Tag Archives: copyrights

Apple is seeking to cut license royalties paid to record labels

July 2, 2017 by Bruce Berman 0 Comments

While the share of revenue from streaming paid to record labels and recording artists is rising, Apple Inc., among the fairest licensees in on-line music, is now seeking to reduce record labels’ share of revenue from streaming.

Bloomberg reports that the record labels’ deal with Apple were expected to expire at the end of June, though they are likely to be extended if the parties can’t agree on new terms, according to the people who asked not to be identified.

“Part of negotiations is to revise the iPhone maker’s overall relationship with the music industry.”

The negotiations would bring number two Apple closer to the rate industry streaming leader Spotify Ltd. pays labels, and allow both sides to adjust to the new realities of the music industry. Streaming services have been a source of renewed hope following a decade of decline in the digital age.

Patent holders may believe there is an element of deja vu taking place in music content. Once rock solid copyrights are now subject to renegotiation and diminished revenue because of lost leverage due to lower valuations and easier access. A key will be finding what will make copyrights more relevant again, and creating more competition among streaming services for content.

More Optimistic

Record labels are now more optimistic about the future health of their industry, which grew 5.9 percent last year worldwide thanks to paid streaming services Spotify and Apple Music. They recently negotiated a new deal with Spotify further lowering their take from the service, provided Spotify’s growth continues.

“Apple initially overpaid to placate the labels,” says Bloomberg, “who were concerned Apple Music would cripple or cannibalize iTunes, a major source of revenue.”

For the full Bloomberg article, go here.

Sales vs. Streams 

Though online sales of music have plummeted over the past few years, they still account for 24 percent of sales in the U.S., according to the Recording Industry Association of America. Vinyl record sales also are up but they are still limited to a specialty audience, while CD sale are way down.

According to Billboard, streaming led the U.S. music industry to its first back-to-back yearly growth this millennium and in the first half of 2016 was the single ­highest source of revenue in the U.S. recorded-music industry, ­bringing in $1.61 billion. All three major labels — Universal, Sony and Warner — posted streaming-driven double-digit percent boosts in earnings throughout the year.

The Trichordist, a publication devoted to “Artists for an Ethical and Sustainable Internet,” reports that Spotify was paying .00521 back in 2014, two years later the aggregate net average per play has dropped to .00437 a reduction of 16%.

                     Apple Music generates 7% of all streams and 13% of revenue

YouTube now has their licensed, subscription service (formerly YouTube Red) represented in these numbers as opposed to the Artist Channel and Content ID numbers we used last time. Just looking at the new YouTube subscription service numbers isolated here, they generate over 21% of all licensed audio streams, but less than 4% of revenue! By comparison Apple Music generates 7% of all streams and 13% of revenue.

Apple sits in the sweet spot, generating the second largest amount of streaming revenue with a per stream rate .00735, nearly double what Spotify is paying. But, Spotify has a near monopoly on streaming market share dominating 63% of all streams and 69% of all streaming revenue.

The top 10 streamers account for 99% of all streaming revenue.

New Technology, New Values

IP rights holders, including those with patents and trademarks, need to think through where they fit in the current digital scheme of things, and how much should be expected in a world that finds not paying for others’ intellectual property increasingly acceptable.

For patent holders, the streaming/copyright battle could be the proverbial canary in the mine.

Image source: fortune.com

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Up to $600 billion in U.S. IP is stolen annually by foreigners, says report

June 1, 2017 by Bruce Berman 0 Comments

An IP Commission study finds that foreign sources, especially China, are responsible for the bulk U.S. theft.

Counterfeit goods, pirated software, and theft of trade secrets together represent a “systematic threat” to the US economy of between $225 billion and $600 billion annually, according to the findings of a 2017 research report from the bi-partisan IP Commission, The Theft of American Intellectual Property: Reassessments of the Challenge and United States Policy.

The massive theft of American IP—from companies and universities across the country, from U.S. labs to defense contractors, from banks to software companies—threatens the nation’s security, says the report.

The research, and update of a 2013 report, is the work of the bi-partisan IP Commission and was published by the National Bureau of Asian Research (NBR).  NBR conducts advanced independent research on strategic, political, economic and other issues affecting U.S. relations with Asia, including China and Russia.

The Intangible Investor in June’s IAM features a full perspective on the report, “Foreign sources responsible for most IP theft.” Subscribers can find a copy here.

Pioneering Research

Kudos to the IP Commission for establishing a beachhead in the global war to combat IP theft and cyber crime. Its pioneering research provides American and other lawmakers, businesses, investors and the public, with data about IP infringement that are cannot be ignored.

However, the report falls short. Identifying and stopping infringement, including cyber-espionage, should not be restricted to sources outside of the U.S.  The IP Commission’s research zeros in on foreign counterfeit, trade secret and copyright violations. It does not account for increasing domestic patent infringement and copyright abuses, which have profoundly affected the software, recording and other industries, and impacted U.S. jobs.

To be fair, this IP Commission’s focus is foreign IP threats, and it is a daunting task to estimate the financial impact of domestic invention theft on U.S. businesses – not just what gets reported in the press about settlements and licenses.

But speaking to a range of IP attorneys and holders, it becomes clear that much IP abuse comes from domestic IT businesses, Internet providers, streaming services, individuals and others that know they are unlikely to be caught infringing rights or will have to pay for a license. By the IP Commissions own admission, IP theft is less benign than it might appear.

The theft of American IP is not just the ‘greatest transfer of wealth in human history,’ as General Keith Alexander put it; IP theft undercuts the primary competitive advantage of American business—the capacity for innovation.

Inspiration and a Challenge

The IP Commission’s timely report is a challenge to IP holders, and lawmakers alike who are concerned about innovation and commerce. It is a call to examine the source, type, and level of domestic IP rights theft, including patents, on SMEs, inventors, and universities, and how they affect the economy now and are likely to in the future.

The full 24-page update, The Theft of American Intellectual Property: Reassessments of the Challenge of the United States Policy, is well worth reading. Visit  www.ipcommission.org.

The original 2013 report, Report of the Commission on the Theft of American Intellectual Property, is also available and useful for comparison. 

Image source: ipcommission.org; linkedin.com

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Trade in counterfeit & pirated goods is $.5 trillion – 2.5% of all imports

February 7, 2017 by Bruce Berman 0 Comments

“Fakes,” or counterfeit products, are a growing menace that deplete resources, threaten jobs and endanger lives. 

A report compiled by the Organization for Economic Cooperation and Development (OECD) says that imports of counterfeit and pirated goods are worth nearly half a trillion dollars a year, or around 2.5% of global imports. That is about the entire GDP of Austria, or of Ireland and the Czech Republic combined.

The U.S., Italian and French brands have been the hardest hit, and “many of the proceeds going to organised crime.” The 2016 report was co-authored by the EU’s Intellectual Property Office. China also is in the top 12 (see graph below).

Five-percent are Fakes

“Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact” puts the value of imported fake goods worldwide at $461 billion in 2013, compared with total imports in world trade of $17.9 trillion.

Up to 5% of goods imported into the European Union are fakes, the report stated. Most originate in middle-income or emerging countries, with China the top producer.

“Transit points include economies with very weak governance and having a strong presence of organized crime or even terrorist networks (e.g. Afghanistan or Syria).”

nationshit

“Given the fundamental economic importance of IP, counterfeiting and piracy must be directly targeted as a threat to sustainable IP-based business models,” concludes the OECD report.

China may be making great strides in domestic patent protection (see China is Poised to Overtake the U.S. as the Leading Patent System) with low injunction hurdles and high respect for foreign-held rights, but as of 2013, it was responsible for almost two-thirds of global counterfeits, based on the percent of seizures documented.

Missing: Content and Invention Theft

Ironically, the Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, does not mention content sharing or copying, copyright violations, as a global threat.

It also does not address the economic impact of products being falsely sold as original that are infringing other businesses’ patents.

fakeoriginators

For those interested, the 2017 OECD Global Anti-Corruption and Integrity Forum will be held this year in Paris, March 30-31. For more information go here.

 

Image source: OECD report

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‘Innocent’ IP theft is widely accepted and dangerously viral – Why?

January 26, 2017 by Bruce Berman 0 Comments

So widespread is IP abuse that it no longer is regarded as a crime by many of the people committing it or authorities entrusted to preventing it. 

What has happened to change law-abiding citizens and honest businesses into serial patent, copyright and trademark infringers?

Start with geometric increases in information and speed. Putting enormous computing (and copying) power in the hands of billions of people and tens of thousands of businesses has made access seamless. What’s theirs often feels like mine, even when it is not.

26069006_sA heightened sense of entitlement is another factor. People want their Rolex or Gucci bag, or latest Adele song, and they want it now, for a fraction of the actual cost if not for free. (The same could be said of the latest mobile phone chip.)

Many businesses believe that even if they did not invent a particular product feature, they definitely could have, and why should they pay for it if no one is forcing them to. Besides, someone has to identify infringement and prove it in court. Good luck with that.

Unusual Bond

Consumers and companies have an unusual bond: they know that they can freely infringe without much fear of retribution. And you know what, they think — “everyone seems to be doing it lately.”

A third but not final reason is suspicion of IP rights and owners. Patents, copyrights, trademarks all are government-issued, lawyer-administered and business-owned rights. The average person will never own an IP right and believes that benefiting from them is for the privileged or wealthy. They are only partially right. No one – not the lawmakers, not federal agencies, not the police, the schools or businesses or community leaders – has done a very good job of explaining what’s in IP for them?

Fueling the Rise in IP Abuse

“When theft is no crime” in the March IAM magazine, the Intangible Investor looks at the rise in IP abuse and what is fueling it. IAM subscribers can go here for the full article.

Free riding comes in many shapes and sizes. It is economically a threat and constantly growing. It has become so much a part of American fabric that millions of people, businesses and community leaders are not even aware that it is taking place. IP theft may seem like a victimless crime, but data shows it is not.

The Department of Commerce’s 2016 update, “Intellectual Property and the US Economy”, reports that IP-intensive industries supported 45.5 million jobs and contributed $6.6 trillion in value added, equivalent to free-riding-final-2-768x34638.2% of US gross domestic product. These impressive results for IP holders are far from guaranteed if IP protections can be easily ignored. On the down side counterfeits, patent infringement music file sharing are way up.

Re-writing the Rules

Whether they acknowledge it or not, some companies and individuals are attempting to rewrite the property rule-book, or, at least, ignore it as long as they can. The impact may not be that readily apparent at first, but it will eventually be widely felt: by musicians, authors, inventors, investors, small businesses, consumers and companies selling products from automobile brake parts to pharmaceuticals and luxury goods – along with their employees. 

Lack of awareness plays a role in ignoring IP rights, but there may be something deeper and more insidious going on: distrust of authority and frustration with government and laws. Some of this anger has been orchestrated by anti-patent lobbyists.

Routine acceptance of IP theft also reflects the growing antipathy towards so-called ‘elites’, which led to Brexit and the election of Donald Trump. Why IP holders don’t deserve exclusivity and land owners do is rooted in how the culture views IP rights and holders, as much as the difficulty accepting their value.

People need to be reminded that with IP rights, not every restriction is an obstacle.

________

I will be announcing a non-profit organization in a few weeks dedicated to addressing the lack of IP awareness and increasing hostility to rights. Watch IP CloseUp for more information.

Image source: digitalguardian.com; theCenterforIPUnderstanding

 

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Gov’t study of economic impact of patent infringement is needed ASAP, experts say

December 13, 2016 by Bruce Berman 0 Comments

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

____________________

“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

_________________

“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

_________________

“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

___________________

 

Image source: ltrdigitalgroup.com

 

 

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Licensing deal with IP rights group ends YouTube blackout in Germany – “no more red faces”

November 14, 2016 by Bruce Berman 0 Comments

Tens of thousands of recording artists and musicians in Germany will be receiving payment for their content under the terms of agreement struck last week between YouTube and GEMA, Germany’s leading royalty collection group.

The deal will end a seven-year YouTube ban in Germany, which had previously blocked access to the streaming site over non-payment of performance royalties. It is unclear if the pact is a harbinger of things to come in the ongoing battle between streaming sites, search engines and content providers, such as musicians, or if it includes published works, like books and photographs.

Resolution of the dispute, reports The New York Times, comes “with European officials revamping the region’s copyright rules to give more power to music labels, publishers and other content producers over the likes of Google, which owns YouTube, and Facebook.”

“We remained true to our position that authors should also get a fair remuneration in the digital age, despite the resistance we met,” Harald Heker, GEMA’s chief executive, said in a statement. He added that the agreement covered future royalties, as well as those accrued over the last seven years.

Blocking alert that German YouTube users will no longer see

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“This is a win for music artists around the world, enabling them to reach new and existing fans in Germany, while also earning money from the advertising on their videos,” YouTube’s Christophe Muller told TorrentFreak, a publication dedicated to bringing the latest news about copyright, privacy, and everything related to filesharing.

TorrentFreak also reports that “Increasingly, music groups are criticizing YouTube for ‘profiting’ from the hard work of artists without paying proper compensations, so it’s not unlikely that similar deals will follow in other countries.”

A prominent L.A.-based producer told IP CloseUp that the deal (which deal? The deals in other countries? “that such deals in other countries”) “appears to be progress,” but Google (which owns YouTube) is too big for the little record companies to fight. “Whenever they try collective action, Google runs to the anti trust authorities.”

Agreement that the Internet has been bad for the music business is not universal. Factors that influence “free” distribution depend on a label’s size, the popularity of its artists and their point-of-view about how best to generate income. Sony has said that impeding YouTube costs the music industry millions of dollars.

One of the people who embraces this positive view of streaming is Edgar Berger, Sony Music’s CEO of international business. In a recent interview he stressed the importance of the Internet, while noting that the increase in Internet sales almost makes up for the decline in physical sales. See a summary of the interview, here.

“There is absolutely nothing to complain about. The Internet is a great stroke of luck for the music industry, or better: the Internet is a blessing for us,” Berger said.

No More Red Faces

“The [GEMA] deal means YouTube will unblock thousands of clips in Germany for the first time in seven years,” wrote Bloomberg News. “When German music fans in the past tried to watch videos of their favorite songs they only got an youtube-sad-face-300x159error message showing a red YouTube sad face with a line saying the content was banned from the portal for copyright reasons.”

The parties did not disclose financial details of the agreement. YouTube has, in the past, struck similar deals with dozens of groups around the world, including one in 2009 with the U.K.’s PRS for Music.

The groups also did not say if YouTube’s familiar sad red face would be replaced with a happy green one.

Image source: theheureka.com

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An AT&T-Time Warner deal may affect the value of more than premium content & copyrights

October 25, 2016 by Bruce Berman 0 Comments

The $85.4 billion buyout of Time Warner Corporation (TWC) by AT&T, if it goes through, is a good omen for the value of content providers, like HBO and CNN.

It is unclear, however, how the ambitious acquisition will affect less well-branded copyright holders like independent film productions, TV studios and recording artists dependent on digital distribution.

If content is now truly king, the tide may rise broadly, and rather rapidly.

If nothing else, the proposed acquisition conveys a heightened respect for content – and willingness to pay premium for it – that Google, its YouTube subsidiary and others have heretofore been reluctant to acknowledge.

“The deal is probably neutral for copyrights, but it has the potential to be positive,” one purveyor of music and the content told me from Los Angeles. “The combined entities will still be about half the size of Google, and will be saddled with $120 billion in debt. With those numbers, AT&T’s 5.1% dividend may longer be a given.”

Time Warner is the world’s largest diversified media company.

AT&T’s $107.50 per share offer is 35% premium over its market value. You have to wonder what the transaction might do to secondary content brands like indie labels and movie producers. It’s not just about having a great lineup, but about the particular content that Internet provides believe audiences will crave, which is currently in flux.

AT&T is betting that premium content will matter deeply. Other streaming services are not so certain.

The Future of TV & Broadband

If all of this sounds a bit speculative,” reported The New York Times, “that’s because it is. What this deal actually symbolizes is that the future of television is increasingly going to be built on lots of bold, possibly speculative, experiments.”

Recent acquisitions by Verizon included AOL and Yahoo, which some view as content. I tend to believe that content protected under copyright, and premium content (HBO, CNN) will certainly benefit.

time-warner-1-1024x390

This chart represents TWC prior to the sale of  AOL to Verizon.

 

Bad Business or Goog Timing?

Is the AT&T-TWC deal inherently anti-competitive or merely timely recognition of undervalued assets? After the deal will all content delivery continue to be treated fairly on the AT&T network so far as delivery speeds are concerned?

Will Disney, Comcast – which had acquired NBC-Universal – and Fox move swiftly to shore up their own content?  It’s too soon to tell, but there may be more pressure on Google to become more proprietary with regard to content (and maybe patents) than it has in the past.

It also will be interesting to see if there is a ripple effect on streaming content like music with services like iTunes, Pandora and Spotify.

A list of assets owned by TWC can be found here.

Image source: cnn.com; valuewalk.com

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No Monkey Business: Animal selfie raises serious questions about copyright ownership

August 29, 2016 by Bruce Berman 0 Comments

Who is the legitimate owner of a selfie taken by a monkey, but positioned by a nature photographer? Is it the intellectual property of the animal or the photog?

A novel law suit filed recently by PETA (People for Ethical Treatment of Animals), the animal rights advocates, asserts that a macaque monkey, Naruto, should be declared the author of a selfie, not the photographer, David Slater, who set up the shot and had included it in a book. The suit demands that the monkey receive any proceeds generated by a now-famous 2011 photograph.

PETA is seeking a court order, through a suit filed in federal district court in San Francisco, to allow it to administer all proceeds from the photos for the benefit of the six-year-old Naruto, and other crested macaques living in a reserve on the Indonesian island of Sulawesi.

The photos were taken during a 2011 trip to Sulawesi by British nature photographer Slater. Through San Francisco-based self-publishing company Blurb, reports The Daily Mail, he has published a book called Wildlife Personalities that includes the ‘monkey selfie’ photos.

However, the photos have been widely distributed elsewhere by outlets, including Wikipedia, reports the _85730600_monkey2
news outlet, “which contend that no one owns the copyright to the images because they were taken by an animal, not a person.” 

Monkey See

“‘The facts are that I was the intellect behind the photos, I set the whole thing up,'” Slater said in an email. “‘A monkey only pressed a button of a camera set up on a tripod – a tripod I positioned and held throughout the shoot.’

“‘I sincerely wish my 5-year-old daughter to be able to be proud of her father and inherit my copyrights so that she can make my work into an asset and inheritance and go to university. ‘I have very little else to offer her.'”

Last year, the US Copyright Office issued an updated compendium of its policies, including a section stipulating that it would register copyrights only for works produced by human beings.

It specified that works produced by animals, whether a photo taken by a monkey or a mural painted by an elephant, would not qualify.

Not Species-Specific

However, Jeffrey Kerr, a lawyer with PETA, said the copyright office policy ‘is only an opinion,’ and the US Copyright Act itself does not contain language limiting copyrights to humans.

‘The act grants copyright to authors of original works, with no limit on species,’ Kerr said. ‘Copyright law is clear: It’s not the person who owns the camera, it’s the being who took the photograph.’

If the court rules in Naruto’s favor, reports Quartz, PETA would manage the copyright of the photos on behalf of Naruto and license them for commercial use. “All royalties earned from these pictures would be specifically used for Naruto’s benefit and that of his extended family, who are being impacted by encroaching human development.” PETA is not asking for any compensation.

Animals can be the authors of valuable works of art, and there is a market for art created by animals. In fact, many zoos raise money by selling paintings created by the animals—just recently, the Lincoln Children’s Zoo in Nebraska sold 116 pieces of art in its semi-annual Animal Art event.

Survival of the Fittest

Now, if we can just treat inventors regarding their IP rights as fairly as PETA wishes to treat monkeys, their (inventors’) survival would be less in doubt.    

 

Image source: dailymail.co.uk, via AP; photo credit: Naruto 

 

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Taylor Swift assists recording artists, Apple Music, and (even) herself

July 27, 2016 by Bruce Berman 0 Comments

Taylor Swift, a pop star with sufficient power to move mountains, succeeded in moving an equally resolute object last year: Apple Music’s position on paying royalties to recording artists. 

A year later it is unclear if was the musicians, Apple, or Swift who benefited the most.

A Wall Street Journal op-ed last week reminded us that there are more important things to cover other than Kardashian/West war of words that the combatants and media are jointly milking.

“In Support of Taylor Swift, Economist,“ Hong Kong based op-ed writer David Feith says,”Never mind the feud with Kanye West, the pop star has waged more important fights defending the value of intellectual property.”

Taylor-Swift-Apple-642x3611

The Top Earner

Forbes ranks Swift as the number one celebrity artist in 2016 with $170M in earnings. According to the magazine she is in the top 100 of self-made women and power women.

Swift has sought to champion the IP rights of recording artists by using her star power to assure that they (not she) are paid. That’s admirable, for sure, as the streaming services, Pandora, Spotify and YouTube, to name a few, have built valuable businesses without paying their fare share of artists royalties. (YouTube has been valued by Bank of America at $80 billion.)

But maybe Swift was at least somewhat motivated by dollars, not sense.

After outing Apple Music for refusing to pay artist royalties in a now infamous tumblr post, Swift wound up receiving not one but two spots from the company, promoting their new streaming service. I guess they were more interested in thanking her for the exposure than punishing her for the dis. Both ads went viral generating huge attention for Apple Music and her. Good timing, I guess.

Here is the latest Taylor Swift Apple Music ad, which generated more hits than most TV series (via Fortune).

Below is the original tumblr piece in which Swift challenged Apple – and the stream industry – to change their music rights policy. Swift won more than the argument, and so did Apple. The argument is well-stated:

http://taylorswift.tumblr.com/post/122071902085/to-apple-love-taylor

 Free-riders come in many shapes and sizes

“This may be the ‘information wants to be free’ era, when online content is glibly swiped by millions who would never dream of shoplifting,” said WSJ’s Feith, “but Ms. Swift has a deep appreciation for the profit motive and the fruits it bestows on society.

“Ms. Swift’s most ambitious [IP] crusade may be in China,” writes WSJ’s Feith, “where she has launched branded clothing lines with special anti-piracy mechanisms to combat rampant counterfeiting on e-commerce sites like Alibaba’s Taobao.”

Swift has been known to trademark not song or titles, but phrases from songs which can be used to build her brands and fashion portfolio.

*****

I hope that Taylor Swift invents something soon, so she can bring her loyal following and keen business instincts to patents and patent holders. They sure could use them. 

Image source: appadvice.com 

 

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Angry musicians are pushing back on royalties – Will inventors follow?

November 5, 2015 by Bruce Berman 0 Comments

Song writers may have something to teach inventors when it comes to getting a fair share for their intellectual property rights, or not.  

Confusion faced by writers and performers in the recording industry over “legal” downloading of copyrighted work by aggregators like Spotify, Pandora and YouTube have forced a range of musicians to question the logic of an overly complex and chronically opaque royalty payment system.

With most music streaming services using copyrighted content for free, or almost free, confusion has given way to anger and frustration.

Who Said Fair? 

The primary issue right now for many copyright holders is not a matter of the legitimacy of their rights, but how much is fair payment for frequent use? In at least one important way, song writers are way ahead of inventors, who hold more encompassing, but frequently uncertain, patent rights. For them, the first hurdle is whether their invention is innovative in the eyes of the changing law — a challenge, even under the best of circumstances. Then, it needs to be determined if the invention is indeed being used (infringed) and by whom, and how much they should be compensated. (Did you think innovation could be so much fun?)

There are reasons why patent licensing has become synonymous with costly litigation. With high-tech inventions today, virtually no one takes a license unless they are forced to. Why should they? Exactly who are the bad actors is not always clear.

Inventors and patent holders can learn from the tension between recording artists and their intermediaries (publishers and record labels), and distributors (e.g. Spotify). To be fair, most of these streaming services are not very profitable. Still, they are building bold business model and creating value on the backs of musicians and publishers. Both song writers and inventors (or those assigned to hold their patents) do not have much negotiating leverage when it comes to 02byrne-master675collecting a fair share of royalties. For patent holders attempting to out-license for revenue, it is frequently sue or get nothing at all – and that’s no bargaining position.

Historically, there has been little transparency regarding the deals made to use copyrighted songs, and today it is no different. There are few standards and the information provided about deals is asymmetric. Basically, the pricing is what ever the distribution channel (and the labels) can get away with, and they both no longer see a much of need for publishers, who they would prefer to cut out. Headliners have more leverage and can benefit from free exposure (more concerts, merchandise licensing) in ways that less well-known artists cannot.

The Business, as Usual

A recent New York Times article, “Music Artists Take on the Business, Calling for Change,” acknowledged that more musicians are fed up about their participation in benefits of the new distribution technologies and have begun to demand a better accounting. It helped when Taylor Swift refused to take no royalties during a three-month trial period on Apple Radio’s. (Would Apple allow customers to use a new iPhone for free until they deemed it worth purchasing? Oh, you say, doesn’t Apple have an R&D investment and the copyright holders are just pulling tunes out of the air?)

Ms. Swift was probably thinking more about her own interests, but they affected the entire industry, and Apple got the message.

“‘The support that we’re seeing, in terms of the range and number of artists, whether it’s from somebody who’s a working-class musician to somebody who’s very successful, it’s unprecedented,’ said Ted Kalo, the executive director of MusicFirst, a lobbying coalition that includes record labels and musicians’ groups and that helped organize the social media campaign.

“The economics behind downloads is relatively simple: Typically about 70 percent of a song’s retail price goes to a record company, which then pays its musicians according to its contracts. But with streaming, the system is complex and often opaque, as became apparent in May, when an outdated licensing contract between Sony and Spotify was leaked online, showing the elaborate formulas used in computing streaming rates.

“Public relations missteps in the early 2000s kept many musicians from speaking out about economic issues, artists and executives said. Those include the music industry’s lawsuits against thousands of fans for online file-sharing, and the pillorying that the band Metallica received after it sued Napster for copyright infringement. But the shift toward streaming in recent years has prompted many musicians to investigate the changes in the business…”

A Bottle of Wine

“New businesses are being built on this cheap almost free use of copyrights,” said Steve Loeb, a producer of more a dozen albums for Riot, a heavy metal band. “It’s sad but has always been this way. Now we’re all Black blues artists, if you catch the drift. They used to pay those guys with a bottle of wine – now they pay all of us that way.”

“Most artists don’t have the intellect to understand what is going on affects their future and music quality,” continues Loeb, who closed his successful Greene St. Recording in 2001. “Inventors don’t appear to be much smarter when it comes to how their work is used. Royalty payments are a complex process that’s become even more complicated with new technology, and few are willing spend the time to understand it.”

Pandora’s market value is about $3 billion; Spotify’s is over $8 billion. Bank of America analyst Justin Post believes that YouTube’s value on its own is about $70 billion. 

Black Box 

In a Times op-ed, “Open the Music Industry’s Black Box,” David Bryne, a musician and author, said

“Everyone should be celebrating — but many of us who create, perform and record music are not. Tales of popular artists (as popular as
02artists-web4-articleLargePharrell Williams) who received paltry royalty checks for songs that streamed thousands or even millions of times (like “Happy”) on Pandora or Spotify are common. Obviously, the situation for less-well-known artists is much more dire. For them, making a living in this new musical landscape seems impossible… Perhaps the biggest problem artists face today is that lack of transparency.

“Some of these ideas regarding openness are radical — ‘disruptive’ is the word Silicon Valley might use — but that’s what’s needed. It’s not just about the labels either. By opening the Black Box, the whole music industry, all of it, can flourish. There is a rising tide of dissatisfaction, but we can work together to make fundamental changes that will be good for all.”

More Transparency

Patent holders are frustrated with the uncertainly of issued patents, whose validity must be proven repeatedly before review boards, in the courts and in appeals.

Will they respond as an increasing number of musical artists have and demand more certainty and transparency?

It’s important to remember that what makes patent licensing easier for some, makes it more expensive for others. That’s why those well-situated on the corner of technology and brand are compelled to determine what is truly innovative and its value before others do.

Patent holders: Both of the provocative articles above are worth reading.

Image source: nyt.com

 

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Digital Downloading Embodies a Growing Culture of IP Piracy

October 5, 2012 by Bruce Berman 2 Comments

Attitude Toward Content Theft Fuels Free-Riding on Others’ Inventions & Counterfeits of Branded Products

The ease of downloading copyrighted content on a computer or smart phone is at the core of an explosion of IP abuse that also impacts branded goods and patented inventions.

Record labels, film studios and publishing houses are among those most directly affected by copyright infringement on the Internet. But musicians, authors, luxury brands and inventors, and thousands of industry jobs and businesses, also are among those feeling the impact of a rapidly growing culture of free-riders. More than 50 pirate political parties and groups in the U.S. and Europe are a symptom of a much greater disease.

Theft of IP rights has not only become acceptable in some circles, it has become fashionable. It feeds off of the ease of digital file sharing and knock-offs, and affects struggling artists and inventors, as well as businesses of all sizes.

The Court of Public Opinion

In the court of public opinion copyrights and brands have fared poorly. Theft of digitally rendered content and counterfeits is easily achieved and difficult to stop. Patents have not done much better. A cultural disdain for IP rights has emerged, facilitated in part by businesses that stand to profit from free content, look-alike goods and others’ inventions, and end users who don’t give a damn.

“He’s No Robin Hood,” my Intangible Investor column appearing in the current (November) IAM, looks at the broader implications of the acceptance of file sharing. Some excerpts from the article:

“File sharing promotes a culture of piracy that makes it more acceptable to steal branded goods and inventions, as well as content. Big daddy Kim Dotcom is sticking it to all IP holders.    

“Exhibit A for the legitimization of IP theft is Kim Dotcom Schmitz. Dotcom has slyly built himself into a modern folk hero, replete with a mellow “gangsta” style and outsider reputation. (He is a champion gamer and car racer.)

“This larger-than-life, medallion-wearing bad boy looks like he is deserving of a modest scolding and a heath club membership, not 20 years behind bars. That’s what he and his supporters would like you to believe. In fact, his illegal businesses has generated more than 66 million illegal subscribers and has helped to make file sharing acceptable and dismantle the recording industry.”

“Megaupload and the twilight of copyright” by Roger Parloff in Fortune is an extremely timely article that helps to put file sharing into criminal perspective. It illustrates how in the space of twenty years we went from a society where copyright served the needs of emerging artists and authors, as well as businesses, to one where IP is perceived to impede technological innovation and freedom of expression.

This article truly is a must read for anyone interested new ideas or IP rights. It also serves as a wake-up call for patent holders who expect their rights to be upheld.  

Illustration source: techwireasia.com; fortune.com 

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Occupy IP: New Economy Businesses Clash with Old

January 23, 2012 by Bruce Berman 1 Comment

It May be Too Much, Too Late for Content Providers Finally Trying to Tame the Internet; a Fresh Approach is Needed

[The following appears as an “Insider Views” commentary on Intellectual Property Watch]

Have copyright holders become their own worst enemies?

Poorly drafted bills in the U.S. Senate and Congress designed to curb music and other Internet piracy, in some cases by holding information aggregators who enable it responsible, is fueling a new wave of anger towards lawmakers and copyright holders.

SOPA, Stop Online Piracy Act, and PIPA, The Protect IP Act, will need to be heavily reworked if they are to pass and be accepted.

Part of the problem is that for the past 20 years or so the music industry failed to successfully enforce its copyrights on the Internet and curb piracy from Asia. Now, experiencing the desperation of a dying industry, it believes it must do something. They reason that even the Wild West was tamed, eventually. A generation of file-sharing listeners and content users does not agree. There is fear that any intervention in the Internet or restriction is a potential threat to individual freedoms and will promote spying and stifle innovation. Many believe that controls do not have to play out that way.

In my not-so-humble opinion the Internet — and social networks in particular– can and should have some borders. Rampant abuses, not just to copyright holders but individuals’ personal information, have been swept under the rug. It’s difficult to say what form the oversight should take, or how much is onerous, but the current situation is dangerous and too important to ignore.

The film and book publishing industries are not far behind the foibles of the music business. Google has tried to post all books and force blanket agreements on authors, great for readers and even some writers, but not for those who live by book sales. For better or worse content-capturing or file sharing has become to many an acceptable way of life, and piracy is now simply the new technology doing its digital thing — not.

Enablers or Pirates?

Some say content providers need new business models that incorporate innovative technologies and the current culture. I’m not so sure the problem is that easily resolved. Sweden-based Spotify, for example, relies on copyrighted content deals negotiated directly with the labels and some artists. Not all agree that is they best place or deal for their content. Eventually, they may not have much of a choice. The major recording artists at least may have some bargaining leverage, the lesser names not. The French, ironically, have been tougher on file sharing than most countries, possibly because of its history of  respect for artists and innovators.

Part of the problem in the U.S. is that (1) it is the largest content provider, (2) expectations have changed from years of failed enforcement, (3) content can be expensive, and (4) today, well established, new economy information aggregators and social networks are o.k. bending privacy and ownership rules. (Their advertisers don’t seem to mind.)

Google, Facebook, YouTube and other business models depend on compelling but highly accessible content to prosper. So, to put it crudely, it’s sort of Hollywood (content providers) vs. Silicon Valley (device and distribution owners).

While there have been attempts to work together, the fundamental differences between old and new economy businesses have kept them apart. A few artists may benefit from the free Internet visibility which may support their (paid) performances or what they can sell or license; most will not.

*   *   *

Useful Background:

Below are links to several stories and a video which help to put into context the controversy over Internet piracy and regulation. Caveat: They provide good perspective but should be digested with a hefty grain of salt.

Remember CNN-Money is owned by content provider Time Warner and YouTube distributed is owned by Google. Wikipedia has a somewhat similar perspective to Google.

– Short video: “What Is SOPA?”

_____________________________________________

– Anti-Regulation: The Wikipedia perspective.

– Story from CNN-Money: “SOPA Explained: What it is and Why it Matters”

– From the Wall Street Journal: “What is SOPA Anyway? A Guide to Understanding the Online Piracy Bill”

– Astute Op-Ed (please read this): “It’s a mistake to think the danger is from big media choking the Internet.”

Image sources:
http://www.cwu.edu/~ryanma/piratecopyright.html
http://redd4a3.wordpress.com/2011/08/08/intellectual-property-and-my-copyright-stance-and-policies/

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