RIAA Thinks LimeWire Owes $75 Trillion in Damages

PC World

The music industry wants LimeWire to pay up to $75 trillion in damages after losing a copyright infringement claim. That's right . . . $75 trillion. Manhattan federal Judge Kimba Wood has labeled this request "absurd."

You're telling me. To put that number into perspective (I bet a lot of you didn't even know "trillion" was a real number), the U.S. GDP is around 14 trillion -- less than one fifth of what the music industry is requesting. Heck, the GDP of the entire world is between 59 and 62 trillion. That's right, the music industry wants LimeWire to pay more money than exists in the entire world.

Popular file-sharing service LimeWire was shut down last October, after Judge Wood found them liable for copyright infringement in May 2010.

According to Law.com, the RIAA and the 13 record companies that are suing LimeWire for copyright infringement have demanded damages ranging from $400 billion to $75 trillion, and have claimed that Section 504(c)(1) of the Copyright Act allow them to request damages for each instance of infringement where two or more parties were liable. In other words, the RIAA thinks it should be entitled to damages not only for the individual works, but for every time that work was infringed (i.e. downloaded by another user).

At the moment, about 11,000 songs have been identified as "infringed" material, and each song has probably been downloaded thousands of times. The RIAA thinks it should be compensated for each individual download.

Judge Wood disagrees. In a 14-page ruling (PDF), Judge Wood said that the music industry is entitled only to a "single statutory damage award from Defendants per work infringed," for several reasons, including "Absurd Result." According to the document, the "Plaintiffs' position on statutory damages also offends the 'canon that we should avoid endorsing statutory interpretations that would lead to absurd results.'"

The document goes on to read: "As it stands now, Defendants face a damage award that 'could be in the hundreds of millions of dollars, if not over a billion dollars.'"

Judge Wood also points out that "if one multiplies the maximum statutory damage award ($150,000) by approximately 10,000 post-1972 works, Defendants face a potential award of over a billion dollars in statutory damages alone. If Plaintiffs were able to pursue a statutory damage theory predicated on the number of direct infringers per work, Defendants' damages could reach into the trillions. As Defendants note, Plaintiffs are suggesting an award that is 'more money than the entire music recording industry has made since Edison's invention of the phonograph in 1877.'"

This "absurd results" clause isn't anything new, Judge Wood points out. She mentions the 2010 Arista Records LLC v. Usenet.com, Inc. case, in which Arista Records requested the court calculate the damages by multiplying the maximum amount of damages ($150,000) by the number of infringements (878), or $131,700,000. The court found the defendants liable for $6,585,000, by multiplying the number of infringements by $7,500.

Unfortunately, this still isn't great news for LimeWire -- while Judge Wood says the music industry is entitled to only a single statutory damage award per infringed work, there are still 11,000 works. That means LimeWire could still be liable for damages in excess of one billion.

Anonymous Hacker Group to Launch Music Platform

Anontune pulls streams from YouTube, Soundcloud, MySpace, more

By Jenn Pelly

The Anonymous "hacktivist" group has begun work on a social music platform called Anontune, as Wired reports. The service will allow users to create streamlined playlists that draw from third-party distributors like YouTube, SoundCloud, and MySpace. 

A prototype for the service is online now. According to Wired, the service is 20% complete. In an alien-voiced video announcement (see below), the founders mourned the loss of services like Limewire, but noted that the platform "will never host any copyrighted music," nor will it host streams or downloads on its own servers.

Anontune has been in the works since February 23, 2012, approximately one month after the RIAA shut down the file-sharing service Megaupload. Anonymous retaliated for the shutdown by hacking the websites for the Department of Justice, Universal Music Group, the Recording Industry Association of America, and the Motion Picture Association of America.

Is Megaupload "a lot less guilty than you think?"

arstechnica.com

Is Megaupload doomed? Last month, we talked to three legal scholars who suggested that the shuttered file locker was probably in trouble. While the University of Virginia's Chris Sprigman thought Megaupload's principals had a fighting chance of being acquitted, James Grimmelmann of New York Law School argued that the government had a strong case—perhaps even a "slam dunk."

But Jennifer Granick, a Bay Area attorney blogging for Stanford's Center for Internet and Society, has risen to Megaupload's defense, calling the site "a lot less guilty than you think."

Granick focuses on an issue that didn't come up much in our earlier discussion: the distinction between civil and criminal law. Traditionally, copyright enforcement has largely been a civil matter—that is, it focused on private disputes between copyright holders and infringers. But in recent years, Congress has increasingly made copyright infringement a criminal matter, getting the federal government directly involved in prosecuting alleged infringers.

For example, the lawsuits against Napster and Grokster a decade ago were both civil cases in which major copyright holders sought damages and injunctions against the file-sharing services. The individuals who ran those companies didn't face jail time even though they lost their cases. In contrast, Megaupload is being criminally prosecuted by the federal government. If he loses the case, CEO Kim Dotcom (read our profile) is likely to spend years in jail.

That matters because some of the government's key arguments against Megaupload are based on judge-made doctrines that have emerged from civil cases. Concepts like "secondary liability" (e.g. a company like Napster knowingly facilitating infringement by users) and "inducement" (e.g. Grokster "inducing" its users to commit infringement) were created through America's common-law legal process, in which earlier decisions serve as precedents for later ones. And the courts have shown great reluctance to throw a defendant in jail for actions that have not been explicitly declared illegal by Congress.

Direct vs. indirect

Megaupload's executives face two kinds of charges. First, they are accused of direct copyright infringement—the unauthorized duplication of copyrighted works by the defendants themselves. Second, they are accused of secondary infringement—aiding and abetting infringement by Megaupload users.

"I agree with the copyright law experts interviewed by Ars Technica that the most damning allegations in the indictment are the claims of direct infringement, particularly for the prerelease movies," Granick said in her blog post. But she argued that the government's case was much weaker on the secondary infringement charges.

Jennifer Granick

Granick says the government's "aiding and abetting" charges are "something like the civil liability inducement theory the US Supreme Court created in the 2005 Grokster case." But, she said, it's far from clear that a civil offense like inducement can actually give rise to criminal liability.

"This has never been decided by any court," she wrote, but the pending Rojadirecta case raises just this issue. The government's seizure of rojadirecta.com was a criminal matter, but the charges against Rojadirecta focus on links to infringing content, which would be secondary—and therefore civil—infringement.

Rojadirecta's lawyers "argue that judge-made secondary infringement liability theories, including Grokster-style inducement, cannot be the basis for a criminal copyright violation because the criminal copyright statute doesn't mention secondary liability," Granick wrote. "Due process doesn't allow incarceration under a civil legal theory that the Supreme Court dreamed up in 2005."

She makes a similar point about the conspiracy charges facing Megaupload. Conspiracy is a criminal offense, but the government is effectively charging Megaupload's executives with conspiring to commit civil copyright infringement. Yet the conspiracy statute "makes clear that the object of the conspiracy must be an offense or fraud against the United States, in other words, a federal crime," Granick writes. A conspiracy to induce others to commit copyright infringement doesn't qualify.

"Prosecuting this case against Mega, especially if Defendants get good criminal lawyers who also understand copyright law, is going to be an uphill battle for the government," she concluded.

"The defendants look really guilty"

Is she right? We asked Derek Bambauer, a noted legal scholar at Brooklyn Law School, for a second opinion.

Derek Bambauer

Bambauer largely agreed with Granick on the merits; subjecting Megaupload to criminal penalties for committing offenses under judge-made civil law would be a troubling step. But Bambauer wasn't convinced that Granick's arguments will save Kim Dotcom.

 

For starters, under the 1997 No Electronic Theft (NET) Act, direct infringements alone (for example, casual file-swapping by individual Megaupload employees) could get the defendants five to ten years in prison. He noted that in principle, ordinary users sharing infringing works on BitTorrent face similar penalties; the federal government just doesn't invoke these penalties very often. But when the government wants to, as in this case, it can seek multi-year jail sentences for even casual file-swapping.

That means that the Megaupload principals could wind up serving long jail sentences even if Megaupload is found completely blameless for the infringing activities of its users.

Unsurprisingly, then, Bambauer predicts the defendants will accept a plea bargain agreement rather than take the case to trial.

As for the inducement charges, Bambauer suggests one way the government could argue for applying criminal penalties: while Congress hasn't explicitly endorsed judge-made theories of secondary liability, it has jacked up the criminal penalties associated with copyright infringement since the courts began formulating secondary liability theories. The courts might rule that when Congress made more kinds of infringement subject to criminal penalties in 1997, they were implicitly including secondary infringements among the offenses eligible for those penalties.

Bambauer notes that Kim Dotcom and his associates are not sympathetic defendants. "In theory, they should be interpreting this carefully, but the defendants look really guilty," he said. "They look like they are running a criminal enterprise. There are all sorts of emails showing them trying to skirt the law." So, he predicted, the courts might well be strongly motivated to find a legal theory that allows them to put Kim Dotcom and company in jail.

 

Despite a previous licensing deal with the company, EMI is joining the other 3 major label groups in suing Grooveshark. In October 2009, Grooveshark had signed a deal with EMI Records and Publishing that both ended a previous lawsuit and licensed content to the music streaming service. Since then, according to the new filing, Grooveshark parent company Escape has “made not a single royalty payment to EMI, nor provided a single accounting statement.”

Filed in New York State Supreme Court in Manhattan, EMI is seeking unspecified damages. But in correspondence included in the filing, EMI asks Grooveshark to pay at least $150,000 in royalties, according to the New York Times.

“This is a contract dispute that we expect to resolve,” Grooveshark said in a statement.

The EMI lawsuit remains seperate from a federal copyright infringement case filed late last year against by Universal and later joined by Sony Music and the Warner Music Group.

Record Industry Braces for Artists’ Battles Over Song Rights

 By LARRY ROHTER

Since their release in 1978, hit albums like Bruce Springsteen’s “Darkness on the Edge of Town,” Billy Joel’s “52nd Street,” the Doobie Brothers’ “Minute by Minute,” Kenny Rogers’s “Gambler” and Funkadelic’s “One Nation Under a Groove” have generated tens of millions of dollars for record companies. But thanks to a little-noted provision in United States copyright law, those artists — and thousands more — now have the right to reclaim ownership of their recordings, potentially leaving the labels out in the cold.

When copyright law was revised in the mid-1970s, musicians, like creators of other works of art, were granted “termination rights,” which allow them to regain control of their work after 35 years, so long as they apply at least two years in advance. Recordings from 1978 are the first to fall under the purview of the law, but in a matter of months, hits from 1979, like “The Long Run” by the Eagles and “Bad Girls” by Donna Summer, will be in the same situation — and then, as the calendar advances, every other master recording once it reaches the 35-year mark.

The provision also permits songwriters to reclaim ownership of qualifying songs. Bob Dylan has already filed to regain some of his compositions, as have other rock, pop and country performers like Tom Petty, Bryan Adams, Loretta Lynn, Kris Kristofferson, Tom Waits and Charlie Daniels, according to records on file at the United States Copyright Office.

“In terms of all those big acts you name, the recording industry has made a gazillion dollars on those masters, more than the artists have,” said Don Henley, a founder both of the Eagles and the Recording Artists Coalition, which seeks to protect performers’ legal rights. “So there’s an issue of parity here, of fairness. This is a bone of contention, and it’s going to get more contentious in the next couple of years.”

With the recording industry already reeling from plummeting sales, termination rights claims could be another serious financial blow. Sales plunged to about $6.3 billion from $14.6 billion over the decade ending in 2009, in large part because of unauthorized downloading of music on the Internet, especially of new releases, which has left record labels disproportionately dependent on sales of older recordings in their catalogs.

“This is a life-threatening change for them, the legal equivalent of Internet technology,” said Kenneth J. Abdo, a lawyer who leads a termination rights working group for the National Academy of Recording Arts and Sciences and has filed claims for some of his clients, who include Kool and the Gang. As a result the four major record companies — Universal, Sony BMG, EMI and Warner — have made it clear that they will not relinquish recordings they consider their property without a fight.

“We believe the termination right doesn’t apply to most sound recordings,” said Steven Marks, general counsel for the Recording Industry Association of America, a lobbying group in Washington that represents the interests of record labels. As the record companies see it, the master recordings belong to them in perpetuity, rather than to the artists who wrote and recorded the songs, because, the labels argue, the records are “works for hire,” compilations created not by independent performers but by musicians who are, in essence, their employees.

Independent copyright experts, however, find that argument unconvincing. Not only have recording artists traditionally paid for the making of their records themselves, with advances from the record companies that are then charged against royalties, they are also exempted from both the obligations and benefits an employee typically expects.

“This is a situation where you have to use your own common sense,” said June M. Besek, executive director of the Kernochan Center for Law, Media and the Arts at the Columbia University School of Law. “Where do they work? Do you pay Social Security for them? Do you withdraw taxes from a paycheck? Under those kinds of definitions it seems pretty clear that your standard kind of recording artist from the ’70s or ’80s is not an employee but an independent contractor.”

Daryl Friedman, the Washington representative of the recording academy, which administers the Grammy Awards and is allied with the artists’ position, expressed hope that negotiations could lead to a “broad consensus in the artistic community, so there don’t have to be 100 lawsuits.” But with no such talks under way, lawyers predict that the termination rights dispute will have to be resolved in court.

“My gut feeling is that the issue could even make it to the Supreme Court,” said Lita Rosario, an entertainment lawyer specializing in soul, funk and rap artists who has filed termination claims on behalf of clients, whom she declined to name. “Some lawyers and managers see this as an opportunity to go in and renegotiate a new and better deal. But I think there are going to be some artists who feel so strongly about this that they are not going to want to settle, and will insist on getting all their rights back.”

Read more...

Former Google CIO: LimeWire Pirates Were iTunes’ Best Customers

Delivering his keynote address at this week’s annual CA Expo in Sydney, former Google CIO Douglas C Merrill added to the growing belief that punishing and demonizing file-sharers is a bad idea. Merrill, who after his Google stint joined EMI records, revealed that his profiling research at the label found that LimeWire pirates were iTunes’ biggest customers.

Yesterday, during his keynote speech at the CA Expo in Sydney, former Google boss Douglas C Merrill said that companies stuck in the past risk becoming irrelevant. He also had some very interesting things to say about pirates.

Merrill, who was Chief Information Officer and Vice President of Engineering at Google, left the search giant in 2008 after being poached by EMI, a key member label of the RIAA.

At EMI he took up the impressive position of Chief Operating Officer of New Music and President of Digital Business, despite admitting this week that he knew the music industry was “collapsing”.

“The RIAA said it isn’t that we are making bad music, but the ‘dirty file sharing guys’ are the problem,” he said during his speech as quoted by ComputerWorld.

“Going to sue customers for file sharing is like trying to sell soap by throwing dirt on your customers.”

But those “dirty file-sharing guys” had an even dirtier secret. During his stint at EMI, Merrill profiled the behavior of LimeWire users and discovered something rather interesting. Those same file-sharing “thieves” were also iTunes’ biggest spenders.

“That’s not theft, that’s try-before-you-buy marketing and we weren’t even paying for it… so it makes sense to sue them,” Merrill said, while undoubtedly rolling his eyes.

That same “try-before-you-buy” discovery was echoed in another study we reported on last week which found that users of pirate sites, including the recently-busted Kino.to, buy more DVDs, visit the cinema more often and on average spend more at the box office than their ‘honest’ counterparts.

Merrill’s words yesterday are not the only pragmatic file-sharing related comments he’s made in recent years. Almost immediately after his 2008 EMI appointment, he made comments which didn’t necessarily tow the company line.

“For example, there’s a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn’t be stopping it all the time. I don’t know,” Merrill said.

“Obviously, there is piracy that is quite destructive but again I think the data shows that in some cases file sharing might be okay. What we need to do is understand when is it good, when it is not good…Suing fans doesn’t feel like a winning strategy,” he concluded.

Less than a year later, Merrill was forced out by EMI.

 

RIAA Goes After Torrent Sites

For years BitTorrent sites have remained untouched by the RIAA’s legal battles, but recent court filings indicate that this may change. After settling their dispute with LimeWire earlier this year the RIAA is now targeting several BitTorrent indexers. The record industry group has filed a complaint at the U.S. District Court of Columbia and has obtained subpoenas to reveal the identities of individuals behind three large torrent sites.

Historically the RIAA’s litigation campaigns have focused mainly on individual file-sharers and P2P-software and services such as LimeWire.

Unlike their counterparts at the MPAA, BitTorrent sites have not been prime targets for the recording industry association’s lawyers. However, recent court filings obtained by TorrentFreak show that the RIAA might have just changed course.

The U.S. District Court for the District of Columbia has granted a request from the RIAA to subpoena the privacy protection services utilized by three large torrent sites. The site owners use these services to hide their personal details from otherwise publicly available WHOIS domain records, but the RIAA wants to know who they are dealing with.

The targeted sites are Monova.org, Bitsnoop.com and Limetorrents.com, which all have hundreds of thousands of daily visitors. According to the RIAA, these sites are infringing on the copyrights of many artists.

“We believe your service is hosting the above-referenced website on its network. This website offers direct links to files containing sound recordings for other users to download by such artists as Lady Gaga, Micheal Jackson, Coldplay, Madonna and Kanye West,” the RIAA writes in a letter to Whoisguard.com.

“As stated in the attached subpoena, you are required to disclose to the RIAA information sufficient to identify the infringer. This would include the individual’s IP-address and e-mail address,” the RIAA adds.

One of the torrent site operators targeted by the RIAA told TorrentFreak that the subpoena comes as a surprise. He always responded swiftly to RIAA’s DMCA requests while the court documents suggest that he hasn’t been cooperative at all.

“The RIAA has sent us several DMCA requests in the past and we always honored these,” Bitsnoop’s owner informed us. “Apparently that wasn’t enough, so now they pull this stunt.”

At this point it is unknown what the RIAA is planning to do once they obtain the personal information of the site’s owners. Although it could theoretically be the beginning of a full-fledged litigation campaign against the torrent sites, it seems more likely that the subpoenas will be used to pressure and threaten operators.

During the past year several music industry associations in Europe and Asia have sent requests to domain registrars with a similar objective. The ultimate goal is to make it harder for BitTorrent site operators to continue their business by putting pressure on them, and the companies that provide services to these sites.

A good example is the following sentence in the letter to Whoisguard.com, which goes far beyond the attached subpoena for information.

“We are asking for your immediate assistance in stopping this [linking to torrent files] unauthorized activity. Specifically, we request that you remove the infringing files from the system, or that you disable access to the infringing files, and that you inform the site operator of the illegality or his or her conduct.”

Whatever the true motivation of the RIAA is, with the recent news about domain seizures, extradition requests and these recent subpoenas, operating a BitTorrent site has become a stressful job. Whether this will have the desired outcome for the music industry group in the long run remains to be seen.

TorrentFreak asked the RIAA to comment on our finding but we have not received a response.

The Next Piracy Battle? Illegal Password-Sharing...

 

This could become a huge issue as the cloud starts to mature. Because it's one thing to hack into someone else's music account, or illegally download files. But what if you share passwords, with just one person paying? Should that be illegal?

The right thing to do, of course, is to access your own account - and pay for it.  But in a land of file-sharing excess and freebieentitlement, password-sharing is likely to grow.  Ahead of that curve, legislators in Tennessee have just passed a measure prohibiting password-sharing.  The initiative, backed heavily by the RIAA, would make it illegal for anyone to share passwords to accounts like Netflix, Rhapsody, Hulu Plus, and the Amazon Cloud.  It is currently awaiting the signature of Tennessee governor Bill Haslam, who is likely to approve the measure.    

The ostensible target of the measure is a more professional hacker, one who shares passwords to larger groups of people.  More casual sharing between friends could be overlooked, especially given the difficulties of tracking shared account activity.  But Representative Gerald McCormick, a sponsor of the bill, pointed to a scenario somewhere in the middle. "What becomes not legal is if you send your username and password to all your friends so they can get free subscriptions," McCormick described, a situation that probably involves little profiteering.

And the penalties?  After a service complains, theft of content under $500 would result in a misdemeanor offense - but maximum penalties of $2,500 or a year in jail.  Higher levels of theft would be treated as a felony.

Behind The Scenes: Record Label Demands From Amazon

This is a guest post from Michael Robertson, a 12-year veteran of the digital music business. He is the founder and former CEO of digital music pioneer MP3.com. He is currently the CEO of music locker company MP3tunes..

Amazon defied the record labels by launching an unlicensed personal cloud music service. (Disclosure: I’m CEO of competitor MP3tunes.) Music companies immediately expressed their dissatisfaction and Amazon public stated they would discuss licenses with labels. Since then considerable speculation has swirled about regarding licensing discussions Amazon, Google and Apple are having with the 4 major record labels.

Dominating the discussions is the labels concern that personal cloud services will exacerbate piracy and erode their business even further. Consequently they want to impose substantial restrictions on any such service, but each labels has different concerns and demands. Below are examples of the startling limitations major labels wish to impose on such services.

Universal Music Group is concerned that users will load pirated songs into lockers. Average MP3 players house more than a thousand songs and UMG believes that many were unpaid for. They do not want to see the billions of songs that came from P2P system laundered (think drug money) in a cloud service and become legitimate.

To combat this they want only songs with digital receipts to be able to added to lockers. For some time UMG has been demanding that online music retailers embed personal information in every song they sell. They call it UITS. iTunes has been inserting email addresses into every song while other retailers like Napster are using a unique receipt number. (Techcrunch first wrote about Dirty MP3s a year ago and how these might be used by future cloud services.)

All songs without a proof of purchase would be assumed to be unauthorized and not accepted into the system. Songs ripped from CDs would not have unique identifiers and wouldn’t be loaded. Any song purchased prior to retailers inserting personal identifiers or from retailers who have yet to personalize every song would also be excluded. (To date, Amazon’s MP3 store does not put any unique identifiers in songs despite UMG’s demand that they do so.) Promotional songs download online would also not work.

Sony Music Group shares UMGs concern about the laundering of songs, but seems more concerned about locker sharing and downloads and is demanding restrictions in those areas. Sony believes users will share lockers by visiting each others houses and syncing in each others music. To combat this Sony wants loading to happen from only one computer. Each locker owner would have to designate a single location from which they could upload songs. Users could load music from either their laptop or desktop or office computer but not all three. Their belief is that this will prevent friend to friend file sharing.

Downloading is another area of concern for Sony. To prevent lockers from become Napster like repositories they want to restrict downloading to one emergency download only. Locker owners would only be able to download their music files a single time if they claimed they were lost. All future downloads would be forbidden. This would limit the ability for a locker owner to go to a friends house, download all their music and then have the friend upload those songs as their own. This means that syncing to portable players and smart phones would not be allowed. Neither would download to laptops for offline playback.

Most worrisome to Warner Music Group is that users may setup multiple lockers and the distribute the extra lockers to friends. Imagine if a locker owner setup a locker at Apple and Amazon and then gave their less used locker away or maybe even sold it. What WMG would like to see happen is that a central locker authority would administer all locker assignments. For awhile they were pushing Catch Media as the solution. More recently they may have relaxed their demands in this area and insisted that locker identities be uniquely tied to a valid credit card or some other such verified identity.

The above list of demands is by no means complete but rather an illustration of the labels mindset. There are others issues dealing with simultaneous user access, family accounts, mobile access, local caching, regional restrictions and more. The one company who had such a personal cloud license is the now defunct Lala who had to agree to no downloads whatsoever, no mobile stream (web browser only) and costly per song stream fees.

In addition to usage restrictions, labels are demanding that cloud services pay them an annual per user fee. Labels will demand a minimum per user fee each year and not the more business friendly percentage model. Such a flat fee will mean no free or advertising sponsored service will be possible. For subscriptions services such as Rhapsody and MOG they demand the HIGHER of: per user fee, percentage of revenues or per stream fee effectively boxing in services and insuring they’re never able to turn a profit..

The challenge for cloud services such as Amazon’s is how to appease the record labels and still have a consumer friendly service that is financially viable. Even one of the above restrictions renders a cloud service mostly useless. Combined they would make a locker service utterly worthless, for sure nothing that a music fan would pay for making it impossible for the company to cover the demanded per user fees. Amazon has publicly stated that their position is that a license is not required for a service such as theirs. This issue is currently being litigated by my company in EMI v MP3tunes where we await the Judge’s ruling. With the record labels wide reaching demands it’s difficult to see how Amazon, or any company, could arrive at a workable license for personal cloud music.

Danish Company Says It Can Turn Piracy Into Real Money For Artist

 by Bruce Houghton

Monetizing the millions of music tracks and other files traded illegally each day has felt more like a fantasy than a serious business opportunity.  Bo Schønemann and René Nygaard of Denmark's 7 Sky Media say they've developed a system which makes that fantasy a reality and they are out trying to get the licenses to make it work.

“Our software is designed to play all digital files and locate the copyright holders regardless of where the file came from,” Schønemann told Comon.dk (via TorrentFreak). "We are the only company in the world that can offer the industry earnings from these vast quantities of music, from which they currently do not receive a single penny.”

7 Sky Media would embed its software in devices and a player. When a user plays pirated music on either, an ad appears and revenue is shared with rightsholders. Users can pay a small free go ad-free.

That means that for there concept to work, bit rightsholders and consumers have to agree to play along. But the pair is making headway “We’ve spent 3 years so far on agreements and contracts, this is not just an idea we have, but a real product.” according to Nygaard. Ane their intentions are noble: “My partner is from the music business and we will also use 7 Sky to help the ‘small’ musicians, partly by diffusion, so they can monetize their music without a record label.”

More Legal Services to Combat Piracy?

According to a report by James Myring at BDRC Continental, the best way to counter music piracy is to create more legal services. At the Media Research Group conference in Malta, Myring said that, "If piracy is to be reduced, it can’t be through threats and sanctioning. Carrot and stick need to work together."

His research suggests that legal alternatives like Spotify and other streaming sites have reduced piracy. The more ways that fans have to access music the better. Micropayment systems must be tied to these services if piracy is to be overcome. He states that the reason fans like streaming sites is because they don't want to lose control of their media experience. Myring's assertions allign with comments made by Michael Robertson, founder and CEO of MP3tunes.

In an interview with PaidContent, Robertson expressed his concerns that throwing more money and litigation will not stop piracy. He says give fans what they want:

"You must figure out a way to swim with the tide instead of against the tide—to use people’s innate curiosity and desire to share things they find interesting as a way to drive awareness, and sales, for your business.

To me this is like the drug war. You can spend billions if you want, but you’re wasting your time. You’re better off recognizing that people want immediate access to content—and then get them into legitimate e-commerce activities." (Read on.)

 

Google Hires Top Industry Attorney To Jump Start New Music Service

Google has hired well known music attorney Elizabeth Moody to negotiate with record labels, music publishers and other rights holders for a planned Google Music service.

Sources close to recent negotiations with the label groups concerning similar music streaming services say that each of the four major labels are voicing different concerns making uniform - and profitable - deals difficult.  Moody, a true music industry insider with deep experience working with most of the majors, backed by the deep pockets and prestige of Google, may be able to break the log jam that has kept Spotify and others of launching in the U.S. 

 “This is a really big deal," a former Moody client told TechCrunch. "She and (her law partner) Fred did everyones deal. That is a great hire for Google. The flipside is that I interpret this as another nail in the coffin for music startups…”

Royalty Evolution: Why the UMG+TuneSat Deal Matters...

 Author Info

Tuesday, June 08, 2010

Glance around the industry, and it seems that royalty monitoring, collection, and distribution are hopelessly chaotic affairs.  But that spells opportunity for a number of smart technology plays.

On Tuesday morning, Universal Music Group Publishing officially tapped TuneSat to help monitor performance royalties on broadcast television. TuneSat is mostly a behind-the-scenes, non-hyped company, though its revenue potential could be important. The company scours broadcast television for unauthorized uses of songs, thereby unearthing 'found money' for publishers, labels, and other rights holders.

TuneSat is aiming to monetize royalties "buried under layers of antiquated reporting systems," and this is a company unafraid to name names.  That includes ASCAP, whom TuneSat accuses of relying on "antiquated cue sheets" that are "80 percent inaccurate because they are mostly manual and fraught with error," according to one executive.

Universal Music Group Publishing is obviously paying attention, and TuneSat also just sealed a relationship with SESAC.  But how much money is buried under the traditional tube?  In the US alone, TuneSat estimates that ASCAP, SESAC, and BMI collect and distribute $2 billion annually in broadcast performance licensing income.  Perhaps a few extra billion remain untapped.

Hillary Rosen: First The RIAA, Now BP

From Dave Marsh of Rock & Rap Confidential

"We would have thought it well nigh impossible for Democratic Party operative Hilary Rosen to find a more loathsome employer than the Recording Industry Association of America. Rosen worked for the RIAA from 1987 to 2003, the last five years as executive director. Under Rosen's watch, the RIAA launched its vicious war against music fans, making the words "file sharer" synonymous with "criminal." Rosen shepherded the draconian Digital Millennium Copyright Act through Congress.

For an encore, Ms. Rosen, in her capacity as a managing partner of the London PR firm Brunswick Group, has been hired by BP to put a pretty face on the oil spill in the Gulf. Rosen is in the familiar company of log-rollers: BP has also hired 27 lobbyists who formerly worked in Congress or the executive branch.
 
Whether you want to listen to music or live on a planet not poisoned by corporate greed, Hilary Rosen is there to say 'You can't.'

Feds Investigating Apple's Control Of Music Industry

The U.S. Department of Justice is in the early stages of an investigation into how Apple runs its digital music business, according to several reports. While the probe is broad in scope, reportedly of particular interest to the Feds are alleged heavy handed tactics used against labels that participated in Amazon's Daily Deal promotion, which Hypebot reported in early March.

In 2009, Amazon began asking labels to give it a 1 day exclusive and digital marketing support as part of the Daily Deal package. "When that happened iTunes said, enough of that shit," and began threatening to bury releases that had been featured on it competitor.

Once a beloved and scrappy upstart, the DOJ investigation is further confirmation that Apple's image is shifting to that of corporate behemoth. According to NPD Group data, Apple is the dominant retailer of music downloads in the U.S. with 69% of the market and Amazon is second with just 8%. When physical product is factored in, Apples is still #1 with 26.7% of sales.

“Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple,” Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton told the New York Times.

Inside Amazon's Daily Deal

 

The Daily Deal has been, for all practical purposes, a free promotion subsidized by Amazon. If accepted into the  program, artists and labels are asked for a one day exclusive. During that 24 hours Amazon aggressively discounts the title to between $1.99 and $3.99. In part, to keep each sale eligible to be counted on the major charts, Amazon actually reimburses the labels at the normal wholesale price. In effect, subsidizing about $3 of each purchase.  Amazon MP3 also features the title on its web pages and to the 1.4 million that follow the Daily Deal on Twitter.

Unlike the old price and positioning charges at brick and mortar retail, Amazon and most other online retailers do not charge labels for these promotions.  In the case of the Daily Deal, artists and labels are only asked to promote the release via their web sites, email lists and social networks.

Some label executives worried that deep discounts cannibalized early sales that would have happened at full price. But one major label group recently told its labels that its own studies had shown that as much as 95% of all Daily Deal sales were incremental and would never have happened without the discount.

Apple Fought Back

Steve Jobs has often attempted to position himself as a champion of music and Apple as music's savior. But not this time.

Starting early last year, Jobs & Co. reportedly made it clear to almost every major and indie record label that participation in Amazon's Daily Deal would cost then dearly at iTunes. Afraid of Apple's power, most labels capitulated.

WMG & UMG Drop Project Playlist Lawsuit

(UPDATED) WMG has also dropped it's lawsuit against Project Playlist, Billboard is reporting. It is unclear if WMG will also license catalog to Playlist.com. The site has now settled it's lawsuits with all four major label groups.

Universal has dropped its lawsuit against Project Playlist clearing the way for the startup to offer music from three of the all four major label groups. EMI and Sony had settled previously. "While it was unfortunate that legal action was necessary, we are pleased to have resolved this litigation in an amicable manner," Universal said in a statement. Terms of the settlement were not announced.

Music lovers had been flocking to Project Playlist (now playlist.com), which grabs free music from around the web to create custom playlists, until the lawsuits started flying. During that time, then chief executive Owen Van Natta left to helm MySpace, lasting there only a few months. With increasing competition from a variety of online and mobile music services that each attack playlists from a different angle, it's unclear if Project Playlist will be able to grab fan attention a second time.

Songwriters: piracy "dwarfs bank robbery," FBI must act

By Nate Anderson 

The Songwriters Guild of America has a message for the government: start prosecuting file-sharers, both criminally and civilly, because file-sharing is much worse than bank robbery.

"There are numerous economic crimes of much lesser magnitude (such as bank robbery) that are routinely and fully investigated, for which law enforcement agencies such as the FBI have significant resources," complains the Guild (PDF). "By contrast, online copyright piracy dwarfs bank robbery in causing economic losses, yet the FBI has limited criminal investigative interest and no civil mandate whatsoever to pursue this devastating economic harm. This inequity must change."

The Guild demands that the Department of Justice make criminal prosecutions of "willful copyright infringement" a higher priority; right now, the issue is not classed as a "serious" crime. 

"Unfortunately, this misguided attitude allows domestic and foreign pirates to decimate an industry—intellectual property—where the United States enjoys a true global competitive advantage," says the group.

In addition, the federal government should do whatever it takes to start bringing civil copyright lawsuits against online offenders, something that is currently up to the private sector. This would require a change to the law; something along these lines was considered in the PRO-IP Act, but was ultimately scrapped before passage.

The Guild contends that its members simply aren't able to "sue thousands of infringers in the Federal Courts"—but the government could. (And should.)

The suggestions were all directed at the new Intellectual Property Enforcement Coordinator in the White House, Victoria Espinel, whose position was created by the PRO-IP Act. Espinel is currently working on her legally mandated Joint Strategic Plan to bring all the forces of government to bear on counterfeiters, pirates, and trade secret thieves. She asked for public comment—and wow, is she getting it.

Still, the Songwriters Guild had nothing on the MPAA, RIAA, and other "creative community organizations," all of whom suggested to Espinel (PDF) that good ways to deal with online piracy include using:

• Technologies to detect, monitor (and filter) traffic or specific files based on analysis of information such as protocols, file types, text description, metadata, file size and other “external” information;
• Content recognition technologies such as digital hashes, watermark detection, and fingerprinting technologies;
• Site blocking, redirection with automated warning systems/quarantine of repeat offending sites;
• Bandwidth shaping and throttling;
• Scanning infrastructure (the ability to subscribe to RSS-style data feeds as sites get new postings of content and links (for linking, streaming, and locker sites)

Music industry needs clear strategy and control over illegal downloads

The Times

It’s 4am in a hotel room far from home and you’ve just broken up with your lover. Aside from the minibar, there’s no empathy on offer: not a soul to talk to, no shoulder to cry on.

You update your Facebook status with news of the split. Seconds later someone on the other side of the world sends your smart phone a digital version of What Difference Does It Make?, allowing you and Morrissey to wallow together in self-pity. Someone else sends you Paul Simon’s Fifty Ways to Leave Your Lover, which cheers you up a bit. This may sound far-fetched, but the hope of the music industry rests upon such connections. A future where songs are not bought, but accessed via telephones, sent across cyberspace, and passed around friends through platforms such as Twitter, is what is hoped will save music from the twin ravages of illegal downloading and a lack of strategic direction.

The full extent of the crisis was illustrated with the news that EMI, the label that gave the world the Beatles and Pink Floyd, faces the possibility of break-up if it fails to find £120 million by June. The smallest of the “big four” record labels, it has suffered from the battle between its parent company and bankers over a £2.6 billion debt — despite a jump in profits and the signing of 200 artists in 18 months.

“EMI are perceived to be in a terrible situation, worse than they actually are, and that’s putting off some artists,” said James Sandom, manager of the Kaiser Chiefs. “It’s a shame because they’ve got some great creative people and are out to prove a point.”

The internet is the big battleground. Piracy remains rampant, with more than seven million illegal file-sharers in Britain alone. Shops such as Woolworths and Zaavi have collapsed, further depressing CD sales. Albums, which bring in the most amount of revenue to record labels, have been hit by digital websites such as Apple’s iTunes that allow users to “cherry-pick” their favourite singles. Falling revenue has had an inevitable effect on talent.
“The number of artists getting signed is down 50 per cent from 2006,” Mr Sandom said. “The class of 2003 and 2007, including Franz Ferdinand and the Kaiser Chiefs, were able to build massive careers. There’s not been one artist in the past three years, apart from Kings of Leon, given the backing to achieve that success.

“There are a couple of the major labels that have made it very clear internally that they don’t believe signing bands is a viable prospect. Solo artists need less investment, they either work on the radio or they don’t.”
The desperate situation has pre-empted two radical approaches: labels have invested in new subscription services such as Spotify, and artists have increasingly moved towards corporate sponsorship.

“As an industry we’ve fought back from near collapse,” said Paul McGuinness, the U2 manager who masterminded the Irish band’s current multimillion-pound sponsorship deal with RIM’s Blackberry.
For the right band, Mr McGuinness said, “Record label funding can be replaced by the right corporate sponsor. And falling CD sales can — hopefully — be made up for by subscription packages.”

Feargal Sharkey, the former lead singer of the Undertones and chief executive of UK Music, agreed. “Research shows that 80 per cent of 14 to 24-year-old UK filesharers would pay for a legal service. Quite clearly, this is the direction in which we need to be heading.”

Daniel Ek, 27, the founder of Spotify, the online music site, told The Times that he expected his company to be one of a few players in a $50 billion-dollar industry in five years’ time.
Spotify currently has seven million users in Britain, Spain, France, Sweden, Norway and Finland, of which about 5 per cent pay a monthly subscription fee to listen to advert-free music. Based on recent venture capital investment, the four-year-old company is now worth about $250 million (£164 million).

“By 2012 half of all telephones will be smart phones and we’ll see impressive growth in ‘access’ music services such as Spotify,” Mr Ek said. “The overall industry will be worth $40 to $50 billion dollars and, if you look at how internet companies develop, there will be only a couple of really dominant players. We hope to be one of them.”
If Mr Ek’s valuation is correct he will become a very rich man. The entrepreneur reportedly co-owns 47 per cent of Spotify along with its co-founder, Martin Lorentzon. But Spotify’s growth particularly its delayed American launch, has been hampered by concerns that not enough users would upgrade to its “premium” service.

“While Spotify Premium is a good product, we doubt that the majority of music fans will want to sign up to a monthly subscription service in the near term,” a recent report by Enders Analysis concluded. “The majority of people do not spend £10 a month on music.” Record labels doubt that advertiser-funded services can provide a sustainable business model.

Edgar Bronfman Jr, chief executive of Warner Music, has condemned such services as “clearly not positive for the industry”. Universal Music, however, has praised Spotify as a “sustainable financial model”.
Mr Ek expects the number of paid subscribers to reach 700,000 “in the not too distant future”, he said — and growth in subscribers has “shot up” since his company introduced an iPhone application last September. He is also working with record labels to offer incentives to premium users, such as exclusive tickets to gigs and early song releases.

Spotify is also looking to introduce new “household” subscription services, allowing a parent to pay for the family’s content, as well as partnering with more internet service providers and telephone companies.
In a few years time, Mr Ek predicts, “I will be able to update my status on Twitter to ‘I’m feeling lonely’ and someone will send me a track to cheer me up. But we’re only at the beginning. This will only work if there’s massive adoption of people paying for music.”

Those in the industry accept that the days when record labels such as EMI could spend an alleged £200,000 a year on sex and drugs for artists were over. “There are concerns over how much money advertising-funded models will bring in,” said Jon Webster, the chief executive of the Music Managers Forum. “But we want to embrace new models.

“There are people who believe the music industry should have the same revenue as it had ten years ago. But unfortunately the world has changed.”
And, if any further warning were needed, Spain offers a salutary lesson to those who doubt the effect of music piracy, which the British Recorded Music Industry, or BPI, claims cost the worldwide industry £1.2 billion between 2008 and 2012. There, the music market is currently about a third of its 2001 level.
“We have made a great effort to create new business models on the internet,” said Salvador Cufi, chairman of Musica Global, a Spanish independent label. “But there is no way in today’s market that we can make those investments profitable. It’s a very sad situation that we can no longer invest in new artists in the way we would like.”

Plummeting investment has seen local artist album sales in Spain fall by 65 per cent.
“Spain is a sign of what could happen in the UK if we don’t deal with piracy and invest and support new services,” said John Kennedy, chief executive of the IFPI, which represents the recording industry worldwide. “I don’t know how many years we can cope with revenue declines of 8 or 9 per cent.”
So what of EMI? Elio Leoni-Sceti, chief executive, accepted that “the issues around the debt are not easy”. But he said he was confident that the label would cope.

“We are a leaner, fitter organisation,” he said. “We’ve removed any bureaucracy, left our baggage behind and got better at listening to both our consumers and our artists.”
The question remains: in five years time, will we be listening to them?

Making Art and Commerce Thrive in a Hybrid Economy

February 26, 2010 - www.wellroundedradio.net

In many music and entertainment circles, the name Lawrence Lessig needs no introduction, but for those who don't know his work, here's some background.

Lessig is a lawyer and activist whose interests are mostly in intellectual property, copyright, technology, and political reform.

He's has written five influential books, including Code and Other Laws of Cyberspace (2000), The Future of Ideas (2001), Free Culture (2004), Code: Version 2.0 (2006), and Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008).

Remix was just published in paperback in October 2009 .

Over the past 10 years, Lessig has worked for both Harvard Law School and Stanford Law School. He is currently a lawyer at Harvard Law School and director of the Edmond J. Safra Foundation Center for Ethics at Harvard University.

Lessig is a founding board member of Creative Commons. In 2008, Lessig launched the Change Congress campaign, now called Fix Congress First. Lessig talks about Creative Commons during the interview, but in a nutshell it's an organization with copyright tools that allows content creators to give various levels of freedom to others for them to remix and build upon the original work.

The idea behind remix culture is how an artist can take a work that a pervious artist has produced and build upon it to create something new. The term has become more commonplace in the last decade, but in fact the concept has been in use for decades, most notably in rap music starting 30 years ago.

Growing up in Queens, New York, I was lucky enough to hear the rap bands of the first era pretty early on (granted, thanks to bands like Blondie and The Clash and college radio putting Grandmaster Flash, The Sugar Hill Gang, Kurtis Blow, and Afrika Bambaattaa on my radar) which usually utilized sampling techniques when creating their music.

I have long been a fan of the groups who fine tuned the ideas behind audio sampling to perfection, in Long Island's Public Enemy and De La Soul. I’ve always thought both groups pushed the ideas behind sampling in ways that few others did before or since, albeit in very different directions.

With Public Enemy’s 1988 album It Takes a Nation of Millions to Hold Us Back and De La Soul’s3 Feet High and Rising, at the moment it seemed like the idea of what music “is” was being reinvented. But, after a series of lawsuits for a variety of musicians and labels, the art of sampling and remixing was largely hobbled, in either using others work with or without their consent.

Twenty years later, it is still mostly the domain of those willing to tread in dangerous waters or for artists who want to engage their own fans by allowing them to remix work as part of the growing participatory culture community. For remix artists who might be looking to push their ideas further, it’s unlikely they can put their work into the public without a sizable budget.

Having read all of Lessig’s work and seen two recent documentaries about the remix culture (Brett Gaylor’s RIP: A Remix ManifestoCopyright Criminals), I wanted to speak with Lessig about how current musicians could utilize Creative Commons and share with their own audience as well as look at how we music fans can better understand this era of shared creativity, which dramatically changes the idea of those performers vs. us in the audience.
and Benjamin Franzen’s
In addition to these films and Lessig’s Remix book, some good reads on the subject include DJ Spooky’s book Sound Unbound (2008) and Matt Mason’s The Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism (2009). The show includes music from the earlier era of sampling as well as some recent examples of mainstream musicians offering up their work for remixing, including David Byrne and Brian Eno, Radiohead, and Bjork.

US Court Brings Back Price Fixing Lawsuit Against Major Record Labels

For many years, we've wondered why the major labels haven't gotten in trouble for what appears to be clear price fixing -- having all of the major labels band together to both demand identical wholesale pricing and attempt to dictate retail pricing by partners as well. There have been various investigations by both local and federal officials, along with a few lawsuits -- but nothing has really gone very far. One lawsuit was tossed out by the district court back in 2008, but in a surprising move, the 2nd circuit appeals court has revived the lawsuit, claiming that the evidence is "sufficient to plausibly suggest" price fixing by the major labels with regards to digital music. So now it goes back to the lower court. I still doubt this will really have much of an impact, but it's nice to see some recognition of what's seemed pretty obvious for quite some time.

EU urged to crack down on internet piracy

January 11, 2010 - by Katie Allen The Guardian

European trade unions and industry groups call for tighter controls on illegal filesharing and more pressure on ISPs

In a controversial blog, Lily Allen gave her support to plans to crack down on copyright infringement. Photograph: Leon Neal/AFP/Getty Images

European trade unions and industry groups from TV, film and radio have joined Bono, Lily Allen and other big-name artists in calling for wider legal crackdowns on internet piracy.

Workers' representatives and trade groups from across Europe have formed a coalition to urge the European Union to formally adopt a strong stance against illegal filesharing and to put more pressure on internet service providers (ISPs) to help curb piracy.

The calls follow headline-grabbing plans from the UK government to curb copyright infringement, including sending warning letters to persistent unlawful filesharers. Under the proposals, if piracy is not reduced by 70%, the government will introduce a series of "technical measures" that could include suspending a pirate's broadband connection. The plans have drawn intense criticism from ISPs and consumer groups but support from musicians, including Allen, who collated the views of various artists in a controversial blog last autumn.

The European Audiovisual Social Dialogue Committee is now calling for "improvements to the legal framework" throughout the EU to encourage producers, broadcasters and content creators to provide more lawful online services.

"The unauthorised filesharing of protected works and performances – as well as the need for all right holders to derive tangible benefits from the exploitation of their work – are important issues that need to be better recognised by the European commission and other EU institutions," the committee – whose members include the Association of Commercial Television in Europe, the International Federation of Film Producers Associations and the European Federation of Journalists – said in a joint statement.

The committee wants the internal markets commissioner to "ensure that all member states have the necessary infrastructure to effectively enforce copyright protection laws and ensure all ISPs work to prevent illegal P2P filesharing and other IP infringements through their services."

The commission is also being asked to carry out research into the economic effects of online piracy, including possible job losses and lost revenues, and to consider introducing or reviewing EU legislation to protect copyright holders.

The UK grouping of entertainment industry trade unions, called the Creative Coalition Campaign, backed the Europe-wide calls.

"Although the UK is taking a lead with the proposals outlined in the digital economy bill, unfortunately, other EU countries are lagging behind, putting the whole of the EU's creative sector at serious risk," Christine Payne, general secretary of Equity and chair of the Creative Coalition Campaign, said.

But the demands are likely to face strong opposition from ISPs. The UK plans have already been strongly condemned by TalkTalk as draconian and unlikely to work.

Last week the broadband company, part of Charles Dunstone's Carphone Warehouse business, criticised comments by Bono, the U2 frontman, questioning ISPs' claims that they cannot always know the nature of internet traffic.

Bono cited "America's noble effort to stop child pornography" as proof to the contrary, but Andrew Heaney, TalkTalk's executive director of strategy and regulation, said: "It is outrageous to equate the need to protect minors from the evils of child pornography with the need to protect copyright owners.

"Bono obviously does not understand how simple it is to access copyright-protected content without being detected. P2P filesharing can be spotted (albeit at great cost) but there are dozens of applications and tools out there which allow people to view content for free and no amount of snooping can detect it."

Artist Thinking vs. Lawyer Thinking

January 08, 2010

from the which-one-is-better-for-creativity? dept

Darren alerts us to an interesting writeup by a performance artist who can't do a certain performance because of licensing issues. It's not that the musicians don't want their work used by the artist. In fact, they've spoken and they would love for their music to be used. But, of course, they don't own the copyrights on their own music, so the performer needs to work through all the licensing issues, which is simply too much of a pain -- so the whole performance gets dropped:

The thing is, I've spent a lot of time learning how to make art. I have spent no time learning how to negotiate the licensing of music. These are very different skills! It's bizarre that in order to share my art, I need to have the latter skill set, or hire someone who does. The lack of that skill set results in my work being kept secret.

It's really backward. I would love to talk to artists directly, and negotiate something that's mutually beneficial. Right? My work calls attention to their work. I'm a big fan of their work. I want to support their art and their livelihood. I want everyone to know about and support their work. It's such a natural alliance, but it's perverted by this system we have now.

Will France's Three Strikes Law Matter?

by Mike Masnick

Mon, Jan 4th 2010

from the we-shall-see... dept

While some are saying that France's "three strikes" law has been delayed until April due to data protection issues, others are reporting that the law is in effect as of January 1st, and people should start getting "warning" messages soon. That same article quotes a French senator who believes that 95% of people will "finish with that bad usage" after the second warning message they receive, but others figure what's more likely is that people will just move on to other ways of accessing files -- ways that can't easily be tracked. My guess is that like when Napster was shut down or with Sweden's IPRED law, there may be a temporary bounceback in sales, but as more people learn of ways to go back to accessing music for free in ways that are less likely to be caught, they will do so. Quickly. As much as the entertainment industry and some politicians have trouble comprehending this, you can't stop what technology allows.

Big Music: damn the numbers, give us antipiracy laws anyway

If P2P use is declining or holding steady without new "antipiracy" laws, are those laws still needed? Music trade groups say yes.

The UK has just started to consider a new Digital Economy bill that could eventually usher in sanctions for illegal P2P use. From a rightsholder perspective, this makes it an inconvenient time for studies showing that P2P use is actually dropping, so the music industry commissioned a new study of its own which shows that other techniques for infringing copyright are picking up the slack. Would you believe that newsgroup usage is soaring?

In summer 2009, a survey found that UK broadband users who also happened to be "music fans" were using P2P less than ever—only 17 percent swapped copyrighted files with regularity, down from 22 percent back in 2007. And rather than switching to other piratical modes of acquisition, many of these users were just going to legal streaming services like Spotify, YouTube, and MySpace instead.

While good news from one perspective, such a finding could put a damper on the idea (found in the new Digital Economy bill) that the Secretary of State should be granted fast-track authority to impose all sorts of sanctions on Internet-using copyright infringers. BPI, the UK's major label music trade group, has now countered with a new study of its own, one which is big on percentages but light on real numbers.

The study was performed by Harris Interactive in November 2009, and even BPI's writeup of the results has to admit that "peer-to-peer use remains level" at 23 percent. But, says the trade group, "non-P2P methods to acquire music illegally have grown significantly in last six months, and are expected to keep growing," and it has the shocking stats to prove it.

In the last six months, the survey shows big increases in the use of overseas unlicensed MP3 pay sites (47 percent surge!), newsgroups (42 percent increase!), MP3 search engines (28 percent upswing!) and forum, blog and board links to cyberlockers (18 percent explosion!).

Must! Act! Now!

But percentage increases don't mean much on their own, and it's clear that the non-P2P usage stats are relatively low. BPI stresses that P2P remains by far the largest threat to its business, though just about any data can justify a call to pass the Digital Economy bill.

For instance, though the industry's own evidence shows P2P use holding steady, and outside surveys show it declining, BPI boss Geoff Taylor stresses the still-too-high P2P usage level in his call to action. "It’s disappointing that levels of illegal P2P use remain high despite this and the publicity surrounding imminent measures to address the problem," he said. "It's vital that those measures come into force as quickly as possible."

Shift the discussion to non-P2P methods of infringement and the argument changes dramatically. It's not about high levels, but growth rates. "The growth in other, non-P2P methods of downloading music illegally is a concern, and highlights the importance of including a mechanism in the Digital Economy Bill to deal with threats other than P2P," he said in the same press release.

It's easy to look at all of this another way, too, which is that P2P is a serious issue—but it's not singlehandedly destroying music. Despite numerous claims and studies over the years about P2P sucking up anywhere from 40 to 90 percent of backbone Internet bandwidth, the P2P usage rate just isn't that high.

The BPI-commissioned study puts P2P use in the UK at 23 percent (among Internet users aged 16-54). The global music industry trade group IFPI says that P2P use hovers at around 18 percent in Europe as a whole. And the Leading Questions survey from summer 2009 puts the UK P2P use rate at only 17 percent—and it even included 14 and 15-year olds in its study. The numbers are certainly high, but are they we-demand-you-rewrite-the-laws-immediately high?

Plenty of skeptics say no, and not just the usual digital rights advocates. This summer, EU Commissioner Viviane Reding said that increased piracy was a "vote of no-confidence in existing business models and legal solutions," adding that it should be a "wake-up call for policy-makers." The UK's All Party Parliamentary Communications Group also concluded this year that "much of the problem with illegal sharing of copyrighted material has been caused by the rightsholders, and the music industry in particular, being far too slow in getting their act together and making popular legal alternatives available."

At least the music industry has recognized this problem for some time, and BPI's Geoff Taylor begins his recent statement by stressing just how far the industry has come: "There are now more than thirty-five legal digital music services in the UK, offering music fans a great choice of ways to get music legally."

Peter Jenner: Exploring the future of copyright

Clearly the EU does not think this, nor anyone else who is not dependant on a large salary from a record (or other ‘content’)  company, or else is living in a time warp. The internet is a totally different method of distribution and reproduction, which relies on the end users manufacturing or storage capacity for reproduction and their broadband subscription for distribution. Furthermore each copy increases the total supply of files and this growth in the supply has no limit.

Forcing the legal and administrative system that was developed along with the growth and change in the music distribution schemes of the pre digital age into the digital world has clearly broken down. So much so that the EU has recognised it. So fundamental is the inevitable change in the market, and so incapable of being resolved by reference to traditional copyright and administration that they have asked for help. This call for help is broader and more daring than anything I have seen from any governmental or administrative body.

As an industry we need to respond in the same bold way. We need to ask what the industry could look like if we had our way in five (or ten) years time. Can we all find the humility, and collegial recognition of our collective mutual dependance to present a picture of the future which the bulk of the industry could imagine being  politically, socially and economically viable for all the parties?

Let us try to forget our disputes and discuss like grown ups how we could shape an industry that rewards the creation of recorded music, the investment in it and  the marketing and promotion of it. The EU wants a quick response, as the matters are urgent, but we need to make suggestions for structures that can provide the new music that the public want to hear and that makes enough money for everyone who needs to be involved to be able to make a return on their investment of time, money and creativity.

But this will need to be a flexible structure that can adjust to unimaginable changes in the next decades. The old copyright system evolved over a couple of hundred years and adjusted to huge changes in technology, but it has finally hit a wall. Are we capable of finding answers for the next 10 years, let alone the next century?

One thing is for sure: the whole industry needs to look at the possibility of  new models that could work for all sectors in principle.Then we would all need to haggle over how any spoils should be divided. Radically new models require radical new thought about how any net revenues should be divided between creators and enablers, and between recording and writing. The old splits are a reflection of the varied contributions in terms of investment by the various parties involved, albeit as far as I am concerned imperfect ones.

We all need each other, writers, performers, recording companies, distributors, promoters, publishers, retailers etc, but we need to have grown up discussions about how the responsibilities, investment and creativity should be rewarded in the new digital environment, and how in turn we all interact with the digital distributors and the public, so that they too can live with the necessary compromises. One thing the industry will have to recognise is that control is severely limited in the new world and that moral rights need redefining in the new environment. These major changes in our rights will be hard to make, but financial compensation may make the pain less unbearable, but that price must be high.

I will be chairing a round table discussion* at MIDEM looking five to ten years ahead and trying to see whether any agreement can be reached about what the industry of the future might/should look like. Admission will be by invitation and limited in numbers, but I do not think it should just be for people I happen to know, so if anyone would like an invitation to attend let me know and I will try to enable as many to come as is possible- but first come, first served.

Net Neutrality: Vuze Joins 24 Leading Companies

Today, Vuze co-signed a letter to the FCC supporting an open Internet with a group of 24 internet CEOs and founders, including Amazon, Craigslist, Digg, eBay, Facebook, Flickr, Google, IAC, LinkedIn, Skype, Tivo, Twitter, YouTube, and Zynga.

 Back in 2007-08, Vuze was an early advocate for the net neutrality movement when we took Comcast to task for unfairly discriminating against p2p traffic.  The FCC agreed with us, and vowed to prevent cable companies and ISPs from unfairly discriminating against internet traffic in the future.  Since then, we’ve continued to consistently encourage the FCC to actively guard net neutrality.

As a small start-up, this government advocacy takes up valuable time, resources, and executive bandwidth.  However, the Vuze team firmly believes that the net neutrality cause is well worth our efforts.  There is an inherent conflict of interest in network providers (cable companies / ISPs) providing content services while arguing that they should be allowed to prioritize some content types over others.  The Comcast debacle proved the danger of not remaining vigilant, and since then, other cable operators have gone down a similarly dangerous path.

At the end of the day, Vuze simply wants a level playing field.  This is why we continue to advocate net neutrality, and why we were pleased to sign today’s letter, reinforcing the idea that:

An open Internet fuels a competitive and efficient marketplace, where consumers make the ultimate choices about which products succeed and which fail. This allows businesses of all sizes, from the smallest startup to larger corporations, to compete, yielding maximum economic growth and opportunity.

Dec. 7, 1999: RIAA Sues Napster

By David Kravets

1999: The Recording Industry Association of America sues Napster, the online, peer-to-peer file sharing service that’s allowing millions of computer users to score free, copyright music. The rules are about to change.

Napster founder Shawn Fanning won rock-star celebrity with the service. But music-industry heads were spinning.

So, the RIAA sued Napster and all of its financial backers in federal court in San Francisco. The outcome eventually defined the rules of online, peer-to-peer file sharing networks.

The case began 10 years ago today and dragged on for almost eight years.

A federal judge and an appeals court in San Francisco both ruled in 2002 that Napster was liable for contributory or vicarious copyright violations, because it was allowing millions of users to download music for free. Napster eventually shut down and went bankrupt, later re-emerging as a legitimate, online music service.

The Napster trial was about big money. Along the way, the case mutated into a cannibalizing feeding frenzy: The music industry was searching for deep financial pockets, and targeted one of its own.

With a bankrupt Napster unable to cough up big financial damages, the industry turned to the transnational German media conglomerate Bertelsmann. The lawsuits accused Bertelsmann of copyright infringement for propping up Napster financially with loans totaling $85 million. The lawsuits claimed the firm wanted “to preserve Napster’s user base for Bertelsmann’s own commercial advantage.”

At the time of the loans, Bertelsmann’s chairman, Thomas Middelhoff, explained that “Napster has pointed the way for a new direction for music distribution, and we believe it will form the basis of important and exciting new business models for the future of the music industry.”

Bertelsmann paid millions of dollars to settle the claims. The media concern agreed in 2006 to pay the world’s largest label, Universal Music Group, $60 million to settle the allegations. EMI got an undisclosed amount in 2007, and Warner Music Group settled that same year for $110 million.

The Napster case closed its final chapter in August 2007, when Bertelsmann agreed to pay the National Music Publishers Association $130 million to settle the remaining copyright claims.

The case also served as the impetus, in part, for the RIAA’s litigation campaign against individual users, as the industry could not keep up a legal game of Whac-A-Mole against flourishing file sharing services like Kazaa and Limewire. In the last six years, the RIAA has filed about 30,000 copyright cases against individuals, most of whom have settled out of court.

The two individual defendants who went to trial were assessed more than $2 million combined in damages.

------------------------------------------

Major Labels Accused Of $60 Billion Worth Of Copyright Infringement In Canada

from the oops dept

The major labels and their friends like to throw around huge numbers of "damages" when it comes to copyright infringement. But how about when they're on the receiving end of a copyright infringement lawsuit. Up in Canada, there's a class action lawsuit against the Canadian divisions of all of the major record labels, suggesting that the labels have infringed on the copyrights of artists to the tune of $60 billion. As Michael Geist explains:

The claims arise from a longstanding practice of the recording industry in Canada, described in the lawsuit as "exploit now, pay later if at all." It involves the use of works that are often included in compilation CDs (ie. the top dance tracks of 2009) or live recordings. The record labels create, press, distribute, and sell the CDs, but do not obtain the necessary copyright licences.

Instead, the names of the songs on the CDs are placed on a "pending list", which signifies that approval and payment is pending. The pending list dates back to the late 1980s, when Canada changed its copyright law by replacing a compulsory licence with the need for specific authorization for each use. It is perhaps better characterized as a copyright infringement admission list, however, since for each use of the work, the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee.

Over the years, the size of the pending list has grown dramatically, now containing over 300,000 songs. From Beyonce to Bruce Springsteen, the artists waiting for payment are far from obscure, as thousands of Canadian and foreign artists have seen their copyrights used without permission and payment.

And yet, amazingly, the record labels -- these "strong defenders" of the importance of copyright and paying for every use -- somehow have decided that it makes no sense to pay this bill. The list itself details about $50 million in unpaid royalties that are owed, often to well known musicians who it would be quite easy for the industry to find and pay up. As for the $60 billion number? Well, the class action lawsuit that's been filed seeks statutory damages starting at $20,000 per infringement and going up from there. Given that these same record labels have been defending those same (or, similar, in the US, at least) statutory rates for infringement, you have to wonder how they can realistically claim that those statutory rates shouldn't apply to themselves as well.

Once again, though, we're seeing what's really happening. The record labels are copyright defenders only when they profit unfairly from it. When they can screw over others via ignoring copyright, they have no problem doing so.

A Push in Law Schools to Reform Copyright

In July, a U.S. court in Boston rendered a six-figure judgment against Joel Tenenbaum, a 25-year-old Boston University doctoral student, for illegally downloading and distributing 30 songs over the Internet.

The $675,000 judgment, or $22,500 per track downloaded, was neither the first nor the heaviest assessed against an individual for downloading and file-sharing copyrighted music without a license. But it has ignited activism and fierce debate on university campuses on the future of digital copyright.

Since 2007, U.S. university students have been a prime target of a litigation campaign by the Recording Industry Association of America, or R.I.A.A., the music industry trade group that has found university campuses to be hives of file-sharing activity.

“The music industry is acting like a digital police force,” Charles Nesson, a Harvard law professor who defended Mr. Tenenbaum at trial with the assistance of law students, said in a phone interview from Boston. “Academia must get involved, to bring fairness to the process.”

Mr. Nesson, who is also the director and co-founder of the Berkman Center for Internet and Society, a cyberspace research center at Harvard Law School, is a passionate proponent of social change via the Internet.

“Joel was just a kid doing what kids do on the Internet,” Mr. Nesson told the court. The judge, however, ruled that Mr. Tenenbaum’s infringement of copyright was incontrovertible, and the jury found it to be willful — a finding that under the U.S. Copyright Act of 1976, as amended in 1999, rendered him liable for a fine of up to $150,000 per song.

A report in June by the analysis firm Forrester Research said that 27 percent of peer-to-peer, or P2P, network music sharers in the United States last year were in the 18 to 24 age group and 43 percent in the 25 to 34 age group. File sharing, a largely clandestine activity, is hard to measure, but Forrester said that, based on admitted cases, it estimated the number of file-sharers, as a percentage of all Internet users, to be two to three times greater in Europe than in the United States.

“Downloading is so easy, and there is so much free content on the Internet, it is hard to distinguish between illegal downloading, streaming free content and copying from a friend’s laptop,” said Rana Nader, a recent law graduate of Université Panthéon-Assas, in Paris, who also has a law master’s degree in multimedia and information technology from Kings College in London.

“When the product is digital, it does not feel like stealing,” said Ms. Nader.

In the past decade, peer-to-peer technology companies have mutated endlessly and rapidly in cyberspace, becoming increasingly difficult to police.

In the 10 years since Napster first offered its P2P service, the ability to create, access and swap music in user-friendly MP3 format has revolutionized the music industry for a generation of musicians, producers and consumers.

But along with ease of access has come legal uncertainty and risk.

“Internet has helped develop new forms of amateur entertainment,” said Mr. Nesson. “You no longer need a ‘label’ to put out a good song. Soon, we will not be able to tell what is copyrighted and what isn’t. That is why defining the limits of copyright and public right is fundamental to the development of cyberspace.”

Law school teachers are active participants, in classrooms, in the courts and before legislative assemblies, in the debate on how to reform laws often dating from the age of vinyl.

“File sharing is the way music is accessed today,” said Daniel Gervais, professor of international intellectual property law at Vanderbilt University in Nashville, Tennessee. “Our students ask, ‘Why can’t we continue to do it, but pay for it?”’

Last August, Mr. Gervais, who is also affiliated with the University of Ottawa in Canada, received funding from the Ontario Province government to propose changes to Canadian copyright law to meet the needs of users of copyrighted material. Fifteen students are helping him to complete the project.

“We are making ourselves heard by the legislature and the courts,” Mr. Gervais said.

--------------------------------------------------------------------------------------------------------

November 30, 2009

From The Economist print edition Nov 12th 2009

The battle against online music piracy is turning. A return to growth will take a good deal longer

Rex Features

“ROCK and roll is dead,” sang Lenny Kravitz. It is certainly poorly. Music was the first media business to be seriously affected by piracy and has suffered most severely. Yet the prognosis is improving. While it is by no means over, the struggle against music piracy is going better than at any point since the appearance of Napster, a file-sharing service, ten years ago.

It has been a brutal decade. In many countries music sales to consumers have fallen by more than a third. Even Apple’s popular digital iTunes store is little more than a niche service: fully 95% of downloads are illegal, according to the International Federation of the Phonographic Industry (IFPI), a trade group. Established bands have been able to raise ticket prices in response. But by reducing the money available to sign and tout new artists, file-sharing has made it harder for bands to become established. Paul McGuinness, who manages the band U2, says the whole “starmaking apparatus” is damaged.

The music business is now doing two things right. First, it has built a better stick. Most countries have virtually abandoned the practice of suing people for downloading copyrighted files. The favoured approach these days is known as “graduated response” or “three strikes and you’re out”. People who are suspected of trading media illegally are sent warnings. If they fail to stop, their internet-service provider (ISP) may slow their connection. If that fails to deter, they may be temporarily cut off.

Graduated-response laws appeared this spring in Taiwan and South Korea—an advanced market where digital music has overtaken sales of CDs and DVDs. In October, following many political and legal hitches, they were enacted in France. The British government is expected to announce similar measures on November 18th. Almost everywhere in the developed world, such laws are being debated. Even where they are not (America, for example), ISPs are working quietly with the record industry to similar ends.

The trouble with the old practice of suing people for swapping music is that it is slow, expensive and limited. In most countries, being prosecuted for file-sharing is a little like being struck by lightning. The exception is Germany, where a cheap, efficient legal system has made it possible to launch some 100,000 prosecutions. In the past two years the proportion of German internet users who share files illegally has dropped significantly. It now stands at 6%, according to Jupiter Research—less than in any other big European country. Graduated response ought to make it possible to reach many more people, reckons Steven Marks, general counsel for the Recording Industry Association of America.

The second change is that the industry is offering tastier carrots. These days the music associations talk less about lawsuits and more about cultivating alternatives to piracy. The past year has seen rapid growth of digital music services that accept the post-Napster consensus that music should be free, or at least appear to be free. The companies involved range from Google, which now facilitates music streaming from its search page in America, to Nokia, which bundles access to a music-download service with some of its mobile phones. “The next big thing is a dozen different things,” says Thomas Hesse of Sony Music Entertainment.

The hottest product is Spotify, which has been downloaded to 6m computers in Europe. Spotify streams tracks free, interrupted by minimal advertising. Customers can pay a monthly fee to get rid of the advertisements or to install the application on iPhones and other mobile devices. Although streaming a song is not the same as owning it, Spotify has proved a compelling alternative to illegal file-sharing.

Ahoy there, me hearties

The effect is clearest in Sweden. That country incubated Spotify and The Pirate Bay, a popular website that allowed people to find pirated files easily. In April four people associated with the website were found guilty of copyright infringement. At about the same time Sweden enacted a law forcing ISPs to reveal more information about their subscribers. In the past, such legal actions have led music fans to find new ways of sharing files. Not so this time. In June a poll carried out by GfK, a market-research firm, found that 60% of Swedish file-sharers had cut back or stopped altogether. Of that group half had resorted to advertising-supported streaming.

Potentially more important are the efforts of ISPs, such as Virgin and BSkyB in Britain, to sell subscriptions to broadband and music together. Internet bills are often paid by parents who may wish to remove the temptation for their children to use peer-to-peer services. Such deals should also prod ISPs into a more active role in discouraging file-sharing. They are likely to become more involved if video piracy continues to grow, in any case. Many broadband suppliers are also in the pay-television business. If Comcast ends up buying NBC Universal (see article) a broadband supplier will own a film studio.

The pioneer of this model is Denmark’s incumbent telecoms firm, TDC, which offers more than 5m songs. Some 120m tracks have been downloaded so far, which works out at 22 per Dane. The tracks self-destruct shortly after a consumer lets his subscription lapse. Yet they seem to be a good enough substitute. Earlier this year more than two-fifths of TDC Play users told Megafon, a pollster, that they were downloading fewer illegal files. TDC likes the arrangement, too, because it makes customers more loyal.

The recorded-music business is not about to lurch into growth. A big proportion of revenues—more than half just about everywhere—still comes from CD albums, which are gradually falling out of favour. Start-ups like Spotify need to turn more freeloaders into paying subscribers if they are to survive and start providing a serious income stream to record companies and artists. And there are still plenty of ways of sneakily copying music.

John Kennedy, head of the IFPI, points out that piracy was rife even before file-sharing. The goal is not to eradicate it—that is impossible—but to tilt the playing field towards legitimate services. That finally seems to be happening.

=======================================

December 1st, 2009

Surveillance Shocker: Sprint Received 8 MILLION Law Enforcement Requests for GPS Location Data in the Past Year

News Update by Kevin Bankston

This October, Chris Soghoian — computer security researcher, oft-times journalist, and current technical consultant for the FTC's privacy protection office — attended a closed-door conference called "ISS World". ISS World — the "ISS" is for "Intelligence Support Systems for Lawful Interception, Criminal Investigations and Intelligence Gathering" — is where law enforcement and intelligence agencies consult with telco representatives and surveillance equipment manufacturers about the state of electronic surveillance technology and practice. Armed with a tape recorder, Soghoian went to the conference looking for information about the scope of the government's surveillance practices in the US. What Soghoian uncovered, as he reported on his blog this morning, is more shocking and frightening than anyone could have ever expected

At the ISS conference, Soghoian taped astonishing comments by Paul Taylor, Sprint/Nextel's Manager of Electronic Surveillance. In complaining about the volume of requests that Sprint receives from law enforcement, Taylor noted a shocking number of requests that Sprint had received in the past year for precise GPS (Global Positioning System) location data revealing the location and movements of Sprint's customers. That number?

EIGHT MILLION. Click here to read more...

Lawyers target thousands of illegal file-sharers

Andrew Lyle   November 27, 3009

ACS:Law said it will be sending thousands of letters to alleged file-sharers of copyright infringement. The lawsuits will go out in the New Year to thousands of suspected file-sharers, asking them for a compromise to avoid dealing with it in court, averaging for several thousand pounds as a settlement.

ACS:Law said each case will be different, based on the amount of illegal copyright material downloaded, ranging between several thousand pounds, but said the compromise will typically be between £300-500.

Jaclyn Clarabut, from Which?, told BBC News that, "A lot are accused of downloading pornography," while other cases will be based on illegally distributing movies, games, and music.

"Many have never heard of peer-to-peer file sharing," said Jaclyn Clarabut, in reference to the 15,000 suspected file-sharers.

ACS:Law recently acquired two high court orders to obtain 30,000 IP Addresses with account details, including their name and address of the account owner, and is in the process of preparing three more court orders.

However, the technology to hide or spoof an IP Address, disguising the users true IP Address, is available on the Internet, which could cause for many consumers to be false accused of file-sharing. Andrew Crossley from ACS:Law said that this does not apply for file sharing purposes.

There are also cases where consumers do not password protect their router, and makes it easy for near-by users to simply connect to their Internet connection and illegally download copyright material.

 --------------------------------------------------------------------------------------------------------