Label-Buster is Caught With His Pants Down

By Moses Avalon

New York Gov. Elliot Spitzer, who spearheaded the “Payola” campaign against Major Labels in 2005 has been caught spending over $80,000 on hookers and will resign his office immediately.

The case proves that God doth have a sense of humor. Inside sources implicate that it was during his investigation into record business promotions practices that Spitzer–then Attorney General–was first exposed to the liberal use of high-end escort services as a business lubricant. Thus began his dissent into society’s underclass. (That is the world of hookers, I mean. Not the music business. I think).

Spitzer’s indictments of the four major distributors, Universal Music, Sony, EMI and Warner Music resulted in labels paying about $30 million for influencing radio station’s play-lists. This was followed by several State Attorney General Offices leveraging the settlement into a secondary indictment in 2006 of Clear Channel for accepting bribes from Major Labels.

Despite the fact that promotional bribes exist in many industries, the music business is burdened with having to promote their work on publicly owned airwaves, which requires public disclosure when its airtime is sold to a private interest. Radio stations would rather go back to using 12″ LPs than admit that they are for-hire, as they believe pay-for-play makes them appear grossly un-hip to advertisers.

Spitzer’s campaign was successful in the respect that it stirred a pot that had been stewing for far too long. But after attorney’s fees of roughly $10 Million were deducted, and some money distributed to several arts organizations, not one penny found its way into the hands of “the people” or to independent labels, who Spitzer identified as the real victims of Payola.

Also, because the practice of influencing radio play-lists with incentives is an economic reality to selling millions of records–and has not diminished despite Spitzer’s campaign–some analysts cried foul, claiming that Spitzer aimed his guns at a weak industry, already facing severe challenges in the digital age.

Labels and Clear Channel admitted no wrongdoing and claimed they settled out of economic necessity, essentially accusing Spitzer of prosecutorial extortion. And I’ve got $100 bucks that says reprisals played a role here: that escort services, whose cash cows include a bevy of high-paying music clients, shared information with investigators. It may be no small coincidence that the girl of Spitzer’s fancy was an aspiring singer.

Still, fans of Spitzer point to his almost flawless public service record and claim he paved the way for a more honest music business, giving smaller labels a big legal stick to use against majors over payola.

Why didn’t Spitzer choose to impeach other industries’ advertising practices? Could it be that the music biz is a relatively small $12 Billion a year industry and has chosen, as a political platform, to sue its customers instead of getting a top-shelf politician in their back pocket? Maybe. We’ve never been very good at big politics.

One thing we are really good at… is partying! Spitzer will be leaving public office, probably forever, to “spend time with his family.” But like many who have come in brief contact with the music business, he takes with him a hell of a hangover and a few resurfacing sores.

Hey, Elliot– Thanks for playing.



Meanwhile The EFF Has A Way To End P2P Lawsuits

By Moses Avalon

Remember Jammie Thomas the single mom who lost her suit against the RIAA and was ordered to pay $220,000 for participating in P2P file sharing? Well, the Department Of Justice, has told her to pony up. Original story

Although Thomas had illegally shared a total of 1,702 songs over the Kazaa file-sharing network, the RIAA only focused on 24 songs. Statutes allow for damages between $750 and $30,000 per infringement, with a maximum of $150,000 for a willful violation. A jury of her peers ordered Thomas to pay $9,250 for each of the 24 songs she “stole.”

Well, not surprisingly she thought that judgment was unfair and appealed. Thomas argued that since the music labels made about 70 cents per song, she should be liable for only that amount.

The DOJ decided this was absurd. In a brief filed in U.S District Court in Minnesota, Acting Assistant Attorney General (and Metallica fan) Jeffrey Bucholtz, said that damages assessed by the jury of her peers was not excessive.

The RIAA has 26,000 other lawsuits pending. Many previous suits against parents and grandmothers of minors who file share, as well as college students and hackers, have settled out of court for flat fees of about $5000.

But, inspired by organizations like EFF (Electronic Frontier Foundation), Thomas chose to fight rather than settle. The EFF, an “advocacy” group that is opposed to the RIAA suing P2P users, claims that P2P falls within public policy.

They are one of several organizations supported by the tech industry who feel that P2P sharing of music files is not a crime. Thomas’ lawyer, Brian Toder, opted to use the arguments posted on their websites in court, instead of consulting something more conventional — like a law book.

Net result (no pun intended): Ms. Thomas, unemployed mother of two, will have to have either pay the full amount or appeal to a higher court. How much of this money will go toward the musicians is anyone’s guess. Many artists are still waiting for their share of the $400+ million that labels received from settlements with Napster over five years ago, and more recently Kazaa, YouTube and other networks.

Spokesperson for EFF said, “We think this really sucks, dude, and to show our conviction to the cause and put our money where out mouth is, we’re going to pay all of Jammie’s legal bills and her debt.”

Carry Sherman, Executive Director of the RIAA laughed, “One down; 25,999 to go. Bring it be-atch!”

(I made that up. The EFF quote is also fake. Actually, EFF hasn’t responded publicly to the incident at all, and makes no reference to this on its website.)


Instead of lawsuits, the EFF proposes that the music industry charge a voluntary $5 per month for an all you can eat buffet of music downloading.

While the site offers no practical solution on how to monitor/administrate this system, how the money would be divided between publishers and record companies, or how to fairly compensate artists; or the fact that Apple–who controls about 80% of the “player” market–refuses to go toward a subscription model, it does offer historical precedent as to why this should work: the “radio model.”

The EFF says that songwriters got radio to “come in from the cold” by forming “voluntary” organizations like ASCAP and BMIto make payment easy and painless.

It’s unfortunate that whoever researched that suggestion didn’t look into several surreptitious cases, like the one between ASCAP and the Girl Scouts of America (GSA), wherein the songwriter-run agency shook-down the evil cookie pushers for not buying a license to sing “Puff the Magic Dragon” around campfires.

Here’s a short “Greatest Hits” list of ASCPA/BMI arm-twisting taken from Confessions of Record Producer (3Rd Edition):

  • In the fall of 1996, ASCAP shook down the Girl Scouts of America for a license to sing “campfire songs.” This resulted in the GSA deleting “Puff the Magic Dragon” and other favorites from their songbook.
  • NASAwas contacted for a license by copyright holders of “Mustang Sally” (registered with BMI) after astronaut, Sally Ride, sang “ride, Sally ride” during a press conference–while orbiting Earth. BMI claimed their territory is “the known universe.”
  • ASCAP has been known to threaten legal action for the singing of “Happy Birthday to You” at ice-cream parlors and children’s birthday venues.
  • In 2002, BMI sued a bar for having karaoke night without a license. One of the “infringing” songs named in the complaint was “God Bless America (Ironically an ASCAP song).”
  • In 2004, BMI supported one of its publishers when it sued a website (JibJab.com) for using a political satire song, “This Land Is Your Land,” as the basis for a new political satire song.
  • In 1999, BMI requested that record stores buy licenses to play CD’s while customers shop, They also requested that stores buy licenses every time artists perform their own material during in-store promotions. . Stores flat-out refused, daring them to sue. BMI opted not to.

Too bad the EFF doesn’t think artists/labels should have the same rights as songwriters.

What? You don’t believe such a well respected advocacy group (especially one funded by well educated tech-companies) could be so wrong on the facts? Read for yourself:

Then light a fatty.

Mo Out!

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