For the London Free Press – August 16, 2010

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[UPDATE: Also take a look at this related Techdirt post entitled The Insanity Of Music Licensing: In One Single Graphic ]

Radio royalties are complex.

On July 9, 2010, the Copyright Board of Canada issued its long-awaited Commercial Radio tariff and reasons. It dealt with payments radio stations must pay to copyright collectives to obtain rights to play music.

The rights to use most music flows through copyright collectives that collect royalties from broadcasters and other users, so they don’t have to deal with rights holders individually. The collectives in turn pay the royalties to the rights holders.

Even with the collectives taking the place of rights holders, the various copyright payments broadcasters must pay for music are complex. Radio stations must pay for six different rights.

The board stated:

A Canadian radio station that broadcasts recorded music off a server reproduces and communicates musical works, performers’ performances and sound recordings. Four copyrights and two remuneration rights must be accounted for.

The board estimates that commercial radio stations will pay a total of $85 million annually in royalties under the new rates, an increase of $13 million over previous rates.

Of the $85 million in royalties, the board estimates $51 million will go to SOCAN, $13 million to Re:Sound, $11 million to CSI, $10 million to AVLA/SOPROQ and $200,000 to ArtistI.

SOCAN administers the exclusive right of the owner of the copyright in a musical work to communicate it to the public by telecommunication for most composers, authors, and publishers.

The second and third rights are the remuneration rights that performers and record companies enjoy when a recording of a musical work is communicated to the public by telecommunication. Re:Sound administers these rights for most eligible performers and makers.

The fourth set of rights is the exclusive right to reproduce a musical work. CSI, SODRAC and CMRRA administer these rights.

The fifth set of rights is the exclusive right to reproduce a sound recording. AVLA and SOPROQ act for most record producers, record companies and artists.

The sixth set of rights is the exclusive right in a performer’s performance to reproduce the performance for a purpose other than the purpose for which authorization was given. ArtistI, ACTRA PRS, AFM Canada Artisl, and others administer this right.

The estimated $85 million in royalties payable by radio broadcasters does not include instances where collectives have not filed tariffs. As a result, the $85 million estimate may be understating the monies payable by radio broadcasters.

The Commercial Radio tariff is a consolidation of several proposed tariffs filed in 2007 and 2008. If the board’s decision ends up being judicially reviewed by the Federal Court of Appeal, a final decision will likely be over a year away.

Techdirt has a post that’s worth a read that talks about a debate sparked by the NY Times and Computerworld about the ethics of downloading something you have already paid for.  Its an issue worth considering, especially in light of an expected new copyright reform bill in Canada.   It ties into issues about format shifting and whether copying is theft when it doesn’t deprive the owner of what they have.

For the London Free Press – April 19, 2010

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n December 2009, isoHunt, a BitTorrent and peer-to-peer search engine, was found liable by a U.S. District Court judge for inducing copyright infringement. The operator of the isoHunt website says he will appeal.

IsoHunt was founded by Canadian Gary Fung in January 2003. According to Wikipedia, thousands of torrents are added to and deleted from the website each day. Users of the website perform more than 40 million unique searches each month.

The isoHunt website is a file search engine, but according to its creator, it does not induce copyright infringement. This distinction is crucial because over the last few years, a number of peer-to-peer service companies have been shut down because they were deemed to have induced copyright infringement.

These players include Napster, shut down in 2001, Grokster and Morpheus, shut down in 2005, and TorrentSpy, shut down in 2008.

BitTorrent websites allow users to download files of any kind directly from the computers of other users. Fung says the isoHunt website is similar to a search engine, such as Google, as the website itself does not store any contents and the files are not downloaded from the servers of the websites, and thus should not be liable for inducing copyright infringement.

The U.S. District Court said Fung had solicited infringement of copyrighted files by the way he has designed his website and by comments he made in interviews and online. For example, the isoHunt website allows users to access the top searches or the top files by category. The website also links users to websites that have torrent files or that invite users to upload copyrighted files. The judge felt Fung was aware of the copyright infringement and actively induced the infringement.

More recently, Judge Stephen Wilson of the U.S. District Court in Los Angeles ordered isoHunt to remove all infringing content from its website.

“It is axiomatic that the availability of free infringing copies of the plaintiffs’ work through defendants’ websites irreparably undermines the growing legitimate market for consumers to purchase access to the same works,” Judge Wilson said.

Fung said Wilson’s injunction “amounts to nothing less than taking down our search engine . . . We’re discussing the mechanics, the process that is reasonable for an injunction. We’re still trying to hope that the judge will do the right thing.”

IsoHunt has also taken the initiative and sued the Canadian Recording Industry Association (CRIA) to get a court ruling regarding the legality of the website. This came before the Supreme Court of British Columbia in March 2009 for a summary judgment, but the court ordered the matter proceed to trial.

The line where someone becomes liable for a copyright infringement of another is not clear. U.S. courts have found some peer-to-peer service companies liable for providing tools that were deemed to be intended to be used for unlawful copying. But others have created services that essentially allow users to do the same thing but in a way that avoids liability for copyright infringement

That’s the title of my Slaw post for today.  It reads as follows.

We have seen much pressure over the years for governments to enact tougher laws for piracy and counterfeiting – often based on statistics that lead to conclusions that billions of dollars are being lost because of it.   

It leads to questionable things like three strikes laws, the Digital Economy Bill, and the ACTA treaty discussions.  Many people have questioned the statistics, and the conclusions based on them.

The US government accountability office (GAO) just released a report that concludes that while the problems are real, “Three widely cited U.S. government estimates of economic losses resulting from counterfeiting cannot be substantiated due to the absence of underlying studies”.  Also that assumptions are used to compensate for the lack of data.

For more commentary on this issue, see the reactions of Mike Masnick and Michael Geist.

For the London Free Press – April 12, 2010

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Copyright infringement: Even its own employees couldn’t keep track of everything it posted or left on the site as promotions

Three years ago, Viacom sued YouTube for $1 billion based on claims of copyright infringement for unauthorized posting of Viacom copyrighted material.

This case is complex and controversial. Until recently, many documents in the litigation were sealed and not available to the public. Summary judgment materials have now been filed and the parties have gone public with their complaints.

When the documents were released, YouTube’s chief legal counsel, Zavanah Levine, made this surprising blog post:

“For years, Viacom – a media conglomerate in the United States that owns such networks as MTV and Comedy Central – continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired 18 marketing agencies to upload its content to the site. It deliberately ‘roughed up’ the videos to make them look stolen or leaked. It opened YouTube accounts using phony e-mail addresses. It even sent employees to Kinko’s to upload clips from computers that couldn’t be traced to Viacom. And in an effort to promote its own shows, as a matter of company policy, Viacom routinely left up clips from shows that had been uploaded to YouTube by ordinary users.

Executives as high up as the president of Comedy Central and the head of MTV Networks felt ‘very strongly’ that clips from shows like The Daily Show and The Colbert Report should remain on YouTube.

Viacom’s efforts to disguise its promotional use of YouTube worked so well even its own employees couldn’t keep track of everything it was posting or leaving up on the site. Viacom demanded the removal of clips it had uploaded to YouTube, only to return to sheepishly ask for their reinstatement. In fact, some of the very clips Viacom is suing us over were actually uploaded by Viacom itself.”

If that is true, it seems inconsistent with Viacom’s lawsuit.

Viacom now states it does not take issue with how YouTube has operated since May 2008. In May 2008, YouTube integrated a Content ID system into its site, which permitted copyright owners to assert ownership over their own content. In doing so, the copyright owner can let YouTube know whether it wants the content blocked or monetized.

The Electronic Frontier Foundation’s take on the case is it comes down to Viacom seeking to change the law on copyright in the U.S. to ensure that online service providers be required to implement and pay for copyright filtering. This type of argument has already been considered and rejected by U.S. courts.

The Digital Millennium Copyright Act (DMCA) provides safe harbours for U.S. hosting providers. It provides a protocol for service providers to follow when anyone alleges someone has posted anything on the service provider’s service that infringes copyright. So long as the service provider follows the protocol, it’s not liable for copyright infringement.

The UK government rammed through a controversial bill that includes provisions similar to the much maligned three strikes laws.    

Its beyond me why governments insist on urgently passing this kind of thing without thinking it through, and without taking the time to really listen to various viewpoints, or understand where technology, the economy, and culture is headed.

Detail on the controversy can be found on the BBC news, Boing Boing, and Techdirt and another on Techdirt.

I’ve written before about how the three strikes law that is in force in France, and is being contemplated in other countries, is fundamentally wrong.

Take a look at this short video interview from author Cory Doctorow that puts it in perspective.

Mike Masnick of Techdirt has published a post that is a chapter he wrote for a book being presented at a conference for the International Association of Entertainment Lawyers (IAEL).

Its worth a read, not only for Mike’s thoughts on new ways for the music industry to make money, but also to consider how that business model might work for other industries. 

Here are some snippets to get a flavour:

It’s no secret that there’s a lot of concern these days about what the music industry will look like going forward — especially from those who work on the label side of the business and have been around for a bit. A variety of things have caused rapid change in the market. Competition from other forms of entertainment, such as the internet, movies and video games, have put more pressure on the industry, as consumers have been presented with significantly more options for their entertainment attention and dollars. And, of course, there’s the ever-present specter of unauthorized file sharing — or, as the industry prefers to call it (accurately or not), “piracy.”

…

However, there is another solution: stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement.

In simplest terms, the model can be defined as:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model

Sound simple? It is, if you understand the basics — and it can be incredibly lucrative. The problem, of course, is that very few seem to fully understand how this model works. However, let’s go through some examples.

…

This is a business model that’s working now and it will work better and better in the future as more people understand the mechanisms and improve on them. Worrying about new copyright laws or new licensing schemes or new DRM or new lawsuits or new ways to shut down file sharing is counterproductive, unnecessary and dangerous. Focusing on what’s working and encouraging more of that is the way to go. It’s a model that works for musicians, works for enablers and works for fans. It is the future and we should be thrilled with what it’s producing.

For the London Free Press – November 23. 2009

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INFRINGEMENT: It addresses concerns of creators and publishers of movies and music

The “three-strikes law” is a controversial proposal to address download infringement concerns of creators and publishers of movies and music.

The concept is that if someone alleges an Internet user is downloading copyrighted material, they can advise their Internet Service Provider (ISP). The ISP then tells the customer to cease this illegal activity. If this happens three times, the ISP must turn off the customer’s Internet access.

France recently approved such a plan, but not without a struggle. An initial version was ruled unconstitutional by the French courts. An amended version was approved this fall which calls on a judge, not a government actor, to sign off on account suspensions.

France is now viewed by supporters as a pioneer against piracy, leading the way by implementing this legislation.

The same proposal in Britain met with public backlash. Public consensus is these measures are too drastic and draconian. The measures will generate a bureaucratic nightmare while having little impact on the overall prevalence of file-sharing.

Other critics argue the increasing prominence of the Internet in everyday life makes suspending that privilege a limit on individual freedom of expression.

Even holders of copyrighted material are split on the subject. Artists, such as the music group Radiohead, argue that any effort to criminalize file-sharing is in vain. They believe artists would be better to embrace the potential of file sharing to share their work with a larger audience. This will allow them the opportunity to generate revenues through concerts and merchandising, and even the sale of their music.

Other artists are of an opposite view, believing that file-sharing restricts the ability of young artists to make a living, lessening the likelihood of success for emerging artists.

The three-strikes law is misguided, even if you believe such activity should be controlled.

Whether someone has violated copyright is often not a black-or-white issue. Copyright law is complex, and knowing in any given instance whether an infringement happened isn’t easy.

To implement these policies on a mass basis, in a similar manner to handing out parking tickets, ignores this complexity. And the penalty is more than paying a few dollars in parking fines.

The proposal is also open to abuse as sanctions imposed at the request of an alleged victim can be taken advantage of.

There are numerous examples of questionable takedown notices under the existing U.S. DMCA rules. In fact, the Electronic Frontier Foundation has created a Takedown Hall of Shame, which lists “bogus copyright and trademark complaints” which “have threatened all kinds of creative expression on the Internet.”

This points up another problem with the concept: violations need only be alleged, not proven. An individual may be accused and given a strike by their ISP with no proof of misconduct. Guilty till proven innocent is not something we should condone.

The issue of digital piracy will continue to be a contentious topic. The three strikes proposal is not a palatable solution.

Digital Video Recorders have been attacked by many in the entertainment industry as being harmful to TV ratings and advertisers.   Just like VCR’s were supposed to ruin the video industry.  In general, the entertainment industry historically has tended to fear and fight every new technological development.

Turns out that the reality is that DVRs actually add significantly to live ratings, and have helped some otherwise marginal shows become hits.

From the New York Times:

…television network executives have fallen in love with a former tormentor: the digital video recorder.

The reason is not simply that more households own DVRs — 33 percent compared with 28 percent at this point in 2008 — helping some marginal shows become hits. It is also that more people seem content to sit through the commercials than networks once thought.

These factors combined mean DVR ratings now add significantly to live ratings and thus to ad revenue.

Also see commentary by the EFF, and Cory Doctorow of Boing Boing.