EMI Boss Opposes SOPA, Says Piracy is a Service Issue
27th January 2012

The RIAA has been one of the most dedicated supporters of the PIPA and SOPA bills, but not all of the people they represent share their enthusiasm. EMI’s VP of Urban Promotions Craig Davis made some very reasonable remarks on the controversial anti-piracy plans, stating that “the method they’re using is incorrect.” In addition, the VP says that he’s no fan of DRM and that piracy is a service issue, not an issue of money.

In recent weeks millions of people have spoken out against the pending PIPA and SOPA anti-piracy bills, which have both been delayed as a result.

Today we can add a VP at one of the major RIAA labels to this list, which is quite unique and yet another game changer.

Speaking for himself, EMI’s VP of Urban Promotions Craig Davis said that the two pending anti-piracy bills are not the way to move forward.

“Personally, I feel that the method they’re using is incorrect. All it will do is cause headaches and issues for everyone,” Davis noted.

While the EMI VP opposes PIPA and SOPA, he does admit that piracy is a problem. However, Davis thinks that the problem can be better solved from within the music industry itself. In other words, the key to solving piracy isn’t legislation, but innovation.

“I do believe that a person should be compensated for their work. I feel that piracy is a big issue, and things like Spotify will assist in combating this problem,” he said.

Reiterating this point, the EMI VP refers to comments that were recently made by Gabe Newell. The Valve co-founder said that piracy is a service issue – once you give people what they want it will mostly disappear.

“Gabe Newell is correct, it’s a service issue not an issue of money. Sales have gone up from sales concerts and merchandise, it’s obvious that our fans still love music. We’re just not giving them their music in an easier way,” Davis noted.

Adding to the above, Davis also commented negatively on DRM in a separate question that he was asked on Reddit.

“Personally I’m not happy with the way DRM is right now. We need to re-evaluate technology to find a better way to give you music,” he wrote.

Davis’ take on the piracy problem stands in clear contrast with the policy of the RIAA, who tend to prefer the repressive approach over innovation. Defining piracy as a service issue, however, is in line with the things we, and many others with us, have been saying for years.

People are happy to pay as long as they get what they want.

This is also illustrated by the fact that people are willing to pay hundreds of millions of dollars for premium access to file-hosting sites, often to download content that’s not available at all legally, or only in inferior quality. In recent years the music industry has caught up quite a bit by removing DRM and launching services like Spotify. But the movie industry is lagging behind, especially outside the US.

Implementing harsh anti-piracy laws and disconnecting file-sharers from the Internet doesn’t change the mismatch between what the public wants and what the industry offers. Improving availability, quality and other service issues can probably make a much bigger impact.

It’s good to see that some people in the industry are well aware of this, but we doubt that the RIAA would make itself obsolete by agreeing.

Why do you spend a ton of money on tons of songs when you only listen to one particular song on repeat? Don’t you know that the music industry needs to make a lot of money, therefore, they want you to buy every single edition of each album. Yes, you do need to buy the collection edition, deluxe edition and 10 year anniversary edition.

According to the site Discogs.com, about 800 remixes were released in 1983. In 1990, more than 4,000; in 2000, almost 15,000. And in 2010, there were 22,750 remixes released, an increase of more than 450% in twenty years. Not surprisingly, as that number has leapt up, remixes also have come to represent a much larger share of what’s being released: in 1983, they accounted for 2% of all releases; 7% in 1990; 17% in 2000; until, by 2010, a staggering 20% of all releases were remixes.

How did we get to the point where a one-hit-wonder band from the ’90s like Marcy Playground can release an entire album of remixes made by fans? Why is everyone a DJ these days, and why does every band in the world have to have a remix?

The short answer is “because they can.” As technology has advanced, so has the remix. It started in Jamaica in the ’60s with dub effects, emerged in America through disco and the 12″ mix, helped to create rap through the power of their sound systems, exploded in the ’90s with the maxi-CD, and became participatory (and ubiquitous) with digital mashups. At each step of the way, the particular kind of technology available shaped the nature of that moment’s remixes.

ReDigi insists it’s legal to Sell used iTunes tracks

ReDigi, the company that calls itself “your favorite pre-owned record store, but for digital music files,” is pushing back against a massive copyright infringement lawsuit launched by Capitol Records. In its answer to the complaint, ReDigi’s lawyers insist that Capitol’s core argument is false; no “copying” takes place in the resale process that ReDigi facilitates between buyers and sellers of digital tunes.

In fact, Capitol’s accusations “reflect a profound misunderstanding of how ReDigi works and have no merit,” insists the plea from ReDigi attorneys to the United States District Court Southern District of New York. But the request for the court to squelch the suit does acknowledge that some copying “arguably takes place,” that being the upload into or the download from the user’s ReDigi cloud locker, “both of which are obvious fair uses.”

At a fraction of the price

As already noted, ReDigi bills itself as a sort of online used record shop, allowing users to sell digital files acquired from iTunes “at a fraction of the price currently available” via that venue. The startup says that it does this via its “forensic Verification Engine”—software that analyzes each upload to make sure that it is a legally acquired track. Songs ripped from CDs are excluded. Once a tune is classified as kosher, ReDigi software deletes it from the uploader’s synced gadgets or computer.

ReDigi explains itself to the public.
But none of this impressed the Recording Industry Association of America, which sent the company a cease-and-desist-then-roll-over-and-die note in mid-November. The RIAA letter called the First Sale doctrine irrelevant in this case. The bottom line (to the trade association) is that the process of transferring a file to ReDigi’s cloud represents an act of copying. First Sale permits a user to sell their copy of an item, not a copy of the copy.

“Thus, even if ReDigi’s software and system works as described by ReDigi (i.e. that it deletes the original copy before it makes the sale), ReDigi would still be liable for copyright infringement,” the RIAA letter warned. Stop what you are doing, the group demanded, quarantine the site and hand over “an accounting of all sales achieved and revenue generated” from RIAA member sound recordings through the ReDigi service, “so that we can discuss a resolution of our Members’ claims.”

No more Mr. Nice Guy

That little love note arrived even before the Capitol Records lawsuit, which more or less echoes RIAA’s opening arguments, with some embellishment.

“While ReDigi touts its service as the equivalent of a used record store, that analogy is inapplicable,” the suit contends. “Used record stores do not make copies to fill their shelves. ReDigi is actually a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings owned by Plaintiff and others.”

Borrowing from ReDigi promotional literature, Capitol insists that the company is about copying from the moment a user uploads a song to the moment she buys one:

The track “store” in and offered to consumers from ReDigi’s “cloud” is necessarily a copy of the user’s original file, which ReDigi purportedly deletes from the user’s hard-drive. No tangible, material object is transferred to the ReDigi “cloud”; rather, the user’s original file is duplicated and then stored by the ReDigi service, regardless of whether the user’s original file remains on his or her computer or is deleted.

A second copy is then made when a ReDigi transaction is consummated. As the press release continues, “When the song is purchased, the track and license will be instantly transferred to its new owner.” The so-called sale, in other words, can only be accomplished by the creation and transfer of yet another copy of what was once the original user’s digital file.

Some of the Capitol suit can probably be brushed aside. The filing warns that Amazon.com prohibits customers of its MP3 Music Service from selling their files. But ReDigi insists it doesn’t accept Amazon-purchased tunes.

Then the action contends that “it is questionable whether ReDigi can effectively determine whether files were lawfully obtained in the first place.” Perhaps not, but last we checked, the question was not whether ReDigi is doing anything “questionable,” but whether the company is doing something that is illegal.

Essential step?

Which brings us to ReDigi’s response. First, as noted earlier, the company is deploying some kind of fair use defense. We contacted ReDigi’s lawyers to get a better sense of how this might work, but not surprisingly, they didn’t want to talk. “At this time as we are in litigation over these issues, we cannot comment on the legal arguments except as they are made in court,” a ReDigi spokesperson told us.

So we checked in with IP attorney Rick Sanders, who in a review of ReDigi predicted that the firm might offer a fair use argument in a lawsuit. Sanders emphasized that he doesn’t know how ReDigi plans to elaborate on this in court, but the generic fair use case is pretty straightforward. “In order to make anything we have to make copies of it,” Sanders noted. Thus, technology companies have “generalized fair use principles to make intermediate copies in order to exercise some right that they have been given.” In this case, that would be the right of resale based on the First Sale doctrine.

Second, ReDigi is deploying the “essential step” defense. This is embedded in Section 117 of the Copyright Act, as so:

(a) Making of additional copy or adaptation by owner of copy. Notwithstanding the provisions of section 106 [ 17 USC 106 ], it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

(1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner [italics ours]

ReDigi argues that “since an mp3 file is a computer program,” the essential step clause protects the company from liability. And on top of that, Capitol’s claim “would be barred by Plaintiff’s failure to have even attempted to comply with the DMCA”—presumably because the company never bothered to send notice and takedown requests to the defendant.

It sings and speaks

How does the government define a computer program? Section 101 of the Copyright classifies it this way: “A ‘computer program’ is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.”

Sanders also predicted that essential step might come into play, although as he noted in our interview, a lot of “open questions” are raised in this defense, such as “when is digital content a computer program and when is it just data?” But he seems to lean towards the position that a music file is about more than just data:

The data is not “dumb”: it sings, it speaks. Yes, an application must translate its wonders for a computer, but isn’t the content a file that tells the computer what to do?

Perhaps just as important, digital content is protectable data. It might look like 0′s and 1′s, but it reproduces protectable works, like music, books and movies. If the essential step defense didn’t give you a right to make an intermediate copy of the content file, you couldn’t enjoy the copyrightable work.

ReDigi also defends its use of 30-second sample streams, which are provided by an “outside, licensed provider,” the company notes, and adds that it offers no public streaming itself. But between the fair use and essential step questions, there will plenty for the court to grapple with.

Capitol wants the maximum statutory award of $150,000 per allegedly illegally downloaded tune. ReDigi is asking the court to dismiss the case and award “attorneys’ fees, costs, disbursements, and such other and further relief as to the Court seems proper.”

Australia: US Copyright Colony or Just a Good Friend?

Collectively, we Australians can be a cowardly bunch, so scared of an unknown invader that we will sell our sovereignty for the illusion of protection. This fear is symbolised in the movie ‘Tomorrow When the War Began,’ a film of dubious quality that portrays an Australia under invasion from some shadowy Asiatic power.

The foundation-stone of Australia’s defence policy is our alliance with the United States. Known as the ANZUS treaty, on paper this alliance guarantees mutual defence. In practice, the friendship is far from equal.

As with their treatment of sovereign nations the world over, the Americans have no qualms about interfering in our domestic politics and local legal systems. The kind of behaviour that, if reciprocated, would swiftly end the alliance. The latest front in this meddling is the crossover between file-sharing and intellectual property.

Individually, Australians can show enormous courage. Currently, an Australian is enduring a lengthy legal battle that may see him end up as an inmate at Guantanamo Bay, or worse.

Julian Assange and the Wikileaks organisation he help found shone a sterilising light on the behaviour of the US Embassy in Australia’s capital, Canberra. For his bravery Australian Prime Minister Julia Gillard, a trained lawyer, prejudiced any future legal action by prematurely labelling Assange’s actions “illegal.” She has since sacked the Attorney-General whose job it was to give legal advice on the Wikileaks matter, but the damage has been done and the comment has never been retracted.

While the Gillard Government was quick to shoot the messenger, it has remained eerily silent on the message – one of potential interference in domestic legal affairs by a foreign power and so-called ally.

The Canberra Wikileaks cables revealed the US Embassy sanctioned a conspiracy by Hollywood studios to target Australian communications company iiNet through the local court-system, with the aim of establishing a binding common-law precedent which would make ISPs responsible for the unauthorised file-sharing of their customers.

Both the location, Australia, and the target, iiNet, were carefully selected. A precedent set in Australia would be influential in countries with comparable legal systems such as Canada, India, New Zealand and Great Britain. Australian telecommunications giant Telstra was judged too large for the purposes of the attack. Owing to its smaller size and more limited resources, iiNet was gauged the perfect candidate.

The involvement of major American studios in the offensive was suppressed. “The case was filed by … the Motion Picture Association of America (MPAA) and its international affiliate, the Motion Picture Association (MPA), but does not want that fact to be broadcasted,” the US Embassy, Canberra wrote. “We will monitor this case … to see whether or not the ‘AFACT vs. the local ISP’ featured attraction spawns a ‘giant American bullies vs. little Aussie battlers’ sequel.”

The Wikileaks cables also revealed a number of Australian political power-brokers were US informers. Prominent union leader Paul Howes and Federal Senator Mark Aribib were both named in the cables as “protected” informants. Both were instrumental in elevating the current Prime Minister to office in 2009 in what many commentators described as a “bloodless coup.”

Had either been caught spilling secrets to any other national government, with the possible exception of Great Britain, they would have seen their reputations destroyed at best. At worst, been put on trial for treason. The mere hint of back-room dealings with Australia’s largest trading partner, China, has toppled political careers.

Senator Arbib was recently promoted to Assistant Treasurer by the Prime Minister he helped put in office. Without further leaks, we cannot know if Arbib still reports to his American handlers.

Prime Minister Gillard made her feelings towards America known when she addressed the US Congress in March, 2011 and proclaimed, somewhat sycophantically, “You can do anything.” This is not the diplomatic language of allies. It is the language of worship.

Many Australians believe we are special, that the US really does hold us in the highest regard, reinforced by frequent utterings from successive US administrations that America “has no better friend” than Australia. Unfortunately, such a reality is challenged by the even more frequent utterings that the US has no better friend than Canada, Great Britain, France, Italy, Israel, Japan, Poland and South Korea.

The “Australian” Federation Against Copyright Theft (AFACT), a consortium of American movie studios with token Australian representation, began legal action against iiNet in November, 2008.

The MPA and US Embassy badly misjudged their target. In tenacious Australian fashion, iiNet put up the legal fight of their lives. AFACT lost the case and all subsequent appeals. Next month, the final episode of this long saga will culminate with a full ruling of the Australian High Court.

AFACT is already preparing for a loss in February by shifting its focus to lobbying the Australian Government directly. The process began behind closed doors late last year when meetings were held between AFACT, linked copyright industry lobbyists, the Federal Attorney-General’s department and a coalition of Australian ISPs. The voting public have not been told what was discussed or what plans have been developed.

If the High Court rules against AFACT and its Hollywood and US Government backers, as every lower court has done thus far, Australia will be faced with a test of national sovereignty. Only Australia’s Federal Parliament can overturn the decision.

With a Prime Minister visibly enamoured with the United States and known informers in the Federal Ministry, there is a strong likelihood any win for iiNet will herald changes in Australian law. It is unlikely those changes will be friendly to an open file-sharing culture.

A British student faces up to a decade in a U.S. prison for actions which are not even a crime in the UK. Campaigners say Richard O’Dwyer, 23, is being abandoned by his country in the same way as computer hacker Gary McKinnon. Mr O’Dwyer is accused of listing places where films and TV programmes could be illegally downloaded, on a website he ran from his university bedroom in Sheffield.

‘Guinea pig’: Richard O’Dwyer arrives with his mother Julia at Westminster Magistrates’ Court in London today Legal experts say this is not an offence under British law, and he did not download any of the entertainment himself.  Yet the ‘quiet and vulnerable’ son of a GP could spend ten years in a high-security American jail after he lost his fight against extradition yesterday. The case has chilling similarities with the attempt by the U.S. to extradite Asperger’s sufferer Mr McKinnon, who hacked into Pentagon computers from his north London bedroom.  Instead of putting the men on trial in the country where their alleged offences took place, the British legal system is permitting them to be bundled on a plane to America.
Mr O’Dwyer’s mother Julia, a paediatric nurse from Chesterfield, wept outside Westminster magistrates’ court after a judge ruled there was no legal bar to sending her son for trial.

Dangerous ground: O’Dwyer, 23, could become the first Briton to be extradited to the U.S. for this kind of offence. She said the ‘rotten’ U.S./UK extradition treaty needed ‘fixing fast’ and warned: ‘If they can come for Richard they can come for anyone.’ Her husband Dr Peter O’Dwyer said his son was ‘quiet, introverted and vulnerable’.  The retired family doctor said he feared the ordeal of being sent to the U.S. could damage his son’s emotional health. The couple say Mr O’Dwyer, who is studying software programming at Sheffield Hallam university, is being used as a ‘guinea pig’ as no one has ever been extradited on similar charges.

The U.S. Immigration and Customs Enforcement agency wants to prosecute him on two counts of breaching copyright, each carrying a maximum five-year sentence. The court heard that his website, TVShack.net, was earning £15,000 a month from advertising revenue.  Mr O’Dwyer was arrested in November 2010 when police and U.S. officials turned up at his hall of residence. He pulled the plug on the site immediately. His lawyer Ben Cooper argued that it did not store copyright material itself and merely pointed users to other sites, in the same way that Google and Yahoo operate. But District Judge Quentin Purdy said the extradition could go ahead, saying there were ‘said to be direct consequences of criminal activity by Richard O’Dwyer in the U.S. albeit by him never leaving the North of England’.

RIAA Labels Demand Cash from Alleged BitTorrent Pirates

Although the major label members of the RIAA publicly ended their file-sharing settlement schemes in the United States, surprisingly they are continuing with a similar project elsewhere. Using the same IP address-based evidence, Universal, Sony, EMI and Warner are sending out controversial cash settlement demands in Germany where recipients have little alternative than to pay up.

During the last decade the RIAA embarked on an online anti-piracy action which would later go down as one of the most controversial ever seen.

After spending years on various educational campaigns, none of which worked, a new plan was put into motion. It involved monitoring P2P networks for infringements, unmasking the perpetrators, and then threatening to sue unless a large ‘fine’ or settlement was paid.

Although the RIAA stopped its settlement actions against US citizens some time ago, the fallout from the campaign is still felt today, with cases ongoing against Jammie Thomas and Joel Tenenbaum. However, while those Stateside are no longer targets for the RIAA’s so-called “sue-em-all” campaign, the same cannot be said of citizens in Europe.

In common with their counterparts in the gaming industry, the major labels – Universal, Sony, EMI and Warner – are all actively sending out cash settlement demands to alleged file-sharers.

For the past several years, 2011 included, the labels have been pursuing cash settlements from German Internet users for the alleged sharing of music from dozens of major stars artists. A small sample is shown below:

Universal

Amy Winehouse, Blink 182, Bon Jovi, Eminem, Florence And The Machine, Jamiroquai, Jennifer Lopez, Justin Bieber, Lady Gaga, Rihanna, Take That, The Black Eyed Peas, The Rolling Stones.

Settlement amount demanded: 1,200 euros

Sony

AC/DC, Alexandra Burke, Alica Keys, Avril Lavigne, Backstreet Boys, Beyonce, Britney Spears, Christina Aguilera, Foo Fighters, Kasabian, Kesha, Kings of Leon, Leona Lewis, Michael Jackson, Ozzy Osbourne, Pink, Pitbull, R. Kelly, Shakira, The Strokes.

Settlement amount demanded: Up to 950 euros

EMI

Bryan Ferry, Coldplay, David Guetta, Depeche Mode, Good Charlotte, Gorillaz, Katy Perry, Snoop Dogg, U2

Settlement amount demanded: Up to 1,200 euros

Warner

Of the four labels, Warner appears to be least active, particularly when chasing settlements on behalf of major acts. Warner’s activities appear to be limited to local artists of limited international appeal.

Settlement amount demanded: Up to 1,200 euros

Although these labels are playing a major part in the settlement business, they are not doing so in isolation. Dozens of other labels are acting in their own right including RoadRunner Records, Ministry of Sound and Pink Floyd Music.

As previously reported, getting payments from Internet users in Germany is trivial since the law there requires the accused to prove their innocence (rather than rightsholders prove guilt) and holds account holders responsible for the actions of others.

So, despite their recent protestations in response to findings from YouHaveDownloaded, the RIAA would be found liable had they been judged by German standards.

Although hundreds of thousands of people are currently being targeted for settlements in the United States for sharing adult titles, currently the major labels and movie studios there aren’t pursuing the strategy locally. That, however, could all change at the flick of a switch.

SOPA Is Baaaack!

A few days ago the news broke that the pending Stop Online Piracy Act (SOPA) was put on hold until consensus was reached.

Although the announcement was rather vague, some news sites and blogs declared SOPA dead, or “shelved,” or erased from history.

Wishful thinking, because today SOPA is back in full force.

House Judiciary Committee Chairman Lamar Smith just announced that the SOPA markup is expected to continue next month.

“To enact legislation that protects consumers, businesses and jobs from foreign thieves who steal America’s intellectual property, we will continue to bring together industry representatives and Members to find ways to combat online piracy,” Chairman Smith said.

“Due to the Republican and Democratic retreats taking place over the next two weeks, markup of the Stop Online Piracy Act is expected to resume in February.

“I am committed to continuing to work with my colleagues in the House and Senate to send a bipartisan bill to the White House that saves American jobs and protects intellectual property.”

In 2011 90% of New Album Sales Came from 2% of Releases

There’s now even more proof that for early-stage artists, the money is probably not in recordings.  That is, unless there’s serious financial or label backing involved.

In 2011, 76,875 albums were released and sold at least one copy in the US, according to stats shared by Nielsen Soundscan.  These releases came from major and indie labels, as well as unsigned artists, as long as they were properly registered and set up with identifiers like UPC barcodes. That group of 76,875 albums collectively went on to sell about 113 million copies in the US. Of that total, sales of roughly 100 million, or 88.5%, came from just 1,500 releases, or 1.9% of the release total.

Which means that, roughly speaking, 2% of releases accounted for 90% of new release sales.

Last.fm annual losses increased in 2010

Last.fm saw its annual loss grow significantly in 2010 – the last year for which records are available to the public. The streaming music service saw an annual loss of £2.89m in 2009 grow to over £5m in 2010, according to newly uncovered data. Turnover in 2012 was just £7.992m in 2010 (up slightly from £7.283m in 2009). Administrative expenses for the company increased from £2.95m to over £8m. US broadcaster CBS acquired Last.fm for £280m in 2007.

Is the beginning of the end for Last.FM?