There are two big stories in the news today related to intellectual property and music royalties. The first, which I will save for a separate post, is the passing of the Performance Rights Act by the Senate Judiciary Committee. I’ve written about the PRA before, but there have been some new developments since then and I think it’s worth revisiting.

The second big story is the rejection of one of the most bogus lawsuits of the past year (and that is saying a lot.) Back in June royalty collection society ASCAP sued mobile carrier AT&T for violating their copyrights. ASCAP argued that they should be paid a royalty each time a musical ringtone plays because it constitutes a ‘public performance.’ AT&T pointed out that they already pay a royalty each time a ringtone is downloaded. Yet ASCAP believed that there should be another royalty on top of that to cover instances where these same ringtones might be overheard in a crowded restaurant, or perhaps on the subway.

There would have been huge implications if ASCAP had gotten its way – not just for AT&T and other mobile carriers, but for consumers as well. Essentially what ASCAP is saying here is that anytime anyone place any kind of music – even if it isn’t for commercial or financial gain – they are infringing on the composers’ copyrights. Imagine living in a world where you couldn’t roll down your car windows for fear that someone in the next car might overhear the music you’re playing. That’s exactly the kind of environment ASCAP appears to be trying to create.

Fortunately, the judge overseeing the case soundly rejected the claims, ruling that “when a ringtone plays on a cellular telephone, even when that occurs in public, the user is exempt from copyright liability, and [the cellular carrier] is not liable either secondarily or directly.” In other words, you can take your phone off vibrate again.

This case is only one of many in recent months where ASCAP and BMI have attempted to double-dip on royalties. In July, ASCAP started sending collection letters to sites who had embedded YouTube videos that contained music. The problem is, YouTube already pays royalties on video plays even if that video is embedded on another site. And in September, ASCAP and BMI decided that they should be paid royalties for the 30 second previews offered by download sites like iTunes and Amazon.

Yes, it is ASCAP’s job to look out for it’s members, the composers and publishers. But is this really the way to go about it? What do you think?

Original cellphone sketch by makiko.

What makes music valuable? And who is it valuable to?

I recently had a discussion with a musician who is convinced that new business models – specifically those involving free or open licenses, such as Creative Commons – “devalue music.” The spirit behind his position is simple: the less control he has over the tracks he releases the less revenue he will be able to extract from them.

Unfortunately, this line of reasoning is backwards for a variety of reasons. The biggest issue – aside from its cynical, borderline anti-fan sentiment – is that it’s based on the idea that profitability creates value, rather than the other way around. When a product becomes less profitable it has therefore become less valuable.

Yet, that’s not how it works. A product becomes less profitable because it has lost value. To over simplify it a bit – value determines profitability, and profitability is the result of value.

Of course, backwards logic inevitably produces backwards business models. In an effort to squeeze every last penny out of each track they release the lock it down with restrictions – stringent copyright laws, DRM, etc. They do whatever they can to ensure that no one is able to engage with the tracks in any way without the industry being compensated for it. This leads consumers to look for other ways of getting their music – ways that will allow them to use it how they want. Isn’t that why you bother to own something in the first place?

So is my musician friend accurate in his assertion that open licenses such as Creative Commons really “devalue music?” No – in fact, for many fans the freedom to share, remix, mash-up and engage with music only makes that music more valuable to them. Restrictions are what drains music of its worth. As a music lover, which would you rather own – tracks hindered by DRM, or open for you to use as you please? Pretty clear choice, right? Yet the record companies – as well as many artists – continue to ignore this reality.

Obviously, there is a big disparity between what is valuable to listeners and what’s perceived as valuable to the industry. It has gotten so bad that the industry actually believes that if they give the consumers what they want it will destroy their profitability. This is not a sustainable way to do business. It’s the consumer who ultimately determines value. Until the industry can learn to reconcile listener value and commercial value we’ll continue to be stuck right where we are today – battered by declining sales, declining consumer interest, and unwilling to walk the paths that will lead us back to stability.

Artists and the record companies need to make money – no one is suggesting otherwise. Yet, attempting to drive profits by decreasing value is nothing but a great way to ensure that even those profits you do find will eventually dry up. On the other hand, if you offer listeners something that they actually want, they will pay for it.

New business models are risky. Giving up control to the consumer is hard to do. Yet, some risk is necessary for real progress to be made. A changing marketplace should fuel innovation, not self-preservationism.

Here’s a recap of what went on in the music industry this week. Make sure to check out anything you might have missed and leave your comments. Know something we don’t? Submit a story.

Most Popular:

5 Reasons Why the Performance Rights Act is a Bad Idea – Is this bill really for the artists?

Why the Music Industry Still Needs Tastemakers – Sometimes ‘recommendation engines’ just don’t cut it.

Last Week

Creative Culture and the Growing Copyright Extremism – How the industry is criminalizing a generation, what they could have done instead, and how music fans can respond.

How Creative Commons can Enhance Your Business Model – Demystifying the various Creative Commons licenses.

Big New Album Releases – Several highly anticipated albums dropped last week – Check out a full list here.

How to Create a Release Strategy for the New Music Marketplace – Capitalize on the new ways fans are consuming music.

Music Video Picks:

No new videos last week, but check out out the archives.

This Week in Music History:

1975 – American singer songwriter Tim Buckley completed the last show of a tour in Dallas, Texas, playing to a sold-out crowd of 1,800 people. This was Buckley’s last ever show, he died the following day of a heroin and morphine overdose aged 28. (This Day in Music)

Creative culture is on the rise, thanks largely to recent technology. Anybody can shoot a video or record a song and upload it to YouTube and millions of people might see it. Digital technology has put the arts back into the hands of the people.

Copyright lawyer and chairman of Creative Commons Larry Lessig gave a presentation about a year and a half ago in which he talks about the way that the younger generation’s perception of creativity and copyright has changed since their parents’. This generation has the tools and the desire to remix, mash-up and recreate the music they hear and the videos they watch and turn them into something new. The way they appreciate art is by engaging with it and making it their own.

Lessig suggests that the law has not greeted “this new use of culture using digital technologies” with much common sense. Common sense would have been to realize that times have changed, that digital technology has fundamentally altered the way that consumers and creators alike are able to produce, enjoy and interact with art. Common sense would have been for entities like the RIAA to acknowledge that fact and adapt business practices to be remain competitive in the emerging market.

Of course, that’s not what happened. Instead, “the architecture of copyright law and the architecture digital technologies as they interact have produced the presumptionthat these activities are illegal.” Lessig continues, “because if copyright law at it’s core regulates something called ‘copies’ than in the digital world the one fact we can’t escape is that every single use of digital technology produces a copy. Every single use therefore requires permission. Without permission you are a trespasser.”

So this presumption that remixes, mash-ups, videos or any other fan created content that uses copyrighted material are illegal has made nearly an entire generation guilty of breaking the law. I love it that he uses the word presumption – this is one of the foremost lawyers on copyright saying that what the RIAA believes about copyright law is not correct.

The RIAA has seen the internet and digital technology as a threat to their business, and responded by taking an extreme position regarding copyright law. This exaggerated version of copyright all but ignores the concept of fair-use and considers – wrongly – that every use of copyrighted material is illegal.

So they crack down, launching a huge legal offensive against just about everybody, including individual consumers suspected of violating their interpretation of copyright law. This in turn creates a growing backlash – both among those whose genuinely illegal activities were thwarted, and those whose legitimate fair-use was wrongly lumped together with piracy. Now the world is experiencing a “growing copyright abolitionism” says Lessig, “a generation that rejects the very notion of what copyright is supposed to do … and believes that the law is nothing more than an ass to be ignored and to be fought at every opportunity possible. The extremism on one side begets extremism on the other – a fact we should have learned many, many times over.”

You and I can’t control the RIAA. They have proven that they are out of touch with today’s digital culture and determined to snuff out any innovation that smells like it might disrupt the traditional models. We can influence the other side of the table, though.

Artists don’t have to get in bed with the RIAA. The new independent, DIY approach to a career in music is not just a pipe dream anymore – there are plenty of success stories to look to now. In this new marketplace the artists who recognize the value of openness will be the ones who succeed. The ones who see the benefit of allowing their fans to remix their tracks, or to produce amateur videos for their songs and spread them across the Internet.

Regardless of what we have been taught to believe recently, there is such a thing as fair use, and it’s in the artist’s best interests to allow it. Release your music under a more open license such as Creative Commons and see what happens. Let your fans do the promoting – if you give them a quality product and the freedom to use it the way they want use it they’ll do a surprisingly good job. Better than you could ever do, maybe even with a big-label marketing budget that only the top acts see anyway.

Thanks to Eugenia for the video.

The RIAA is not going to be happy about the newest evolution of file-sharing technology.

BitBlinder is a free new service that claims to hide users’ IP addresses, allowing them to
use BitTorrent anonymously. There is only one reason for this, of course, and that is to
hide illegal activity from the authorities. In the words of one of its creators, “We want to
make online anonymity fast, usable and ubiquitous to the point that organisations give up
on spying and filtering us.”

In my mind, anonymous file-sharing has been an inevitability since the RIAA began demanding large sums of money from thousands of individuals under the threat of legal action. It’s a simple escalation principle – if the cops have handguns, the crooks get machine guns and around and around we go.

Many rights-holders and lobbyist groups want to fight file-sharing for a variety of reasons. Some of those reasons are legitimate and others are based on false assumptions. I don’t want to get too deep into that discussion right now, in part because it may be irrelevant anyway. Does the RIAA honestly think it can out-gun the filesharing community? Even more to the point – should it want to?

In a recent article I talked about the different factors that have driven the value of recorded music down to just about zero. File-sharing – although it is widely heralded by groups like the RIAA as the destroyer of music – was not on the list. Why? Because I don’t believe that file-sharing is a cause of the devaluation of recorded music so much as a byproduct of that devaluation. Digital technology has made it possible to generate nearly infinite copies of the files that now contain most of the worlds recorded music. If you can look at it objectively, that sounds a whole lot like progress.

In many ways, Filesharing simply utilizes the infinite copy-ability of digital technology to its full potential. Does that make it right? Well, under our current copyright system no, it doesn’t. Just because you can do something doesn’t mean it’s legal. Yet it does bring up some interesting questions about progress vs. established systems.

At what point do we let go of the old and make room for new systems which are better equipped to handle today’s market realities?

Danger Mouse – real name Brian Burton – was a relative unknown until he produced the Grey Album, which took the vocal tracks of Jay-Z’s a capella Black Album and laid them over beats that he created using samples of the Beatles’ White Album. The Grey Album couldn’t be sold commercially, but quickly spread across the internet and was called the ‘ultimate remix album’ by Rolling Stones. Since then he has produced and contributed to albums by Beck, Black Eyed Peas, The Rapture and Sparklehorse among others, and is one half of duo Gnarles Barkley.

Burton has become infamous in many circles due to his apparent disregard for copyright law. Not only did the Grey Album take advantage of 100% copyrighted material (without permission) he and graffiti artist Banksy also once replaced 500 copies of Paris Hilton’s album Paris with their own special version which contained altered artwork and and a forty minute oringinal song featuring sound bites of various Paris Hilton quotes. I’m sure Paris was thrilled.

Well, Burton is being dogged by legal troubles again. In collaboration with Sparklehorse and David Lynch, Burton’s Danger Mouse will be releasing a new album called Dark Night of the Soul. The album features contributions from the Flaming Lips, Iggy Pop, the Strokes, the Shins, and Black Francis, and is accompanied by a 100+ page book of photographs by Lynch. You can find it on sale here. And if you do click that link and purchase the album, you will likely notice that there is something else unique about this album. There is no music.

That’s right – due to an ongoing copyright dispute with record label EMI, Danger Mouse is unable to release Dark Night of the Soul  for fear of legal action. So instead, Burton decided release the album, the packaging and the extensive book of photos along with a blank recordable CD-R labeled with the album’s title in black permanent marker. The inclusion of a blank recordable CD-R carries some pretty clear implications, but if subtly isn’t your thing the artists’ intentions are spelled out pretty clearly in a recent press release:

Danger Mouse’s new project Dark Night Of The Soul consists of an album length piece of music by Danger Mouse, Sparklehorse and a host of guest vocalists, along with a collection of original David Lynch photography inspired by and based on the music.

The photographs, which provide a visual narrative for the music, are compiled in a limited edition, hand numbered 100+ page book which will now come with a blank, recordable CD-R. All copies will be clearly labeled: ‘For Legal Reasons, enclosed CD-R contains no music. Use it as you will.’

Due to an ongoing dispute with EMI, Danger Mouse is unable to release the recorded music for Dark Night Of The Soul without fear of being sued by EMI.

Danger Mouse remains hugely proud of Dark Night Of The Soul and hopes that people lucky enough to hear the music, by whatever means, are as excited by it as he is.

 It’s not exatly clear why Dark Night of the Soul would earn a lawsuit, but Danger Mouse and EMI have been at odds since the Grey Album. The move is getting a lot of attention because Danger Mouse is obviously encouraging fans to get their hands on the music “by whatever means,” yet there is at this point no way to download the album legally. Moral dillema aside, I can’t imagine that this will play well with EMI. In the meantime, you can check out the album at the NPR website where they are streaming it for free.

All that being said, I can’t help but wonder if this whole thing is one big publicity stunt. If you read the article alongside the free stream at NPR.org, you’ll see that Danger Mouse and co. have gone to great lengths to create an air of mystery around this album:

It all started back in March, at the South by Southwest music festival and conference. A number of us on the NPR Music team had noticed strange posters around downtown Austin, Texas, that read “Dark Night of the Soul.” They looked like movie posters and had David Lynch’s name on them, alongside names of some of our favorite artists, like Danger Mouse, Sparklehorse, Vic Chesnutt, Jason Lytle and more. We wondered if it was some sort of musical film.

Soon after our Austin trip, NPR Music received copies of the mysterious posters in the mail. No return address. Someone was messing with us. I tried to find out more, but had zero success.

So you can see why I might be a little bit skeptical of the whole situation. Either way, Dark Night has already created a frenzy among the artists’ fans and throughout the ranks of the anti-copyright crowd, and EMI is again largely to thank.

Google recently blocked all music videos from YouTube users in the UK, and now it looks like it has done the same in Germany. In both cases the deal breaker was royalty fees that Google deemed unacceptably high. Google’s contract with GEMA – the German royalty collection agency - expired last Thursday and GEMA is requiring royalty fees fifty times higher than even the PRS in the UK. This could cost Google as much as €120,000 per million streams. GEMA did offer Google a slight discount (from €0.12 to €0.1) although it appears to have been in exchange for greater transparency on Google’s part, a requirement the search giant was unwilling to meet.

This is the same issue that has led Last.fm to require membership fees from it’s international users, and why it is considering similar fees here in the US. Ad revenue alone is simply proving not to be enough to bear the burden of sky-high royalty fees. The irony is that while the GEMA and the PRS and claim to be representing composers and songwriters, they are also doing them a great disservice. Their artists are not likely to be happy about having their music videos suddenly pulled from YouTube, which amounts to a huge loss in free publicity.