil and respectful. Would love to know your thoughts pro and con per SOPA.
This article would not be possible without advice and clarification from Alex Curtis of Creators Freedom on the legal aspects of SOPA.