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Death By a Thousand Papercuts: How Streaming Services Protect Themselves From Lawsuits by Burying the Copyright Office in Paperwork

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Death By a Thousand Papercuts: How Streaming Services Protect Themselves From Lawsuits by Burying the Copyright Office in Paperwork

Postby MrFredPFL » Sun Apr 15, 2018 11:35 pm

Story :

In 2016, Daniel Dewar and a friend founded Paperchain, a company that planned to use Blockchain technology in order to more accurately allocate the mechanical royalties that on-demand streaming services like Spotify owe music publishers. A laid-back Australian with a background in sound engineering and data analytics, Dewar figured that services could use Blockchain to validate their rightsholder information against an authoritative database.

Then he realized: there wasn’t one. The lack of such a database is what made it so hard to account correctly in the first place.

From the beginning, the inability of streaming services to accurately pay rightsholders represented an existential risk for streaming as a business model: Spotify and other companies could be liable for between $750 and $150,000 in statutory damages for each composition they stream without a license. Then it became an even bigger mess. After Spotify got hit with a class-action lawsuit – which it eventually settled for $43.45 million – streaming services began filing Notices of Intention (NOIs) with the U.S. Copyright Office for songs whose rightsholders they couldn’t identify or find. That’s what they were supposed to have done all along – doing so shields them from liability – but paying a filing fee for each notice would have added up. Once the U.S. Copyright Office changed the rules and began charging per spreadsheet instead of per composition in 2016, however, services began filing NOIs in bulk. By the end of 2017, more than 50 million NOIs had been filed – some for well-known songs like the Beach Boys hit "Surfer Girl." (It’s by Brian Wilson!) Even by music business standards, this is nuts.

By the end of 2016, Dewar changed Paperchain’s strategy. Rather than help streaming services identify rightsholders, the company would help rightsholders sort through the NOIs to find money they were owed. He wrote a program to download and query the NOIs filed with the Copyright Office, then began to study how much money all of these NOIs represented. What he found was that, although streaming services aren’t doing a very good job of matching compositions with rightsholders, the number of NOIs don’t reflect the number of compositions for which rightsholders aren’t being paid. Spotify was sloppy enough that Wixen Music Publishing filed a lawsuit for the service’s unlicensed use of music by Tom Petty, Neil Young, and other household names, and a smart intern ought to know who wrote some of the songs the service infringed. But services also seem to be filing NOIs for compositions they’re also paying for: Although Spotify filed an NOI for Ed Sheeran's "Perfect," Sony/ATV Music Publishing confirmed that the service had been paying for its use of the song. “It’s a misnomer that Spotify can’t find Ed Sheeran,” Dewar says.

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