CMU Daily 18.09.17: Spotify latest mechanicals motion denied, LiveXLive acquires Slacker Radio

Spotify's latest mechanicals motion denied, though it could persist with its bold new argument
The judge overseeing one of Spotify's ongoing mechanical royalty lawsuits has knocked back its 'motion for a more definite statement', which was the court submission where the streaming firm introduced the dramatic new argument that it didn't actually exploit the so called mechanical rights of the song copyright. Though last week's ruling on the matter doesn't mean Team Spotify can't continue to make that controversial new argument.

As much previously reported, Spotify - and other streaming firms - have been on the receiving end of multiple lawsuits in the US over unpaid mechanical royalties. To date the streaming firms have generally claimed that the unpaid royalties are simply the result of the US music publishing sector having never established a collecting society for mechanicals.

This month's "we're not sure mechanical royalties are even due" argument is new. Because to date, it has generally been agreed that an on-demand stream exploits both the 'performing rights' and the 'mechanical rights' of the copyright.

This is important in the songs business, because in some countries the two elements of the song copyright have traditionally been licensed separately. Though, even where that is the case, you can usually get industry-wide blanket licences (or 'mop-up licences' covering anything not licensed directly) from a local collecting society, even if you need to get one blanket licence for performing rights and another for mechanical rights.

However, in the US there are only collecting societies for the performing rights. Royalties due for exploiting the mechanical rights need to be paid directly to the publisher.

That means a digital service needs to work out what songs it has exploited and who controls those songs. Which - with no publicly-accessible industry-wide database of music rights information available - has proven to be a tricky a task. Or, at least, those streaming firms who hired US mechanical royalty specialists The Harry Fox Agency to process the monies haven't been getting everyone paid.

Which resulted in those mega-bucks lawsuits, in which unpaid songwriters or publishers can sue for statutory damages of up to $150,000 per song, oblivious of what mechanical royalties are actually due from any one streaming service.

Although it's been generally accepted within the music industry that an on-demand stream exploits both the performing and the mechanical rights, copyright law is generally silent on such things. Hence Spotify's bold new argument that its streams only exploit the performing rights; an argument mainly based on legal precedent in the US that says personalised radio services like Pandora don't exploit the mechanical rights.

That new argument - contained within the aforementioned 'motion for a more definite statement' filed in relation to two recent mechanical royalty lawsuits - has been rejected not only by the lawyer leading on that litigation, but also by plenty of Spotify's friends in the music publishing sector, and the US National Music Publishers Association.

Given that Spotify isn't actually trying to reduce its overall payments to songwriters and publishers here - just alter the way it makes those payments - you might wonder why the pro-streaming music publishers would object to the idea. It would simply see the streaming firm push all its royalty payments through the performing rights organisations that it already has licensing relationships with.

The PROs would then work out which songwriters and publishers need to be paid, and protect Spotify from legal claims for statutory damages from writers and publishers who don't dig the new fangled streaming business.

Though in some countries, publishing contract conventions mean that publishers prefer mechanical right royalties to performing right royalties, because a chunk of the latter are generally paid directly to the songwriter, even if said writer is yet to recoup their most recent advance paid by the publisher. Therefore publishers don't want all the streaming money to go through the PROs, which - in the US - are also subject to those pesky consent decrees.

With all that in mind, it will be interesting to see if Spotify continues to put forward its new mechanicals argument in the US courts.

In its 'motion for a more definite statement' earlier this month, Spotify basically argued that the lawsuits filed in July by Bluewater Music Services and Bob Gaudio were high on bluster but low on legal argument. In particular - the streaming firm added - the lawsuits took it for granted that mechanical royalties were due, but - in Spotify's newly formed opinion - that's not a given, and the plaintiffs should have presented arguments proving that is so.

According to Billboard, the judge overseeing the case rejected that motion on Thursday. In doing so, judge Jon Phipps McCalla was basically saying that the plaintiff's arguments are already sufficient for the case to proceed. Which means no new legal filing is require from the Gaudio camp. Though Spotify could now file a motion to dismiss the case using the same 'no mechanicals are due, mate' argument. So we await its next response with interest.

BACK TO THE TOP OF THE BULLETIN

EU to pressure web giants to do more to tackle piracy on their networks
The European Union could put new pressure on search engines and social networks to do more to tackle illegal content online, including that which infringes copyright. This is according to new draft guidelines seen by Reuters last week.

When it comes to copyright matters, firms like Google, Facebook and Twitter are protected by those pesky safe harbours, meaning that they can't be held liable when their users' distribute content without licence, providing they have a system in place via which copyright owners can demand that infringing files be removed.

Whereas with user-upload services like YouTube, the music industry has been arguing that safe harbour protection should be withdrawn entirely, for search engines and social networks the music community generally recognises that the safe harbour makes sense.

The music industry would nevertheless like those companies to be more proactive in removing copyright infringing material. And in the UK, under pressure from government, Google and Microsoft have agreed to increase anti-piracy measures on their respective search engines.

The new proposals in Europe would likely seek similar commitments from a wider range of companies, keeping the safe harbour intact, but pressuring web giants to be more proactive in removing infringing material, alongside concurrent efforts to get better at removing hate speech and extremist content.

According to Reuters, the EU's draft new guidelines state: "Online platforms need to significantly step up their actions [in this area]. They need to be proactive in weeding out illegal content, put effective notice-and-action procedures in place, and establish well-functioning interfaces with third parties - such as 'trusted flaggers' - and give a particular priority to notifications from national law enforcement authorities".

The guidelines - which include measures already employed by some web firms, Google in particular - should be published later this month. They will initially be non-binding, though with the threat of new laws being proposed in this domain in the future if the web giants don't voluntarily move to tackle illegal activity on their networks.

Any such new laws, of course, will raise the usual free speech concerns, though arguably it is measures against alleged hate speech and extremist content that pose more challenges when it comes to protecting the right to freedom of expression.

BACK TO THE TOP OF THE BULLETIN

Tencent isn't buying Spotify, but wanted to
China's Tencent isn't buying Spotify. That's today's news. I'm also not buying Spotify. Though that's not news, because I never offered to buy it.

Actually, I did recently get half way through writing an email to Daniel Ek offering to take the streaming service off his hands. But then CMU's Andy Malt distracted me by seeking feedback on the new theme tune he's making for the CMU Podcast, which currently goes beep, beep, boop, beep, woo, do dah do, woosh. So that's something to look forward to. Even if it does mean Ek won't get to offload Spotify in return for the big jar of five pence pieces I keep tripping over in my flat. And the jar itself is worth a pound!

However, Chinese web giant Tencent seemingly did get its email off to Team Spotify confirming it was interested in buying the streaming firm, or at least so says TechCrunch.

Tencent, of course, has become a significant player in the rapidly emerging streaming music market in China, as both a distributor of content and an operator of streaming services, in particular QQ Music. It's also known the web firm has musical ambitions beyond its home country, and it is already active in other territories via a service called Joox. A purchase of Spotify would have transformed it into a global digital music player over night.

But, say TechCrunch's sources, when Tencent approached Spotify to float the idea of an acquisition earlier this year, execs at the latter ultimately declined the offer. It's not quite clear whether there was an immediate knock back from Spotify HQ - which is busy prepping its listing on the New York Stock Exchange, of course - or whether any initial talks did in fact take place. Neither companies are commenting on their conversations.

Which is annoying. Because if the deal breaker was the size of Tencent's five pence piece jar, then I'd know it was worth finishing my email to Ek, because mine's quite a big jar. Still, I'm too busy trying to persuade Malt to remove the 'woosh' to care at the moment. The CMU Podcast will be back soon by the way. That's the real news today.

--------------------------------------------------

LiveXLive Media acquires streaming service Slacker
US-based LiveXLive Media, which operates a live music streaming platform, is to acquire personalised radio service Slacker Radio.

Slacker has been a player in the US digital music space for over a decade now, mainly focused on personalised radio like the core Pandora and iHeartRadio services. It was last in the news back in March when it confirmed it was laying off about a quarter of its workforce as part of a "focus on efficiency" and in a bid to "accelerate the path towards profitability".

Confirming the acquisition, LiveXLive Media - previously known as Loton Corp - said that the deal "will help accelerate LiveXLive Media's efforts to deliver world-class entertainment, information and music content".

It went on: "Slacker Radio has been a key innovator in the streaming music space, with a proven programming and personalisation platform that has powered streaming music experiences for global brands like Tesla and Samsung. Slacker and LiveXLive Media will combine content programming teams to build a network of both audio and video channels that stretch across mobile, TV apps, and in-car infotainment systems".

Sounds like fun. The Slacker deal comes as LiveXLive - which had UK operations for a time via an alliance with London venue Koko - appoints a new President in the form of Andy Schuon. The company says its new hire will "oversee all of the company's divisions, which include live music lifestyle video service LiveXLive, Wantickets and social media influencer business LiveXLive Influencers as well as Slacker Radio".

Commenting on the Slacker deal, Schuon told reporters: "To continue to have the opportunity to shape the future of music streaming services and streaming radio with a leading platform like Slacker Radio is incredibly exciting. I look forward to working with the Slacker team as we bring the worlds of recorded music and live music together with the best audio and video content".
--------------------------------------------------

Vevo server hacked and three terabytes of files shared
You've not really made it as a company in the modern world until hackers have nicked all your emails and private documents and shared them with the world. So well done, Vevo. You've finally made it! Plus the music video site also got to learn a nice little lesson out of its big hack. Remember kids, when hackers tell you they just hacked your server, don't tell them to "fuck off". Even if you really, really want to.

Vevo, which counts Sony Music and Universal Music as key shareholders of course, was hacked by a hacking team that goes by the name of OurMine, which then plonked a big fat stack of the music company's documents online for all to see. Most were pretty mundane documents, though an email with the burglar alarm code for the firm's new London HQ was among the more sensitive bits of information to be shared.

Interestingly, the OurMine group doesn't usually publish large quantities of hacked material, instead preferring to make companies aware of security issues on their systems. But they told Gizmodo that they published over three terabytes of Vevo internal files because when they reached out to someone who works at the company, to tell them they'd been hacked, the Vevo rep responded with a nice neat "fuck off".

Team OurMine added, when speaking to the tech site, that they'd gladly take the leaked files offline again if someone at Vevo asked them to do so nicely. Given the leaked files were subsequently taken offline, presumably Vevo got in touch.

A Vevo spokesperson has now told Gizmodo: "[We] can confirm that Vevo experienced a data breach as a result of a phishing scam via Linkedin. We have addressed the issue and are investigating the extent of exposure".

BACK TO THE TOP OF THE BULLETIN

Rolling Stone up for sale
Wenner Media is considering putting its 51% controlling stake in Rolling Stone magazine up for sale.

Founded in 1967 by Jann Wenner, the iconic music magazine, which celebrates its 50th anniversary this year, has been struggling of late, as ad revenues and sales both fall. Following numerous staffing cuts, Wenner Media sold a 49% stake in the title to Singapore-based company BandLab Technologies last year.

Despite that cash injection, matters have seemingly not improved for Rolling Stone, with its future remaining uncertain - not least because of the recent $1.65 million settlement of a defamation case relating to its retracted 'Rape On Campus' article. As a result, Wenner Media announced yesterday that it is exploring "strategic options for its majority interest in Rolling Stone to best position the brand for future growth".

Jann Wenner told the New York Times that he is hoping to find a buyer with "lots of money" who understands the magazine. "Rolling Stone has played such a role in the history of our times, socially and politically and culturally. We want to retain that position", he said.

BACK TO THE TOP OF THE BULLETIN

Tyler, The Creator kept Flower Boy track for himself after Zayn "flaked"
Tyler, The Creator has said that his song 'See You Again', which appears on new album 'Flower Boy', was originally written for Zayn Malik.

The rapper claims that the former One Direction member failed to turn up to record with him twice, so he kept the track for himself. "I wrote 'See You Again' for Zayn but that bitch flaked on studio time twice", wrote Tyler on Twitter. "Worked out actually".
Tyler has also released a trailer for his new animated comedy show 'The Jellies', which is due to begin airing on Adult Swim next month. Watch that here.

BACK TO THE TOP OF THE BULLETIN

Niall Horan announces debut solo album, remembers 'disastrous' first One Direction show
Niall Horan has announced that he will release his debut solo album, 'Flicker', on 20 Oct. New single, 'Too Much To Ask', was released on Friday.

As well as the album, Horan announced arena tour dates in North America and Australasia last week. He's limbering up for those shows currently with a run of dates in smaller venues around the world. They seem to be going fine, but are bringing back awful memories of One Direction's first ever live show.

"I never want to talk about that gig again", he tells the BBC. "Worst night of my life. The worst One Direction show ever. We've refused to talk about it ever since. It was a disaster. We were just a joke. Anything we rehearsed just went out the window. It was our first ever gig and we just didn't know what the fuck was going on".

His current run of solo shows in theatre venues is going better, he adds. "It's brilliant, especially with the type of music I'm doing. You feel like you're in someone's living room. With One Direction, we were doing five or six kilometres a night, running around the stage like lunatics. There's none of that now. I'll probably put on a bit of weight, standing still and playing guitar all the time!"

Perhaps he'll build some running around into those arena shows next year. We'll just have to wait and see. For now, here's 'Too Much To Ask'.

BACK TO THE TOP OF THE BULLETIN

Wu-Tang Clan, Morrissey, Nick Jonas, more

Other notable announcements and developments today...

• That Wu-Tang Clan album sold for $1,025,100 on eBay. The buyer might have to wait for current owner Martin Shkreli to get out of prison before they can get their hands on it, though.

• A new official Morrissey Twitter account has been registered to promote his new album, everyone apparently having forgotten what happened last time someone did that.

• Nick Jonas has released a new single, 'Find You', his first new music since last year's 'Last Year Was Complicated' album.

• Carly Rae Jepsen has released the video for new single 'Cut To The Feeling'.

• Björk has released the video for new single, 'The Gate'. Her new album is out later this year.

• Frightened Rabbit have announced a new EP, 'Recorded Songs', featuring three songs, 'Roadless', 'Rained On' and 'How It Gets In' (feat Julien Baker). "These three songs seemed to exist happily next to one another, so it made sense to place them on an EP instead of wedging them into an album on which they didn't fit", says band leader Scott Hutchinson. "These are not B-sides or bonus tracks. These are songs that still fill us with the same feelings that our albums can, and I'm happy that they now have a place to live".

• Sephine Llo has shared new track, 'Paper Thin'. Her debut album, 'I, Your Moon', is out on 27 Oct.

• Check out our weekly Spotify playlist of new music featured in the CMU Daily - updated every Friday.

BACK TO THE TOP OF THE BULLETIN

New music service offers free downloads with legal marijuana
A new service called Hi-Tunes has launched, bringing together marijuana and music downloads through the public's unending love of QR codes.

A spin-off from legal cannabis brand Caviar Gold's in-house record label, Hi-Tunes will sell pre-rolled joints that each come with a different QR code for the smoker to gain access to a free download. At least until Apple issues a cease and desist over that name.

"Hi-Tunes is music distribution through marijuana", explains co-founder Scott McKinley. "We are giving artists their own branded marijuana lines to push. If they do well with joints and participate with stores in our Washington market, we will put out more products on that artist's line, and we can get really creative and fun".

One of the artists who has been convinced that this is in some way a good idea, Yoshi Gish, says: "Scott approached me in 2016 with the concept of selling music with marijuana. I was looking for something new, just like this. Records, tapes and CDs are now so slow and bulky compared to our network, but now a simple scan on a smartphone can connect people with my music. I feel cannabis can influence many new avenues of distribution".

Taking this idea and running with it, McKinley adds: "Music used to sell sheet music, then records and record players, tapes and tape players, CDs and CD players, MP3 players - and now music has nothing to sell. We intend to change that by matching music with marijuana. Smoke this, listen to that. It's a beautiful concept".

Yes, using a product that is illegal in most places to distribute music in a format that is already in massive decline is definitely the solution to all of the record industry's problems. Those QR codes are just the icing on the cake.

BACK TO THE TOP OF THE BULLETIN