Last month the European Composer & Songwriter Alliance (ECSA) held a press conference at the Silken Berlaymont Hotel in Brussels to brief news reporters about a stance it was taking against European broadcasters on behalf of music composers. ECSA accused Europe’s leading broadcasters of forcing composers to give up their rights in return for TV commissions. Big names in broadcasting, such as RTL, ITV, BskyB, TF1, ZDF and Rai, were all accused of operating a system called coercive commissioning – in return for awarding a composer with a commission, the composer must assign all rights in the music to the broadcaster or TV production company. Put simply, no rights, no commission. Read the rest of this entry »
Earlier this month, US District Judge Richard Sullivan ruled against EMI’s Capitol Records’ request for a preliminary injunction against the digital-music reseller ReDigi. Capitol had wanted the service closed down but Judge Sullivan denied the record company’s demand and insisted that the service should stay online and the case go to trial. The judge’s action has been widely reported as a victory for ReDigi and to some extent it is. Not every day can a start-up company say it has fended off one of the world’s biggest record companies. But in the longer term, having the case go to a full trial can only be a good thing for the music industry. Should Judge Sullivan have ruled without a trial that ReDigi was infringing copyright then the issue of legality would rumble on and proponents of digital resale would simply claim they have been trodden on by a big corporation wanting to protect its business. Read the rest of this entry »
The European Commission (EC) is planning to publish draft legislation proposals early next year that will include new rules for the cross-border licensing of digital music. For several years representatives of the EC have expressed a mixture of mild irritation and outright annoyance over the licensing process for digital-music services in Europe. The number of such services has grown rapidly in the region, but several service providers continue to bemoan the time-consuming process involved in securing rights to operate in several countries. New business models specializing in digital-music delivery have brought change to collection societies, but according to some service providers, rights remain fragmented, and some providers have questioned whether the major publishers’ Pan-European initiatives have simply added a new layer of fragmentation and complexity to the licensing process, with Europe’s largest collection societies the only ones seeing any benefit. Read the rest of this entry »
Pirate-music sites offering free music downloads are being indirectly funded by a wide range of blue-chip companies. A survey conducted by Music & Copyright in the UK has found that all of the companies whose advertising appeared on a selection of pirate sites were unaware of the ads’ presence. Should these companies know where their ads are going? Read the rest of this entry »
Artist endorsements of products and services, as well as company sponsorships of tours and festivals, have been a part of the music industry for many years, and examples of successful alliances between brands and artists are numerous. Although ensuring that all interests are served without limiting artists’ creativity can be a complex process, achieving the right balance between rights and obligations can be beneficial for all concerned. We asked Ailish McKenna, a solicitor with Bray & Krais Solicitors for her take on what restrictions brands can reasonably impose on artists.
The word “partnership” can be used to describe a whole range of relationships in varying settings. In the area of brand endorsements, the word is commonly used to define the nature of the relationship between the brand and the artist chosen to endorse certain goods and services under that brand. Both parties entering into a media partnership have their own interests to serve. The hope and the intention is of course that a mutually beneficial and fruitful alliance will unfold. Read the rest of this entry »
The issue of Pan-European licensing and how best it can be achieved is a hot topic. Earlier this week, in an interview with the UK trade magazine Music Week, Pandora founder Tim Westergren said that a centralized licensing structure was needed for the service to return to Europe. Westergren is not alone in his criticism of the licensing in Europe as plenty of other digital music services have bemoaned the complexity of the licensing structure in the region. But is the situation as bad as they all claim? The big music publishers have all set up “hubs” to streamline the licensing process and the Pan-Nordic mechanical-rights-collection society Nordisk Copyright Bureau has shown that multiterritory licensing can be achieved without legislation from Europe.
With this in mind, Music & Copyright would like your opinion on the issue. Please answer the below question and by all means add any comments. The results of the poll will be published in the next issue on July 13.
Amazon has rolled out a new service in the US that allows users to store music in a digital locker that can be accessed from any PC or Android-powered mobile device. The latest issue of Music & Copyright takes a look at why the launch has prompted a significant amount of debate over its legality. Amazon claims it needs no license for simple remote storage. Read the rest of this entry »
New research published by Music & Copyright reveals that total distributions of performance-rights collections increased to US$1.46 million last year. However, the volatility of the currency markets greatly affected the year-on-year comparison. Excluding these exchange-rate fluctuations, global performance-rights distributions were up 6.3%.
With much of the focus on how the recorded-music industry has fared from year to year centered on the sale of music, the contribution to both record companies and performers from performance-rights collections is often overlooked. Recent years have seen performance-rights collections rise, in complete contrast to the falls in recorded-music sales.
Music & Copyright has calculated that performance-rights distributions to record producers totaled US$794.6 million, up 2.2% from US$777.4 million in 2008. But at constant currency exchange rates, distributions increased 8.2% last year. For performers, distributions last year stood at US$664.9 million, down 1.2% from US$672.7 million in 2008. At constant currency rates, distributions to performers rose 4.1%.
Europe is the largest region for performance rights. In 2009 it accounted for 64.8% of the global distribution total, down from 70.7% in 2008. Distributions in Europe decreased 7.8%, to US$945.5 million. At constant currency rates, distributions in Europe were flat. Several unconnected factors conspired to exaggerate the decline in European collections. The largest performance-rights society in the world in terms of representation, the UK’s Phonographic Performance (PPL), was hit by a ruling late last year by the UK Copyright Tribunal regarding the rates payable by pubs, bars, restaurants, offices and factories, which meant distributions to performers and producers were down. Problems with the Italian performers’ society IMAIE meant distributions were affected. IMAIE went into liquidation in July last year, and therefore royalties collected for performers have not been paid.
In terms of potential for growth, low collection rates in the less developed regions of the world suggest that countries in Eastern Europe, Latin America and Asia Pacific should be the main targets. However, the US still offers the greatest prospects, particularly in light of the continuing strong performance of digital-performance-rights society SoundExchange.
A resolution to the performance-rights issue in the US still seems a long way off. US copyright legislation exempts AM/FM-radio broadcasters from this type of rights, and the passage of new legislation to change this is making slow progress. The Performance Rights Bill (PRB) has been considered in committee and is awaiting approval in Congress and the Senate. Few estimates exist as to what the potential payments from terrestrial broadcasters could be if the bill is passed. However, SoundExchange has offered a glimpse of the revenues that might be possible. In 2009 it distributed US$155.5 million to producers and performers, up from US$100 million in 2008.
The world is just emerging from one of the worst recessions in history and many countries around the world are only just starting to record economic growth. Despite this, 2009 may be the year recorded music sales started to turn a corner. The question many are asking is, what part has tougher legal played in the turnaround?
The global trade association the IFPI has published figures on the global music industry. Unsurprisingly, physical sales were down and digital sales were up. Digital is not yet compensating for the physical decline so the overall recorded music sales figure was down, by just over 7%. But this year’s report included details of quite a few countries that registered growth in 2009 compared with 2008, 13 to be precise. In six of these, growth in digital sales more than offset the fall in physical sales. In Brazil and Sweden, the sales improvement has been achieved by a rise in physical as well as digital sales.
The Swedish effect
Much has been written of the return to growth by Sweden. Earlier this year the local Swedish IFPI association said that the trade value of recorded-music sales increased 10.2% year-on-year in 2009, to SEK861.4 million, marking the first rise in the trade value of sales since 2000. Although the trade value of digital sales almost doubled, physical-album shipments rose by 7.6%. Extensive media coverage of the implementation of the IPRED law at the beginning of April, which allows rights holders to gain access to an infringing subscriber’s identity details, as well as coverage of legal action against the creators of The Pirate Bay torrent tracker site earlier in the year are thought to have been the main reasons for music sales growth. A GfK study in June last year found that 60% of file sharers had stopped using peer-to-peer networks.
Similar evidence of legal action changing file sharers’ attitudes is evident in France. The publicity surrounding the HADOPI legislation, which allows for the sending of warning letters to Internet users that infringe copyrights, was fairly intense in the second half of last year, a period that also saw a rise in the trade value of music sales. Although the trade value for the full year fell by 3.2% compared with 2008, for the final six months of the year the trade value actually increased by 9.3% compared with the same period in 2008. A similar pattern of growth continued in the first three months of this year with the local trade association SNEP reporting a rise in both physical and digital sales compared with the same period of 2009.
Some doubt over the effectiveness of HADOPI was cast by a study conducted by researchers at the University of Rennes which found that illegal downloading has grown by 3%. The study also found that of the 2,000 Internet users surveyed in Brittany, 5% had stopped file sharing, but 10% had switched from P2P to alternative methods of illegal downloading. The IFPI dismissed the study this as “nonsense” as it was conducted before any warning letters had been sent out.
The evidence grows
In the cases of France and Sweden, most would agree that it is too early to hail tougher legislation as the music industry’s panacea and 2010 results will probably present more compelling evidence. But there are several more countries that have also seen improvements in sales following a move to more rigorous intellectual property enforcement. IFPI sales figures for South Korea in 2009 and 2008 show large sales increases coinciding with the introduction of tough new laws. While South Korea still has some way to go before it reaches the peak year of 1996, when retail sales totaled Won415.6 billion, last year’s sales figure of Won364.3 billion is a significant move closer.
Some countries have experienced a slowing in the levels of falling sales with no new national legislation. For example, Germany has consistently stated that it would not impose any graduated response system to combat file sharing. But German rights holders do have some recourse to protect their intellectual property. To begin with a warning letter is sent to an Internet user identified as infringing copyright. The offender is invited to sign a cease & desist letter and to pay compensation. If there is no agreement on a settlement, the issue is then taken to court. Is it a coincidence that the decline in the trade value of recorded music sales in Germany has slowed at the same time local rights holders have been sending out warning letters? It would appear not. The German trade association the BVMI has recently presented details of a study on the level of file sharing in Germany, which shows it declined last year.
Unpopular in some circles as this may be, there is growing evidence that legislation is having an effect on the attitudes of file sharers. New examples are emerging that illustrate an improvement in music sales following the introduction of tougher measures to control copyright infringement. Although some countries are closing in on the point where sales can’t fall anymore and growing investment in new digital services is leading to increased user interest, it would appear that legislation is the answer, in the short term at least. Do you agree?
Recently a UK Government advisory body – the Strategic Advisory Board for Intellectual Property (SABIP) – has bucked the trend by calling for an urgent investigation into consumers’ attitudes and behaviour in relation to offline copyright infringement. It says that too much focus has been placed on looking into online peer-to-peer file-sharing. SABIP is concerned that physical copying by swapping hard drives and memory sticks has been overlooked and may pose a greater threat of piracy than online copying. Although SABIP believes that there is a lot of offline copying taking place in this way, it says that further research is needed to establish the extent of it. Initial SABIP research (conducted by BOP Consulting) shows that consumers are more interested in price, quality and availability of material than whether it is legal or illegal. The natural implication seems to be that if legal material happens to be better quality than unlawful copies, that will influence consumers to buy legally. That is food for thought, particularly in light of the following survey of legal purchasers – who break the law.
73% of 2000 people surveyed by Consumer Focus in the UK admitted to being confused by what they were legally permitted to copy or record. Most of the consumers did not know that it was illegal to copy something that they have legitimately paid for (such as a CD) over onto another medium (such as a computer) for their own personal use. Consumer Focus accused the current copyright laws of being outdated and not reflecting what consumers reasonably believe to be the case when using music just for themselves to listen to. Indeed, it seems clear that many people who are not illegal peer-to-peer file-sharers are still clearly breaking the UK’s copyright laws, despite not realising it. The congruence between the law and what people believe to be the law seems to be in a bit of a mess.
Turning to online protection, in the UK, initial steps to enforce the law seem to have failed. The first prosecution in the UK of a person charged with illegal peer-to-peer file-sharing ended with a not guilty verdict. A man ran an unauthorised music-sharing web site called Oink from his home in the North East. The site allowed members to share files. From its launch in 2004 until police closed it down in 2007, over 20 million music files were shared. Users had to make a donation to the site so that they could invite friends to become members too. The site operator made a considerable amount of money – some £10,000 a month, in donations. However, the site operator was found not guilty of the offence of conspiracy to defraud by Teesside Crown Court.
In Australia, a court ruled that an Internet Service Provider (ISP) was not liable for the unauthorised peer-to-peer file-sharing habits of users to whom that ISP merely provided access. Roadshow Films claimed that iiNet (an ISP) had authorised copyright infringement by its users, but the Australian Federal Court disagreed. The judge said that the fact that copyright infringement was occurring on a wide scale across the ISP’s network did not mean that the ISP had authorised the wrong-doing as it was not compelled to stop the infringements. Mere knowledge that infringement was taking place was not enough. As with English law, Australian copyright law forbids the doing or authorisation of the doing of anything which infringes someone else’s copyright. The two legal systems have common roots, and the decision may therefore be persuasive (although not binding) on similar English court cases.
Over the past few months, the UK government has turned to a different approach with its Digital Economy Bill. When passed, the Digital Economy Bill will see file-sharers being identified, warned and ultimately stopped from having full Internet access. There is some recent uncertainty whether the Government has shifted its position in the Digital Economy Bill and adopted a more lenient line in respect of illegal peer-to-peer file-sharers. Instead of cutting off persistent file-sharers from the Internet, the Government now says that their accounts will be temporarily suspended – although it is unclear what this means. It is not clear if this is a change or not. According to Jim Killock, of the Open Rights Group – a body against the proposed legislation – nothing has really changed. He says that temporary account suspension still means that families will be stopped from using the Internet.
As to cost – the Government has announced that rights-holders will have to pay 75% of the cost of dealing with Internet pirates under the proposed Digital Economy Bill and ISPs will be required to foot the balance of 25% of the cost – although the entertainment industry had hoped for a 50/50 split.
However, the law may say (or be about to say) one thing but the technical ability to identify file-sharers is far from fool-proof. Indeed it would seem to be a pre-requisite to any enforcement under the Digital Economy Bill that file-sharers are identifiable. Recently, Virgin Media announced that it is planning to trial new software called CView which will analyse file-sharing by its customers. However, Privacy International – a privacy rights watchdog – has taken issue with the ISP’s actions and has asked the European Commission to report on the legality of the proposed software use. Privacy International claims that the trial would breach the Regulation of Investigatory Powers Act, under which it is a criminal offence to intercept communications without consent unless certain exemptions apply. However, Virgin Media counters that it is not actually identifying individual users. Instead, it is conducting the trial to see how much of the traffic through its service is illegal file-sharing. It wants to find out what it can do to reduce illegal file-sharing and the trial will give it useful information to help to achieve that. Virgin Media has admitted that it would be possible technically to use the deep packet inspection software to identify Internet protocol addresses (from which individual users could be identified) but has announced that this is not currently its plan.
Importantly, Virgin Media claims that CView will not help with the proposed Digital Economy Bill precisely because it says that CView does not actually identify anyone.
It seems that the ability to identify file-sharers as file-sharers beyond a reasonable doubt (the criminal standard of proof) or even on a balance of probabilities (the civil standard of proof) remains in doubt at present. That must surely put the utility of the proposed Digital Economy Bill in doubt too.
Ways to deal with file-sharing seem to be in state of flux. It is not just files that are being shared – the problem is being shared as well – between those responsible for the legal aspects, the technical aspects and the educational aspects of this modern problem. And, of course, by those losing money as a result.
This blog entry was written by Mark Weston, who is a partner at Matthew Arnold and Baldwin LLP. There he heads the Commercial/IP/IT team. He joined in 2004 after many years in the Magic Circle law firms. Although Mark’s team deals with non-contentious and contentious matters, Mark’s own practice has primarily evolved focus on non-contentious matters in all areas of commercial law, information technology law, intellectual property law and Internet and on-line commerce law.
