Oracle pushed back Wednesday against Google’s claims that the survival of software innovation rests on their long-running copyright battle, arguing an Oracle victory will ensure software makers enjoy copyright protections.
Why it matters: The Supreme Court is considering key questions related to software copyright and fair use — with billions of dollars in damages in the balance.
This is one of the most astonishing lower lows, even for news from the Goolag. According to Oracle’s head of government affairs:
Before we turn to the more than 30 amicus briefs filed in support of Oracle at the Supreme Court, we are obligated to highlight the conduct of Google’s head of Global Affairs and Chief Legal Officer, Kent Walker. Over the past few months, Walker led a coercion campaign against companies and organizations that were likely to file on Oracle’s behalf to persuade them to stay silent. We are aware of more than half a dozen contacts by Mr. Walker (or his representatives) to likely amici, but we probably only heard of a small piece of his efforts.
Amazing. Read the post on Oracle’s site.
[Editor Charlie sez: The Oracle v. Google case is going to be the most important copyright case in a very, very long time. Oracle won the case on appeal twice and Google got the Supreme Court to review. The case is about two issues being copyright in software and whether Google’s taking of Oracle’s code is fair use and permissionless innovation. Because of the fair use argument, this is not just some battle of tech companies because no one knows better than us that Google will take any win on fair use and push it even farther.
So all artists, songwriters, photographers, film makers, authors–all of us–are in the same boat with Oracle on this point. Sure Oracle is a big company, but Google is an even bigger company with a trillion dollar market cap and Google is trying to roll over Oracle the same way they roll over us.
In a must read “friend of the court” brief, Helienne Lindvall, David Lowery, Blake Morgan and the Songwriters Guild of America make this case as independent artists, songwriters and labels all harmed by Google’s policies that are out of touch with the market starting with YouTube.
As Beggars Group Chairman Martin Mills put it, “[P]olicing the YouTubes of this world for infringing content is a herculean task, one beyond all but the largest of companies. For my community, the independents, it’s a game of whack-a-mole they can only lose.”
Helienne, David, Blake and the SGA put that case squarely before the U.S. Supreme Court in this must-read friend of the court brief.]
Independent creators rely on copyright protection to safeguard their works. This is true not just of songwriters and composers, but of countless creators, including recording artists, photographers, filmmakers, visual artists, and software developers. Copyright is, in fact, of existential importance to such creators, who would be utterly lacking in market power and the ability to earn their livings without it.
Google’s business model is a prime example of the need for strong copyright protection. Since Google’s founding, Amici have experienced, observed and believe that Google has used its unprecedented online footprint to dictate the terms of the market for creative works. By tying together a set of limited exceptions and exclusions within the U.S. Copyright Act and analogous laws in other countries, and then advocating for the radical expansion of those exceptions, Google has amplified its own market power to the great detriment of copyright owners. Thus, where fair use is meant to be a limited defense to infringement founded on the cultural and economic good for both creators and the public, Google has throttled it into a business model.
[This is an important post from Jonathan Lee (@telecomsense) that fills in some of the available data on just how much of YouTube is music and infers what that means for royalties.]
YouTube Is Primarily a Music Service
Given recent headlines criticizing YouTube’s algorithms for promoting home movies of pre-teens to pedophiles, violent videos to young children, as well as political extremism/bullying, you might have the idea that a lot of people watch these videos; they don’t. As this fascinating post–describing documents that surfaced in Viacom’s copyright suit against Google–explains, YouTube became popular not because of homemade videos, but because it embraced piracy.
The model of other people’s copyrighted videos driving user traffic remains the secret of YouTube’s success. Social media monitoring firm Pex recently calculated that less than 1% of YouTube’s videos–0.64%–were responsible for over 80% of video views. The majority of these videos are music videos.
[Editor Charlie sez: Hey Susan, do you like apples?]
Alphabet CFO Ruth Porat told investors during an earnings call on Monday afternoon that YouTube pays out a majority of that advertising revenue to its creators. Although Porat wouldn’t say how much of the $15 billion goes to its content makers, she did specify those payouts belong to YouTube’s “content acquisition” costs, which run around $8.5 billion.
For people trying to make their living on YouTube, many feel like they don’t see nearly enough of that $8.5 billion. Top creators tend to earn the most ad revenue via higher rates — as long as their content is advertiser-friendly — because they generate a large number of views. Other advertising revenue then trickles down to the thousands upon thousands of creators who belong to YouTube’s Partner Program.
Many personalities have said they feel like they have to fight for advertising revenue, turning to subscription services like Patreon and signing brand deals since ad revenue isn’t reliable. Now, in the wake of major changes to YouTube’s advertising policies when it comes to content aimed at children (which may include popular video genres like gaming), advertising revenue looks even more fraught.
YouTube has long enticed creators to work on its platform with advertising revenue, but most creators didn’t know how much YouTube was making. Now they do — and, as one YouTube employee told The Verge, this feels like “a real seminal moment.”
Very insightful reporting from Rob Copeland at WSJ on Google’s revenue that culls out YouTube’s share of Google’s revenue–and boy are we getting hosed.
Alphabet said YouTube exceeded $15 billion in annual revenue in 2019. That would be on the lower end of projections for the video business, which has been the subject of educated guesses for years, and suggests that YouTube pulls in less than $8 a year from each of its 2 billion users. On a call with analysts, Mr. Pichai said he believes there is “significantly more room” to make money off YouTube’s users.
Given that YouTube is heavily dependent on music videos, it’s hard to explain how YouTube is dead last in royalty rates:
And remember, according to BrandWatch, “[a]s of Jan 2020, the 93% of the most-watched videos [on YouTube] were music videos” and according to IFPI’s Music Consumer Insight Report, 47% of time spent by fans listening to on-demand music is on YouTube. So it’s hard to explain why YouTube royalties are so low–and I would actually say that YouTube royalties are actually negative when you take into account the total cost of dealing with YouTube on DMCA, Content Management System and Content ID.
If you can afford it–remember the A2IM and Future of Music Coalition study that showed the main reason that independent’s don’t pursue their rights is because they can’t afford to. Not a big leap that they definitely can’t afford to challenge Google.
It’s all a little hard to understand. Even at 1% of YouTube revenue for publishing, comparable to the low public performance royalty at radio (distorted by the radio oligopoly), the songwriters alone should divide up $150,000,000–in a comparable deal. Artists should be grossing well over that in line with historical ratios. Given the outsized impact of music on YouTube’s revenue, shouldn’t the total industry-wide royalty payment be vastly more than $150,000,000? Why do we get hosed so badly on YouTube revenues? My bet is that it’s not at the negotiator level. Those are some of the most talented negotiators in the world.
But they’re on a leash and Google knows it. It’s always seemed to be a situation where eventually someone upstairs calls and says, thanks for the great work on YouTube negotiation–we’ll take it from here. And you see the result. Hard to explain any other way.
But it may help to explain why this person is laughing at us.
“This planned violation of privacy by Spotify is a huge reason to stick with @Applefor podcasts. Ads in podcasts are fine with me, and I’ve even bought products advertised on some of my favorite shows. Ads based on vacuuming up my private info aren’t OK.”