Saturday, December 14, 2019

The Wall Street Journal Article | Lefsetz Letter


“Justice Department Preparing Legal Action Against Live Nation for Ticketing Practices-Live Nation allegedly sought to strong-arm concert venues into using its dominant Ticketmaster subsidiary”

The only money is in the ticketing.

Actually, this is not the most important music business story this week. Also from the WSJ:

“Liberty Media Seeks to Increase Stake in iHeart Media-Deal would put nation’s largest radio broadcaster under same umbrella as concert promoter and satellite-radio giant SiriusXM”

Now using the logic of the SiriusXM merger, Liberty’s control of iHeart should be approved by the government. In other words, satellite radio and terrestrial radio are two different entities, they serve different audiences.

Hmm…

Now if you go deep into the inner-workings, antitrust law is a game of the usual suspects on both sides of the fence, both attorneys and government. And the law is not a practical enterprise, a judge doesn’t look at what feels right, but what the law says, how it should be interpreted, and if you’ve got good enough attorneys, which are always better than those employed by the government, chances are you can get what you want, especially if you donate to the ruling party.

So what is end game here?

Liberty Media has a long history of spinning off and exchanging assets. Liberty is in the money business. And it tries not to pay taxes. Ergo, the spinning off and exchange. In other words, the present-day status is not going to go on forever, there’s going to be an event. History tells us, unlike a hedge fund, Liberty is willing to wait. But a transaction transpires.

Now as for Live Nation…

The problem with Ticketmaster is its basic principles and ethos. Credit Fred Rosen with the original problem. He paid buildings to be the exclusive ticketing company. This is a huge incentive to building managers/owners. In essence, it’s free money. But to pay for that deal, Ticketmaster charges the end client, the everyday customer, fees, which consumers abhor, never mind don’t understand. Now the truth is these fees are not only a way to pay building owners, but for the promoter to make money, because the face value of the ticket…almost all of it goes to the talent. The fees are really the talent’s fault. Under the deals, the fees are not commissionable. And, Ticketmaster is paid to take the heat, the fans refuse to blame the acts anyway. And this has worked well until…

Concert ticket prices went through the roof, becoming the main source of income for acts, in a world where experiences are gaining value in comparison to assets. Furthermore, the ticket sellers are trying to squeeze the brokers, and the brokers don’t want to be put out of business. So, it’s an ugly situation, drawing government scrutiny. And the last thing you want is government scrutiny, which always comes too late and is effected by those unsophisticated with the industry.

So if all the money is in the ticketing… Ticketmaster is more valuable than Live Nation. Furthermore, in its war against scalpers, Ticketmaster is now selling secondary market tickets. And those are even more profitable than primary tickets. Ticketmaster is double-dipping, competitors cringe, but this is what is happening.

So…something’s gotta move.

Now a radio conglomerate already bought a concert promotion company, i.e. Clear Channel’s acquisition of SFX. It didn’t pan out financially, but it was approved. So, allowing Liberty to control both iHeart and Live Nation…that should garner approval too.

Now what you’ve got to understand is concert promotion and radio are mature businesses. And with mature businesses there is consolidation, and usually price wars before prices ultimately are stabilized at a higher point. This is the Amazon paradigm. Amazon puts competitors out of business by undercutting their prices, or it buys the competitor, and then prices stabilize at a higher level.

But concerts are not fungible items. And the truth is many shows are actually underpriced, ergo the secondary market.

So…

Do we let Live Nation continue to use its Ticketmaster muscle?

“Live Nation Chief Executive Michael Rapino said the decree allows the company to make decisions that are ‘right for our business,’ and that booking a Live Nation tour date at a venue that uses a ticketing provider other than Ticketmaster may not make economic sense for the company.”

BINGO! If the only profit is in ticketing, if you don’t control it, you don’t make any money. Not that the government understands this.

So…

Amazon is going to buy Ticketmaster. It’s just a matter of when Liberty can strike a stratospheric price. Once again, the value in Live Nation is not in the concert promotion, but the ticketing. Amazon doesn’t want to own a concert company, but it sure wants to own ticketing, it’s a gold mine. Furthermore, Amazon would do a better job of selling tickets than Ticketmaster could ever do. Amazon knows its customers, it’s one stop shopping. It’s the Google of commerce, i.e. you search for what you want on Amazon, not Google. So…

If Liberty can strike a high enough price, done deal. Then it sells the Live Nation concert company to some mark, just like Sillerman sold SFX to Clear Channel. Or it is broken up, the company being worth more when sold piecemeal.

As for SiriusXM/Pandora/iHeart…. If Verizon and AT&T continue to overpay for content companies that don’t pan out, why not buy this entity! There is a deep pocket who would want control of all these distribution pipelines and content. They could be put to better use by someone with a broader game. Or could they?

But when you’re the only game in town, the price goes up.

So…

Distribution is king, but content counts. Liberty has both, and will sell/exchange/merge what it’s got with something bigger.

In other words, this is a money play.

This is what those on the street, not Wall Street, but Main Street, don’t understand.

Even the government thinks it’s about ticketing.

And when businesses are mature, those with money, those involved in maximizing value, enter the picture. Same in tech right now. The crazy days of individual entrepreneurs are done. Now it’s about the investors more than those who actually work at the company.

Now fees have invaded so many spheres. Have you stayed at a hotel recently? And the public hates fees, but pays them anyway, until it gains an option. Napster was that option in recorded music. Does the public have an option regarding ticketing/concerts? No, so that’s why it’s getting the government involved.

Now let’s never forget that they got Al Capone for tax evasion.

So… The public is pissed about ticketing. It is too opaque. It’s just the way the industry wants it, although its goal is to eliminate the secondary market completely, in a world where the public relies on this secondary market for availability. Sound complicated? IT IS!

Ticketmaster is headed for a brick wall. You remove any element and it doesn’t work. You’ve got to have exclusive deals with the venues, you’ve got to have the fees. As for third party entrants…even if they could pay the venues, the venues would be locked out of shows, since the only profit is in the ticketing!

Live Nation’s stock price has gone up and up, that’s what Michael Rapino is paid for. Buyers and sellers, i.e. money, cares not a whit about the underlying business, just the perceived value, and right now the perceived value of Live Nation is stratospheric.

It’s not about ticketing, it’s not about fees, it’s not even about the government investigation. It’s about raising the value and taking advantage of discrepancies in the market, and companies eager for an infusion/rescue. Soon, Liberty will control it all. And Liberty has a history of exchanging assets.

So…

A change is gonna come.

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Certain Songs #1705: R.E.M. – “little america” | Medialoper

Album: Reckoning
Year: 1984

. . .

File Under Lost

Hey, remember that time R.E.M. played The Star Palace? In Fresno? And the fucking Dream Syndicate opened?

That was cool.

The date was June 16, 1984, and from what I can tell 35 years later, several thousand people made it to the 500-person capacity Star Palace to see R.E.M. play the first stop on their Little America tour, a show that I think was added at the last second because somebody realized that KFSR had stoked enough demand to easily sell out the show.

Thanks to Cindy for the picture of her ticket

Which, of course, didn’t stop the promoter of the show — Offshore, I believe — from hooking up with KKDJ to market it. Because they’d played both “Radio Free Europe” and “so. Central Rain” a couple of times, you know. But whatever. I know that I was all outraged at the time about the evil mainstream rock station swooping in and trying to get credit, the major point was that R.E.M. was playing in Fresno! And since I had missed them in ’83 due to being a starving college student, I’m sure that much of my complaining was performative, especially since there would have been no way to seem them otherwise, given that I was still a starving college student who had to put down a deposit on the apartment I’d just rented w/ Kirk & Rob.

Looking at the setlists on Setlist.fm and the R.E.M. timeline, I’m struck that they played four unreleased songs, and also seem to remember they played far more than the 14 songs mentioned. (In fact, I think there may have been a bootleg floating around, to boot.)

Which, BTW, is part of the fun and problem of using crowdsourced websites to try to jar loose memories: the Setlist.fm listing claims that the show as at the Warnors, not the Star Palace. As does the Wikipedia entry. Which is nothing new: I remember looking at one of those R.E.M. fansites in the late 1990s / early 2000s and realizing that they had no record of the show at all, because it was added after the official itinerary was created. I was aghast: the internet was erasing my memories!! Maybe that show didn’t happen after all.

But of course it did — and it was one of the coolest days of my life, long before the show actually started, but I’ll tell that story in a couple of days — and during the show proper, I mostly remember standing and dancing (or at least jumping) pretty much inbetween Michael Stipe & Mike Mills, and being utterly happy and utterly blown away by the show, one of the highlights of which was the closing tracking from Reckoning, “little america,” which starts out with one of Peter Buck’s all-time greatest guitar riffs and just gets better from there.

Backed by Bill Berry furiously spinning on his hi-hat while his kick and snare reliably drove the song forward, Buck’s riff was one of those sit-up-and-take-notice moments, and the cool thing was that he kept playing it after Stipe started singing . . . whatever it was that he was singing, none which was even remotely intelligible until the chorus.

The biggest wagon is the empty wagon is the noisiest
The con stole the horse
Jefferson, I think we’re lost

The cool thing about that last line of course, is that it could have multiple meanings. If “Jefferson” is their manager Jefferson Holt, it could be as mundane as being the band being lost on their way to their next gig; or as profound as Stipe questioning the direction the band was heading in. Hell, given the fact that Stipe would start reciting the Pledge of Allegiance over the opening riff in concert, it could even be construed as their first political song in the depths of the Reagan era: (Thomas) “Jefferson, I think we’re lost.”

But once again, I spent more time listening to what Buck was doing than anything else: I’m not sure I’d ever quite heard a guitar part like that one, and while he’d definitely go back to that well a few times again, it well and truly blew me away every single time. And it also made “little america” the perfect ending to Reckoning: one last statement of their brand of rock ‘n’ roll after the balladry of “camerA” and the twang of “(don’t Go back TO) ROCKVILLE.”

Though in typically perverse fashion, they stuck a coda onto Reckoning: a jangling, tom-heavy near-instrumental that might have been a cool song in and of itself, but alas, we’ll probably never know. And if you were one of those people who lifted the needle off of the record too quickly, you might have totally missed it. ::coughs:: Jay ::coughs::

Boosted by the concert, Reckoning pretty much owned 1984 in our little world, easily winning the 1984 KFSR DJs poll, and in fact topping my personal ballot, though by the end of the decade, it was overtaken by Let It Be, which I eventually figured out was my all-time favorite album by anybody. But, of course, we’ll get there when we get there.

“little america”

“little america” live in Passiac, 1984
https://www.youtube.com/watch?v=kRTH8eqZbPM&t=52m04s

“little america” live in Germany, 1985
https://www.youtube.com/watch?v=jckCwlAw6y8&t=54m38s

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Check it out!

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(It’s recommended that you listen to this on Spotify as their embed only has 200 songs.)

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Score One for the Serfs: Copyright Royalty Judges Mandate MLC/DLC “Settlement”…With a “But” | MUSIC • TECHNOLOGY • POLICY

Always read the footnotes.

Remember how we all were told that the services were going to pay for the administrative costs of operating the Mechanical Licensing Collective under the Music Modernization Act.  And that songwriters would benefit because there would be no administrative costs for the mechanical royalties collected and paid by the MLC.  (This implies, although importantly does not say, that publishers could not charge an administration fee for mechanicals they receive through the MLC but not surprisingly the MMA is silent on this not so nuanced nuance.  And why might that be?)

The drafters of Title I of the MMA (which is where the MLC-DLC rule reside) put it on the Copyright Royalty Judges to decide if the “administrative assessment” was fair and reasonable.  In case you missed it, the MLC and the DLC have reached a voluntary settlement that is several million dollars short of what the MLC asked for.  The CRJs have now issued an order making the settlement the law of the land.  With a twist.  (Order Granting Participants’Joint Motion To Adopt Proposed Regulations,  In Re Determination And Allocation Of Initial Administrative Assessment To Fund Mechanical Licensing Collective, Docket No. 19-CRB-0009-AA, (Dec. 12, 2019).)

Here’s some relevant language from the CRJs’ order:

Section 115(d)(7)(D)(v) of the Copyright Act authorizes the Judges to approve and adopt a negotiated agreement that has been agreed to by the Mechanical Licensing Collective and the Digital Licensee Coordinator in lieu of a determination of the administrative assessment. An administrative assessment adopted under section 115(d)(7)(D)(v) “shall apply to all digital music providers and significant nonblanket licensees engaged in covered activities during the period the administrative assessment is in effect.”

Sounds good, right?  But the CRJs go on:

However, the Judges, in their discretion, may reject a proposed settlement for good cause shown. Id. Section 355.4(c)(4) of the Judges’ rules establishes a process for non-settling participants to comment on a proposed settlement and for the settling participants to respond. Because there were no non-settling participants in the instant proceeding, the proposed settlement was unopposed.1

Notice two things:  First, the CRJs’ adopt the position of the MLC and the DLC that the only people who could object to the settlement were “participants”.  Who might that be?  Why the DLC and the MLC, of course.  There were other participants, most prominently the Songwriters Guild of America.  SGA was hounded out of the proceeding because the MLC apparently did not want to include SGA in the negotiation of a settlement.

I can understand the complexity of a three-way negotiation with those pesky songwriters about a matter that affects all the songwriters in the world who have ever written a song or that may ever write a song.  Those songwriters might really get in the way.  What I do not understand, however, is why the songwriters would not be afforded the opportunity to at least comment on the settlement that carries the awesome power of the Leviathan behind it.  I do understand how the rules came to be written the way they are, however.

And this leads to the other thing to observe about this ruling.  “Because there were no non-settling participants…the proposed settlement was unopposed.”  Rather tautological, right?  How can the settlement be opposed if those who might oppose it are not allowed to do so?

Let’s be clear what “opposition” means in this context.  You could just as easily say “improve” or “make fair”.  And lest you think that this is yet another example of sloppy legislative drafting in the mistake-prone Title I, this time I don’t think it’s a mistake.  I think it is exactly what the drafters intended.

But notice something else.  After the world “unopposed” the CRJs drop a footnote.  And it is this footnote that is probably the most important point to the unrepresented songwriters and startups who either couldn’t afford to participate or who were afraid of back alley retaliation if they did.

The Judges have been advised by their staff that some members of the public sent emails to the Copyright Royalty Board seeking to comment on the proposed settlement agreement. Neither the Copyright Act, nor the regulations adopted thereunder, provide for submission or consideration of comments on a proposed settlement by non-participants in an administrative assessment proceeding. Consequently, as a matter of law, the Judges could not, and did not, consider these ex parte communications in deciding whether to approve the proposed settlement. Additionally, the Judges’ non-consideration of these ex parte communications does not: (i) imply any opinion by the Judges as to the substantive merits of any statements contained in such communications; or (ii) reflect any inability of the Judges to question, [on their own motion without a filing from a participant] whether good cause exists to adopt a settlement and to then utilize all express or reasonably implied statutory authority granted to them to make a determination as to the existence…of good cause [to reject the settlement now or in the future].

This footnote is very, very important.  I would interpret it to mean that the CRJs may anticipate that they are directly or indirectly appealed or their decision is examined by the Congress that has ultimate oversight.  (Remember, the CRJs are not truly “judges” under the powers of the judiciary in Article III of the Constitution, but are more like administrative law judges under the powers of the Congress in Article I as the CRJs are part of the Library of Congress
The Copyright Royalty and Distribution Reform Act of 2004 (CRDRA) established the Copyright Royalty Judges program in the Library of Congress.”)

The fact is that the entire process is deeply flawed and fraught with moral hazard if not outright conflicts of interest.  And even if the rule makers manage to exclude the rule takers from the rule making, those pesky songwriters and the public will still comment and criticize.  The insiders can’t threaten to sue everyone.  While the CRJs cannot officially acknowledge the criticisms of the Leviathan by the governed for well-founded fear of the back alley tactics, this footnote is about as close to a “message received” as the governed is going to get.

For now.

Score one for the serfs.

 

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Two Las Vegas Men Plead Guilty in U.S. Criminal Streaming Piracy Case | TorrentFreak

Earlier this year a federal grand jury charged eight men for their involvement with the streaming services Jetflicks and iStreamitAll.

The platforms, which were headquartered in Las Vegas, offered a wide range of pirated videos that could be accessed in exchange for a monthly subscription fee.

This week, two of the defendants pleaded guilty. The first is Las Vegas resident Darryl Julius Polo, aka djppimp, who was involved in both services through which he earned over a million dollars in revenue.

In a plea agreement, Polo admits the various counts of criminal copyright infringement and well as a money laundering charge. The copyright offenses carry a maximum penalty of five years in prison and money laundering is punishable by up to 20 years incarceration.

Polo both owned and operated iStreamitAll (ISIA) which he launched after being involved with Jetflicks. In a signed statement, he admits that ISIA offered access to 118,479 different TV episodes and 10,980 individual movies.

Between September 2014 and December 2016 the streaming service processed at least 18,551 successful credit and debit card charges. The associated subscription fees ranged from $19.99 per month up to $179.99 per year.

According to the agreed statement of facts (pdf), Polo pitched his service to potential clients by pointing out that it offered more content than competing legal services such as Netflix, Hulu, Vudu, and Amazon Prime.

“In fact, the defendant sent out emails to potential subscribers highlighting ISIA’s huge catalog of works and urging them to cancel Netflix, Hulu, and similar services, and subscribe to ISIA instead,” it reads.

The various movies and TV-shows were sources from Usenet and torrent sites. Polo had set up an automated system where software including SickRage, Sick Beard, and
SABnzbd scoured the Internet for pirated content which was then stored by the service so it could be streamed to subscribers.

“These tools allowed the defendant to search for pirated movies and television shows available on some of the most popular torrent sites in the world, such as The
Pirate Bay, RARBG, and TorrentDay, as well as some of the largest Usenet NZB index sites,” the statement of facts reads.

The streaming service was not the first piracy operation Polo was involved in. He further admits that he operated the NZB indexer SmackDownOnYou, BoxBusters.TV, Jailbreakingtheipad, and the music piracy site MixtapeUG.

In addition to Polo, 40-year old Luis Angel Villarino from Las Vegas also pleaded guilty. He admits his involvement as a programmer for Jetflicks from December 2016 to at least June 2017.

Villarino agreed to be charged with one count of conspiracy to commit criminal copyright infringement, which carries a maximum prison sentence of five years.

Jetflicks used many of the same sources as the ISIA streaming service. It was tailored towards TV-show content and listed thousands of shows that could be accessed through a subscription. Both services worked in regular browsers and through various apps, including a Kodi-addon.

According to Villarino’s signed statement of facts (pdf), he mostly worked as a programmer to optimize the scripts that fetched the pirated TV-shows.

“The defendant mostly worked on solving problems with the Jetflicks’ computer scripts that co-defendants Darryl Julius Polo, Peter H. Huber, and Vaillant had written or refined and that were designed to help locate, download, process, store, stream, and make available for downloaded pirated television shows.”

In exchange for the guilty pleas, both defendants can expect a lower sentencing recommendation. They agree to cooperate fully in any further investigations and may have to provide information on and testify against the remaining six defendants, who go to trial in February 2020.

Polo and Villarino will be sentenced a month later. Both men must pay restitution to their victims while their criminal proceeds will be forfeited. In Polo’s case, that’s at least $1 million.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and more. We also have VPN reviews, discounts, offers and coupons.

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Getting It Done: The Week In D.I.Y & Indie Music | Hypebot

In our do-it-yourself section this week, we offered independent artists tips and advice on how to avoid over promotion, the best to avoid the industry holiday slowdown, how to make. Continue reading

The post Getting It Done: The Week In D.I.Y & Indie Music appeared first on Hypebot.

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Music Think Tank Weekly Recap: Protecting Your Instruments • Starting An Independent Music Career • Unexpected Expenses • More | Hypebot

On MusicThinkTank this week, our contributors shared pieces on how to keep you instruments safe from harm, what it takes to start your own independent music career, how to prepare. Continue reading

The post Music Think Tank Weekly Recap: Protecting Your Instruments • Starting An Independent Music Career • Unexpected Expenses • More appeared first on Hypebot.

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REWIND: The New Music Industry’s Week In Review | Hypebot

In this look back through a full week of music industry goings on, we revisit Spotify’s ‘best of the decade,’ the impending problems YouTube Creators are going to face, the. Continue reading

The post REWIND: The New Music Industry’s Week In Review appeared first on Hypebot.

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