Save the Date: MusicBiz Law & Tech: Buyer Beware: What does the legal future hold for TikTok?

Save the date! September 25, 2020 at 1:35 pm ET Chris Castle will moderate a panel for the Music Business Association Entertainment & Technology Law Conference, an online event. Registration is required at the even site.

Panelists are Rick Lane, CEO, Iggy Ventures, LLC, Gwendolyn Seale, Attorney, Mike Tolleson & Associates, David Sterns, Partner, Sotos Class Actions, and Trent Teyema, Principal, Global Threat Management and former FBI Special Agent.

The panel will cover:

1.  TikTok Data Functionality:  Trent and Chris

2.  The TikTok Executive Orders:  Rick and Chris

3.  Copyright Infringement on TikTok: Chris and Gwen

4.  Copyright Infringement Class Actions in the US and Canada: Chris and David

Press Release: @SoundExchange Praises European Union Court Decision On Equal Treatment for Creators

Sep 08, 2020

In Affirming “National Treatment” Principle, European Court of Justice Rejects Unfair Treatment of Music Creators Based on Nationality

Washington, DC – September 8, 2020 – SoundExchange praised the European Court of Justice’s ruling ordering European Union countries to treat music creators equally regardless of their nationality, recognizing this as an important milestone in the fight to ensure music fairness.

The ECJ ruling stemmed from a case in Ireland regarding whether US music creators should be paid royalties when their music is played on Irish radio or in places such as restaurants or bars. Some countries deny foreign music creators royalties for the use of their work even though royalties are otherwise paid to artists who are nationals of those countries.

The ruling has broad implications for music creators around the world. By adopting the principle of “national treatment” – that a country should provide foreign entities the same benefits and protections as it would its own citizens – the ECJ is setting the stage for all artists to be paid royalties when their music is played on EU radio broadcasts and public performances.

“Today’s decision by the European Court of Justice reflects a growing global recognition that countries should treat all music creators the same, regardless of their nationality. The ECJ reaffirmed equal treatment as a fundamental principle of how nations engage with one another,” said SoundExchange President and CEO Michael Huppe.

“We appreciate the leadership of Ireland’s RAAP in advancing the cause of fairness within the global community of music creators. We urge EU member states to quickly follow suit so that ALL musicians and labels, from whatever territory, can be properly respected for the benefits they provide beyond their home country,” added Huppe.

The ruling comes as the United States and United Kingdom undertake negotiations on a post-Brexit trade agreement. A broad spectrum of organizations representing artists, publishers, musicians and managers have urged negotiators to insist that national treatment be included in the final US-UK trade agreement.

Unfair treatment denies US music creators an estimated $330 million in direct global royalty payments a year. For more information on the Fair Trade of Music campaign, please go to www.fairtradeofmusic.com.

@SGAWrites and Society of Composers & Lyricists Proposal for Secret Deals

[Editor Charlie sez: Here’s an excerpt from the important joint comment by the Songwriters Guild and the Society of Composers & Lyricists to the Copyright Office about how to address the previously secret deals between digital music services and publishers (called the “Negotiated Agreements”. Read the full comment here.].]

With potentially hundreds of millions of dollars in songwriter and composer royalties at stake now and in the future, and in light of the profound lack of transparency surrounding these issues, we believe that the following questions should be openly addressed, answered and acted upon by the USCO as expeditiously as possible: 

(i) What do these individual, Negotiated Agreements actually state? 

(ii) What efforts (global and US) were undertaken by the DSPs and/or the music publishers to identify the true owners of the musical compositions that were the source of the unclaimed/unmatched royalties purportedly being dealt with in the Negotiated Agreements? 

(iii) Were the sums received by music publishers under these Negotiated Agreements (whether purportedly associated with unclaimed/unmatched royalties or not) ever shared with music creators, and if so, how? Put another way, what efforts were made to determine how music creators should share in these revenues? and; 

(iv) How do the provisions of the MMA (such as those that require mandatory accrual and turnover by the DMPs to the MLC of ALL unclaimed/unmatched royalties so that they may be researched for matching –and failing that effort– distributed according to the statutory provisions that protect music creator rights) apply to these royalties and Negotiated Agreements. 

Not the Happiest Place on Earth: Kevin Mayer Resigns as TikTok CEO

Shanghai Disneyland it ain’t: According to the Financial Times (and according to HITS Magazine according to the Financial Times), former Disney honcho Kevin Mayer has resigned as CEO of TikTok. This should be a lesson to everyone who is negotiating favorable deals with tech companies only to jump ship–sometimes you can’t go home again.

According to FT, Mayer said:

“In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for. Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company,” Mr Mayer said in a letter to employees. “I understand that the role that I signed up for — including running TikTok globally — will look very different as a result of the US administration’s action to push for a sell off of the US business,” he added.

The smart money seems to be on an imminent sale (i.e., not waiting the full 90 days that they were given by the government), so Mayer is either getting out while the getting is good or may have been pushed out. Bear in mind–Bytedance CEO Zhang Yiming must be well aware that pre-acquisition review by the U.S. Government’s Committee on Foreign Investment (CFIUS) is a standard procedure which Bytedance chose not to pursue when it acquired Musical.ly.  Had Bytedance submitted the Musical.ly transaction to a pre-acquisition review, TikTok might still have a version of the current problem, but it would have to come from a less legally solid ground and the government probably would not be able to use CFIUS to force a sale.

But that would have required opening the kimono, so to speak, and that would have been out of character.

Another lesson to be learned about entertainment industry executives switching sides and going to work for big data lords is that you have no idea what they are really doing with the user data being scraped every minute of every day and stored who knows where. But you can bet on one thing–it’s pretty horrible stuff and it’s probably illegal. (TikTok already got caught and fined by the FTC for exploiting children in violation of U.S. law.) Not to mention that TikTok is a massive copyright infringer. Child advocates complained to FTC accusing TikTok of ignoring the prior FTC settlement, which should come as no surprise because it’s just too tempting and they get to scrape all that data. (Another reason why it made sense for TikTok to want a Disney person for the CEO spot since Disney also makes tons of money off of kids, so Mr. Mayer had all that “good” training.)

Given all of TikTok’s problems with scraping data on young children and other disgusting practices, it’s hard to believe that this government-mandated unwinding transaction (aka fire sale) is going to go down without a lot of transparency. Which does not bode well for the data lords because there are two things they will simply not tolerate: transparency and getting caught.

Also remember that Kevin Mayer comes from a background that on a certain level is very well suited to dealing with authoritarian regimes. But he was not ever subject to the laws of an actual authoritarian regime. Disney is a nasty place, but the executives don’t carry guns at the office if you know what I mean. Having looked into the abyss of the coming deluge, Mr. Mayer may well want to make a quick exit before getting pulled down the maelstrom. Remember, Chairman for Life Xi Jinping (call sign “Batman”) is good buddies with Crown Prince Mohammed bin Salman (call sign “Bonesaw”) (for example, Batman is helping Bonesaw build nukes). There’s no oxygen in that room for Kevin Mayer.

Bonesaw (L) and Batman (R)

It’s also worth noting that Mr. Mayer’s phraseology is quite reminiscent of another Bytedance executive who reconsidered his life after “reflection”. (Bytedance is the parent of TikTok.)

According to his Wikipedia page, Bytedance CEO Zhang Yiming understands what happens when you don’t toe the Party line:

ByteDance’s first app, Neihan Duanzi, was shut down in 2018 by the National Radio and Television Administration. In response, Zhang issued an apology stating that the app was “incommensurate with socialist core values“, that it had a “weak” implementation of Xi Jinping Thought, and promised that ByteDance would “further deepen cooperation” with the ruling Chinese Communist Party to better promote its policies.

So there’s a whole lot of reflecting going on at Not the Happiest Place on Earth. Good for Kevin Mayer for getting out. Hopefully, they’ll let him. What’s a few subpoenas among friends, anyway?

The Economist: The world’s most valuable resource is no longer oil, but data

[Editor Charlie sez: This post is an oldie but a goodie. It’s a topic that doesn’t get talked about anywhere near as much as it should. It’s particularly relevant to the TikTok and WeChat situation–the reason that the Chinese government is so interested in scraping data from these apps is the same reason that they build smart cities on the Belt & Road, and it’s the same reason that Willie Sutton robbed banks. Because that’s where the money is. You could say that the Chinese government intends to become the Saudi Arabia of data and you wouldn’t be wrong. If Facebook hasn’t already beat them to it. And remember–we all gave all of them the data for free.]

A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.

Read the post on The Economist (registration required)