Business Matters: U.S. Senate's PROTECT IP Act Gathering Steam
Business Matters: U.S. Senate's PROTECT IP Act Gathering Steam

U.S. Senate's PROTECT IP Act Gathering Steam
-- Support for the PROTECT IP Act is growing. Since being introduced, the bill has attracted 17 co-sponsors including Senators John McCain (R-AZ), Lamar Alexander (R-TN), Bob Corker (R-TN), Marco Rubio (R-FL) and Kristen Gillibrand (D-NY).

PROTECT IP, short for Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011, was introduced in May. The bill awaits a full vote in the Senate and the House is reportedly working on its own version. It is a rewriting of the Combating Online Infringement and Counterfeits Act (COICA), which never received a vote in the Senate although the Senate Judiciary Committee voted for it 19-0.

The bill aims to combat piracy and the online sale of counterfeited good by using the domain name system (DNS), which is like the Internet's address book. Through PROTECT IP, ISPs would filter out DNS requests for web sites found to be engaged in illegal behavior.

As detailed in a post at the Copyhype blog, many associations and businesses have come out in support of the bill. Here's a short list: National Music Publishers Association, Nashville Songwriters Association International, Recording Industry Association of America, Graphic Artists Guild, US Chamber of Commerce, Viacom, NBCUniversal, Software and Information Industry Association, California Healthcare Institute and State International Development Organizations.

In addition, a number of politicians (such as governors Beverly Purdue of North Carolina and Gary Herbert of Utah) and individuals (such as First Amendment expert Floyd Abrams and musician Don Henley) have voiced their support. While most of the support came in May, when the bill was introduced, more supporters joined in from June through September.

There's a good deal of opposition, too. Back in May, Google chairman Eric Schmidt said it would set a "disastrous precedent" for freedom of speech and Google "would still fight it" if signed into law by the president. A letter to Congress from legal academics around the country warned of "potentially catastrophic consequences for the stability and security of the DNS."

Opposition to just about any Internet restrictions are a given, however. "The technology is there, but the will of some companies is not," wrote Henley in a USA Today editorial. For a thoughtful explanation of the technologies involved in the enforcement of PROTECT IP, Copyhype links to a blog post by George Ou that counters the criticism of a group of Internet engineers. "The charge that DNS filtering would devalue and fragment the official DNS system of the Internet is inconsistent with reality," Ou argues.
(Copyhype) A Venture Capitalist's Love Story
-- Writing at his blog on one of his latest investments, the oh-so popular, Union Square Ventures' Fred Wilson explains how the service quickly won him over - but he was hesitant at first. He didn't want to use the Facebook log-in, and he had rejected the pitches of's co-founders many times over the years.

"But the service kept coming after me," he writes. "It was showing up in my Twitter stream, my Facebook feed, my tumblr dashboard. My friends were on it and loving it. Our office was on it and loving it. So one day in late June or early July, I finally hit that Facebook login and took a tour of turntable. What I found was people, lots of them, they were playing music, they were listening to music, they were talking to each other, they were dancing, they were having fun. And I was too. I was sold in about five minutes."

Moral to the story: If the venture capitalists quickly fall in love with your product, you just might get funding. Well known but not officially announced until Tuesday, Union Square Ventures led a $7 million funding that also included investments from Polaris Ventures, First Round Capital and Lowercase Capital.
(A VC)

.02 - .06 Cents: More on Miniscule Digital Music Streaming Payouts
-- The difference in payouts from various formats and music services is getting a lot of attention in the blogosphere. A post at site of the band Uniform Motion, re-posted at Techdirt, shows the differences between payouts from such as Spotify, eMusic and iTunes, and compares them to a label's take from physical format sales.

Much of it is common knowledge to regular Billboard readers. We've reported about Spotify payouts numerous times. In August 2010, for example, one band was getting from 0.02 cents to 0.06 cents per stream. And the amounts received from download stores and physical formats are pretty common knowledge among Billboard readers.

But one thing in the post that merits mention is the payout French digital music service Deezer, a service that is not available in the U.S. and so tends to get left out of the conversation. "We've been getting 0.006 EUR/play from them," the band writes. That's twice what it's getting for each play at Spotify. Deezer, a cloud-based service with a freemium model like that of Spotify, is available in France and will launch in the U.K. later this month.

Another important aspect, which Techdirt did not explain and the band mentions without getting into detail, is that the listed payouts reflect what the record label would receive before any distribution fees and mechanical royalties. In this case, the band that provided the numbers owns its masters - the band is its own record label and so it receives the full share of the sale price.

In contrast, a band signed to a record label would receive far less than these amounts (advances and expenses must be recouped before a royalty is paid). Of course, a signed band may be able to make up the difference through quantity of streams and sales, but that's really another issue for another day.
( Uniform Motion, via Techdirt)