Considering the financial havoc that has been wreaked with artists' income as a result of Google's DMCA safe harbor for YouTube, it seems odd that anyone remotely informed on the topic of music licensing would think another safe harbor for streaming services would be a good idea, and yet that's just what appears to have been proposed.
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Guest post from David Lowery of The Trichordist
Think of the damage that Google has been able to do to artists’ income with the DMCA safe harbor and YouTube. The DMCA safe harbor means that artists have to play an endless game of Whac-A-Mole with the second largest corporation on the planet, or take the shitty music licensing deal they offer. A textbook case of market failure.
And really the other streaming services should object to YouTube’s abuse of the DMCA takedown process because it makes it near impossible for them to fairly compete. Why pay for Spotify premium when you can get all the same music for free on YouTube? Again another market failure. I’m positive the authors of the 1998 copyright legislation did not intend for companies like Google to build an interactive music streaming service on the safe harbor protections.
So after 2 decades of living with the DMCA safe harbors, every rightsholder, performer or songwriter will tell you the same thing. The DMCA safe harbor needs to be fixed. Anyone that knows anything about music licensing would NOT propose another safe harbor.
Yet this looks like it’s being seriously floated. The video above is from a Technology Policy Institute panel at NYU. Starting at 10:15 Professor Lawrence White proposes a new safe harbor for streaming services. It’s important to note that White is sitting between two of thefour horsemen of the songpocalypse (Sirius and Jim Griffin). This is clearly a harbinger. The idea is that if a streaming service makes a “good faith effort” to find a song and they can’t find the owner they don’t have to pay. In the world this professor lives in (not ours) the new safe harbor thus “incentivizes” songwriters to build a global all-encompassing database in order to get paid.
Neat, except…what the professor (and to be fair most music licensing lawyers and policy wonks) don’t understand is there is no incentive to register precisely because the royalty is too low! Would you spend 20 minutes registering something in some wonky database if it meant you’d get $1.08 check 2 years from now? There is an entire generation of musicians that have given up on registering music or collecting royalties because it’s not worth the hassle. Second no database would ever be fully up to date anyway. New songs are written every day. Songs and catalogues change ownership. This perfect database will never exist. The services will just legally keep all the “unmatched” royalties. They will have a financial incentive to NOT find the owners.
Curiously White has an interesting paper on creating more competition in music licensing. But after watching this, if he’s pro-competitive, as he claims, it’s a funny kind of pro-competitive. Competition requires regulatory “space” not further narrowing of the songwriters ability to negotiate. Adding new federal safe harbors or expanding compulsory licenses for the use of music further reduces competition.
Rarely noted is that we have exactly the same problem on the other end of the compulsory license. By federal statute all streaming services have access to exactly the same composition repertoire. Federal regulations force them all to function in much the same manner. They all have the same royalty expense structure. They charge the same subscription rates etc.
How do they distinguish themselves?
They don’t. And once one music service becomes dominant all competition will fade away. There is no way for a competitor to innovate and displace the dominant service. So why bother?
I guess I’m not NYU-educated enough to understand how adding more mandates to the swamp of federal music licensing regulations “drains the swamp” and creates competition. To me this looks like another handout to Silicon Valley billionaires and the VCs that back these services.
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