IFPI Claims Success of Progressive Reponse in Curbing Infringement January 30, 2012
Posted by Bill Rosenblatt in Europe, Law, New Zealand.2 comments
The International Federation for the Phonographic Industry (IFPI), the global umbrella of national music trade associations like the RIAA in the United States, published its annual Digital Music Report last week. Among the most interesting findings is results of studies of the effects of the progressive response law enacted in France in 2009.
The French Creation and Internet Law, which is referred to as “Hadopi” after the agency it created (Haute Autorité pour la Diffusion des Oeuvres et la Protection des droits sur l’Internet), is one of a handful of so-called progressive response regimes, in which ISPs in a given country are obliged to respond to complaints about file-sharing by issuing a series of increasingly stern warnings and then potentially suspending their Internet accounts or fining them.
IFPI worked with Nielsen to measure Hadopi’s effects on file-sharing in France, and found that the effect was to decrease file-sharing by 26% over the year after Hadopi’s October 2010 implementation, although the numbers have been creeping back up a bit since October 2011. IFPI’s report also published the results of a separate academic study by economists at Carnegie-Mellon University and Wellesley College that claims a net increase of 22.5-25% in paid iTunes music downloads from before to after Hadopi was implemented.
The IFPI report also cites studies that show that warning messages have an effect: a May 2011 study found that 50% of people who either received a Hadopi notice or knew someone who got one stopped their illegal file-sharing. The same measurement for South Korea, another country with progressive response in place, was 70%.
Critics of progressive response reply that P2P file-sharing has been decreasing anyway, that file-sharing is “yesterday’s problem” as copyright infringement moves from file-sharing networks to torrent sites, cyberlockers, and other places. It’s hard to argue that the reduction of 26% in French file-sharing means “piracy has decreased by 26%” (and in fact IFPI isn’t arguing that at all). Yet the graph in the IFPI report clearly indicates a drop in file-sharing activity that coincides with the deployment of Hadopi.
It’s worth bearing in mind that the vast majority of Hadopi activity is warnings, which fall under the heading of “education” instead of “technical protection measures,” because the warnings don’t actually prevent users from doing anything that they could do before.
At the same time, there is one sour note in the IFPI report: in a discussion of the graduated response system in New Zealand (which accompanied a decrease in P2P usage of 16%), rights holders complain that “the high cost of notifications to ISPs … could prevent the graduated response system being used over the long term to optimum effect.” In other words, it’s not enough to have a government-mandated requirement for ISPs to act on complaints of file-sharing; copyright owners also don’t want to have to pay to generate the complaints. I don’t know what they call this in New Zealand, but in France, Marie Antoinette might have called it “Qu’ils ont de la brioche et la manger aussi.”*
P.S. The IFPI Digital Music Report also contains the very exciting statistic that the total of paying users of music subscription services has shot up 65% over the past year to an estimated 13 million plus. That number blows by the 10 million that I thought would be reached by next September.
*”Let them have their cake and eat it too.”
Creative Commons for Music: What’s the Point? January 22, 2012
Posted by Bill Rosenblatt in Law, Music, Rights Licensing, Services, Standards.20 comments
I recently came across a music startup called Airborne Music, which touts two features: a business model based on “subscribing to an artist” for US $1/month, and music distributed under Creative Commons licenses. Like other music services that use Creative Commons, Airborne Music appeals primarily to indie artists who are looking to get exposure for their work. This got me thinking about how — or whether — Creative Commons has any real economic value for creative artists.
I have been fascinated by a dichotomy of indie vs. major-label music: indie musicians value promotion over immediate revenue, while for major-label artists it’s the other way around. (Same for book authors with respect to the Big 6 trade publishers, photographers with respect to Getty and Corbis, etc.) Back when the major labels were only allowing digital downloads with DRM — a technology intended to preserve revenue at the expense of promotion — I wondered if those few indie artists who landed major-label deals were getting the optimal promotion-versus-revenue tradeoffs, or if this issue even figured into major-label thinking about licensing terms and rights technologies.
When I looked at Airborne Music, it dawned on me that Creative Commons is interesting for indie artists who want to promote their works while preserving the right (if not the ability) to make money from them later. The Creative Commons website lists ten existing sites that enable musicians to distribute their music under CC, including big ones like the bulge-bracket-funded startup SoundCloud and the commercially-oriented BandCamp.
This is an eminently practical application of Creative Commons’s motto: “Some rights reserved.” Many CC-licensing services use the BY-SA (Attribution-Share-Alike) Creative Commons license, which gives you the right to copy and distribute the artist’s music as long as you attribute it to the artist and redistribute (i.e. share) it under the same terms. That’s exactly what indie artists want: to get their content distributed as widely as possible but to make sure that everyone knows it’s their work. Some use BY-SA-NC (Attribution-Share-Alike-Noncommercial), which adds the condition that you can’t sell the content, meaning that the artist is preserving her ability to make money from it.
It sounds great in theory. It’s just too bad that there isn’t a way to make sure that those rights are actually respected. There is a rights expression language for Creative Commons (CC REL), which makes it possible for content rendering or editing software to read the license (in XML RDFa) and act accordingly. As a technology, the REL concept originated with Mark Stefik at Xerox PARC in the mid-1990s; the eminent MIT computer scientist Hal Abelson created CC REL in 2008. Since then, the Creative Commons organization has maintained something of an arms-length relationship with CC REL: it describes the language and offers links to information about it, but it doesn’t (for example) include CC REL code in the actual licenses it offers.
More to the point, while there are code libraries for generating CC REL code, I have yet to hear of a working system that actually reads CC REL license terms and acts on them. (Yes, this would be extraordinarily difficult to achieve with any completeness, e.g., taking Fair Use into account.)
Without a real enforcement mechanism, CC licenses are all little more than labels, like the garment care hieroglyphics mandated by the Federal Trade Commission in the United States. For example, some BY-SA-licensed music tracks may end up in mashups. How many of those mashups will attribute the sources’ artists properly? Not many, I would guess. Conversely, what really prevents someone who gets music licensed under ND (No Derivative Works) terms from remixing or excerpting in ways that aren’t considered Fair Use? Are these people really afraid of being sued? I hardly think so.
This trap door into the legal system, as I have called it, makes Creative Commons licensing of more theoretical than practical interest. The practical value of CC seems to be concentrated in business-to-business content licensing agreements, where corporations need to take more responsibility for observing licensing terms and CC’s ready-made licenses make it easy for them to do so. The music site Jamendo is a good example of this: it licenses its members’ music content for commercial sync rights to movie and TV producers while making it free to the public.
Free culture advocates like to tell content creators that they should give up control over their content in the digital age. As far as I’m concerned, anyone who claims to welcome the end of control and also supports Creative Commons is talking through both sides of his mouth. If you use a Creative Commons license, you express a desire for control, even if you don’t actually get very much of it. What you really get is a badge that describes your intentions — a badge that a large and increasing number of web-savvy people recognize. Yet as a practical matter, a Creative Commons logo on your site is tantamount to a statement to the average user that the content is free for the taking.
The truth is that sometimes artists benefit most from lack of control over their content, while other times they benefit from more control. The copyright system is supposed to make sure that the public’s and creators’ benefits from creative works are balanced in order to optimize creative output. Creative Commons purports to provide simple means of redressing what its designers believe is a lack of balance in the current copyright law. But to be attractive to artists, CC needs to offer them ways to determine their levels of control in ways that the copyright system does not support.
In the end, Creative Commons is a burglar alarm sign on your lawn without the actual alarm system. You can easily buy fake alarm signs for a few dollars, whereas real alarm systems cost thousands. It’s the same with digital content. At least Creative Commons, like almost all of the content licensed with it, is free.
(I should add that I wear the badge myself. My whitepapers and this blog are licensed under Creative Commons BY-NC-ND (Attribution-Noncommercial-No Derivative Works) terms. I would at least rather have the copyright-savvy people who read this know my intentions.)
Public Library E-Book Lending Must Change to Survive December 4, 2011
Posted by Bill Rosenblatt in DRM, Law, Publishing, Uncategorized.9 comments
A few events over the past few weeks illustrate the downward arc that I have suggested is in store for public libraries in the e-book age. First, Amazon introduced its own e-book “lending library” for members of its $79/year Amazon Prime service, which allows users to “borrow” one e-book at a time, with no due dates. Second, yet another major trade book publisher, Penguin, got into a spat with public libraries over e-book lending. Penguin stopped offering new titles and withheld Kindle access to all titles, out of unspecified security concerns with OverDrive (the service that powers most U.S. e-book library lending) and Amazon. (Penguin subsequently restored access for existing titles, but not for new ones.)
The Penguin incident is only the latest in what will undoubtedly be a long series of squabbles between publishers and libraries over e-book lending. In fact, five of the “Big Six” U.S. trade book publishers are now either limiting their e-book licensing to libraries or not licensing at all — and the sixth (and largest), Random House, is reportedly reconsidering its library e-book licensing policies. Such spats may well lead to a world of off-putting restrictions and confusion for libraries and their patrons.
Libraries have two fundamental problems here: they have less control over the situation than publishers do, and they are about to get some serious competition from the private sector. An article in Publishers Weekly gives an overview of Amazon’s e-book lending feature and its implications for publishers and authors. In a nutshell, the program is currently limited to a few thousand titles that originate either from Amazon itself or from smaller publishers that still sell e-books to Amazon under a wholesale model, as opposed to the “agent” model used by most major trade publishers, which forbids such activity.
But the Publishers Weekly piece only covers the impact of e-book lending on publishers and authors, many of whom are raising a fuss about Amazon’s program. It says nothing about the program’s impact on public libraries. The executive director of the American Library Association (ALA), Keith Fiels, has publicly expressed a lack of concern over the impact of Amazon’s lending program, given its limited range of titles and that it’s part of a subscription program that includes other features such as streaming video and free expedited shipping. The ALA is more concerned about major-publisher moves like Penguin’s.
Indeed, public libraries are experiencing major growth in e-book lending, especially since Amazon joined the e-lending world by opening up its DRM to enable lending and integrating it with OverDrive’s library lending service. Another piece of evidence that library e-lending is expanding is the entry of a Seattle-based startup called BlueFire Productions as the first serious competitor to OverDrive in the public library space.
At bottom, this is about two things: ways to make e-books available legally for free, and the promotional value of free distribution. That’s why libraries should be worried. First, consumers generally don’t care where they get free legal e-books, as long as they are available conveniently and can be read on their favorite devices. Second, what Amazon has started as a limited service that’s only available to an elite tier of customers will surely become more widely available and with more titles, especially with competitors like Barnes & Noble constantly looking for ways to differentiate themselves from the market leader.
Amazon subsidizes the wholesale cost of e-books that it lends to Amazon Prime members. It does this to make its own services and devices more attractive, not to spur sales of those e-books. If and when B&N offers an equivalent feature, it will undoubtedly do the same.
If I were Keith Fiels at the ALA, I would be very, very afraid. The e-book publishing world may be about to split up into the equivalent of the music industry’s major and indie labels: major labels tend to make deals that maximize revenue and limit free promotion, while indies try for maximum promotion in hopes of getting revenue later. When you apply this dichotomy to publishers and e-books, you will see that libraries will inevitably get squeezed out.
The majors will make life increasingly difficult for public libraries through refusal to license or restrictive and confusing licensing terms. Meanwhile, smaller publishers will “lend” their titles through Amazon and other e-book services — and will most likely be happy with the arrangement for the promotional value it gets them. And some indie publishers will give their e-books away outright — through e-book retailers or through sites like Facebook — in hopes of getting exposure for their authors and selling hardcopy titles, just as thousands of indie musicians used to give away MP3s on MySpace. And let’s not forget that e-book prices are often much lower than their hardcopy counterparts to begin with.
Then it will only be a matter of time until some publishing industry equivalent of Michael Robertson (the music industry’s digital provocateur) will create a search engine for finding free e-books from all of these sources in a single convenient place, storing them in an online locker, sharing them with friends, etc.
If you extrapolate from these changes, you can see how public libraries could become virtually irrelevant for e-book readers.
It’s all because publishers get to decide what e-book titles libraries may lend and (to some extent) under what terms. Again, think of this in music terms: radio stations get the right to play whatever music they want under a license granted by law — a so-called statutory license. Online equivalents of radio (e.g., Pandora, iHeartRadio) get similar rights. Library lending of digital music is virtually nonexistent; radio remains the primary promotional channel for record companies. Perhaps it’s time to think more carefully about public libraries in this light for e-books, as I’ll explain.
There is no equivalent of a statutory license for e-books that would allow libraries to lend them without explicit, title-by-title permission from publishers. As I’ve discussed previously, libraries do get rights under Section 108 of the copyright law to lend e-books under certain conditions. But because most publishers only give libraries e-books to lend as DRM-protected files with license terms attached to them, and Section 108 requires libraries to abide by those license terms, libraries can’t exercise those rights. In effect, those rights have no value for libraries.
Libraries simply do not have enough leverage against major publishers and retailers to improve this situation in the private sector. If they are to remain relevant in the e-book age, they are going to need to push for significant legal reforms, which both publishers and retailers will undoubtedly resist.
I previously suggested one option, albeit in a somewhat tongue-in-cheek manner: push for the Copyright Office to define an exemption to the law that criminalizes hacking of DRMs (Section 1201 of the Copyright Act) so that public libraries can legally remove DRM for the purpose of lending e-books if they repackage them with DRM to enforce lending terms. However, this has two disadvantages: exemptions to Section 1201 only last for three years, until the Copyright Office considers a new set of exemptions, and publishers could push for stronger DRMs that are harder to hack.
The “cleanest” solution to this problem would be to enact Digital First Sale, i.e., an extension to Section 109 of the copyright law that lets anyone do whatever they want with digital downloads once they have acquired them legally. (We had a great discussion on this subject at last week’s conference.) Public libraries owe their existence to First Sale (on physical goods) in the first place. But that won’t help for e-books as long as publishers distribute them with DRM and DRM hacking is still illegal; and anyway, as I discussed recently, Digital First Sale isn’t likely to happen anytime soon. Therefore it would be worth libraries’ while to investigate changes to the law that help them lend e-books while leaving Digital First Sale off the table.
One option would be to push for additional rights for libraries under Section 108. At a minimum, Subsection (f)(4) would have to be relaxed so that publishers may lend e-books even if the licenses they come with forbid this activity. This would be tantamount to a statutory license for libraries to lend e-books without explicit permission from publishers.
As a practical matter, this wouldn’t really change the way things are done today. Libraries lend e-books through third parties like OverDrive, which already get e-books from publishers without DRM and package them with DRM — just like music and video retail services. And provisions already exist in Section 108 that hold libraries liable if they make their own unauthorized copies of e-books. OverDrive and its ilk use DRM to enforce one-copy-at-a time lending as well as the lending time limits that are in libraries’ own best interests.
This change in the law would improve the situation for libraries substantially. However, the economics may have to change to make it palatable to publishers. For example, libraries acquire e-books for their collections by paying for them title by title, just as they pay for printed books. Radio stations, on the other hand, typically get free copies of recordings from record labels but pay royalties to the music industry for playing them on the air.
If publishers acknowledge the promotional value of library e-book lending, then they might be willing to accept a statutory license to lend e-books if they can negotiate a per-loan royalty rate in lieu of upfront purchase prices. The Copyright Clearance Center, for example, would be in a good position to manage these payments and royalty disbursements, just as ASCAP, BMI, and SoundExchange do for music.
This type of arrangement would enable libraries to maintain huge collections of e-books (through service providers like OverDrive and BlueFire, which would actually house and distribute the e-books) and thus serve the public well. At the same time, the negotiations would have to resolve questions of how many copies of an e-book a given library could lend out concurrently; one copy per library doesn’t reflect the fact that big libraries acquire multiple copies of popular titles. Is it possible for the numbers to defined so as to be fair to both publishers and libraries? That would be a good question for the Section 108 Study Group, the venue for recommending changes to that section of the copyright law, which used to convene every five years but was disbanded by Congress after its last report in 2008.
A limited form of just such a statutory license-type solution has actually been suggested in the private sector already, in the proposed settlement to publishers’ and authors’ lawsuits against Google. It includes giving public libraries rights to make every book scanned on Google’s behalf — over 12 million titles at last count — available on a single terminal within each library. Libraries would not even have to pay for this. However, this doesn’t allow e-books to be available outside of libraries’ physical confines, it doesn’t allow libraries to acquire multiple copies of e-books they want to make available to more than one patron at a time, and Google can withhold up to 15% of its scanned titles at its discretion.
The Google book settlement is still unresolved, but the terms in it show that publishers may be willing to grant libraries some limited e-book lending rights. Libraries have complained about the “table crumbs” offered to them in the Google book settlement. But unless they take action similar to what I’ve described here, those rights may be the best that public libraries can hope for as the e-book market expands.
European High Court Says No to ISP-Level Copyright Filtering November 28, 2011
Posted by Bill Rosenblatt in Europe, Fingerprinting, Law, Music, Services.add a comment
Last Thursday the European Court of Justice (ECJ) ruled that ISPs cannot be held responsible for filtering traffic on their networks in order to catch copyright infringements. This ruling was the final step in the journey of the litigation between the Belgian music rights collecting society SABAM and the ISP Scarlet, but it is a landmark decision for all of Europe.
This ruling overturned the Belgian Court of First Instance, which four years ago required Scarlet to install filtering technology such as acoustic fingerprinting to monitor Internet traffic and block uploads of copyrighted material to the network. Scarlet appealed this decision to the Brussels Court of Appeals, which sought guidance from the ECJ.
The ECJ’s statement affirmed copyright holders’ rights to seek injunctions from ISPs like Scarlet to prevent copyright infringement, but it said that the Belgian court’s injunction requiring ISP-level copyright filtering went too far. It cited Article 3 of European Union Directive 2004/48, which states that “measures, procedures and remedies [for enforcing intellectual property rights] shall be fair and equitable, shall not be unnecessarily complicated or costly and not impose unreasonable time-limits or unwarranted delays.” The ECJ decided that the mechanism defined in the appeals court’s ruling did not meet these criteria.
The real issues here are the requirement that the ISP bear the cost and complexity of running the filtering technology, and the fact that running it would slow down the network for all ISP users. It’s easy to see how this would not meet the requirements in the above EU Directive.
This decision has direct applicability in the European Union, but its implications could reach further afield. For example, the issue currently being argued between Viacom and Google at the appeals court level in the United States boils down to the same thing: whose bears the cost and responsibilty to police copyrights on the Internet?
Of course, EU law doesn’t apply in the United States. In the Viacom/Google litigation, Google is relying on the “notice and takedown” portion of the Digital Millennium Copyright Act (DMCA), a/k/a section 512 of the US copyright law. This says that if a copyright holder (e.g., Viacom) sees one of its works online without its authorization, it can issue a notice to the network service provider to take the work down, and if it does so, it won’t be liable for infringement. Google’s argument is that it follows section 512 assiduously and therefore should not be liable.
Viacom’s task in this litigation is to convince the court that the DMCA doesn’t go far enough. More specifically, its argument is that the legislative intent behind the DMCA is not served well enough by the notice-and-takedown provisions, that network service providers should be required to take more proactive responsibility for policing copyrights on their services instead of requiring copyright owners to play the Whack-a-Mole game of notice and takedown.
The ECJ’s decsion in SABAM v. Scarlet has no precedential weight in Viacom v. Google. But it may help get the Third Circuit Appeals Court to focus on what Jonathan Zittrain of Harvard Law School has called the “gravamen” (which is legalese for “MacGuffin“) in this case: who should be paying for protecting copyrights.
ReDigi Gets RIAA Nastygram November 15, 2011
Posted by Bill Rosenblatt in Economics, Law, Music, Services, United States.8 comments
Last week the RIAA issued a cease-and-desist letter to a music startup called ReDigi, which has been attempting to create a market for “used” digital music files. It allows users to sell their music files for prices below those of “new” files on iTunes or Amazon, and gives a portion of the proceeds to record labels. (It does not have licenses from the labels to do this.)
I had been paying attention to ReDigi since it had gotten some attention on the tech blogs when it issued a beta release a month ago, and I consulted a couple of copyright law experts about the legality of what they are doing. Based on the results of my research, the RIAA’s actions towards ReDigi were about as surprising to me as an announcement that the sun will rise tomorrow morning.
Who were the “legal experts” that ReDigi claims told it that what it does is within the law? What investors were credulous or rash enough to finance this venture? Or did everyone involved do this just to try to make a point? Regardless of the motivation, ReDigi’s legally embattled state has been a foregone conclusion.
ReDigi purports to implement something called Digital First Sale. The First Sale Doctrine (a/k/a Section 109 of the U.S. copyright law, and known as Exhaustion in most other countries) says that if you obtain a copy of a copyrighted work legally, you can do as you wish with it – keep it, lend it, sell it, give it away, use it to line a birdcage – as long as you obtained it legally and you don’t do anything with it that infringes copyright law, such as make unauthorized copies.
The issue is that this law was designed to apply to physical goods; no one is quite sure about its applicability to piles of bits. The U.S. Copyright Office was asked for an opinion on Digital First Sale a decade ago. The Office stated that Digital First Sale would require a complex technical mechanism that ensured that once you gave your copy of a file to someone else (whether for money or not; whether permanently or not), you had no further access to the file. The technical shorthand for such a mechanism is “forward and delete.” The Office opined that such a mechanism might be feasible at some point in the future but wasn’t then, so it declined to endorse the concept of Digital First Sale.
ReDigi claims to have implemented a robust forward-and-delete mechanism. It uses acoustic fingerprinting from Gracenote to ensure that once a user has sold a file, the same song no longer exists on the user’s PC or iPod. There are ways to hack the system, but that’s somewhat beside the point.
Digital First Sale remains very much unsettled law, even according to copyleft legal scholars, such as Jason Schultz of Berkeley (formerly of the Electronic Frontier Foundation), who would generally like to see Digital First Sale become reality.
Even putting First Sale aside, there’s another legal issue with ReDigi’s model. ReDigi only lets users sell files that they bought on sites such as iTunes and Amazon, in order to ensure that users are only reselling legally-obtained files. (The source of a file can be determined by examining metadata or watermarks.) There’s just one little problem with that: these sites have Terms of Use that expressly forbid resale of purchased digital files. (Here are Amazon’s and iTunes’s.) In other words, users who sell files on ReDigi may or may not be infringing copyrights, but they are certainly running afoul of iTunes or Amazon’s Terms of Use, which are contracts between the retailer and the user.
But wait a minute: if the Terms of Service forbid users from doing something that copyright law allows, which one prevails? Apparently that’s an unsettled question as well, according to both a senior legal authority at the Copyright Office and one of America’s leading copyright litigators. The latter told me “the ink is not dry” on this area of copyright law.
Yet one thing is very clear: Digital First Sale scares the media industry to death. Think about it: if anyone could resell their digital content at any price, then ReDigi would only be the beginning. There would be many competing content-resale marketplaces. People could auction their “used” files on eBay. People could “donate” them to public libraries with virtually no cost or effort – and get a tax deduction for a charitable donation. All perfectly legal. The result of this would be a rapid acceleration of what I have called the race to the bottom: the price of legal content would drop to near its cost of coping and distribution, i.e., virtually nothing. Furthermore, the major copyright owners would lose a lot of control over distribution; for example, Hollywood studios’ release windows would become virtually meaningless.
It’s also evident that the media industry would much rather nip this trend in the bud than endure years of litigation with uncertain outcomes. Even attempting to negotiate a license with a service like ReDigi would imply some comfort with Digital First Sale at a conceptual level, which is something that the media industry would surely want to avoid. Thus the RIAA’s actions against ReDigi come as no surprise.
The RIAA’s “nastygram” points to file copying that must take place in order for ReDigi’s system to work as evidence of copyright infringement, even though, of course, that’s not the real issue here. Other litigation concerning Digital First Sale, such as Vernor v. Autodesk (commercial software), is working its way through the courts. Whatever happens with Digital First Sale, the law will take years to reach clarity — and until then, services like ReDigi will continue to be in limbo.
Incidentally, Digital First Sale is going to be a topic at our Copyright and Technology conference week after next (Wednesday November 30). We will have legal experts on this topic as well as Paul Sweazey of the IEEE 1817 standards initiative, which is another attempt to implement something approximating Digital First Sale. The discounted registration offer I made last week still stands.
The Future of Music: From Blanket Licensing to Registries October 10, 2011
Posted by Bill Rosenblatt in Law, Music, Rights Licensing, Standards.4 comments
The Future of Music Coalition Policy Summit, which took place last week, has been a fixture in Washington, DC for a decade now. For those interested in how copyright has to find its way in the ever-changing world of digital music, this is a wonderful place to spend a couple of days. The FMC Policy Summit is a great event — and an inspiration for our own Copyright and Technology Conference — because it gathers many different types of people and forces them into a single room to get to know one another. As an organization, FMC represents the interests of independent musicians and songwriters, but the subject matter discussed at its Policy Summit should be of interest to anyone contemplating the future of music.
The panels at the FMC Policy Summit cover a range of topics beyond copyright. But last week’s conference had two panels on copyright arcana that were linked implicitly if not explicitly: on the first day, a panel on blanket licensing; on the second, a panel on music copyright registries. Perhaps the most remarkable aspect of these two panels was that digital music expert/ideologue Jim Griffin was on the latter panel, not the former.
Let me take a couple of steps back to explain why this is remarkable.
The treatment of music copyrights most countries is a horrible mess. It is so complex as to be virtually incomprehensible to content creators — the people who need to understand them the most.
If you make a music recording, you have two sets of copyrights: one for the underlying composition (which could be someone else’s if you didn’t write the music), and another for the recorded performance of it. Each of those rights needs to be owned by, granted by law to, or licensed by entities such as record labels, distributors, service providers, and end-users. These rights are handled in various different ways in the United States. Some are implicit copyright rights; some come from so-called statutory licenses that have been added to the copyright law; some result from ad-hoc license agreements; and some come through collecting societies (a/k/a PROs or Performing Rights Organizations) like ASCAP and BMI, which represent only those rights holders who sign up with them.
If you’re already confused, welcome to a very large club.
A few panelists at the FMC Summit — mainly law-professor types who habitually think in terms of concepts and idealism instead of practicalities and the real world — contemplated blowing up the entire system and starting from scratch. Others, such as the new Register of Copyrights, Maria Pallante, settled for “Sure it’s bad here in the US, but it’s worse elsewhere” arguments. Her predecessor, Marybeth Peters, was an advocate of streamlining the entire music licensing process so that content creators can come closer to “one-stop shopping,” as countries such as the UK have attempted.
There are two schools of thought on how to improve a system that, in the words of Gary Greenstein of the law firm Wilson Sonsini (who will also speak at Copyright and Technology 2011), exists primarily to preserve the many jobs that would be eliminated under a more streamlined system. One is to move to a comprehensive system of blanket licensing, i.e. forming entities that represent all music rights holders and license their works under fixed terms. Another is to use technology to measure all usages of copyrighted works and compensate rights holders accordingly.
These two schools of thought are not mutually exclusive. Automated measurement and compensation can work in a blanket or statutory licensing regime if the technology is pervasive and accurate enough. Yet blanket licensing usually works with compensation schemes derived from sampling (e.g., BMI requires radio stations to log the music they play for a couple of weeks each year) or levies (“copyright taxes” collected from makers of consumer electronics or blank recording media). These are blunt-instrument approaches which all but guarantee that “long tail” content creators will not be compensated fairly and that abuses will creep in.
The blunt-instrument school of thought has persisted for quite a while as a lowest common denominator that is at least practicable, even if it has outlived its usefulness. Yet recent developments have proved two important things: first, the blunt-instrument approach has serious limitations in the digital world, given the Byzantine nature of the underlying system; second, better alternatives not only exist but are exposing the inherent inadequacies of the blunt-instrument approach.
The better alternative that has emerged here in the States, according to the views of most FMC Policy Summit attendees, is SoundExchange. SoundExchange came in to being in the early 2000s as the result of laws enacted in the late 90s that established “performance rights in sound recordings”; this meant that online music services had to pay royalties for playing recordings, not just for the underlying compositions. The latter royalties are administered by composers’ collecting societies like ASCAP and BMI. As the result of the new laws, online music services would have to pay performance royalties, though terrestrial broadcast radio would not. (See, I told you this was a confusing mess.)
SoundExchange requires online music services to collect data on the music they play, report the data, and pay royalties accordingly. (Small noncommercial webcasters are exempt from this process and only pay a small flat annual fee.) SoundExchange negotiates royalty rates for various types of digital music services (webcasters, on-demand streaming services, satellite radio, etc.) through periodic rate-setting proceedings before panels of judges in Washington.
FMC Policy Summit attendees — who tend to be musicians, songwriters, or indie label people — see SoundExchange as a beacon of light in the darkness, an organization that gets musicians paid and does it with relative transparency and low overhead, at least compared to older organizations like ASCAP and BMI.
While SoundExchange has shown that automated, data-driven royalty compensation can be done, advocates of blanket licensing have run into a major snag: if you’re going to offer an online music service a blanket license to music, you have to offer it for “all music,” not just some of it, otherwise what you’re offering is not going to be very helpful to the online music service. The problem is that offering a license to “all music” is just plain impossible, at least without an act of Congress like that which produced SoundExchange.
With this insight, naive and idealistic notions such as charging all ISP subscribers a monthly “music tax” that gets (somehow) distributed to rights holders go straight out the window. This is where we finally get back to Jim Griffin: blanket-licensing schemes such as Choruss, the business that Jim Griffin ran for Warner Music Group, are revealed to be the impossibilities they are.
Griffin, a battle-scarred veteran of the early days of digital music, had been an articulate blanket-licensing ideologue for years when WMG CEO Edgar Bronfman asked him to set up a blanket licensing business, which they called Choruss. Choruss failed about a year ago; as I explained at that time, the primary reason for its failure was that it couldn’t get licenses to anywhere near “all music.”
So Griffin has acknowledged the impossibility and moved on. He has turned his attention to an underlying problem that is even more complex and fundamental: the lack of a global registry of all music rights information that would be required to support any kind of comprehensive and fair licensing scheme. At the FMC Policy Summit, Griffin was on a panel on music rights data; he was talking about the International Music Registry (IMR), a project led by the World Intellectual Property Organization (WIPO). Griffin is one of over two dozen people from around the world working on the IMR.
IMR is adopting a federated approach to rights registries that acknowledges and leverages the existences of various “island” registries throughout the world and attempts to build a unifying layer on top of them. (One of these “islands” is the so-called Global Repertoire Database, which is initially focused on Europe.) This approach is analogous to the Digital Object Identifier (DOI) standard that I helped define in the publishing industry in the late 1990s: we wanted a copyright work identifier and registry that could coexist peacefully with various existing standards and registries such as ISBN for books, ISSN for journals, PII for other journals, URL for online resources, and so on. On the other hand, it differs from the Book Rights Registry contemplated in Google’s settlement with book publishers and authors, which would have been a single über-registry for all book content, at least in the United States.
So that’s a long way of explaining what Jim Griffin was doing on the music registry panel instead of the blanket licensing panel at the FMC Policy Summit, and why that’s important. The rights registry problem is the right (no pun intended) one to be working on. If it can be solved, it would get us away from blunt-instrument schemes that encourage systemic abuses and favor big-name artists over the long tail, and it would facilitate content creators actually getting paid according to how much their music is played. It’s a problem that’s worth the monumental effort it will take to solve… if it’s even solvable at all. It will take years to find out one way or another, but it’s worth the journey.
Mixed Verdict for EMI against MP3tunes.com August 23, 2011
Posted by Bill Rosenblatt in Law, Music, Services, United States.4 comments
A federal district court judge in New York this Monday delivered a mixed-bag opinion in long-running copyright litigation between a number of record companies led by EMI and MP3tunes.com, led by that veteran of music industry litigation, Michael Robertson.
The summary judgment decision affirmed yet again the principle that online content providers have no obligation to proactively “police” their sites or services for their users’ copyright infringements — which has been established in such recent cases as Viacom v. Google (YouTube) and Universal Music Group v. Veoh, at least at the district court level. As long as service providers respond “expeditiously” to takedown notices under the Digital Millennium Copyright Act (17 U.S.C. § 512) and terminate the accounts of egregious repeat offenders, they aren’t liable for their users’ infringements.
MP3tunes provides what has come to be known as a locker service: users can upload their music to the service and access it from any Internet-connected device. That aspect of MP3tunes.com got a clean bill of legal health from Judge William Pauley.
Another feature didn’t, though: the “sideload” feature. MP3tunes operates a separate website called sideload.com, which lets users search third-party sites that contain free music files (whether legal or not). Users can search all of those sites with a single search command, select files from them, and copy the files into their MP3tunes lockers. Sideload.com currently claims access to over 160,000 tracks. MP3tunes responds to takedown notices on such files by removing its links to them from sideload.com search results, but not removing copies of the actual files from users’ lockers. Judge Pauley didn’t buy MP3tunes’ argument that doing the latter would violate its users’ privacy and personal property; instead he found MP3tunes liable.
Michael Robertson is a wealthy man, having sold his previous music venture, MP3.com, to Universal Music Group for over US $370 Million back in 2001. Now it seems that he spends his time and effort designing technology products and services that provocatively test the boundaries of both copyright law and copyright owners’ patience. Robertson started MP3tunes.com in 2005, and in doing so, he invented the idea of “cloud sync” locker services, which are now virtually mandatory checklist items for online music services. Other vehicles for Robertson’s copyright nose-thumbing include AnywhereCD (buy a CD, get the MP3 for free) and Linspire (Linux-based operating system that runs Windows programs), both now defunct.
As Judge Pauley’s order reveals, MP3tunes.com looks like a site that was designed by Robertson in consultation with copyright law experts with the objective of figuring out just how much they can get away with without record company licenses. As an example of this, consider a feature in some locker services known as scan and match. With scan and match, a locker service need not upload a user’s actual files. Instead, the service scans each file and identifies the music through various means such as examining ID3 tags (metadata in MP3 file headers) and acoustic fingerprinting. If it has that music in its online catalog already, it skips the upload step and gives the user access to the copy of the file that the service already has.
Scan and match has two big advantages over uploading. First, uploading could take hours, days, or even weeks depending on the size of the user’s collection. Second, scan and match eliminates the need for the service to store many files of the same music; it only needs to store a single copy.
Scan and match is a controversial feature; record companies claim that it requires a license from them to cover the “master” files that the service provider hosts. Apple has a license to implement scan and match for its forthcoming iTunes Match service. Catch Media has a license for this as well. Google and Amazon do not.
MP3tunes finesses this issue by actually uploading users’ files but only storing a single copy. It claims to be able to restore the copy that a user actually uploaded when she wants it — possibly by storing some information about how the uploaded file differs from the file that MP3tunes stores and then using that information to reconstruct the user’s original file on demand. In other words, MP3tunes has it both ways: it presumably avoids the need for record company licenses (by doing actual uploads instead of scanning and matching) while also avoiding both the storage overhead and the copyright liability of storing multiple copies of the same music on its servers (because each copy is a separate possible infringement, and each infringement carries high financial penalties). MP3 tunes thus does not actually source its music from record companies; it sources the files from its users. Another service that operates this way is Grooveshark, which has also found itself in legal hot water.
The point is that MP3tunes’ implementation has nothing to do with the user experience and everything to do with treading on the knife-edge of the law.
Similarly, sideload.com is based on the legal principle that because users don’t know whether the music on the third-party sites to which it links is unauthorized or not, the company should not be liable for contributory infringement for those files. The judge concurred with this.
Robertson’s comments (e.g. on CNet) on the heels of Judge Pauley’s decision reinforce the impression that he is doing this as a professional goad to the music industry: he seems to be much more interested in the decision’s impact on Google and Amazon than on his own site and its 300,000 users. This decision doesn’t seem to help Google and Amazon much, though: at bottom, it merely reiterates findings from the Veoh and YouTube cases at the district court level. We won’t know much more about the legal boundaries of online storage services at least until an appeals court renders a decision in one of these cases.
The Copyright Alert System: A Cautious Experiment July 10, 2011
Posted by Bill Rosenblatt in Law, Services, United States.2 comments
Last Thursday, a coalition of content owners and ISPs announced the creation of a Center for Copyright Information (CCI) and a framework for “Copyright Alerts.” Briefly, the Copyright Alert system identifies a six-level system of interventions that ISPs should take with subscribers if they receive evidence of suspected copyright infringement. They start with simple “educational” messages, move to messages that require user acknowledgement, and culminate in “Mitigation Measures” that could include bandwidth reduction (throttling) or account termination. The CCI analogizes the Copyright Alert system to credit card fraud alerts. It positions the framework as a starting point towards a set of best practices for how ISPs should deal with online infringement.
Perhaps the most encouraging sign about this development is that several organizations representing indie content creators have either signed onto the initiative or issued statements endorsing it, including the Independent Film & Television Alliance, American Association of Independent Music, and Future of Music Coalition. In other words, this is not just the MPAA and/or RIAA. Another good sign for the future is that the announcement has received relatively tepid reactions from entities that one would expect to sound alarms. I can summarize the substantive concerns that have been raised by putting them in a few buckets:
- This initiative may sound inoffensive, but it’s really a foot in the door; future versions of the Copyright Alert system will become more draconian.
- All the language on the Center for Copyright Information website that says “This is not ‘Three Strikes’” is disingenuous: ISPs do have the option to terminate users’ accounts if they are still accused of copyright infringement after a suitable number of warnings.
- The system is based on accusations from copyright owners, not from any sort of objective source, thereby laying the system open to false positives and other abuses.
- There is an issue with presumption of innocence: you can appeal your accusation of infringement to the CCI, but it could cost you $35 to do so; there does not seem to be any redress mechanism for entities that file egregious complaints.
As is often the case, I think Nate Anderson of Ars Technica got it right: the Copyright Alert system does seem sensible, though it would have been easier to swallow if it had been introduced several years ago, instead of after several years of more drastic actions such as lawsuits against individuals and attempts at blunt-instrument legislation (and blunter-instrument levy schemes).
Fear of worse things to come based on worse things that already came explains #1 and #2 above. ISPs have always reserved the right to terminate a subscriber for breach of their Terms of Service anyway.
As for #3, what are the alternatives? ISPs can’t be relied on to self-police. Copyright owners have to produce their own evidence of infringement. The only other possibility would be the government, perhaps through the FBI or some newly created entity.
First of all, this is not supposed to be about law enforcement and criminal charges. Secondly, a fundamental premise of this type of arrangement between industries is to avoid governmental intrusion — and it was most likely created in the first place because the White House and then-New York Attorney General (now Governor) Andrew Cuomo threatened government intervention if the two factions couldn’t reach agreement by themselves. Finally, involvement of some government entity would raise concerns about taxpayer funding, which would be tantamount to the deeply misguided antipiracy levy that was proposed in the UK in early 2009.
I have to admit some sympathy for #4, though, once again, this is not law enforcement. The reason for charging the $35 fee is supposedly to discourage people from abusing the system (i.e. overworking the Copyright Information Center) by bombarding it with cycles of illegal upload, appeal, illegal upload, appeal, etc. If the point is to prevent scalable abuse, then a Captcha system on the appeal form ought to suffice. But if the real reason is to foist the cost of this mechanism onto consumers, then once again, that’s wrong — and this is a particularly poor way to do it, given that at least some of the users who appeal will be innocent.
Yet otherwise, this ought to count as yet another of the many instances in modern life where you have to put up with inconvenience and cost to shake off a false accusation. Anyone who has had a credit card charge refused because of the card company’s hair-trigger fraud detection mechanism, was issued a bogus parking ticket, or found mysterious long-duration calls to Eritrea on their phone bill, will understand — not sympathize, perhaps, but understand. (Yes, all of those things have happened to me.)
What the Copyright Alert system is not is an opportunity for providers of technology to detect infringement on networks, such as content identification (watermarking and fingerprinting) or traffic monitoring, to sell more of their services. Content owners will most likely continue to use the infringement detection services that they currently use. The Copyright Alert system gives them a mechanism through ISPs to inform subscribers about allegedly infringing activities and potentially some actions to take against repeat offenders.
As to the question of whether five or six strikes can ever get you out — i.e., get your Internet access terminated — I suspect the answer is no for the foreseeable future. The Electronic Frontier Foundation has described what’s likely to happen here. ISPs will naturally object to cutting customers off from the products they’ve paid for. The EFF suggests that content owners will believe that they have leverage against ISPs under the DMCA: they will argue that ISPs that refuse to cut off infringers should not enjoy the benefits of DMCA safe harbor (i.e. not being held secondarily liable for users’ infringement). The issue may well end up in court.
In that case, there will be litigation over the meaning of the DMCA — not unlike the current long-running litigation between Viacom and YouTube — that would be destined for high level appeals courts. In other words, a definitive answer to the question of “can ISPs get away with not terminating repeat infringers’ accounts?” will (barring any preliminary injunctions) be several years away, and until that day, the answer will be yes.
The Copyright Alert system is, at bottom, a cautious and reasonable experiment — one that, as many have argued, could have been launched ten years ago to better effect. Many details have yet to be determined, as does the system’s effect on ISP subscribers and on copyright infringement. It’s best thought of as a “watch this space” initiative, to put people on notice. Any conclusions drawn about it are premature, and that’s how it should be.
Music Forecast: Even Cloudier May 11, 2011
Posted by Bill Rosenblatt in Law, Music, Services, United States.add a comment
Earlier this week, Google announced Music Beta by Google, its long-awaited music service. It’s currently an invitation-only beta, and it has gotten mixed reviews including negative press from the New York Times, Wired, and elsewhere. Like Amazon’s Cloud Player/Cloud Drive, it is not licensed by any of the record companies.
Google evidently decided to release an incomplete product after licensing talks with the major record companies broke down. This decision could be a negotiating tactic, a “just try and stop us” gambit to get the record companies to improve their terms. It could also be a rushed-to-market response to Amazon’s recent launch as well as a way of beating Apple to market with a music streaming service.
Whatever the reason, Music Beta by Google hardly bears comparison to full-featured music services like iTunes, Spotify, Rhapsody, etc. It is essentially as much functionality as Google believes it can offer without music licenses. It’s little more than a subset of Amazon’s offerings, with more free storage.
Its functionality is quite similar to that of Amazon Cloud Player/Cloud Drive: it lets users upload and store music they already own onto an Internet file storage service and stream it to any web-connected device with a music player. It also (again, like Amazon) incorporates an app for Android devices that has various additional functions. Of these, the most interesting for our purposes is the ability to store music on Android devices for listening without a network connection (“offline listening”).
Google’s service keeps a limited amount of most-recently-played music on the handset for offline listening. It also allows users to specify which tracks or albums they would like to store on their Android devices for offline listening. As I have mentioned previously, other services such as Spotify, MOG, and Rhapsody offer similar functionality, but they have music licenses. (This means, among other things, that the locally-stored copies must be protected with some form of DRM, even though the services aren’t using that term.)
The record companies must now decide whether to let Amazon and Google continue operating their services without licenses or to put legal pressure on these two tech giants. Their decisions will be based on several interrelated technical, legal, and business issues.
To understand these issues, first we should be more specific about what features these services are and are not offering. Essentially they let users do three things:
- Upload and store copies of their music files online.
- Stream those files onto virtually any network-connected device with a music player.
- Store some files on a user’s Android device for offline listening.
- Google does not actually supply music. In other words, it does not provide a way for users to get music they don’t already have; it doesn’t even recommend or point to new music. (Amazon has an MP3 download store for that purpose.)
- Both use Flash for their player apps and thus won’t run on iOS devices (iPhones, iPads, iPod Touches).
Now’s let’s turn to the business issues. As I mentioned last month, a number of startups have been offering similar sets of services with licenses from the record companies. So-called “cloud sync” services like DoubleTwist and Catch Media enable file distribution across multiple types of devices, not just Android devices. But Catch Media in particular charges users for this service and pays royalties to music companies, whereas Amazon and Google offer it largely for free and do not pay royalties. This must cause the Catch Medias of the world much pain and resentment. The same goes for paid subscription services like Spotify, Rhapsody, and MOG, which supply music in addition to offering Internet streaming and cloud sync features.
The record companies are going to have to decide whether to press Google and Amazon for licenses or risk the wrath of existing licensees, which are presumably paying for the right to offer certain features including those that Google and Amazon are offering without licenses.
So what exactly are those features that require licenses? Both Google and Amazon claim that they are simply offering personal online file storage capabilities, similar to those available from “online backup” services like Norton Online Backup and Trend Micro SafeSync — or even general file-sharing services like RapidShare and DropBox. These services simply enable users to exercise Fair Use rights, and none of them have licenses from copyright owners, so why should we need them? …goes their argument.
This brings us to the technical and legal issues, which are intertwined. The fact is that all of the services mentioned in the previous paragraph offer more than just online storage of a user’s files. For example:
- Google, Amazon, and RapidShare (paid premium accounts) offer streaming of music files.
- RapidShare, DropBox, and SafeSync offer ways for users to give other users (friends, colleagues) access to their online files.
- RapidShare, Norton Online Backup, and SafeSync let users publish links (URLs) to their online files.
- RapidShare and DropBox let users download files onto any computer where they log in with their user IDs.
- Google and Amazon will download certain files onto users’ Android devices.
The right to store copies of one’s existing files on a network server is not really settled law in the United States. The recent Cablevision decision in the Second Circuit, which determined that server-based PVR (personal video recording) services are legal, is somewhat but not exactly relevant. Nevertheless, none of these services have been sued just for enabling personal online file storage. The ambiguities — and therefore the potential legal battlegrounds — lie in the other features.
Here we get into the meanings of words like “copy” and “cache.” A “copy” is something that is presumably covered under copyright law. A “cache” can imply something known as an “incidental copy,” which has a certain meaning under copyright law and is often assumed not to require licensing. (For example, streaming buffer data kept in RAM usually falls under the “incidental copy” rubric.) Google, in its description of Music Beta, circumlocutes these terms by using phrases like “will automatically be available offline.” Amazon uses the more straightforward phrase “download to your device” while still avoiding words like “copy” and “cache” in its description of Cloud Player/Cloud Drive features.
The Cablevision appeals court decision of 2008 established some precedents for determining “when is a copy not really a copy,” but it did not cover the use cases here, which are of uploading a user’s own copies of copyrighted content to a network file storage service for later retrieval and downloading them onto a user’s device for offline playback. Arguments would need to be made in litigation over whether features such as those mentioned above qualify as fair use exceptions to copyright infringement or require licenses from copyright owners. If the music industry decides to sue Amazon or Google, then both sides will have work to do to get courts to see things their way.
Copyright and Technology 2011 Conference: Crowdsourcing the Program April 27, 2011
Posted by Bill Rosenblatt in Events, Law, Uncategorized.add a comment
We are starting to plan the second edition of the Copyright and Technology conference. It will be in late September in New York City. Location and date will be announced shortly.
Those of you who heard about or attended last year’s inaugural event may remember that we offered an afternoon legal track that came with New York State CLE (Continuing Legal Education) credit. We’d like to do that again… but we could use a little help. What hot topics in copyright and technology do you think would make good panels? Let us know.
I’d rather not repeat the subjects of the panels we had last year. The two ideas I have for legal panels so far are these:
- The Future of E-Book Lending: Contract or Copyright?Public library lending of e-books has exploded with the rise of e-reading devices such as the Amazon Kindle, Nook, and Apple iPad. Yet recent controversies over the terms under which publishers license e-books for library lending have thrown this service into some doubt. On this panel, we will explore the rights of publishers and libraries related to content licensing and copyright, including libraries’ rights under 17 USC 108.
- The Google Book Settlement: Good Riddance or Lost Opportunity?Judge Denny Chin rejected the proposed settlement between Google and book publishers and authors over Google’s book scanning and book search programs. The parties to the settlement argued that it contained great benefits to all parties as well as to society, while Judge Chin raised concerns about competition as well as structures that should be set up through legislation rather than litigation. Now that the settlement is dead, what will happen next? What should happen?
Please send me your ideas for legal panels. Don’t propose speakers yet… there will be plenty of time for that. Stay tuned.
Bill Rosenblatt
Azita Arvani
Bill Jones
Niels Thorwirth
