Last week, a music site called BlueBeat made headlines by offering Beatles songs as free streams and 25 cent downloads. The Beatles are known for not making their songs legally available on iTunes or any other online forum, so observers rightly asked "how are they doing this legally?"
EMI, the record label that owns The Beatles' recordings, has a simple response: they're not doing this legally. But here's where the story gets very strange.
The legal reasoning in this case is straight out of "Alice in Wonderland."
(Credit: Wikimedia Commons (public domain illustration))BlueBeat is owned by a company called Media Rights Technologies, which specializes in digital rights management technology. DRM is supposed to be used to prevent copyright infringement. But according to a 2007 blog post on HuffingtonPost.com by the company's founder, Hank Risan, MRT backed into this business after being--get this--targeted by the RIAA for copyright infringement.
As Risan explains in his post, he and a partner had posted a bunch of streaming-audio files to a Web site about the history of music. The RIAA issued a takedown notice, and the site took the streams down.
The streams had been protected by Windows Media DRM, but according to Risan, an update to the Media Player broke the DRM. In response to this flaw, Risan created MRT and built his own DRM system, which he claimed would be far more robust than the systems on the market at that time. Then, in 2007, MRT sent cease-and-desist letters to Microsoft, Apple, Adobe, and RealNetworks, ordering them to use MRT's DRM technology instead of their own, on threat of legal action.
The legal reasoning was twisted--basically, MRT argued that the Digital Millennium Copyright Act should force these companies to use the most robust DRM technology available, even if that technology was created by somebody else. Predictably, nothing ever came of this demand.
MRT's legal reasoning is equally funny this time around, as Ars Technica reports. According to the report, MRT claims that it didn't post the exact Beatles recordings. Instead, it posted "psychoacoustic simulations," then added simple video content to them. This constitutes a new audiovisual work, and isn't covered by the existing copyrights, MRT argues. In fact, MRT even went so far as to apply for copyrights on the "new" works!
Perhaps this is all some kind of metacommentary on the frustrating inconsistency of U.S. copyright law, but I predict that MRT is going to be laughed out of court. In the meantime, if you want your Beatles music online, it's still available on BlueBeat as of the time I posted this. I didn't want to give the company a credit card to test the whether the downloads work, but the streams sound pretty close to perfect...especially considering that they're only psychoacoustic simulations.
I'm not a lawyer, but I'm well-acquainted with legal filings from analyzing Microsoft's legal travails for the last nine years. I've seen a lot of aggressive lawsuits, but a copyright infringement suit filed Monday in the U.S. District Court for Middle Tennessee is one of the boldest--and, I'd argue, short-sighted--filings I've ever seen.
The suit appears to have been initiated by Music Copyright Solutions (MCS), which claims to administer copyrights for more than 45,000 compositions. MCS is named as the lead plaintiff, along with a number of songwriters including Mark Farner of Grand Funk Railroad fame. These folks allege that Microsoft, Yahoo, and RealNetworks improperly licensed the rights to more than 200 compositions that they offered as on-demand streams or limited downloads via the Zune Marketplace, Yahoo Music, and Rhapsody.
Surely these companies paid somebody for the rights to offer these songs. But there's a catch, which TechDirt pointed out earlier Tuesday: these companies may have licensed the rights to the recordings, but that doesn't mean they licensed the rights to the compositions (also known as publishing rights). As section 23 of the legal filing puts it:
In order to transmit, perform, reproduce and deliver any sound recording of any musical work via 'On-Demand Streams' or 'Limited Downloads,' Defendants must first obtain not only the rights for the sound recording itself, but also the rights for the underlying musical composition that is embodied on said musical recording.
Maybe, maybe not--that's up to the court to decide. But that's not the insane part. The insane part is that the plaintiffs are alleging that each time one of the defendants made any recording of a covered song available, that's a copyright violation, and they're seeking damages of $150,000 per violation (or the amount the defendants earned from streaming those songs, whichever is more). So, for example, the lawsuit claims that Yahoo Music offered Conway Twitty's recording of "Fifteen Years Ago" on six different greatest hits albums. The plaintiffs allege that constitutes six copyright violations, which would mean damages of $900,000. Overall, the lawsuit names more than 200 songs, and a far greater number of recordings, meaning that the potential liability for each defendant would be tens of billions of dollars--that's far greater than the total amount of revenues these companies ever earned from any of these services.
These types of cases are usually settled for a relative pittance--something much closer to what the defendant would have paid to license the songs properly in the first place. But imagine for a minute that this lawsuit actually goes to trial and the plaintiffs win damages amounting to 1 percent of what they asked for. No company would ever risk building an online music service again--the legal liability would simply be too high.
When it comes to online music, big legal music services like Zune, Yahoo Music, and Rhapsody are the copyright owners' friends--unlike file-trading networks or free on-demand streaming services, these companies actually collect money from users and disburse it to copyright owners. Perhaps the plaintiffs have a legitimate complaint. But by filing such an aggressive lawsuit to recover billions in supposed damages--I mean honestly, how many Grand Funk Railroad streams have been delivered via the Zune Marketplace?--these folks risk killing their allies and driving music back to the darknet where nobody in the value chain sees a dime.
The recording industry has won its first victory against a user of a file-sharing network. Late yesterday, a jury in Minnesota determined that Jammie Thomas had in fact used Kazaa to share music files. Finding her guilty of "willful" copyright infringement, he jury ordered her to pay the copyright owners (six labels) $9,250 for each of the 24 songs that were at issue, for a total of $220,000.
Reading the coverage of the closing arguments on Ars Technica and Wired, I can see why the jury reached its decision. Somebody using the screen name "Tereastarr" posted certain music files to Kazaa. Thomas uses that screen name in many different places, including e-mail and her PC log-on. The same songs were found on her hard drive. Her PC is password-protected, so it's hard to argue that somebody else snuck on and did the dastardly deeds. Some of the alternate theories from the defense sound like they're ripped from the headlines of every scary security story you've read in the last five years. (Her computer was pwned by zombies!)
Even so--and I'm not a lawyer by any stretch of the imagination--a lot of the evidence seems indirect. That is, despite all the fingers pointing in her direction, I don't think it's possible to prove beyond a shadow of a doubt that the individual Jammie Thomas uploaded these songs to Kazaa. I'm not sure if there's enough for an appeal, but jury verdicts are notorious for being overturned. (Old adage: if you're innocent, ask for a judge; if you're guilty, ask for a jury trial.) Also, the judge found that the RIAA didn't have to prove that anybody actually downloaded the songs that Thomas posted, only that she posted them in an attempt to violate copyright. According to the site The Recording Industry vs. the People, which is run by a pair of lawyers who've represented some plaintiffs against the RIAA, the decision establishing that precedent was actually vacated the week before the trial.
If the RIAA pursues--and wins--other trials, it could cut down on illegal file-trading. But I tend to think that file-trading software or networks will continue to evolve to make it harder to track who's doing what. I imagine there could be a way of masking IP or MAC addresses, or a way to encrypt the sharing folders on the user's PC so that they're invisible to everybody but the user (who'd need a password even to see them).
Not that it's any justification for copyright violation, but I can see why Ms. Thomas didn't want to pay for the tracks at issue. Richard Marx? Vanessa Williams? Then again, maybe I'm just pretentious and out of touch.
Last Friday, a judge found that making music available through a file-trading network does constitute copyright infringement, even if that music is ripped from a CD that you bought. (Here's a link to the PDF of the summary judgment.)
According to the Web site Recording Industry vs. The People, which is run by two lawyers representing some defendants in infringment cases brought by the RIAA, this is the second time a judge has made this point, although last time it was included only as a footnote.
Without this legal precedent, the RIAA would have a very hard time suing file-traders. Now, this finding was part of a summary judgment, so it doesn't necessarily count as precedent, but the RIAA has used it to bolster its argument in two other cases. If judges in those cases rule similarly, then the precedent could be established.
In 2004, the Recording Industry Association of America (RIAA) filed suit against Deborah Foster, an Oklahoma resident, alleging that her computer and her ISP account had been used to download and trade copyrighted recordings illegally. As usual in these suits, the RIAA offered to settle the case for a few thousand dollars.
Except that Deborah Foster knew she hadn't done anything wrong, and refused to pay up. After some initial discovery, the RIAA began to suspect that Deborah's adult daughter, Amanda, was responsible for the alleged downloads, and it added Amanda's name to the suit. But Deborah continued to press the RIAA, asking them to provide details of what was downloaded when. Seeing that this wouldn't be an easy case, the RIAA dropped the suit.
Deborah then sued the RIAA for attorneys' fees and won. After about a year of back and forth over the precise amount, today the judge ordered the RIAA to pay her $68,685.23. (A PDF of the order is available here.)
This judgment changes the calculations involved in the RIAA's strategy of suing alleged file-traders. It doesn't cost much to send an accusatory letter demanding a few thousand dollars. But if the defendant actually puts up a fight, the legal costs for the RIAA quickly mount. In that situation, the RIAA has to believe that it has enough evidence to win, and that the defendant will be able to pay a fine that's large enough to cover the RIAA's costs.
All this means the RIAA has to be extra careful about who it sues--as this case demonstrated, it may not be enough to trace file-trading back to a particular IP address, and work with (or sue) the ISP to figure out who's paying for Internet access at that adress. And taking extra care might raise the RIAA's initial costs enough to make this whole strategy too expensive to continue with.
That would actually be a good thing for the recording industry: the strategy of suing file-traders is error-prone, ineffective, and has created a blizzard of bad p.r. A better option would be to create and promote legal alternatives that still compensate copyright owners, such as ad-funded music-sharing services. Another possibility would be to press legislation forcing ISPs, PC hardware makers, and/or music software makers to chip a few cents per sale into a kitty to compensate content owners for the loss of revenue from file-sharing--something that's already done with the sale of certain blank media in the U.S. and elsewhere.
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