Depending on where a musician sits in the music industry value chain, a top-10 list of what’s most important to an unsigned artist will differ greatly to one compiled by a million-album seller. Scratching a living out of music is something tens of thousands of musicians do every day. Although the Internet has opened up the promotion and distribution of music to anyone with a computer, it has also made selling music a lot more difficult as almost every single release in a digital-music store is available for free somewhere online. Continue reading
Earlier this week the BBC reported the drop in file sharing following the court-ordered block of the Pirate Bay (TPB) was short-lived (link to article). The BBC said it had been shown data by an unnamed major UK ISP which confirmed that P2P activity on the ISP’s network had returned to just below normal one week after the block was put in place. Should we all be surprised by this? Of course not. Stopping Internet users in the UK from accessing TPB won’t stop them file sharing. What will stop them file sharing is if ISPs blocked access to all file sharing services. Interestingly enough, most ISPs’ customer-use policies make it clear that the Internet service provided should not be used to infringe copyright. In fact, the usage policy usually forms part of a contract, and therefore any breach of this contract should result in the customer’s account being terminated. Such a scenario never happens. Continue reading
Political change has come to France and the impact of the switch to a socialist president, following the election of François Hollande earlier this month, could be felt by the music industry. Hollande has begun looking at reforming tough anti-piracy measures despite claims from the music industry that targeting file sharers is beginning to generate increased interest in the legal digital sector. Continue reading
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. Continue reading
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? Continue reading
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. Continue reading
Last month the Pan-Nordic mechanical-rights-collection society Nordisk Copyright Bureau (NCB) reported a fall in the total amounts collected and distributed to its owner societies for last year. Despite the decline, NCB described 2010 as an important year and one that removed much of the uncertainty over the collection society’s future. Perhaps more important though, is the fact that NCB and its owner societies have shown that collection societies, if left to their own devices, can develop a very workable multiterritory online licensing system. Continue reading
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.
The rollout of Pan-European collection societies has run into a bit of a problem in Germany. In a case brought by the German video website MyVideo, the District Court of Munich has ruled that the pan-European collection society CELAS cannot prohibit the reproduction of the EMI MP Anglo-American repertoire it manages for the music publisher. This means that CELAS, and other pan-European collection societies are invalid in Germany due to the fact that the withdrawal of the digital mechanical rights from collecting societies contravenes German copyright law. Not just that, but instead of requesting licenses from each of the pan-European societies, services can obtain the necessary licenses to use content in Germany from the local collection society GEMA. The case, which didn’t receive much in the way of publicity, was concluded in June. CELAS is expected to appeal the ruling.
The case, which was concluded in June in the District Court of Munich, involved the local online video service MyVideo, which operates in the same way to the massively popular Google-owned service YouTube in that it allows registered users to upload videos for streaming. At the end of 2008 MyVideo agreed a licensing deal with GEMA for the period between April 2006 and end-March 2009 for use of GEMA-managed repertoire. The deal excluded content managed by CELAS. Previously, MyVideo had been negotiating with CELAS to license EMI MP repertoire but the parties did not reach agreement.
As CELAS-managed repertoire had been used by MyVideo, legal proceedings were instigated. Fearing an injunction, MyVideo filed a declaratory judgment action in the District Court of Munich (Landgericht München) against CELAS, seeking a declaration that CELAS had no injunction claim against MyVideo concerning reproduction of copyrighted works for online-uses. In response, CELAS filed a cross-action against MyVideo for injunctive relief regarding the making available on MyVideo’s website of 14 individual songs.
As part of its defense, MyVideo stated that the control of mechanical rights in Germany rested with GEMA and that CELAS could not act as a collection society according to the German copyright legislation. This claim stemmed from the rejection by the German supervising authority the Patent and Trademark Office (DPMA) of CELAS’s application to act as a collection society in Germany under the German law for copyright management (UrhWG). CELAS was permitted by the DPMA to operate in Germany as during its application it stated that it only managed the Anglo-American artist mechanical rights for EMI MP. MyVideo stated that CELAS’s claim to be managing just the digital mechanical rights was unlawful in Germany. This is because the process of making available audiovisual content online required not just mechanical reproduction rights, but also the right to make available. Under German copyright law the splitting of the two rights is not permitted.
CELAS asked the court to dismiss the declaratory judgment action and at the same time filed action for injunctive relief. CELAS based its case on the fact that it has previously agreed an exclusive deal with EMI MP to administer the pan-European licensing of certain repertoire as well as the management of its rights. In addition CELAS claimed that it was not a collection society according to the DPMA. CELAS further claimed that according to common law, copyright publishers in common law countries obtained not just derivative rights from the authors and composers but their full copyrights. As such, the making available of 14 songs by MyVideo infringed its mechanical reproduction rights.
In reaching its decision to grant a declaratory judgment to MyVideo, while at the same time denying CELAS its cross-motion for injunctive relief, the court said that even though CELAS managed the pan-European licensing of EMI MP’s Anglo-American repertoire, German copyright legislation applied in this case because its focus was on the question of infringements of copyrights in Germany.
According to the court “the splitting of rights for online-uses, as claimed by Defendant [CELAS], in respect to Anglo-American artists contracting with EMI into mechanical reproduction rights and rights of making available is inadmissible because mechanical reproduction rights (Section 16 of the UrhG) for online uses without the right of making available (Section 19a of the UrhG) does not exist as individual kind of use. This is why EMI Music Publishing Europe Ltd. could not transfer to Defendant the rights which Defendant now claims. This is why Defendant cannot claim injunctive relief against Plaintiff [MyVideo].”
The court stated that a specific kind of use could be licensed according to Section 31 (1) of the UrhG only if the kind of use qualified as sufficiently clearly separable, economically and technically autonomous and unitary use according to prevailing public understanding. Citing German jurisprudence, the court held that reproductions were inherent to the making available of copyrighted works online. If the splitting was admissible and rights would reside with different right holders, users would face substantial legal uncertainty and the risk of double claims regarding a uniform technical process.
Although the court acknowledged that there was a good argument for CELAS to become recognized as a collection society in Germany, the denial of its status as plaintiff meant that this did not need to be decided during these proceedings. The court also did not need to clarify issues such as sufficient proof of chain of rights as well as aspects of antitrust law.
As the case dealt with just the alleged copyright infringement by MyVideo, all other licenses issued by CELAS for use of EMI MP Anglo-American content are, for now, unaffected. Moreover, CELAS’s position with regards to MyVideo remains unchanged in that it believes the video service is operating without the necessary license to use any content forming part of its exclusive licensing deal with EMI MP. CELAS suggests that the decision by the District Court of Munich is restrictive for rights holders, particularly as the management of mechanical rights on behalf of a publisher or group of publishers is an internationally recognized practice. Because of this, the court’s decision is almost certainly to be appealed.
Although the outcome of any appeal will clarify the necessary licensing requirements for MyVideo as well as other German services, it will also impact on all of the publisher models that have operated on the basis of withdrawing their mechanical online rights from the relevant collection societies.