Matt Schruers

Yesterday Billboard reported on research by Pandora finding that music played on the service experienced increased sales.  The study found that, on average, sales increased between 2.31% and 2.66% for music played on the Pandora service.  The effect apparently grows with more spins.  That is, the more frequently a song was played, the likelier listeners were to purchase the track or album.  This data doesn’t even reveal all of the promotional value of the service: to what extent does it lead to concert and merchandise sales, for example?  The takeaway, however, is that digital radio play drives sales, in a quantifiable way, which artists can now analyze at an increasingly granular level.

The findings are consistent with observations made in music producer Steve Albini’s recent, colorful keynote at the Melbourne, Australia “Face the Music” conference.  Albini said:

“It’s no longer necessary to pay people to pay other people to play your records on the radio, only to have those people lie about doing so. It’s no longer necessary to spend money to let people hear your band.”

Albini also lauded that the Internet facilitates a “direct relationship” between fans and artists that “skips all the intermediary steps.” Nevertheless, while artists can now reach audiences directly, existing contractual arrangements and the legacy of industry structure limits the extent to which artists can be compensated by audiences directly.  Thus, as DisCo has noted before, while music services drive sales and pay out the vast majority of their revenues as royalties, those royalties are far more often paid to intermediary rights-holders, and the majority of the revenues don’t reach the artist.

Transparency problems aside, the fact that digital services represent the future of the music industry is increasingly hard to ignore.  Yesterday’s N.Y. Times reported a Sony Music estimate that in four years, streaming and subscriptions would constitute 60% of the music industry’s digital revenue, up from 18% now.  Sony executive Kevin Kelleher claimed to be “very encouraged with the paid streaming model”, while questioning the value of ad-supported models.

Yet digital services are rising to such prominence in the marketplace that, at least in Europe, Spotify appears to have overtaken iTunes in generating royalties for artists.  Given this data, combined with continued growth in legal digital music consumption (music listeners streamed more than 118 billion tracks in 2013), it is hard to understand commentators still suggesting people won’t pay for music.  YouTube, of course, is just launching its Music Key product, betting exactly the opposite.  Nevertheless, like Pandora and Spotify, Music Key keeps with the conventional wisdom that “having a free tier [i.e., ad-supported] as a springboard to get people to pay is key to winning members.”

{ 0 comments }

In another example of Internet services investing greater resources in protecting content online, Google announced various changes today to search results involving movies and music.  Even as News Corp’s James Murdoch was complaining that Google was not doing more to fight piracy, the search provider was announcing further actions to fight piracy, detailed at length in its updated “How Google Fights Piracy” report.

New developments include Google’s testing of a new ad format to appear directly beneath its search box, which will point users to lawful, authorized platforms for content in the search (assuming, presumably, that there are any).  It has also created a new right-hand panel in search results that points to various options as well.  The company is also tweaking its algorithm to further downrank sites that receive high numbers of DMCA notices, and further limiting what terms and results might appear in “autocompleted” queries. MORE »

{ 0 comments }

If you haven’t had your daily fill of irony yet, let me tell you about the Euro-skeptic, free marketeer news organization appealing to European regulators to guarantee “fair returns” in the wake of Internet-driven disruption.

On Wednesday, News Corp released a letter from its CEO Robert Thomson to the EU competition commissioner Joaquín Almunia, criticizing Google and championing regulators to act against the search provider, following similar demands by the news publisher’s European peers.  Unfortunately, Thomson’s letter received about as much fact-checking as a News Corp tabloid.  (Jeff Jarvis has already annotated the letter’s “staggering” “willful blindness to irony” on the News Genius platform).

News Corp publications have championed tech disruption before, but apparently those principles go out the window when News Corp is the one being disrupted.  In fact, News Corp’s own Wall Street Journal previously complained that Google had become its competitors’ “piñata,” who were demanding “a regulatory veto” notwithstanding the fact that they “haven’t demonstrated any economic harm” stemming from the search provider.  Yet this week, News Corp itself jumps into the piñata party, waving the European banner. MORE »

{ 0 comments }

Last week I wrote about a phenomenon I referred to as ‘IP immigration,’ in which plaintiffs with non-IP injuries bring lawsuits making IP-based claims, usually due to the potency of IP remedies compared to what they can claim using more conventional claims.  Given the recent Celebgate debacle, in which compromising photos from celebrities’ iCloud accounts leaked onto the Internet, it is timely to think about whether IP ‘immigration’ is a desirable trend.

As I mentioned before, this phenomenon is not limited to copyright, but it seems to occur most frequently in copyright.  That makes sense; copyright does occasionally play what might look like a privacy-related function in relation to unpublished works.  Cases like Salinger v. Random House, which involved a biographer’s use of author J.D. Salinger’s unpublished letters, and the Supreme Court’s decision in Harper & Row v. Nation Enterprises, which involved a magazine reporting lengthy quotes from former President Gerald Ford’s memoirs using a leaked manuscript, show that copyright interests can be used control the act of first publication.  Still, many ‘immigration’ cases don’t involve unpublished works at all.

In that vein, consider legislation introduced in the 1990s which proposed granting the United States a copyright in the American Flag. (e.g., here and here).  The stated purpose was to prevent anyone from burning or otherwise desecrating flags, a subject of great interest in the early 1990s following court decisions holding that the First Amendment protected such acts.  By assigning a copyright to the government and extending a public license for anyone to sell, distribute, manufacture, and, under certain circumstances, display the flag, the legislation would have permitted the sale and display of flags, but empowered the U.S. Government to still bring criminal charges against flag burners to prevent mutilation of a flag.  (I’m indebted to Prof. Mark Lemley for pointing out these proposals.)  Confronted with the nearly insurmountable barrier of the First Amendment, these (ultimately unsuccessful) bills would have attempted a work-around by ‘immigrating’ to one of the few established First Amendment exceptions: copyright.   MORE »

{ 0 comments }

Intellectual property is facing an “immigration” challenge, but has no immigration policy.  That is, there is an increasing trend of plaintiffs discovering IP to achieve non-IP ends.  The absence of any IP doctrine that can deal with this — aside from amorphous and often inapplicable doctrines of misuse — means that parties can invoke (or are counseled to invoke) the statutory monopolies of intellectual property to achieve objectives that have, at best, a tenuous relation to “promot[ing]… Progress.”

As commentators discussed the recent leak of celebrity nude pictures — at least some of which have been alleged to be “selfies” — copyright comes up frequently.  Generally, the suggestion is that the victims should invoke the copyright in their photos and send Digital Millennium Copyright Act takedown claims (under Section 512) to the sites hosting the files.

This is not the first example of such suggestions: “Revenge porn” victims also want compromising pictures taken down from websites.  Actress Cindy Lee Garcia, unwittingly deceived into appearing in anti-Islam film, receives death threats and wants the film purged from the Internet.  Other examples of non-IP use of IP abound.  For example: deposed Panamanian dictator Manuel Noriega resents being featured as a villain in a historical fiction video game.  A state legislator wants superhero-costumed street performers exiled from New York city streets.  In each of these cases, intellectual property is the proposed solution to unwanted activity that most objective viewers would not characterize as principally involving IP.

What is happening is that plaintiffs are migrating into IP territory.  Why?  In a word: remedies.  When testifying before Congress on this subject in July, I briefly noted that IP remedies are so attractive that they attract plaintiffs from other areas of the law.  Rather than forum-shop, potential plaintiffs jurisprudence-shop.  Claimants come to IP seeking redress for concerns that they cannot vindicate elsewhere.  In the physical world, immigration is usually an indication that the destination is more attractive.  In fact, a large amount of migration occurs in search of better conditions, or opportunities, and the anecdotal evidence suggests that this “remedy immigration” is no different.

MORE »

{ 0 comments }

With its Sept. 1 issue, Bloomberg Businessweek’s cover story again puts online video platforms in the media spotlight with favorable coverage, proclaiming YouTube to be “Hollywood’s new hit factory.”  This is a decidedly different take from Variety’s own ‘YouTube issue” last month, which suggested that “traditional” film and television sectors may be rendered irrelevant by the continued success of online video.  (DisCo mentioned Variety’s “YouTube issue” previously, noting how an odd anti-Internet op-ed was sandwiched between highly favorable coverage of social media video services.)

Businessweek shows that the disintermediation story doesn’t necessarily apply to all content producers.  As DisCo recently noted elsewhere, established incumbents are not invariably disintermediated by new technology, and the Businessweek cover story bears this out with stories of major online video acquisitions by established Hollywood incumbents. MORE »

{ 0 comments }

While reading Variety’s eye-opening article explaining how successful young performers are reaching a new generation through Internet platforms, you might have come across producer Kurt Sutter’s (potentially NSFW) open letter savaging Google about piracy allegations.  Sutter, who produces the FX drama “Sons of Anarchy,” announces the search company is “in the process of systematically destroying our artistic future.”

The attack is uncomfortably wedged between Variety’s impressive coverage of the rise of the Internet content creators, and stars on Google’s YouTube in particular.  In fact, Variety published a survey this morning which concluded that YouTube stars are more popular than “mainstream” celebrities among teens.  Hollywood, however, has no idea who these new stars are — a disconnect likely to widen as more young Americans cut the cord and trade the remote for the smartphone.  Amidst other coverage, one article concludes, “[Internet video brands] AwesomenessTV and Vice could very well be the next mega-brands; they demand our attention now”.

It’s difficult to square Sutter’s dire predictions that we will look back with regret on “the magical days when creatives flourished” when the several preceding articles highlight creativity flourishing on the Internet.  Situated as it is inside what might be called Variety’s Disintermediation Issue, Sutter’s f-bomb fusillade says nothing so loudly as ‘get off my lawn.’

MORE »

{ 4 comments }

As the IP nerd vigil over Aereo continues, let us take a minute to survey what potential outcomes might look like.  So, if World Cup prognostication isn’t for you, this post should get you started on the next best thing: Supreme Court tea-leaf reading.

The Court’s Aereo decision will issue on a Thursday or Monday between now and June 30.  The case could be resolved as early as tomorrow morning, but the fact that it was argued so late in the term may produce a correspondingly late decision date.  I’ll assume you know how Aereo got to the Supreme Court; if not, try this post and infographic surveying the Aereo litigation. Below I describe how the most probable outcomes would look, plus a few unlikely results.

MORE »

{ 0 comments }

Last year I wrote on the question: ‘how long can copyright holders wait to sue?’  The issue animated a case decided by the Supreme Court today, Petrella v. MGM, where the plaintiff had waited 18 years to file her suit.

The quick answer, of course, is that copyright’s statute of limitations (17 U.S.C. 507(b)) is three years.  (A statute of limitations is what it sounds like: it is the part of the law that limits how long a plaintiff has to file a civil lawsuit.  After that time has elapsed, they are out of luck.)  The more complicated answer, at issue in this case, is that a copyright holder can wait a very, very long time, provided the infringement is ongoing.  Petrella inherited the rights to renew her father’s two screenplays and memoir about his friend, champion boxer Jake LaMotta, later adapted into the Academy Award-winning Scorsese/De Niro film Raging Bull, but then didn’t bring suit for nearly two decades.

MGM invoked laches, arguing that Petrella should lose since she unfairly delayed in bringing her claim.  Laches is an equitable doctrine, an ancient rule of fairness.  It represents the idea that plaintiffs shouldn’t be allowed to benefit from their own delay.  It isn’t part of the Copyright Act, but rather a general principle.  Two lower courts sided with MGM’s argument, but the Supreme Court reversed today in a 6-3 decision by Justice Ginsburg. MORE »

{ 0 comments }

This is the fifth and final post in a series on Oracle v. Google. [Previous posts: 1, 2, 3, 4]

Jon’s posts on the Federal Circuit’s Oracle v. Google decision Friday and yesterday covered most of the bases, and other accounts have not been any more charitable. In fact, most have been less so. (e.g., this, this, or this).

Jon’s post alluded to an extraordinary strawman in the court’s opinion, but it needs to be appreciated on its own.  The Federal Circuit contends that parties before it “seem to suggest that software is or should be entitled to protection only under patent law – not copyright law.”

This is surprising, because no one said that.  In fact, as Jon pointed out, Google’s counsel said precisely the opposite.  How do we know this?  You didn’t have to sit through the oral argument; the Federal Circuit itself quotes him saying “it is not our position that none of Java is copyrightable.” (opinion at p. 29)

So, having quoting that, its rather odd to turn around and say, as the Federal Circuit does, that it is being invited to say none of Java is copyrightable, and is only patentable.  (opinion at pp. 68-69)   MORE »

{ 0 comments }