RIAA Archives

The Magical Ring of Gyges: Why Illegal Downloading is So Rampant in the Age of Cyberspace

NBC Universal recently hired a company called Envisional to study counterfeiting activity over the Internet. The results of this study – despite the fact that it is industry funded – are literally astonishing: 24% of all global Internet traffic involves digital theft! Stated another way, one in every four people surfing the Internet are stealing intellectual property, i.e., illegally downloading either copyrighted or trademarked materials. According to the International Federation of the Phonographic Industry, 95% of the music downloaded from the Internet is downloaded illegally! Imagine how our society would react if one out of every four people in retail malls were carrying out stolen merchandise on a daily basis, or if 95% of the product leaving the mall was stolen. It would be chaos.

Now consider whether these people who so quickly download a song or a movie on the Internet without paying for it would also walk up to an artist selling their painting in the park and steal one of their painting. I firmly believe the answer to that question is a resounding no! But why? What is different about the world wide web, i.e. cyberspace, that gives these consumers the feeling that they are entitled to download music and movies through mechanisms like BitTorrent without compensating those who created such product? What are these people thinking?

I think the answer can be found in the writings of Plato. In the second book of his Republic, Plato’s student, Glaucon, poses the illustration of the “Ring of Gyges.” In the story, Gyges is a shepherd who finds a magical ring in a chasm created by a lightning storm. The ring gives him a cloak of invisibility. Using his newfound power, Gyges seduces the Queen of Lydia, murders the King, and takes the throne, gaining power, wealth and fame. In the Republic, Glaucon argues that given a similar opportunity, any person, whether or not they were previously just or unjust, would use the power to commit as many crimes as necessary to get what they want [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][Book II, 359d]. Glaucon was responding to Socrates’ refutation of arguments put forth by Thrasymachus in Book I of the Repbulic, i.e., that “justice is nothing but the advantage of the stronger” [Book I, 338c].

I believe Glaucon’s experiment in thought informs us as to why someone who would not normally steal a tangible object in the physical world is nonetheless more than willing to download music or movies, intangible objects, on the Internet for free: because the fear of being punished or getting caught is eliminated in the evanescent world of Cyberspace. The Internet, like Gyge’s ring, confers upon its users a seeming cloak of indivisibility as it were. As one astute commentator surmised in response to an interview with Alice in Chain’s lead singer, Sean Kinney, “The real reason people steal music is that they CAN and very easily.” That this is a truth is evident from the plethora of “how to” guides on the Internet, teaching people “How not to get caught.” There you have it in a nutshell. All of the commentary about how the record industry has been thieves and how the RIAA unjustly goes after the defenseless people, these are mere justifications for actions people otherwise know in their hearts are wrong.

It’s important to read Plato’s response to his student to understand fully, as Plato did not agree with Glaucon. Plato’s argument in the remaining portion of the Republic is that the just man would not be tempted by this cloak of invisibility to commit crimes. Rather, the just man understands that crime itself makes a person unhappy and that he is better off to remain just. I frequently discuss this issue with my college students at Belmont University when teaching a course on Copyright Law. One of my students made the following observation, which confirms Plato’s conclusion. She said:

I do not follow the rules because I am scared of the RIAA busting me for illegal downloading. I follow the rules because I have respect for the people who wrote and recorded the songs, and even more, because I want to work in the music industry.

Another relevant opinion is offered in the excellent blog article found on arbiteronline entitled Illegal downloading: The real cost of ‘free’ music.” In that article, a student at Boise state, Ammon Roberts, is quoted as saying:

“I don’t do it because I don’t feel it’s right. If I were making the music, I’d be upset if people were downloading it for free.”

For these two students, following the rules is not about whether or not they’ll be caught, it’s about doing the right thing. It’s about honoring, i.e. compensating, the people who created the music. This illustrates Plato’s point precisely: a just person understands that even with a cloak of invisibility, doing the right thing makes a person happy or, in the words of Roberts, makes the person “feel right.”

The Internet is also very much the Land of Oz. In addition to this cloak of invisibility endowed on us by the Internet, it also deceives us with illusions of anonymity – not so much that the user is anonymous, as that’s merely another form of invisibility – but in the sense that it’s difficult to know who’s behind the curtain. As Trent Reznor said in an interview, “there is a perception that you don’t pay for music when your hear it . . . on MySpace.” Because of its sheer vastness and its mysteriousness, Cyberspace gives people false perceptions that their actions on the Internet do not affect real people. This, in turn, creates an illusion that “resistance is futile.” Everyone is doing it, so I can too. In other words, Cyberspace alters our reality in that it makes the real people behind the music an amorphous, anonymous entity. The result is that it’s much easier to steal from an amorphous, anonymous entity – the man behind the curtain – than it is from a struggling songwriter, particularly when all your friends are doing it.

I truly believe that most of the people who are illegally downloading music from the Internet have no idea who they are affecting or how widespread the effect is. Most of these people would not even think about walking up on stage after a singer/songwriter in a nightclub takes a break and stealing his guitar, but that very same person doesn’t think twice of taking that same singer/songwriter’s song from the Internet. They wouldn’t steal the filmmaker’s camera, but downloading the movie doesn’t phase their consciousness. In fact, many who contribute to the dialog would argue that these two thefts are not analogous. But one analysis conducted by the Institute for Policy Innovation states otherwise. The report indicated that music piracy causes $12.5 billion of economic losses every year. It further concluded that 71,060 U.S. jobs are lost, with a total loss of $2.7 billion in workers’ earnings. Such reports abound throughout the industry, yet many of the people guilty of illegal download continue to view these reports as industry-driven and, therefore, skewed. Take this comment by blogger Michael Arrington as an example:

Eventually the reality of the Internet will force the laws to change, too. One way or another the music labels will eventually surrender, and recorded music will be free. Until it is, I refuse to feel guilty for downloading and sharing music. Every time I listen to a song, or share it with a friend, I’m doing the labels a favor. One that eventually I should be paid for. Until that day comes, don’t even think about trying to tell me that I’m doing something ethically wrong when it’s considered quite legal, with the labels’ blessing, in China.

But what this illusion of anonymity, and such misguided opinions, miss is the fact that very real people – not amorphous masses – are being affected. And the effect is devastating. I have clients who are songwriters who are no longer creating art because they are forced to take odd jobs to support their families. The performance royalties they used to receive from ASCAP, BMI or SESAC are down by half or more from a few years ago. Their mechanical royalty checks are virtually non-existent. They simply cannot afford to create simply for the sake of creation. And now, working sometimes two jobs, they don’t have the time to create. What will become of the art of songwriting if Mr. Arrington has his way and all recorded music is free? I believe we will not have the quality of music in this country that we have enjoyed throughout the last millennium. In this instance, I do not believe that resistance is futile.

Now, getting back to Plato and the Ring of Gyges, in answer to Glaucon, Plato would say that the root of all trouble is unlimited desire. How true is that in this world of Cyberspace, in this world of rampant illegal downloading. The wheels really fell off the wagon when the RIAA sued Diamond Multimedia, bringing the MP3 into society’s field of view. Then, Napster exploded and almost everyone found that almost every song they ever loved was available for free. It’s as if they were Harrison Ford and discovered the treasure room in an unknown, ancient tomb: everything your heart desires is within your grasp. It’s yours for the taking. With its cloak of invisibility and its illusion of anonymity, what the Internet has done, in short, is to return the power – i.e., the control – back to the people. Everyone is now a creater, a publisher, and distributor. No one needs the conglomerates anymore – the people have the power. But, as Lord Acton said, beware: “Power tends to corrupt, and absolute power corrupts absolutely.” With power, therefore, comes responsibility. Unfortunately for the music industry, the power is currently being abused and will, ultimately, mean the end of the recording industry as it existed through the 20th century unless the creators regain that power.

So what does this mean for those of us who have chosen to make our living in the world of creation? Does it mean the end of our industry? Does it mean an end to copyright law as it exists? If we examine the origins of copyright – i.e., the protection of an original idea expressed in a tangible format – as passed down to us from our forefathers, we find a concept on which we can continue to build. In the now famous Radiohead experiment in which Reznor and crew allowed consumers to pay what and only if they wanted to, 18% of the consumers chose to do so! That to me, is an encouraging statistic, and one that confirms a believe in the viability of creating art. At least one in five people, even with the cloak of anonymity provided by the Ring of Gyges of this era, i.e., Cyberspace, chose to pay the creators for their creation. Take that Glaucon! Take that Arrington! What does that say for our society? It says that there are people who still chose to do the right thing, even when the tide of conformity rises above their heads.

The bottom line is that it really doesn’t matter what laws are passed by society, there will always be a certain percentage of people who will chose to steal, take and plunder, whether it be because they are more powerful or because they are cloaked with invisibility or shielded by anonymity. But – and here is the important thing – there will also always be a segment of society that recognizes the idea that Thomas Hobbes first advanced hundreds of years ago, i.e., the idea of “giving to every man his own.” If a man bakes a loaf of bread, is it not his right to trade that to the artist for whose painting he wishes to barter? This idea was later incorporated by our Forefathers into Article I, Section 8, Clause 8 of the U.S. Constitution, which gives Congress the authority “[to] promote the progress of science and useful arts, by securing for limited times to Authors and Inventors the exclusive rights to their respective Writings and Discoveries.” Without this Constitutional right, a creator has no hope of protecting his or her property against plunder. And as long as a segment of society believes this proposition to be beneficial to society as a whole, it will hopefully continue to motivate creators to create, and so profit from their creations, despite the efforts of those who choose to destroy it under a cloak of invisibility and unjustly take for themselves the kingdom of Lydia.

Quotations from Republic are taken from the W.H.D. Rouse translation, Great Dialogues of Plato, Mentor Books, 1956, a quoted in this fine article on the topic.

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Digital Downloads, Internet Law, RIAA, Songwriting, Technology

Origins of an Idea–Nothing New Under the Sun?

It was allegedly King Solomon who declared “there is nothing new under the sun!” Now a recent strain of thought seeks to recast King Solomon’s casual observation in order to challenge the basis of U.S. copyright laws, i.e., original ideas. This line of reasoning is perhaps best exemplified in the popular cult film by Brett Gaylor entitled RIP, A Remix Manfesto, inspired by his need to defend the work of his favorite mash up artist, Girltalk. Gaylor makes no bones about his attack on ideas, explaining to his audience near the beginning of the film that this is “a film about the war of ideas, where the Internet is the battleground.” So be it. Let’s debate the film’s primary cornerstone, the first and foundational clause of the Remix Manifesto, which is that “Culture always borrows from the past.” Is that true? Let’s look at what Jefferson said about ideas:

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. – Thomas Jefferson

To be fair to Gaylor, let me initially point out that the entire ReMix Manifesto, and certainly the ideology that undergirds it, is actually borrowed from Dr. Lawrence Lessig, who is a professor at Stanford Law School. Lessig develops the thesis in his book, Remix: Making Art & Commerce Thrive in the Hybrid Economy. Lessig is prominently featured in the film and Gaylor does not shy away from his support of Lessig’s thesis.

Now back to the premise that “culture always borrows from the past.” Without getting too far down the path towards the logical fallacy of drawing a universal conclusion from purely inductive reasoning (as Gaylor does in the film), such a conclusion is, at best, probable, and not definitive. Further, it is only probable if one can assume the truth of the premises used to support the conclusion, for the instant a person can find but one example of an contradicting premise – i.e., in this case an example of something that does not borrow from the past – then the conclusion must be flawed.

Can we find such an example, or are King Solomon and Dr. Lessig correct? Is there no original thought? I personally have a hard time accepting this premise. Spawning original ideas or creating an original thought is, in my humble opinion, what separates us and truly defines us as a species. Sure, the human species uses words, notes, colors, shapes, etc. as the building blocks of its ideas. In that sense, yes, we are using “the past” to create, at least in some fundamental sense. But if you think about it, you’ve heard the old postulation that if you put 50 monkeys in a room filled with typewriters they are statistically incapable of creating a work of Shakespeare simply by striking out random characters on the page and even, perhaps, hitting upon a string of a few words every so often! This illustrates the proposition that the mere existence of the building blocks does not negate original nor creative thought.

King_SolomonEvery now and again, albeit perhaps rare, a human being has a spark of an idea: something is invented or created – something original and unique – that changes, even if only in a small senses, the very nature of life for all humans that follow. It is these original thoughts that propel us forward toward the destiny that is mankind’s, affected forever by the new idea. What it must have been like to be around in the days when the first human species began to formulate language. Creating symbols, be it words or drawings, that communicated their thoughts to another human being. To have been present when the first rudimentary tools were developed to perform the tasks necessary to sustain one’s life in a hostile environment. In the film, Gaylor makes the point that Gutenberg’s invention of the printing press occurred during a time when the “public domain” flourished. His use of this example is, in this case, ironic, since the printing press can truly be defined as one of those creative bursts of unique ideas that only come along one is a few millennia. Since that invention, perhaps only the creation of the Internet has affected the world as much as Gutenberg’s original thought.

So, with these examples, I ask what part of the past did they build on? One might argue that language “borrowed” from the idea of communicating through gestures. Another will say that Gutenberg incorporated language and writing and therefore borrowed from the past. But only in the most general of senses can one seriously maintain that these remarkably useful and unique ideas sustain the principle that “culture always borrows from the past.” I maintain that these are examples of those brilliant moments in human history when someone has that flash of an original idea – whether inspired by God, by his or her muse, by hallucinogenic means, or by heartburn – and creates something that is uniquely and totally new, something that does not, in any substantive sense, borrow from the past. In that moment, we witness the origins of an idea. Perhaps more importantly, when that original idea is expressed in a tangible format, we see the origins of a copyright in the U.S., a copyright that is protectable as a limited monopoly for the life of the author plus seventy years.

In that last conclusion lies the crux of the problem. Lessig and Gaylor make their proposition in the context of trying to solve a perceived problem with current copyright laws: because the length of protection has been extended, there are fewer works going into to public domain and therefore fewer ideas from which to borrow. As a result, “artists” like Girltalk who use pre-existing copyright sound recordings to “mash” together and “create” new songs have fewer popular songs to work with.

In Remix, Lessig says that this results in the criminalization of copying ideas and that, therefore, we should deregulate amateur creativity and decriminalize file sharing. In his words, “chill the ‘control freaks.’” This is where Lessig jumps in to save the day with his “creative commons” license, which uses existing copyright concepts to allow an author to “issue” a license allowing anyone to freely use his or her work, with the only requirement being that of attribution. Ironically enough, Lessig has copyrighted his own books and has, to date at least, not issued a creative commons license for Remix! Now who’s the control freak?

In regard to this issue of works no longer falling into the public domain, while it may be true that extending the period of protection has the effect of slowing down the process, the fact is that our forefathers, primarily Thomas Jefferson, James Madison and Charles Pinckney, clearly anticipated and struggled with the concept that “ideas should spread freely” – as Jefferson says in the quote above – but nonetheless built appropriate safeguards into the copyright provision of the Constitution (Article I, Section 8, Clause 8), providing that Congress may protect the works of “authors and inventors” for “a limited time.” While one can argue, perhaps, that the period of a “limited time” has been grossly exaggerated, one cannot argue that the public domain concept has been abolished.

Frankly, as I see it, giving up on the concept of original thought is not the foundation upon which we as a society should build a debate against the current construct. We should cling to that concept, for it is in that moment – that origin of an original idea – that persons can distinguish themselves from the past, not borrow from it. It is at that moment that our culture is propelled into the future. It is at that moment, I believe, that we are truly alive.

Internet Law, RIAA, Technology, Uncategorized

The Proposed “Combating Online Infringement and Counterfeits Act”– yet another feeble attempt?

By Barry Neil Shrum & Nathan Drake

Since before the day that Napster was a twinkle in Sean Parker’s eye – well over a decade ago now – the legal and music industries have each struggled with ways to cope with and transform their dusty old business models from the physical status quo to the digital revolution. After the industry watchdog, the RIAA, initially targeted the Diamond Multimedia’s Rio MP3 player and then Parker, and then finally individuals were illegally downloading, the major record labels began to realize something: that perhaps the fact that consumers were downloading music illegally was merely a symptom of the problem rather than the source of the problem. So, the RIAA also began suing P2P file-sharing websites that sprang up instantly in the place of Napster, websites like Kazaa and LimeWire. While this method proved to be a bit more effective, the process still accomplished little in preventing future P2P file sharing services from materializing, each taking the place of its predecessor and each growing as rapidly as the one before. In yet another continuing effort to solve the music industry’s nightmare, new legislation has been introduced to Senate which is entitled “Combating Online Infringement and Counterfeits Act.” (S. 3804)

The purpose of the “Combating Online Infringement and Counterfeits Act” (COICA) is to provide owners of intellectual property additional weapons in the battle against illegal downloading. As indicated, the inherent difficulty of deterring and prosecuting these myriad individuals who are profiting off copyrighted materials is that they easily hide behind the anonymous wall of the Internet. Many of the sites providing access to this illegal property are situated well off the shores of the United States, overseas and beyond the long reach of the court’s jurisdiction.

Another problem is the sheer mass of the problem. One study indicates that as much as 1 in 4 Internet users download illegal music – an astonishing statistic! Let me state that another way: 25% of the traffic on the Internet is to sites that allow illegal downloading of copyrighted material, be it digital books, movies or music.

As Senator Leahy, one of the sponsors of COICA says, it is essential that the government enforce a

“means for preventing the importation of infringing goods by rogue websites, particularly for sites that are registered overseas.”

Through focusing on the domain names, COICA gives the Department of Justice the authority to pursue and prosecute offending website, both domestically and abroad. Incentivizing and rewarding creative endeavors remains the core ideology of American copyright protection, and instilling this value in our society is crucial if our society will continue to create. According to the Chamber of Commerce, “…American intellectual property accounts for more than $5 trillion and IP-intensive industries employ more than 18 million workers.” Therefore, protecting this integral aspect of American ingenuity and economy should be a priority.

Additionally, COICA provides universal jurisdiction to the Department of Justice in pursuing and prosecuting domain names that solicit American intellectual property in the United States. If the law succeeds, individuals committing copyright infringement will no longer be able to hide behind the protection of their native country, without fearing that their action can and will be pursued by the United States.

In addition, COICA allows third party participants to be prosecuted for “enabling” the website to sustain itself and lend legitimacy to the practices and products of the website. As Senator Leahy states, “These [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][third] parties monetize the Internet site by enabling U.S. consumers to access the infringing website, to purchase content and products off the website, and to view advertisements on the website. Without partnering with these entities, the financial incentive to run an infringing Internet site is greatly diminished.” Those directly and indirectly supporting copyright infringement will be prosecuted.

For the purposes of COICA, the government defines a website as, “dedicated to infringing activities.” Due to the outstanding number of infringing websites, the government intends to pursue only the most “egregious rogue websites that are trafficking in infringing goods.” To be considered an infringing website, one of two criteria must be identified. First, the website exhibits the “existing threshold for forfeiture” under U.S.C. 2323, or the website reveals no commercial value and intends to only sell copyrightable items protected under Title 17 of the United States Code.

One of the primary opponents to the passage of COICA is the Consumer Electronics Association (CEA). Although CEA supports and agrees with the general direction of COICA, they feel its vague and wide reaching language could potentially harm legitimate businesses that are not committing copyright infringement. CEA says, “Our primary concern is that the scope of S. 3804 was significantly broader than its intended purpose of shutting down ‘rogue’ or foreign websites solely engaging in the exchange of pirated content or goods.” The ambiguous language of COICA could potentially diminish previous milestone cases according to CEA, including the “Betamax Case” determined by the Supreme Court in 1984.

While the technological environment is constantly changing and creating new hurdles for the consumer and business, the importance of copyright protection still remains. A constantly transforming environment requires innovative and relevant legislation to meet the creative needs of our culture. In an attempt to counter this decade long battle, legislation like COICA would allow the government to target the source of global piracy, and enforce the relevance and weight of American copyright protection. But our legislators must be certain to craft language that does not impede the rights of its citizens. Balance is need lest we resort to the overreaching, irrational, and over reactive activity the RIAA engaged itself in over the past decade.

RESOURCES & FURTHER READING

http://supreme.justia.com/us/464/417/

http://openjurist.org/title-18/us-code/section-2323/forfeiture-destruction-and-restitution

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_reports&docid=f:sr373.111.pdf

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Client Activity, Life on the Row, RIAA

Jimmy Eugene opens for Gary Allan and performs for a sold out crowd!

My friend and client, Dr. Jimmy Eugene Pollard, performed a sampling of his music in front of a sold-out crowd, performing as the opening act for Gary Allan’s immensely successful Get Off On the Pain tour. The Pavillion at the Coushatta Casino Resort welcomed over 4000 people for the February 19th event. Allan’s tour has earned a spot on the New York Times Top 10 year end list and earned rave reviews in People, USA Today, Country Weekly, American Songwriter, Billboard, Associated Press among others.

Jimmy Eugene is most known for his interesting life story captured in his book, On the Journey Back. Jimmy was a teenage runaway, joining the military after lying about his age at 17. After service to his country, Jimmy returned to complete a degree in dentistry. He serve another stint in the Navy, achieving officer status, and then retired. Later, he entered medical school and became a maxillofacial surgeon, building a huge practice in Lake Charles, Louisiana (and another in Texas). It was almost twenty years later that Jimmy started writing music. He was in a severe automobile accident, injuring his spine. While in traction, Jimmy had a dream and began hearing music for the first time in his life. He learned to play the guitar and begin to write song. Through a series of connection with Nashville, Jimmy became a client.

Saturday night’s performance was only Jimmy’s third time on stage. “I was a little disoriented when the lights hit me up there,” Jimmy told me in his back stage motor coach. Jimmy performed songs from his new album, Joy of the Journey. He was backed by a team of A-List players from Nashville, hand selected by Steve Tveit of Omnisound and veterans Pat McCrath on guitar, Dug Grieves on electric, Dow Tomlin on bass, Dennis Wage on keyboard, and Steve Hinson on steel guitar, among others. The Louisiana fans seemed to enjoy the performance. A special thank you goes out to our musicians, and to Randy, Jay and all of the other fine staff members at Coushatta for making our visit there extremely enjoyable. Loved the crawfish étouffèe!

Visit Jimmy’s website for more information.

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Technorati Tags: Music Industry,Coushatta Casino Resort,Gary Allan,Get Off On the Pain tour,Louisiana

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Entertainment Industry News, Music Industry, Music Row News, RIAA

Warner Music Group’s Quarterly Report Signals Future Trends

By Nathan Drake & Barry Neil Shrum

Warner Music Group’s (“WMG”) year-end financial reports for 2010 came as little surprise when you take into account two factors: (1) the general economic downturn in the U.S. and (2) the continued piracy in the global music industry. See the report on WMG’s website here. WMG has been the third largest record company in the world since at least 2004, when Time Warner spun off its music-related components. WMG’s stock was trading at $5.92 per share as of the date of this posting, 2/21/2011.

Although WMG posted positive revenue returns in the third and fourth quarter of 2010, WMG claims that total revenue in 2010 decreased sharply as compared to 2008 and 2009. This represents the eighth straight quarter that WMG has posted decreased earnings, a trend that is concerning to many in the music industry. To wit, the demise of EMI Music – currently No. 4 in the music world – as it crumbles under the weight of its massive debt, is a poignant lesson to WMG – and to Universal Music Group and Sony BMG (Nos. 1 and 2 respectively) – that no music conglomerate is immune to hardships and winds of change currently facing the music industry. The wide moat of physical sales that once protected the record labels’ castle from ultimate destitution now fails to provide a comfortable defense.

As a result, a new kind of business model has emerged on Music Row and throughout the music industry, and this business does include “traditional model” involving radio marketing or “physical distribution/sales.”. Rather, ingenuity and innovation include the most pertinent qualities of this business model. See my post, New Formula for the Music Industry. And though the “major record labels” while may be slow to adapt, revenue losses like those reported by WMG, is quickly teaching the behemoths that transformation is essential if they want to stay afloat and competitive in today’s music market. There are constant rumors afoot in Nashville that several of the major labels are shifting away from the traditional type deals toward more reasonable, tech-savvy and partnership-based approaches that fit the model better.

According to WMG’s reports, released on February 8, 2011, revenue totaled $789 million for the fourth quarter of 2010. Even though it reported positive cash flow for the fourth quarter, the reported revenue represents a 14% decline from the 4Q 2009. The impact of this comparative decline becomes clearer when you compare the reported digital revenues for WMG for the same periods. Digital revenue for 4Q 2010 accounted for a staggering 25% of the total revenue, or $187 million. This total represents an increase from the $184 million in digital revenue reported 4Q 2009. Thus, it is obvious that digital revenue continues to be an integral, and fast growing, aspect of the business model for record labels.

The growth in digital revenue and the effect it has had on WMG’s revenue stream is also highlighted in the international sales posted by the company for 2010. While domestic recorded music digital revenue declined 3% in 2010, international recorded music digital revenue grew 12.3% during the same year. International digital purchases of recorded music accounted for 19.7% of total revenue in 4Q 2010, increasing from the previous year’s quarterly earning of of 14.6% in the same sector. WMG’s figures show that marketing internationally provide great opportunities for augmentation, at least for the time being.

The impact of these trends in the music business on the future business model of WMG is also evident from the report for those willing to consider them. First, the news reported by WMG that it is hiring Goldman Sachs to investigate and explore the potential sell of the company offers tremendous insight. WMG has also proposed the option of selling only portions of the company in an effort to alleviate the debt and mere size of the company. Going in totally the opposite directino, a third proposed option in consideration is that WMG would acquire its struggling little sister, EMI Music. According to 2009 Nielson SoundScan® sales figures for each of the major conglomerates, the acquisition of EMI would position WMG as the largest record label in the music industry, with 32.72% of the U.S. market share, leapfrogging both UMG and Sony BMG to take the crown.

As noted earlier, EMI is the fourth largest music conglomerate, representing some of the largest acts in music today, including Katie Parry, Coldplay and Radiohead. Despite its stable of well-known artists, Terra Firma, EMI’s current owner, has been treading water for almost a year now to to repay CitiGroup, from whom it borrowed millions to acquire EMI a mere 2 ½ years ago. But as the repayment prospects for EMI are beginning to dim, as they reported massive losses of nearly $2.5 billion last year. So, while things may look gloomy for EMI, Warner Brothers views EMI’s plight as an opportunity to expand its catalog and artist repertoire. An opportunity of this magnitude is rare; therefore, acquiring EMI yields the potential for Warner Brothers to transform itself into a more profitable and diverse music industry conglomerate. I’m sure EMI hopes the third time is the charm here.

So, the music industry continues to morph and adapt into something that will not resemble the traditional “record label” models of the past. Gone are the days when such conglomerates are the only ones who will be able to produce multi-platinum superstar artists, sold through radio marketing and mass retail distribution on which they have a stronghold. The days of the Internet revolution are upon us and the industry is starting to see its effects. This drama will continue to play out over the course of the next few years.

My co-author, Nathan Drake is a senior at Belmont University from Northville, Michigan who graduates in May with a degree in Music Business from the Mike Curb School of Music Business. Nathan currently clerks for Mr. Barry Neil Shrum, Esquire at Shrum & Associates in Nashville, Tennessee. He plans on pursuing a law degree after graduation. Nathan is author of his own blog entitled “My Thoughts.”

New Formula for the Music Industry

by Ross Hill & Barry Shrum

The new formula for the music industry, as described by Techdirt’s Mike Masnick, is “CwF + RtB = $$$$,”⁵ which, translated means “connect with fans,” and give them a “reason to buy,” which in turn translates to sales!

Masnick’s presentation at MIDEM09 was geared towards this new business model and, frankly, he may not even be the originator of this idea. The actual breakdown of the model is Connect with Fans + Reason to Buy = Success. In today’s market, an artist has to set him or herself apart from the rest of the people on the Internet. By “connecting with the fans,” an artist let’s them know that they care about them, which prompts them to support the artist, or in other words, gives them a “RtB.” Engaging fans on a daily basis increases the sense of belonging they feel. This is where services like Facebook and Tweeter come into the picture, as one artist – Amanda Palmer, formerly of the Dresden Dolls – aptly illustrated in 2008. When Roadrunner Records stop promoting her solo album, she took matters into her own hands and began setting up “flash gigs” via Tweeter. She would tweet the location of an upcoming “impromptu” appearance to her fans, who would show up in droves. One such flash gig on a beach in Los Angeles drew over 200 fans via Twitter. On another night, she begin tweeting about the “Losers of Friday Night on their Computers” club and before long became the #1 trending topic on Twitter. Soon, she had designed a t-shirt based on the conversations of her fans which she ended up selling at $25 a pop, generating over $11,000 in income. She had learned the concept of “connecting” with her fans. CwF!

In his lecture, Mike Masnick described the experience of the more well known band, Nine Inch Nails (NIN). NIN is the prime mover of successes for this business model, specifically the entrepreneurial ideas spawned by Trent Reznor’s experiments.⁵ Reznor perhaps first established the importance of connecting with the fan and engaging them beyond the music. Connecting with fans beyond the music is an area in which Reznor was a professional. By creating interactive games, blogs, and creative pricing for his albums, Reznor became even more of a success than his band had let him be. Although NIN had a fan base before Reznor put his new business ideas into play, the effect they had on the industry was extremely unexpected. Reznor taught the industry that it is not so much about selling the music as it is about getting the fan to fork over the cash for related experiences!

The reason this formula now works is simple: for the first time in the history of the music industry, artists now have access, via the Internet, to the four things that only major corporations had access to for a long time: advertising, marketing, recording, and distribution. As the music industry – major labels, radio, retail record sales – fights to stay alive and keep the independent artists’ newfound power at bay, artists are constantly finding new ways to become successful with little or no help from the major powers. There are so new ways being developed every day that allow today’s artists to connect with the fans and give them reasons to buy.

Social media expert Vashon Patterson says it best, “If you don’t have a Facebook, you aren’t relevant.”⁶ Facebook, currently the world’s most popular social media site, is another platform on which artists have learned to promote themselves. It is estimated that 1/10 of the worlds population has a Facebook page.⁷ By staying on top of their page and engaging with the people who visit their page, artists can quickly gain a fan base.

Cyber PR consultant Ariel Hyatt gives the young musician several keys to being successful using Social Media:

“Find bands that sound like you and recruit their friends. On MySpace and Facebook, it is very easy to see who is friends’ with bands that sound like you, seek out those people and let them know that you exist. Comment on peoples’ pages to let them know you are real. Get Personal. Let the fans know you care that they care.”⁸

These simple tasks are some of the easiest ways upcoming bands can connect with their growing fan base. Little gestures to let fans know that they are needed are some of the key ways artists are getting noticed and will continue to be noticed.

For more ways to connect with fans and give them a reason to buy, consult with the experts at Shrum & Associates.

About the co-author: 21 year old, Ross Hill is a Music Business and Entrepreneurship double major at Belmont University in Nashville, Tennessee and a former student of Dr. Barry Shrum. He has been singing his entire life and his love of music fueled his desire to pursue a career in entertainment entrepreneurship. Ross is a well-known musician and DJ in the Lexington and Nashville area and spends his free time experimenting with photography and cinematography. Ross is constantly looking for new ways to utilize the potential of the internet to promote artists and their music. His personal love of music and the industry led him to choosing the topic of his paper.

⁵Linksvayer, Mike. “NIN Case Study Video: Connect with Fans Reason to Buy.” Creative Commons. 6 Feb. 2009. Web.

⁶06 Dec. 2010. <http://creativecommons.org/weblog/entry/12695>.

⁷Hazlett, Bob. “Social Networking Statistics And Trends.” Upload & Share PowerPoint Presentations and Documents. 1 June 2008. Web. 05 Dec. 2010. <http://www.slideshare.net/onehalfamazing/social-networking-statistics-and-trendspresentation>.

⁸Hyatt, Ariel. “ITunes Success in 12 Steps — Echoes – Insight for Independent Artists.” Echoes – Insight for Independent Artists. 29 Oct. 2009. Web. 06 Dec. 2010. http://blog.discmakers.com/2009/10/itunes-success-in-12-steps/.

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Congress proposes Copyright Protection for Fashion Design

By Nathan Drake

The wildly popular and quickly emerging fashion giant, Forever 21, has endured numerous obstacles since its inception into the fashion industry 27 years ago. Recently however, Forever 21 has encountered a new type of hurdle; copyright infringement. In the January 24th edition of Bloomberg Businessweek, Susan Berfield explains, “Starting in about 2004…labels ranging from Diane von Furstenberg to Anna Sui to Anthropologie, about 50 in all, separately sued Forever 21 for copying their clothes.” According to Susan Scafidi, a copyright professor at Fordham University Law School and director of the Fashion Law Institute, “Of the various fast fashion chains, Forever 21 is the one who treats liability as a cost of doing business…Illegal copying has been incorporated into their business model.” In response to this increasing litigation and skewed mentality in the fashion industry, numerous senators, including Senator Schumer and Senator Clinton, introduced a bill in 2006 amending Title 17 of the Copyright Act of 1976 of the United States Code to include copyright protection for “fashion design.” If it passes, this would represent the first addition of a new protected class of copyrighted works since Congress passed the Architectural Works Copyright Protection Act in 1989.

Consequently, the question that looms in the minds of those opposing copyright protection for fashion design is simple: How does one successfully and fairly protect something as functional and practical as clothing? While certain designers and fashion lines will have their own character and price tag, allowing certain individuals to own sleeve designs or collar configurations would prove absurd and oppressive. Just as architecture laws do not provide copyright protection for “functional elements,” such as doors, windows, walls or ceilings, fashion design is limited in what it can deem copyrightable, i.e., original, due to the utilitarian use of clothing.

Support for copyright protection in the fashion industry has gained a backing from several prominent designers and New York’s Council of Fashion Designers of America, according to Louis S. Ederer and Maxwell Preston of Arnold and Porter LLP. The main opponent of the bill has been the American Apparel and Footwear Association. As Preston and Ederer explain, the AAFA has opposed the bill for several reasons, including, but not limited to ambiguous language in prosecuting copyright infringement and the perceived lack of resources to accommodate the influx of applications the Copyright Office would likely encounter. In response to these complaints, Senator Schumer and his colleagues have revised and submitted a new bill to the Senate as of August 5, 2010 (S. 3728).

In the eyes of the law, clothing serves a “utilitarian” purpose in covering a person’s body, so attempting to separate the fashion design from the clothing becomes a very difficult task. Essentially, the copyright law wants to prevent functional styles, such as the collared shirt or the “v-neck,” to remain unprotected due to the utilitarian and practical purpose it provides. To assure this, the current requirements of the Copyright Act would still apply, i.e.¸ that the fashion design would need possess a “modicum” of originality in order to be eligible for copyright protection. The current draft of the S. 3728 specifically states that the fashion design must “provide a unique, distinguishable non-trivial and non-utilitarian variation over prior designs for similar types of articles” (Section 2(a)(2)(B)(ii)).

Furthermore, while there is no perfect answer for an issue as complex as copyright protection for fashion design, working to promote a healthy industry by awarding creativity is an important principle. The revised bill, currently called the “Innovative Design Protection and Piracy Prevention Act” was introduced on August 5, 2010 and remains in the Senate to be discussed and voted on.

The author, Nathan Drake is a senior at Belmont University from Northville, Michigan who graduates in May with a degree in Music Business from the Mike Curb School of Music Business. Nathan currently clerks for Mr. Barry Neil Shrum at Shrum & Associates in Nashville, Tennessee. He plans on pursuing a law degree after graduation.

References

Berfield, Susan. “Forever 21’s Fast (and Loose) Fashion Empire.” Bloomberg BusinessWeek. 20 Jan. 2011. Web. 14 Feb. 2011. <http://www.businessweek.com/magazine/content/11_05/b4213090559511_page_2.htm>.

“Copyright Law of the United States.” U.S. Copyright Office. Oct. 2009. Web. 7 Feb. 2011. <Copyright.gov>.

Ederer, Louis S., and Maxwell Preston. “The Innovative Design Protection and Piracy Prevention Act – Fashion Industry Friend or Faux?” Business Solutions & Software for Legal, Education and Government | LexisNexis. 25 Aug. 2010. Web. 07 Feb. 2011. <http://www.lexisnexis.com/Community/copyright-trademarklaw/blogs/fashionindustrylaw/archive/2010/08/25/the-innovative-design-protection-and-piracy-prevention-act-fashion-industry-friend-or-faux.aspx>.

Schumer, Charles. “Bill Text – 111th Congress (2009-2010).” THOMAS (Library of Congress). 5 Aug. 2010. Web. 07 Feb. 2011. http://thomas.loc.gov/cgi-bin/query/D?c111:1:./temp/~c11198mPaA::.

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Featured, Life on the Row, RIAA, Technology

Four – initial thoughts on the new iPhone 4.

My belated Father’s Day gift this year was a brand, spanking new iPhone 4 32mb! So, now that I’ve been using it for about two weeks, I decided to share my thoughts and insights, particularly since I’ve previously blogged about my love/hate relationship with Apple and the predecessor phones. I am a staunch Windows 7 user, and have my doubts about the seriousness of anyone who uses the Apple operating system! Just kidding really.

Without a doubt, the first thing you notice about the new iPhone is the superior clarity of t he 960×640 screen. It’s brighter, fonts are clearer, pictures more vibrant and, overall, it’s simply much more impressive. Don’t’ take my word for it, hold one up next to your old iPhone and you’ll see the difference instantly. The 480×320 screen on the older phones appear almost muddy by comparison. Apple doubled the pixels per inch, and it shows. They also increased the contract ratio to 800:1. In the end, the resolution upgrade alone is worth the price of admission!

The next design element I noticed was the shape. The new iPhone 4 is very distinct from its predecessors in its very UN-zen-like feel, stepping toward a more “slate” type approach. That can be either a good or bad choice, depending upon your perspective, and how much you liked the original Zen-like design. I personally really liked the “Zen Stone” feel of the original, with it’s rounded back and corners. My previous model was the white 3g (oh, sorry Apple, I probably shouldn’t mention the “white” right now huh?). That said, the new shape and feel have grown on me and I actually like the new aesthetics, although it did take some adjustments in my holding style. The new model is much starker, with metal edges, creating an almost industrial feel (the very same edges that give the iPhone 4 it’s trademark reception problems). The phone is more slender than its predecessors as well, which gives the misleading appearance of a smaller screen. It’s not – actually they are identical in size at 89 mm. The edges also give the appearance that the 4 is thicker than its ancestory. Again, it’s not. It’s actually shaved thinner – 2 mm to be precise!

Putting aside the incredible screen, the next real beauty of this new model is the software revisions. Many of my faithful readers will recall my constant berating of Apple about the lack of multi-tasking, something the very first Palm Pilots could pull off with ease. So, how many years and version upgrades have we been through? Having poked at the giant enough, I will state unequivocally that Apple’s implementation of this mission critical component is very well done. Two clicks on the home button and up pops a menu at the bottom showing all running applications and allowing you to move between them. One can, for example, read a book and take notes, or time a runner and jot down the time. I know, these seem like simple, ordinary tasks, but try that on an older iPhone! One feature of multitasking that would be an improvement in future version, however, is the ability to shutdown all applications without having to individually close them. After several hours of use, the multiple applications begin to pile up and exhaust valuable resources. But, that caveat expressed, I am SO happy to have multi-tasking on my iPhone. I was beginning to miss those days with my Palm.

Another one of my expressly desired features that did NOT appear on this new model is the week view in the calendar. It might sound like a petty request, but in the business world, many people rely on the week view for advance planning and scheduling. And please, don’t tell me about the “List” view – a more useless apparatus I have never witnessed – it is simply not a replacement for the week view! Ironically, Apple HAS implemented the weekview feature on its enigmatic iPad. I was so put out when I found this. “So, why can’t I have it too?” I asked The “Genius” at the store. She tells me it is planned for a future version, but I don’t know if I trust The Genius. Apple’s sin is further amplified by the fact that because of its proprietary philosophy it will not allow third party software designers to access the code to their precious default programs, so no one can even design a work around! Pocket Informant has a beautiful weekview in its application, but you are relegated to using Google Calendar, not the Apple default. So, this complicates issues with Exchange servers and is not a good work around. Ok, so enough of my bitching, let’s get back to the many things I LIKE about the 4!

Let’s talk folders! Another sadly missing item was rectified by the new operating system by the addition of the foldering system. Now, instead of 10 or so unorganized pages containing a hodge podge of programs, I have one main screen with my most utilized programs, and a page and one half of folders! An organizational system in a Personal Information Manager, imagine that! It’s truly great.

There are, of course, many other wonder additions on the iPhone 4 – the 5 mp camera and front facing camera, video conferencing, gyroscope, etc. — but these are my initial thoughts.

Over the next few months, I will be sharing some of my favorite applications on the iPhone with you, but suffice it to say that the new iPhone is working out quite nicely. I highly recommend an upgrade if you’re considering it and/or are waivering. There is a a good comparison at Wikipedia.

Entertainment Industry News, Entertainment Law, RIAA, Trademark Issues

TIVO v. ECHOSTAR

Editors Note: The following is a research paper from one of the students in my Entertainment Law & Licensing class I teach at Belmont University’s Curb School of Music.

By G. GRANT GUINANE

On July 30, 1998 Tivo Inc. registered a patent for their multimedia time warping system that allows a user to store selected television programs while simultaneously watching or reviewing another program. They patented their process for making this then phenomenon so as to protect their discovery and to become the exclusive financial beneficiaries of this technology. In 1999 it was announced by Dish Network that along with their affiliate Echostar would soon have the time shifting abilities that Tivo was spearheading. This was the warning sign of what would end up being years of court battles between Tivo and the Echostar-Dish Network team.

Tivo filed suit for patent infringement in January of 2004, once they realized that the patent they obtained was being violated, to seek financial retribution and an injunction against Echostar to halt the production of infringing DVR systems that they were producing. Tivo alleged that Echostar was infringing two software claims, “The process for the simultaneous storage and play back of multimedia data, and the apparatus as well” (Tivo v. Echostar, 2). In addition to the software claims, Tivo asserted that Echostar was violating their hardware patent as well.

The suit was first filed with the United States District Court for the Eastern District of Texas. The court found Echostar to be in violation of both claims by Tivo. The judge issued a permanent injunction against EchoStar ordering them:

(1) to stop making, using, offering to sell, and selling the receivers that had been found infringing by the jury and (2) to disable the DVR functionality in existing receivers, with the exception of select receivers that had already been placed with its subscribers”

(Tivo v. Echostar, 3). In addition, the court awarded Tivo $74 million in lost profits.

At that time, Echostar did not appeal the permanent injunction imposed by the court, but it also did not discontinue providing the DVR service. In response, Tivo requested that the district court hold Echostar in contempt. Echostar claimed that it redesigned its product so that it was not infringing any longer.

The district court evaluated EchoStar’s modifications to the infringing DVR software and concluded that the modifications were also infringing. The court concluded

Even if EchoStar had achieved a non-infringing design-around, EchoStar would still be in contempt because it had failed to comply with the disablement provision in the district court’s order requiring it to disable DVR technology completely from the receivers

(Tivo v. Echostar, 4-5).

Dish and EchoStar had argued that it was entitled to a trial to determine if its altered products infringe the patent. The company said it “paid 15 engineers to spend 8,000 hours on the redesign, which took a year” (Decker and McQuillen). Tivo argued against this point saying that the changes made to their DVR players do not make a “colorable” difference.

The court agreed with Tivo stating,

We have made it clear that a lack of intent alone cannot save an infringer from a finding of contempt”

( Tivo v. Echostar, 12).

Echostar claimed that the injunction was unclear, but Tivo claimed the opposite and the record of the court reflected the clarity of the injunction. Also important to note is that the DVR’s time warping software was the only aspect of the boxes required to be disabled; not all of the actual units and hardware, the DVR functionality is just one of many functions that the Echostar Broadcom and 50X receivers performed. Since Echostar never directly appealed the injunction it was judged as a lost cause for them and the court fined them nearly $90 million and amended the previous injunction requiring EchoStar to seek the court’s approval before implementing future DVR software.

The final decision by the Federal Court of Appeals was to uphold the decision made by the district court in a divided 2-1 decision. TiVo said it will be entitled to a total of about $300 million in damages and contempt sanctions through July 1, 2009, and it will seek additional cash for continued infringement after that date. That’s in addition to $100 million Dish paid TiVo after the original appeals court ruling (Decker and McQuillen). While it is a victory for Tivo, they only got a portion of the $1 billion they were seeking.

This case made a huge impact on the DVR industry as well as Tivo’s stock, which skyrocketed following the May 4^th decision by the federal court. Tony Wible, an analyst with Janney Montgomery Scott LLC in Philadelphia, wrote in a note today. “The courts have ruled in TiVo’s favor numerous times over the past five years, which should help the company in the company’s litigation against AT&T, Verizon and Microsoft” (Decker and McQuillen).

It is a good that courts are protecting intellectual properties such as Tivo’s patent in this case, so as to discourage the stealing of ideas and encourage the promotion of innovative thinking. The court’s decision to find EchoStar in violation was a good decision, as Tivo should be the sole beneficiaries of their intellectual property, i.e., the patent.

To play devil’s advocate, however, such decision does stifle competition in the industry, namely, EchoStar was the only true competing DVR provider with any clout. Generally speaking, it is not good to promote a monopolist environment in any industry. This is essentially the state of the DVR industry until Tivo’s patent expires in 2018.

This decision confirms the principal that the twenty years of exclusive ownership granted by patent law is a positive thing—without that right someone could easily profit off of another’s innovation and inventive nature. It is reassuring to see that judges like those in this case are still interested in the protection of important intellectual discoveries such as Tivo’s time warping technology. It also also reinforces the fact that courts will enforce their injunctions against parties and do not take it lightly when a defendant tries to skirt the injunction or slyly work around it. EchoStar’s was penalized an extra $90 million because they tried to do things their own way and work around the court.

These proceedings took over five years, but Tivo still has many legal proceedings ahead of them, probably enough to last the entirety of their patent ownership and beyond! Nonetheless, the EchoStar decision is the most positive sign that Tivo could have received in the midst of the myriad of legal battles they are still facing. This case proves that if one want to protect valuable ideas and me
thods they had better be ready to fight tooth and nail in the court system for years on end—luckily the reward can be great.

Works Cited

Tivo v. Echostar. No. 2009-1374. U.S. Court of Appeals for the Federal Circuit. 4 March 2010.

Decker, Susan, and William McQuillen. “TiVo Wins Court Ruling Against Dish, EchoStar (Update4).” Businessweek.com. Ed. David E. Rovella. Bloomberg, 4 Mar. 2010. Web. 11 Apr. 2010.

Grant Guinane is a recent graduate of Belmont University. He obtained a B.A. in Entertainment Industry Studies with a focus in writing and music, as well as a minor in marketing. Originally from St. Joseph, Michigan, Grant came to Nashville to pursue music. He currently lives in Detroit, Michigan.

Digital Downloads, Entertainment Industry News, Entertainment Law, Featured, Music Industry, Music Law, Music Row News, RIAA, RIAA Litigation

The Limewire Ruling: New King of the Hill for Illegal Downloading Decisions

The U. S. District Court for the Southern District of New York ruled against LimeWire and its parent company, Lime Group, finding them liable for inducement of copyright infringement based on the use of their service by subscribers.

U.S. District Judge Kimba Wood issued the 59-page decision Wednesday, siding with the 13 record companies that sued Lime Wire LLC and founder and Chairman Mark Gorton through the RIAA claiming copyright infringement and unfair competition.

In finding the company liable, Wood opined that LimeWire had optimized its application to “ensure that users can download digital recordings, the majority of which are protected by copyright,” and that the company actively “assists users in committing infringement.” Wood also found that the defendants knew their technology was being used to download copyrighted tunes and took no “meaningful steps” to prevent the infringement. In addition, Lime Wire marketed its software to people “predisposed to committing infringement” and assisted those people, the judge ruled.

Major labels, as represented by the RIAA, were predictably thrilled with the outcome. “This definitive ruling is an extraordinary victory for the entire creative community. The court made clear that LimeWire was liable for inducing widespread copyright theft,” RIAA chairman and CEO Mitch Bainwol relayed.

Lime Wire Chief Executive George Searle issued a statement saying the company “strongly opposed the court’s recent decision.” The statement continued:

“Lime Wire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission,” Searle said.

Searle did not say whether Limewire would appeal the ruling.

The Recording Industry Association of America proclaimed the decision was “an important milestone” in the battle against online copyright infringement, because Gorton was found personally liable, in addition to the company of which he was the chairman. Personal liability against a corporate director is rare.

“The court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability,” Mitch Bainwol, chairman and chief executive of the RIAA, said in a statement.

LimeWire, launched in 2000, is one of the largest remaining commercial peer-to-peer services left on the Web. The company claims to have more than 50 million monthly users. The company has managed to defend itself against major label legal action for years.

In issuing her opinion, Wood relied heavily on the 2005 Grokster ruling, in which the Supreme Court said that a file-sharing service was liable when customers were induced to use it for swapping songs and movies illegally. The test established by the Supreme Court in MGM v. Grokster for provider liability is whether the company actively induced users to commit infringing activities. While LimeWire argued that it did not, Judge Wood noted that the company actively “markets LimeWire to users predisposed to committing infringement.”

The record companies that sued Lime Wire included Arista, Atlantic, BMG Music, Capital, Elektra, Interscope, LaFace, Motown, Priority, Sony BMG, UMG, Virgin and Warner Brothers.

The Magical Ring of Gyges: Why Illegal Downloading is So Rampant in the Age of Cyberspace

The Proposed “Combating Online Infringement and Counterfeits Act”– yet another feeble attempt?

Jimmy Eugene opens for Gary Allan and performs for a sold out crowd!

Warner Music Group’s Quarterly Report Signals Future Trends

New Formula for the Music Industry

Congress proposes Copyright Protection for Fashion Design

Four – initial thoughts on the new iPhone 4.

TIVO v. ECHOSTAR

The Limewire Ruling: New King of the Hill for Illegal Downloading Decisions

Any more questions? Feel free to drop us a line, or call 615.338.5130!

CONTACT

Shrum & Associates PC, d/b/a Shrum Disney & Associates | 615.338.5130 | [email protected]
54 Music Square East • Suite 350 • Nashville, Tennessee 37203

Any more questions? Feel free to drop us a line, or call 615.338.5130!

CONTACT

Shrum & Associates PC, d/b/a Shrum Disney & Associates | 615.338.5130 | [email protected] 54 Music Square East • Suite 350 • Nashville, Tennessee 37203

Shrum & Associates PC, d/b/a Shrum Disney & Associates | 615.338.5130 | [email protected]
54 Music Square East • Suite 350 • Nashville, Tennessee 37203