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The U.S. Supreme Court looks like it might be about to jump into a lawsuit filed by the music database Genius that accuses Google of illegally copying the site’s lyrics and posting them in search results.
After a lower court dismissed the case in March, Genius – a platform that lets users add and annotate lyrics – asked the high court to hear the case and overturn the ruling. Though it called the ruling “unjust” and “absurd,” such petitions are always a long shot; the Supreme Court takes less than 2% of the 7000 cases it receives each year.
But the odds for Genius just got better. In an order Monday, the justices asked the U.S. Solicitor General to file briefs in the case “expressing the views of the United States” on whether or not the court should hear the case against Google.
That kind of request (a “call for the view of the Solicitor General,” or CVSG, in SCOTUS parlance) indicates that the justices think the issues in the case might be significant enough for the court to tackle. Genius has warned that the ruling for Google threatens “a vast swath of internet businesses”; Google says that’s “alarmist hyperbole” and the case does not deserve the high court’s time.
Neither Genius nor Google immediately returned requests for comment on Tuesday.
Genius sued the tech giant in 2019, claiming Google had stolen the site’s carefully-transcribed content for its own “information boxes” in search results, essentially free-riding on the “time, labor, systems and resources” that goes into creating such a service. In a splashy twist, Genius said it had used a secret code buried within lyrics that spelled out REDHANDED to prove Google’s wrongdoing.
Though it sounds like a copyright case, Genius didn’t actually accuse Google of stealing any intellectual property. That’s because it doesn’t own any; songwriters and publishers own the rights to lyrics, and both Google and Genius pay for the same licenses to display them. Instead, Genius argued it had spent time and money transcribing and compiling “authoritative” versions of lyrics, and that Google had breached the site’s terms of service by “exploiting” them without permission.
But in March, that distinction proved fatal for Genius. The U.S. Court of Appeals for the Second Circuit dismissed the case, ruling that only the actual copyright owners – songwriters or publishers – could have filed such a case, not a site that merely transcribed the lyrics. In technical terms, the court said the case was “preempted” by federal copyright law, meaning that the accusations from Genius were so similar to a copyright claim that they could only have been filed that way.
In taking the case to the Supreme Court in August, Genius argued the ruling would be a disaster for websites that spend time and money to aggregate user-generated content online. Such companies should be allowed to protect that effort against clear copycats, the company said, even if they don’t hold copyrights.
“It serves no public purpose … to bar these companies from enforcing their contracts so that behemoths like Google can vacuum up content and increase their internet dominance,” Genius wrote. “Big-tech companies like Google don’t need any assists from an overly broad view of copyright preemption; they already control vast swaths of the internet, to the public’s detriment.”
Google obviously disagrees. In a response to the Supreme Court, the company urged the justices to avoid the case and reject Genius’s “alarmist hyperbole,” arguing that the lower ruling was “plainly correct.” Google said Genius was trying to use an agreement “inconspicuously tucked behind a tiny link” to create “pseudo-copyright” control over songs written by other people.
“Genius does not own the copyrights to any of the lyrics. Genius nevertheless wants to prevent any website visitor from reproducing or publicly displaying the lyrics,” Google’s lawyers wrote. “Its solution? Ignore the true copyright owners and invent new rights through a purported contract.”
Google released its Year in Search for 2022 on Wednesday (Dec. 7), and the trends in the United States throughout the year paint a picture of the most popular stories, songs and events of the year.
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The top musician that was searched on Google this year was Adam Levine, most likely in connection to his alleged affair with Instagram model Sumner Stroh that made waves throughout the Internet back in September. Following Levine, Mary J. Blige, Lil Tjay, Kendrick Lamar and Migos wrap up the top five.
For people in general, Johnny Depp and Amber Heard both made the top five, as their defamation trial was made available for the public to livestream throughout the spring. Will Smith was also in the top five searched people, as a result of his headline-making incident at the 2022 Academy Awards, during which he stormed the stage and slapped Chris Rock across the face.
As far as songs, the Encanto hit, “We Don’t Talk About Bruno” topped the list. The film’s “Surface Pressure” followed, and the TikTok-viral track “Jiggle Jiggle” by Duke & Jones and Louis Theroux. Rounding out the top five are Sam Smith and Kim Petras’ collaboration, “Unholy,” and Harry Styles’ Harry’s House smash, “As It Was.”
“We Don’t Talk About Bruno” also came in at No. 3 on the year’s top trends on Google’s “Hum to Search” feature. The top song on that list was Backstreet Boys’ “Everybody (Backstreets Back),” followed by “Never Gonna Give You Up” by Rick Astley.
See Google’s full Year in Search 2022 report here.
YouTube is reportedly working to remove reuploaded video clips of Kanye “Ye” West‘s controversial interview on Alex Jones’ Infowars talk show.
During his appearance Thursday (Dec. 1) on the alt-right conspiracy theorist’s program, Ye shocked viewers by praising Adolf Hitler and the Nazis. “Every human being has something of value that they brought to the table, especially Hitler,” the rapper said. “How about that one?”
Later in the day, Ye was also suspended once again from Twitter after posting an image of a swastika merged with a Star of David.
NBC News reported on Saturday (Dec. 3) that YouTube parent company Google was “working to remove reuploads if the antisemitism in the interview isn’t denounced in the video via added commentary,” according to a statement from the tech giant.
The article also pointed out that other social media platforms, like Twitter, had not yet stated how it would addressed the matter.
Billboard has reached out to representatives for Google/YouTube and Jones’ Infowars for comment.
Ye has been on a monthlong media tour that has found the rapper repeatedly spewing hateful rhetoric aimed at Jewish people, which has led to rapid downfall of his once-formidable fashion and music empire. The reaction from the public was swift, with several companies — including The Gap, Balenciaga and Adidas — terminating their relationships and brand deals with the rapper.
Ye also announced in recent weeks that he intends to run for president again in 2024.
Spotify’s quest to improve its margins has taken another step forward, as a pilot program for billing subscribers using Google devices expands to the U.S. and additional markets. Called “user choice billing,” the system allows app developers to provide Google Android smartphone users with the option of paying the developer directly — at a reduced fee — or through Google Play.
Last week, Google’s user choice billing pilot expanded to the U.S., Brazil and South Africa, and Google announced that dating app Bumble also joined the program. Spotify was the first developer to join the pilot program in March with test markets of Australia, India, Indonesia, Japan and the European Economic Area. With the additional markets, user choice billing will be tested in most of the world’s largest smartphone markets and most valuable music markets.
With user choice billing, prospective Spotify subscribers are presented with two payment options side-by-side in an Android app: Spotify and Google Play. Choosing Spotify will take the user to a form to fill out credit card information to sign up for a subscription. Importantly, it all happens within the Spotify app, not Spotify’s external website. Choosing to pay with Google Play prompts the user to enter a password to pay with the credit card on file with Google.
Billing is an under-appreciated but important issue in the subscription music business. Because music streaming is inexorably tied to smartphones, and because consumers have come to expect simplicity when engaging in e-commerce on smartphones, in-app billing helps a company like Spotify sign up subscribers. The problem for a music service like Spotify operating on thin margins, though, is that app stores run by Apple and Google have traditionally demanded a cut of these in-app purchases. That’s left music companies either paying the app store fees themselves, without raising prices, eroding each subscription’s profitability, or raising the price to compensate for the fee, which could turn away potential subscribers. Prior to 2016, Spotify charged users 30% more for an in-app upgrade to Premium to offset Apple’s 30% fee.
There’s one other option, of course: To save on fees, a music service may disallow in-app subscriptions and encourage a customer to take a few extra steps and subscribe at its website. That process risks losing potential subscribers along the way, but nevertheless, Spotify has gone this route and not allowed in-app purchasing on its Apple app since 2016.
Companies have faced this quandary for years. In 2019, for example, Pandora raised the price for subscribers who used Apple’s in-app purchasing premium subscription service from $9.99 to $12.99 to offset the fees. Pandora reported paying $50 million in fees to Apple and Google in 2015 – 3.7% of its annual revenue.
“It certainly puts independent music services at a disadvantage where we’re paying 30% of the economics out to the platforms that distribute our apps, who also happen to be competing with us, and for the same users, and the same economics,” Pandora’s then-CFO Mike Herring told investors in 2016.
Apple typically charges a 30% fee for in-app purchases during the first year of a subscription and 15% thereafter, according to Apple’s website for developers. Neither Apple nor Spotify have said publicly what fees are paid for Spotify subscriptions. The fees that Spotify pays Google are also private.
“We’re not going to comment on the terms of our agreement with Google because they are confidential,” a Spotify spokesperson tells Billboard, “but it’s safe to say that our [user choice billing] partnership is based on commercial terms that meet our standards of fairness.”
Generally, subscription services such as Spotify pay a 15% fee for in-app purchases, but the fee can go lower. App developers in Google’s Play Media Experience Program, which integrates apps into Google’s ecosystem of wearables and other hardware products, can pay less than 15%, for example. For subscription-based services with significant licensing costs — such as music, video, books and audiobooks — fees “can be as low as 10%,” according to a Google spokesperson.
User choice billing provides additional savings for app developers on top of any other program or discount. If an Android user presented with user choice billing opts for the app developer’s payment system, Google lowers the fee by 4%. So, if an app developer were paying a 10% fee to Google, user choice billing would reduce the fee to 6%.
Small improvements to gross margin are crucial to a music service that pays more than three-quarters of its revenue to rights holders. Spotify’s gross margin on its Premium subscription service was 28% in the third quarter of 2022, meaning that Spotify paid out 72% of its subscription revenue for licensing fees and some smaller costs of sales. Every percentage point of revenue represents about $100 million in subscription revenue in 2022, based on past earnings and Spotify’s fourth-quarter guidance. If Spotify can move its gross margin by a small amount, it would greatly impact the company’s free cash flow. To put it in perspective, Spotify’s net cash flow from operations for the first three quarters of 2022 was $109 million.
While Google seems willing to consider alternative approaches to in-app billing, Apple does not. Prominent app developers, including Spotify, have been fighting for better terms for years. In 2019, Spotify filed a complaint against Apple with the European Commission for anticompetitive behavior alleging that Apple “continue to give themselves an unfair advantage at every turn.”
Additionally, Apple is currently involved in a lawsuit brought by Epic Games regarding its control over the App Store. Although the judge in the case has mostly sided with Apple, the judge did order Apple to allow apps to provide links to payment alternatives outside the App Store. The lower court’s requirement has been delayed until the appeals court rules on the case. The two sides began oral arguments in the Ninth Circuit Court of Appeals on Monday (Nov. 14).
Apple’s strict rules are particularly meddlesome to Spotify’s latest attempt to improve its margins — audiobooks. In September, the streaming service began selling 300,000 audiobook titles following its acquisition of audiobook distributor Findaway in June. The plan makes sense: Audiobook purchases on its platform can provide Spotify with 60% gross margins — about twice the margin in music streaming – and audiobooks are a natural addition to its burgeoning podcast business.
But Apple’s rules for in-app purchases would make audiobooks purchased through an iOS app far less profitable — and a less straightforward process. Whereas the Google app provides “a beautiful experience,” CEO Daniel Ek said during the Oct. 25 earnings call, the process of buying an audiobook through Apple “is inherently broken because Apple decided it wanted it to be broken.” Spotify had lawyers “in the room” working with developers, but Apple rejected Spotify’s app multiple times, according to Ek. “It holds developers back and holds creators back,” he said. “And it’s bad for consumers.” Plus, there’s the added element here that Apple happens to be Spotify’s leading competitor for music streaming.
With audiobooks, Spotify currently sells titles on its website rather than inside the app to avoid fees (the user can listen using the Spotify app after the title is purchased). But just getting people to its website isn’t straightforward. As Spotify claimed on a website called Time to Play Fair, Apple does not allow Spotify to explain how to purchase an audiobook outside of the app, include a link to direct the user to a Spotify audiobook page, request or receive an email with instructions on how to purchase an audiobook or reveal an audiobook’s price in the app or in an email. Spotify’s Android app does not sell audiobooks, but the app allows users to receive an email with a link to Spotify to purchase a title.
In its June investors’ day presentation, Spotify management looked beyond music, podcasts and audiobooks. In the next ten years, Spotify will add sports, news and education to the platform and double the current average revenue per user, said Gustav Norström, chief freemium business officer. The user choice billing pilot program can only help with that goal.