Spotify questions whether mechanical royalties are even due on a stream
The ongoing debacle around the payment of mechanical royalties on streams in the US has taken a very interesting turn indeed, as Spotify responds to the latest litigation filed on this dispute by asking: what if no mechanical royalties are due on streams at all?

Let's recap. Copyright provides copyright owners with an assortment of controls over whatever content they own. The exact list of controls varies from country to country, but might commonly include all of the following: the reproduction control, the distribution control, the rental control, the adaption control, the performance control, the communication control and the making available control.

In music, and especially music publishing, a distinction is commonly made between the reproduction and distribution controls - often referred to as the 'mechanical rights' - and the performance, communication and making available controls - commonly referred to as the 'performing rights'. In some countries the music publishing sector licenses these different elements of the song copyright separately. So in the UK, PRS represents the performing rights, while MCPS and the music publishers control the mechanicals.

When you press a CD you exploit the mechanical rights but not the performing rights. When you play a song on the radio you exploit the performing rights but not the mechanical rights. But what about digital?

Copyright law doesn't usually state which controls the digital transfer of a song or recording exploits, though generally the music industry has treated a digital delivery as both a reproduction and a communication (or a reproduction and a making available) at the same time - ie both the mechanical and performing rights are exploited. Which means that, in the UK, if you operate a download or streaming platform, you need a licence from both MCPS (and/or the publishers) and PRS just to cover the song copyrights.

That said, the US - as is often the case - has done things differently. There, it was decided early on that a download only exploited the mechanical rights, while a personalised radio service like Pandora or iHeartRadio only exploited the performing rights. However, with on-demand streaming of the Spotify variety, it has generally been accepted that both the mechanical and performing rights are being exploited.

That, of course, has caused all sorts of hassle, because in the US - while there are collecting societies that can together provide an industry-wide blanket licence covering the performing rights in all songs (ie BMI, ASCAP, SESAC and GMR) - the same is not true for mechanical rights. And while there is actually a compulsory licence covering mechanicals - so the rates due to be paid are set by statute - streaming services still need to find the copyright owners of all the songs they stream, put said rights owners on notice and pay over any royalties due.

Spotify, like many streaming companies, hired the services of the Harry Fox Agency - the closest the US has to a mechanical rights collecting society - to administer mechanical royalties. But there are not insignificant gaps in the HFA database, resulting in not insignificant sums of mechanical royalties going unpaid. Which resulted in two major class action lawsuits being filed against Spotify, and a separate multi-million dollar mechanical rights settlement being negotiated between the digital firm and America's National Music Publishers Association.

As previously reported, despite reaching a $43.4 million settlement in relation to the 2015 class actions - which were ultimately merged into one - in July this year two new lawsuits were filed over unpaid Spotify mechanicals, by Bluewater Music Services and Bob Gaudio. The latter was the primary songwriter for Frankie Valli And The Four Seasons and is a music publisher in his own right.

Both lawsuits were highly critical of Spotify and all the previous efforts to solve the mechanical royalties problem. On the NMPA settlement, the Bluewater lawsuit stated that: "[it] did nothing to resolve the outstanding issues with the Spotify licensing and royalty payment system as the settlement allowed Spotify to continue to not pay accurately and did not require it to build any systems moving forward".

Spotify has now formally responded to the new lawsuits. The new legal filing takes particular umbrage to suggestions in the Bluewater/Guadio litigation that its business model has parallels to the original Napster and the other early file-sharing platforms. "Spotify bears no resemblance to Napster", or any other P2P file-sharing network, the digital firm's legal response insists. "Its business practices bear no resemblance to those piratical and unlawful peer-to-peer networks", it goes on. "And nor does its technology".

The new lawsuits include a "dishonest portrayal" of Spotify's business, this week's response states, before accusing the lawyers working for Bluewater and Guadio of making bombastic and unsubstantiated claims in a bid to persuade songwriters and publishers to reject the settlement already reached in the earlier mechanical royalty class action.

Which is all interesting enough, though the most significant part of Spotify's response to the new lawsuits is its questioning of whether or not a stream even exploits the mechanical rights of a song at all.

Spotify's lawyers begin by claiming that the Bluewater and Guadio lawsuits are high on bluster but low on specifics when it comes to the actual allegation of copyright infringement. The litigants would likely argue that it's a given that mechanical royalties are due whenever their songs are streamed, but Spotify's attorneys counter that it is for the plaintiff's to prove that is so.

Write Spotify's lawyers: "Plaintiffs allege that Spotify 'reproduce' and 'distribute' plaintiffs' works, thereby facilely checking the boxes to plead an infringement of the reproduction and distribution rights. But plaintiffs leave Spotify guessing as to what activity plaintiffs actually believe entails 'reproduction' or 'distribution'".

Bluewater and Guadio talk about 'streaming' in their lawsuits, the lawyers go on, but 'streams' aren't in themselves defined in copyright law, and therefore it's for the plaintiffs to describe how Spotify is reproducing and distributing their songs.

The streaming firm's legal filing then runs through the various bits of American case law that confirm personalised radio services like Pandora and iHeartRadio only exploit the performing rights. Why should that principle not still stand just because a stream is available on-demand rather than as a personalised stream?

Anticipating that Bluewater and Guadio might counter that Spotify routinely downloads copies of tracks to mobile devices - rather than just streaming them - so to allow offline listening, the streaming firm suggests that it would argue that functionality is covered by the American principle of fair use, and therefore no licence is required.

Of course lawyers working for Bluewater and Guadio might instead ask why Spotify has previously entered into settlements worth tens of millions of dollars over unpaid mechanicals if it thought no such royalties were ever due. In last year's disputes, Spotify's defence was generally that paying mechanicals in the US was ridiculously complex because of the lack of a relevant collecting society and/or industry-wide song rights database.

It's not clear how Spotify would respond to that perfectly legitimate question. Though it is true that the definition of a stream in terms of which copyright controls are exploited remains ambiguous - hence the dispute elsewhere in the world over whether or not recording artists should receive Performer ER royalties from the streaming services (they should if a stream exploits the basic communication control).

If this case was ever to get to court, any ruling could set a landmark precedent on the definition of a stream Stateside which - if it was ruled a stream only exploited the performing rights in the US - might kick start a big debate over the copyright status of streams in other territories too.

So, all in all, when it comes to legal disputes of the moment, this is definitely one to watch.

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Fyre Festival company forced into bankruptcy
The company behind the disastrous Fyre Festival has been put into bankruptcy by a US judge, according to the Wall Street Journal. Though it's Fyre Festival LLC currently facing the bankruptcy proceedings, rather than parent company Fyre Media Inc.

As much previously reported, the inaugural Fyre Festival promised ticket buyers a luxury experience in the Bahamas. But the event collapsed just as its customers were arriving on the island of Great Exuma, as it became clear that the venture's inept management weren't capable of delivering a basic festival, let alone the premium set up that had been promised.

A stack of lawsuits has since piled up against the companies behind the event, and the founders of Fyre Festival and the talent app it was designed to launch, Ja Rule and Billy McFarland. The latter also faces criminal charges for fraud.

The bankruptcy stems from one of the lawsuits. Three financial backers who together loaned Fyre Festival LLC $530,000 went legal in July, requesting that the company be declared bankrupt.

There's only an outside chance doing so will get the three financiers their money back - given the state of disarray at the asset-lite Fyre business - though placing the company in bankruptcy should shed some light on how all the money McFarland raised from investors and ticket-buyers got spent.

A lawyer working for the litigants, Robert Knuts, confirmed as much to the WSJ, telling the newspaper: "If the money was burned up in the Bahamas we're not going to be able to recover it but at least we'll know where it went".

A trustee is now likely to take control of Fyre Festival LLC, who will be empowered to go through the company's finances and paperwork, and to recover any monies if that's possible. Said trustee could also potentially force Fyre Media Inc into bankruptcy too.

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Flavor Flav sues Chuck D, Chuck D not too bothered
Flavor Flav has sued his Public Enemy cohort Chuck D and various business associates of the seminal hip hop group over allegedly unpaid monies. Though Chuck D says he still expects to be performing with his hype man at upcoming shows.

According to TMZ, Flav's lawsuit claims he is owed money relating to his cut of recording, publishing, live and merch income generated by Public Enemy. Among the disputed cash is a fee Flav reckons he is due from recent album 'Nothing Is Quick In The Desert' and money relating to a deal that resulted in Public Enemy action figures being sold.

Responding to the litigation, Chuck D told TMZ: "Flav has his rights, but took a wrong road on this". Insisting his bandmate was mainly annoyed with a third party merchandiser and changes in the way the music business operates, D reckoned "we will be [together] on a future stage", adding that Flav "will again be embarrassed admitting on stage about the way it spun out - it's always this way with him".

Stressing that he was up for sitting down and going through the various issues at some point, D concluded by saying that he nevertheless hoped that Flav "will be woke in rehearsal studio and paying attention to the work we and all the members do worldwide".

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Auddly announces alliances with PRS and ASCAP
Auddly, the project management platform for artists and songwriters which, among other things, aims to ensure that good copyright data enters the music industry each time new songs and tracks are created, has announced new alliances with collecting societies ASCAP and PRS For Music. The Swedish start-up - backed by Max Martin and Björn Ulvaeus - already had an alliance with Sweden's performing rights organisation STIM.

There has been much debate in recent years, of course, about the need for better music rights data, with accurate information about who wrote and published each and every song all the more important in the streaming age, where the royalties paid to copyright owners are very small but very frequent.

There are various data challenges for the music community to meet, including ensuring that songwriters are better at agreeing and logging how new song copyrights are being split between collaborators. It's that challenge that Auddly is seeking to address, simplifying the process of agreeing song splits and then logging that information with relevant collecting societies, which - on the songs side at least - have traditionally been the gate-keepers to copyright ownership data. Hence Auddly's alliances with the societies.

Confirming its support for the Auddly project, Karen Buse at UK collecting society PRS For Music said yesterday: "PRS For Music has been working with partners to develop new models that establish gold standard authoritative copyright data in a world of multi-territory licensing and high volume transaction processing, and we were delighted to support Auddly in this endeavour".

She went on: "Auddly has real potential in the revolution that is taking place in the industry, offering a new tool to address the data challenges that processing in the online era brings. It will ultimately enable the release of greater value for rightsholders, negating some of the effort involved in correcting errors and resolving disputes".

Meanwhile the boss of US collecting society ASCAP, Elizabeth Matthews, added: "ASCAP is working hard with several partners to help address the complex set of data challenges in the music industry. Auddly's focus on offering songwriters a tool to empower them to collect and authenticate song metadata is an important component in capturing composition ownership information as early as possible in the creative process".

Speaking for Auddly, its CEO Niclas Molinder told reporters: "The industry must work together to shape a transparent future with a functional data flow. We're excited to continue our mission in collaboration with these leading organisations in an ever-expanding network of the most prominent players, now well on our way to unlocking the future of a sustainable music industry to the benefit of all music creators".

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MegaUpload founder shows off new tech venture K.im
Kim Dotcom has this week been demoing his latest tech venture, which goes by the name of K.im and utilises an application called Bitcache.

Dotcom, of course, is still fighting extradition to the US where he faces criminal charges for copyright infringement relating to his long defunct former business MegaUpload.

Since the original MegaUpload file-transfer platform was shut down by the US authorities in 2012, Doctom has launched and then stepped back from two other related business ventures, file-transfer service Mega and direct-to-fan platform Baboom.

The new project - which began life under the name MegaUpload 2.0 - sort of combines those two concepts, allowing creators to digitally transfer their content to third parties in return for a micropayment enabled by Bitcache.

Though K.im won't actually host any content itself, and will instead integrate with other file-transfer and cloud-hosting services like Dropbox and Google Drive.

Talking about the new business, Dotcom told Torrentfreak: "I'm working for both sides. For the copyright holders and also for the people who what to pay for content but have been geo-blocked and then are forced to download for free".

Of course, like MegaUpload, the new service could be utilised by people illegally distributing other people's content, only this time not only would they be making music and movie files available without licence, they would be directly earning from their copyright infringement.

Though Dotcom says K.im will include a system akin to YouTube's Content ID so that rights owners can control third party distribution of their content and, if they wish, choose to monetise that third party delivery and take the money themselves.

Which is nice. Except the entertainment industry has something of a love/hate relationship with YouTube's Content ID, so that element of the new service won't necessarily placate the record companies and movie studios who are already suing Dotcom over the old MegaUpload business.

But, unperturbed, Dotcom adds that his new technology "is the holy grail of copyright enforcement. It is my gift to Hollywood, the movie studios, and everyone else".

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Radioplayer launches new 'smart radio' feed to enhance in-car listening
Radioplayer, the online platform operated by the UK radio industry - and also now licensed into other countries too - has announced the launch of a new 'smart radio' feed for internet-connected cars, and that the Audi/VW group are the first car-maker to sign up to use it.

The new tool builds on the existing Radioplayer Car project. A key feature of the Radioplayer Car application is that the software can automatically switch between the DAB and FM radio networks, and the internet, tapping whichever option is currently offering the strongest signal for the driver's radio station of choice.

The new feed will also pump out useful data from participating radio stations to power extra interactive features on in-car radio platforms, like search, personalised recommendations and catch up content.

Radioplayer MD Michael Hill says: "We've talked to dozens of car companies over the past few years. They're all interested in improving their car radio interfaces, but the question they ask most often is - where can we get a reliable feed of the radio industry's data? This project starts to answer that question... to help keep radio simple, sexy, and central to the dashboard".

Speaking for the car makers, Christian Winter from Audi's research and development team added: "It's great to see the radio industry working together to help us improve car radios. We'll be launching our cutting-edge new hybrid radio interface in the all-new Audi A8 this year, and Radioplayer data is powering that".

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Richard Branson's children to host Emeli Sandé and Ed Sheeran for Give A Home
The previously reported Give A Home project takes place later this month on 20 Sep. As previously reported, this is a venture from Amnesty International and Sofar Sounds that will see a thousand musicians perform in 300 homes in 60 countries on World Refugee Day, with a view to raising awareness of the ever worsening refugee crisis, and funds to support initiatives helping those forced to flee their homes.

In addition to the list of artists participating continuing to grow, this morning it was announced that the children of Sofar Sounds backer Richard Branson are also getting involved. Sam Branson will host Emeli Sandé's Give A Home performance at his own London home, while Holly Branson will play host to Ed Sheeran's set at a residence in Washington DC.

Confirming her involvement, Holly Branson told reporters this morning: "In creating a global campaign dedicated to shining a light on the ever-growing refugee crisis, people the world over are being united through a love of music and a passion for change. It's going to be an incredibly special night and I'm so thankful to have Ed there with me to perform".

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Beef Of The Week #370: Australia v Viagogo
I think it's fair to say that we can assume much of the music community is beefing with the least apologetic of the secondary ticketing platforms - so that'll be Viagogo - in any one given week. Except, I suppose, those members of the music community who are busy touting their own tickets via the resale platform. You know who you are!

But in the last year or so, more and more members of the political community also seem to be putting Viagogo onto their beef lists, as they become increasingly critical of secondary ticketing in general, and/or the secretive Switzerland-based Viagogo in particular.

That's been true in a number of countries, though this week mainly Australia, where not one but three government representatives spoke out against the ticket touting platform.

First the Australian Competition & Consumer Commission announced it was taking Viagogo to court over allegations it had made false or misleading representations, and has engaged in misleading or deceptive conduct. The regulator criticised the secondary ticketing firm for failing to disclose its massive 27.6% booking fee, for misleading consumers about how many tickets were still available for any one show, and for its dubious use of the word 'official' when buying its way to the top of Google searches.

Said ACCC Deputy Chair Delia Rickard: "The ACCC expects all ticket reselling websites to be clear and upfront about the fees they charge, the type of tickets they sell and the nature of their business".

But it wasn't only the ACCC having a good dig at Viagogo this week. At a state level two Australian ministers spoke out against the ticket resale company as well. In New South Wales, Minister For Better Regulation Matt Kean criticised the firm for failing to respond to his state's Fair Trading office, which was investigating various complaints filed by consumers.

Kean told reporters: "Complaints to date have included delayed delivery, events being cancelled, heavily marked-up prices, hidden fees, and failure to provide refunds. With most complaints relating to two or more tickets, [NSW] Fair Trading has estimated around 600 consumers have been ripped off at a cost of almost $130,000".

Meanwhile over in Queensland, the state's Attorney-General and Minister For Justice Yvette D'Ath told reporters: "The number of complaints received and the failure of Viagogo to attempt to resolve them is very concerning".

She went on: "Viagogo's conduct to date shows they have little interest in resolving consumer complaints and are unwilling to act in good faith if something goes wrong. We expect overseas online businesses to operate in a transparent manner and deal promptly with legitimate consumer complaints. Until such time as Viagogo improves its business practices, I urge consumers to think twice before dealing with them".

Ouch. Viagogo, of course, always deals with the steady flow of criticism against its business model - whether from the music or political community - in the same way: by simply ignoring everyone. As it did again this week. Though, given this wall of silence approach is getting all the more pathetic as the criticisms mount, maybe we should start just translating what the silence actually means. So, here goes.

Responding to the firm's Australian critics this week, an official spokesperson for Viagogo told reporters: "Fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off, fuck off".

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