09 February 2016

Good Morning to You

(for some value of "good morning" not related to prior caffeination). Today I present a three-sausage appetizer, then an utterly indigestible main course.

  • I'm very much in favor of forcing multinationals to report their tax arrangements all across Europe — publicly. I would include a much larger group of firms in this (the current proposal is rumored to be for firms with more than €750m, about $830mUS at the present exchange rate, in annual gross revenues, which would exclude many of the biggest abusers of tax arrangements). Whether individual states and localities should be required to do something similar within the US is left as an exercise for the student (I'm lookin' at you, Boeing... but that's just an obvious example).
  • The next stage of "Brownie, you're doing a heckuva job": Cheap cockroach-like operatives not just in emergency management, but actually helping out with disasters. But nothing bad has ever happened by entrusting the world to experimental robots... oh, wait, that's just in movies and manga (both far more realistic than the current political campaigns).
  • I'm in favor of some of the concepts behind the Trans-Pacific Partnership... but absolutely not its process or its details. I'm really getting tired of financial capital being privileged over all else — not just over labor, but over other forms of capital and over civil rights and civil responsibility. It's not that this is somehow unique in history (as obvious ancestors, consider the various East India companies); it's that we haven't learned that makes this worse.

    The real problem with the TPP is that both structurally and fundamentally it simultaneously disfavors the rule of noncommercial law and reifies mere financial investment as providing superior in time and right interests in everything. Leaving aside any issues of justice, this is bad economics... and bad policy for actually creating, exploiting, or protecting intellectual property. Trade isn't just about arbitraging comparative advantage.

*  *  *

And so it appears that Warner-Chappell Music has capitulated and implicitly acknowledged (while explicitly reserving/disavowing, as is normal in these kinds of settlements1) that "Happy Birthday to You" is in the public domain. This begs three questions, though, all related to the overbearing arrogance of the music-publisher subindustry in Nashville (especially, but not only, Acuff-Rose Music, Inc.), and indeed across the entertainment industry.

First, there's the question of compensation not for those who paid license fees — which appears to be part of the settlement, although in far too small a quantity (then, that's the nature of settlements) — but for those who were deterred from making speech protected by the First Amendment by Warner-Chappell's historical overaggressiveness. Bluntly, I don't buy either that "there was room for disagreement" or "they made a mistake" regarding "Good Morning to You" on the factual basis of ownership.

Second, there's the unequal-enforcement issue that was not raised in this litigation. It's all well and good for a retailer to focus on the most-profitable part of its product line; that's just good business. When it's not a retailer but a sublicensor2 — with a fiduciary duty to each of its actual licensors to treat them fairly and equally, not purported ownership of the underlying property — things are little bit murkier. Actually, a lot murkier given dubious ownership claims... and not unique to the music segment of the entertainment industry.3 And the implications for publishing are immense; as Dean Wesley Smith notes (paragraphing omitted),

It would sure be interesting to see the top 50 major bestseller numbers pulled from that traditional publishing number to see how really, really small it is for the normal writer. Hugh? Data Guy? Would that be even possible? Just a thought. Might help the traditional mid-list genre writers understand their positions a little more.4

Third, there's a legal ethics issue in here: Counsel for Warner-Chappell was, at minimum, on inquiry notice regarding the questionable factual basis for its claims not later than 1991 (if I'm reading everything correctly), but there appears little evidence that appropriate inquiry was made. Leave aside whether the corporation itself had an appropriate business model (unfortunately, a number of music-industry decisions over the last sixty years or so arguably support overreaching claims as a business matter), because that's not this issue. This issue is not overreaching interpretation, but overreaching claim of ownership... and that's not some legal grey area. It's the equivalent of slapping a Motel Six sign on the only motel for a hundred miles, with the enthusiastic approval of The Blackstone Group (because all of the nightly fees are being paid to The Blackstone Group), although both the local operator and The Blackstone Group know full well that the property is actually a mismarked national park (because actually checking the surveying records shows that). As bad as that is in a business-ethics sense, it's much worse for lawyers to continue to assert it; they should be glad they're in Tennessee or California and not Texas (and the stakes — death penalty or infringing artistic rights — shouldn't matter).

In short, this matter exposes some subindustry-wide problems that merit further examination. I'm not saying that Warner-Chappell's conduct was the worst in the industry... just that it wasn't acceptable, and hasn't been for years. And that it's got company.

  1. And inherently disserves the public, the legal system, and usually the parties... but is considered absolutely essential by insurers, so these settlements simply do not happen without such language. I say this from personal experience negotiating a lot of such settlements; it's parallel to your automobile insurance company's imprecation not to admit fault at an accident even when you know you were at fault. It has the same bad interpretations of outdated precedent behind it, too.
  2. Not the case here, although pretty clearly implicated and actually the majority instance in both dollar volume and number of claims.
  3. I have personal knowledge and experience with Samuel French's policies and practices concerning both fiduciary duties aspects and the factual accuracy of ownership/authorization/licensing claims. Without breaching confidentiality issues, Samuel French is all too eager to continue asserting licenses and collecting income even when a purported licensor admits that it never had the right to authorize Samuel French to act... and tries to withdraw the unauthorized material. And that's not from just a single instance.
  4. Even more helpful would be showing any kind of smoothing calculations — not just a comparison between "before smoothing" and "after smoothing," but the actual calculations — necessary to deal with data this noisy. However, the very nature of the reported data provides yet another barrier to doing so meaningfully (as opposed to "makes spreadsheet sense because it's an allowed operation"). All of which points back to the underlying theme of this meal: That one's conclusions are no better than the reliability of one's data. Shrieking louder doesn't make things more reliable; neither does having the financial resources to shut up a critic.