Music Forecast: Even Cloudier

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 TimesWired, 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.
And they have these key limitations:
  • 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.

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