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.
Google Book Settlement Rejection: A Missed Opportunity March 30, 2011
Posted by Bill Rosenblatt in Law, Publishing, Rights Licensing, United States.3 comments
U.S. federal judge Denny Chin last week rejected the latest iteration of the settlement agreement between book authors and publishers and Google over Google’s massive-scale scanning and indexing of books. Judge Chin rejected the proposed settlement after having heard from hundreds of parties that objected to it, including members of the author plaintiff class who did not agree with it, academic and public-policy amici curiae, and a coalition of the U.S. Justice Department and Google competitors (Microsoft, Amazon) organized by the prominent antitrust attorney Gary Reback.
The objections to which Judge Chin responded in his opinion focused on areas like Google’s de facto monopoly over the online availability of certain types of works, particularly so-called orphan works whose copyright owners are not in evidence, and the “blessing” that settlement approval would confer on steps that Google took without permission, such as scanning books and making snippets of their texts available online. But the broadest objection that Judge Chin seized on was that the settlement’s structure has such fundamental impact on copyright that it should not be the product of litigation among private parties; it is more properly the domain of Congress.
Large commercial entities such as (in the case of copyright law) major book publishers, record labels, and film studios often bring lawsuits like this one in the first place as a second-best alternative to pushing for legislation. It’s generally more expensive, time-consuming, and risky to litigate than to lobby Congress, but if Congress isn’t paying attention, then the legislative route is not viable.
A prominent example of this is the Supreme Court’s 2005 Grokster decision on file-sharing, which was the result of litigation that music companies instigated when it became clear that Congress wouldn’t enact a bill called the INDUCE Act of 2004. The outcome of Grokster ended up being similar to the INDUCE Act: it established a new class of secondary copyright infringement liability for someone who “induces” people to infringe copyright, in the same manner that someone can induce people to infringe a patent by marketing and profiting from some technology that makes it easy to do so. (The inducement principle for patents is long-established law.)
More recently, Viacom’s huge litigation against Google over YouTube is an attempt to increase network operators’ responsibility to act as “copyright police” over their own services beyond the notice-and-takedown requirements in the current law (17 USC 512). That case is currently making its way through the appeals process. Viacom would also most likely have preferred legislation over this protracted, expensive, and distracting lawsuit to achieve its ends.
Most of the talk over the rejection of the Google book settlement has focused on the issues that Judge Chin emphasized in his opinion: orphaned works, antitrust, and condoning unauthorized copying after the fact. But disappointingly scant attention has been paid to a feature of the settlement that had the potential to improve the global copyright scene for the digital age in a major way: the establishment of a global Book Rights Registry, which Google would have paid over US $30 Million to build.
Many of the problems in managing digital rights to content could be solved if there were complete, consistent, up-to-date, and easily accessible sources of information about content and rights holders. Private companies have made various attempts to solve this problem over the years; none have succeeded, owing to unrealistic profitability requirements, overly narrow scope, lack of cooperation from rights holders, and other factors.
Governments have been understandably reluctant to try to establish such databases — especially in an age where even registering copyrights is not considered mandatory. But the need is there, and it’s sorely felt. Notwithstanding its source, legality, or ethics, the Book Rights Registry could have been a real solution to this problem — moreover, one that would be paid for, not by taxpayers or even rights holders but by a company for whom the price would amount to a rounding error on its balance sheet.
Furthermore, the Book Rights Registry — now in the public view for at least two years — has become a source of inspiration for similar activity in other sectors of the media industry, such as the Global Repertory Database for music currently being contemplated in Europe. Many highly qualified managers and potential implementers have been lining up to build and run the BRR, thus helping to ensure good design and operations.
Now, with Judge Chin’s rejection of the settlement, the BRR looks like a lost cause. Judge Chin’s opinion suggests that a revised settlement could be approved if it works on the “opt in” instead of “opt out” principle, i.e., it should include only those works whose copyright owners proactively agree to let be included. This may pass various legal sniff tests. But any resulting Book Rights Registry under an opt-in regime would be of highly dubious value to the industry in general; in fact, it would scarcely differ from repositories of licensable material available today, such as Overdrive’s Content Reserve.
The parties to the proposed settlement are now in a daze over what to do next. Sentiment seems to be toward Google lobbying Congress to pass legislation that would make orphan works available to the public. Such legislation has been in the works for at least five years. But Congress’s attention nowadays is taken up with issues such as unemployment, wars, the deficit, and other issues which (let’s face it) are more important to U.S. society. Yet orphan works legislation has always sounded like a no-brainer.
Now that Google has an estimable lobbying presence in Washington, we may find ourselves in a world with orphaned works becoming available to the public and a Book Rights Registry that includes them as well as works with claimed ownership on an opt-in basis. That’s well short of the “castle in the air” rights information database that some of us have been dreaming of… but I suppose it’s better than nothing.
E-Book Lending: The Serpent in the Garden of Eden March 3, 2011
Posted by Bill Rosenblatt in Business models, DRM, Law, Publishing, Services, United States.22 comments
I wrote my previous article about e-books and libraries in response to an article by my colleague Thad McIlroy on his Future of Publishing site. The news that HarperCollins had put restrictions into its e-book licenses for lending library services so that each “acquired” title could only be loaned out 26 times was fresh and appeared as a side note in my article. HarperCollins (a division of Rupert Murdoch’s News Corp) is one of the world’s largest trade book publishers. So, what about this major development?
First, let’s quickly review the technical and legal backdrop to what HarperCollins is doing. Libraries normally buy (acquire) books to lend to library patrons. This is made possible through the copyright law, specifically section 109, which is known as First Sale. Section 109 says that anyone who legitimately obtains a copy of a copyrighted work (e.g., a book) can do whatever she wants with it, including resell it, lend it, or give it away. Eventually physical books in lending libraries become worn and damaged; libraries may repair them or dispose of them. Libraries control lending abuses by collecting fines from patrons who return books late or not at all.
In the world of e-books, libraries don’t buy titles; they license e-books in order to license them to patrons. A license is a contract, the terms of which are ultimately up to the publisher. Copyright law allows libraries to lend digital works to their members, but DRM-packaged e-books are governed by licenses, and thus contract law, not copyright law.
Of course, it takes no effort to make a copy of an e-book. That’s why library services use DRM to ensure that e-books are loaned only to properly credentialed users (i.e. members of the library) and that those users can’t make copies for their million best friends. Service providers like Overdrive and NetLibrary have arisen to make it possible for libraries to “lend” e-books in a way that is very similar to the way they lend hardcopy books: you get access to the e-book for the library’s lending period (perhaps a couple of weeks, or for a reference work, a few hours), and then it “disappears” from your device and becomes available to another library member. Libraries can license multiple copies of popular works so that more than one patron at a time can borrow them.
The noted library technologist Eric Hellman calls this the “Pretend It’s Print” model — a characterization I don’t quite agree with, but leave that aside for the moment. Hellman characterizes “Pretend It’s Print” as a reasonable model, at least for the time being. But HarperCollins appears to be taking “Pretend It’s Print” quite literally: they seem to be trying to emulate physical wear and tear on a book that leads some libraries to discard books after a while. Still, Hellman’s blog post on the subject drips with contempt for HarperCollins.
I also believe that HarperCollins has done the wrong thing, but for a different set of reasons. Let me preface my reasons with a couple of caveats: I have no access to statistics on the expected lifespans of library books, though I found a couple of data points that expect between 20 and 35 loans until a book must be either discarded or repaired at a cost that may exceed its value — thus making HarperCollins’s 26 seem like an appropriate number (or did they find the same two articles I did?). I also have no insight into a library book’s promotional value to a publisher, but I suspect it’s not very high.
HarperCollins’s 26- loan limit is just a bad decision. It is bound to please absolutely no one. It is a lose-lose-lose proposition. The library community is up in arms on Twitter and elsewhere about the decision. Many are calling for libraries to boycott HarperCollins material in hardcopy as well as e-book format.
Yet at the same time, two other major publishers, Macmillan and Simon & Schuster, never licensed e-books for library lending in the first place. Librarians complain about this, but not very much.
As I said previously, I had heretofore considered e-book lending to be one of the real success stories of DRM. Libraries get to lend e-books, publishers get paid for those e-books, and library patrons can read them on a wide range of devices (pretty much anything but a Kindle) without leaving their homes or offices. Everybody wins.
Furthermore, let me be clear that some form of content protection is absolutely necessary for library e-book lending. To allow library patrons to make additional copies of “borrowed” digital materials with even relative impunity is just plain unfair to publishers and authors. (Yes, DRMs can be hacked; people can make digital scans of hardcopy books too.)
Yet HarperCollins is making two serious mistakes in DRM implementation. One is to try – too literally – to use DRM emulate a physical product in the digital domain. This has never worked, because a digital emulation will always contain one or more shortcomings with respect to the original physical model that will not meet user expectations. ”Pretend It’s Print” may be a convenient point of reference for consumers, but it is more effective to focus on the content access model rather than the physical product in designing digital content services. (As far as I know, record labels aren’t experimenting with DRMs that gradually introduce clicks, pops, and skips into digital music files.)
In this case, the HarperCollins model will fail to meet “user expectations” by angering librarians, who don’t like DRM in principle. Either the e-book will suddenly become unlendable without warning or the DRM system will warn librarians that they will soon have to pay for another license to keep lending the e-book. How many libraries will re-up? Not many, I suspect.
Furthermore, this move defies logic regarding publishers’ strategies for their backlists (catalogs of older content). Publishers believe that their backlist titles have less value than frontlist titles, and they constantly seek ways to invigorate sales of their backlists. By making it unlikely that e-books will be available for library lending after a year or so, HarperCollins is both cutting off access to products that it presumably does not value highly in the first place and hurting its ability to invigorate its backlist. This makes no sense at all.
The other mistake that HarperCollins has made is to introduce complexity into a DRM implementation in a way that adds no value for users. Many early digital music services failed to gain user acceptance because they were too complex for users to understand. Some, for example, had Byzantine pricing plans – X permanent downloads, Y timed downloads, and Z streams per month – that resembled the bad old days of confusing cell phone plans. iTunes won because it kept things simple. Nowadays, as music services take on more and more new features in their attempts to unseat the iTunes juggernaut, they risk similar user confusion and alienation (most egregious current example: the feature-overloaded MOG).
If HarperCollins wanted to try something different with licensing terms, it should have done something that offered value or choice. It could, for example, have offered a choice of limited-loan titles for less money or unlimited-loan for full price. (Eric Hellman tried polling this question; the responses he got prove little more than how emotional everyone is over this issue — which is exactly my point.)
If HarperCollins does not get value from e-book lending, then why not just pull its catalog entirely and join Simon & Schuster and Macmillan as library holdouts? If they do that instead, librarians need not bother boycotting HarperCollins’s e-books; and any threats to boycott the publisher’s hardcopy releases will surely ring hollow.
The end result of a move like this can only be the slow and painful death of library e-book lending. HarperCollins may hope that other publishers will follow its model – though not so closely as to invite antitrust scrutiny. This will only lead to further confusion for librarians and users alike: HarperCollins allows 26 loans, Random House allows 35, Penguin allows 20, etc. There is no way that a model like this can lead to the growth in library e-book lending that libraries need to survive as e-reading grows in popularity. `
Libraries are highly unlikely to reverse the tide in the market alone. Boycotts may be emotionally satisfying but will have no practical impact. Instead, the library community’s best hopes lie in the legal system.
The most likely route would be to try to get the Copyright Office, at its next DMCA rulemaking in 2013, to approve an exemption that would allow libraries to circumvent (hack) DRMs in order to lend e-books as long as they re-package them for the library patron with the same type or strength of DRM. This would be a more elaborate exception than any that the Copyright Office has granted in its four DMCA rulemakings to date. It also has various disadvantages: it could only last three years under the DMCA rulemaking rules (every exception only lasts until the next triennial rulemaking); it could cost libraries more money to support than they pay Overdrive or NetLibrary, which benefit from scale economies; and it could induce publishers to demand (and perhaps even pay for!) DRM that is more difficult to hack.
But perhaps it’s worth a try. Unlike the Section 108 Study Group — a body that recommends changes to the part of copyright law that covers libraries, which ironically has little bearing on the issue at hand — it is possible for anyone to submit a request for a DMCA exemption to the Copyright Office without first having to run a gauntlet of copyright industry lobbyists.
If the Copyright Office were to grant such an exemption, it would mean that a library could be free to purchase any e-book — not just those that the publisher decides to license — and lend it to its members on its own terms while respecting copyright. The result would be a better version of “Pretend It’s Print” — in the business model sense, where it counts.
Are Libraries Locked Out of the E-book World? February 27, 2011
Posted by Bill Rosenblatt in DRM, Law, Publishing, Uncategorized, United States.8 comments
Publishing guru Thad McIlroy was kind enough to link to one of my stories on the e-book DRM scene in an article on his excellent Future of Publishing site. (I have had the pleasure of working with Thad on various projects over the years. Especially when it comes to production and output issues for publishers, he is The Man.) So it’s incumbent on me to return the favor.
In his piece, Thad accuses book publishers and Amazon of effectively colluding to shut out libraries from access to e-books. You can borrow e-books from many public libraries in the United States, but the process is clunky – because it entails using a system provided by a third party, Overdrive – and you can’t read them on a Kindle device or any of the Kindle apps.
On the one hand, de facto (if not necessarily explicit) collusions of this type are far from uncommon; in fact the history of copyright law is littered with such arrangements (read Jessica Litman’s Digital Copyright
First of all, Amazon is not the only company with a popular e-book platform. Adobe’s e-book platform works on just about every e-reader except the Kindles (including the Barnes & Noble Nooks and Sony Readers) as well as on PCs, Macs, Android, and so on. The Adobe platform supports library lending and in fact is at the heart of Overdrive’s public library e-book lending service. Moreover, a very recent study indicates that the Kindle’s market share among the e-book reading public has dropped below 50%, mainly thanks to the Apple iPad… and regarding iOS devices’ compatibility with the Adobe e-book platform, yes, there’s an app for that. So, if you want to borrow e-books from your public library, just don’t use a Kindle; you have plenty of other choices.
In addition, there is a legal as well as technological or market-based angle to the problem of libraries in the era of digital content that’s worth discussing. Section 108 of the U.S. copyright law grants libraries and archives rights to content that exceed those granted to people under normal conditions. Among other things, it allows libraries to make copies of copyrighted works for noncommercial lending, as long as those copies are limited in number and afforded adequate protections against infringement.
There are various subtleties to Section 108 and its interplay with other areas of copyright law, not to mention moving-target implications of digital technologies. Accordingl, the law requires a group of interested parties to revisit Section 108 every five years and recommend any changes they deem necessary. The Section 108 Study Group is an analog to the better-known rulemaking on Section 1201, which the U.S. Copyright Office conducts every three years. Section 1201 — enacted as part of the Digital Millennium Copyright Act — is the law against circumventing (hacking) DRM on copyrighted works.
The Section 108 Study Group (in its 2008 incarnation, at least) has 19 members, which are well balanced between copyright-owner and library/archive interests: nine from each side and a neutral “legal advisor” from Columbia Law School.
Section 108 allows a library to make a copy of an e-book and lend it out to the library’s members. Under this law, a library could presumably buy an e-book and lend it out. But if the e-book is packaged with DRM, there are two problems. First, the library is not actually buying a copyrighted work, it is licensing the work; see below. Second, Section 108 doesn’t allow the library to hack the DRM in order to make the copy – not even if the library agrees to re-package the copy in a DRM scheme that lets a specific library patron read the e-book. Such hacking would have to be allowed as an exception to Section 1201, which is the province of the Section 1201 rulemaking, and thus of the Copyright Office, not the Section 108 Study Group. (See, I told you this stuff is subtle and complex.)
Because major publishers require DRM on their e-book releases, this means that libraries aren’t able to exercise rights under Section 108 just as a matter of law. This has given rise to services like Overdrive, which facilitate the licensing of e-books from publishers for library lending purposes.
A license is a contract. The licensing of digital content exists in a legal realm that is separate from copyright law – at least for the moment. The upshot is that publishers are free to choose whether to license their material in e-book form for library lending and to dictate some of the terms of those uses, such as the number of devices on which a given user can read the material, period of lending, or number of times an e-book can be loaned. For example, Simon & Schuster doesn’t license for e-book lending at all, and HarperCollins just introduced a policy to limit the number of loans per licensed e-book to 26, in an apparent move to mimic the lifespan of a physical book in library circulation.
Because libraries and publishers will perpetually disagree on these terms, it helps to have a third party like Overdrive or NetLibrary to act as a buffer or intermediary. Some publishers may also agree to license their content through these services because of the risk that their refusal to do so will cause the Section 108 Study Group to recommend changes in the copyright law that give libraries more latitude in lending digital works. As it is now, the copyright-owner contingent in the Study Group can point to services like Overdrive and NetLibrary as evidence that the market is providing solutions so no changes in the law are necessary.
The last Section 108 Study Group Report (for which I consulted to the Study Group) came out in 2008, which means that the activity in preparation for the next one will take place next year. The next Copyright Office 1201 rulemaking also takes place in 2013. If the members of the 108 Study Group who are on the “library side” want greater flexibility for libraries to lend digital works, they may want to try to get exemptions to the 1201 anti-hacking law for library lending proposed and approved.
If that happens, then Amazon and book publishers definitely will no longer have the “library lock-out” that Thad McIlroy described in his article.
Bill Rosenblatt
Azita Arvani
Bill Jones
Niels Thorwirth
