Hard cheese for content owners in the cantons

Torrentfreak reports that the Swiss Government has decided that downloading music and movies will stay legal. With an estimated one in three of the Swiss population admitting to downloading content without permission, Swiss policy will now be that downloading for personal use WILL be legal since people eventually spend the money saved on entertainment products.

The Swiss government had been conducting the study into the impact downloading has on society, and this week their findings and the overall conclusion reached is that current Swiss copyright law, under which downloading copyrighted material for personal use is permitted, doesn’t have to change.

The Report notes that whilst the photocopier, audio cassette tape and VCR were all excellent and efficient copying devices, the internet has an added ‘bonus’- the world wide web offers near instant and global distribution of copies at the click of a button. The Report, which favours the option of putting technology to good use instead of taking the “repressive” approach says “Every time a new media technology has been made available, it has always been “abused”. This is the price we pay for progress. Winners will be those who are able to use the new technology to their advantages and losers those who missed this development and continue to follow old business models,” the Report notes.

The Report further concludes that even in the current situation where piracy is rampant, the entertainment industries are not necessarily losing money. To reach this conclusion, the researchers extrapolated the findings of a study conducted by the Dutch government last year, The report states that around a third of Swiss citizens over 15 years old download pirated music, movies and games from the Internet. However, these people don’t spend less money as a result because the budgets they reserve for entertainment are fairly constant. This means that downloading is mostly “complementary”. Equally the Dutch study showed that downloaders are reported to be more frequent visitors to concerts, and game downloaders actually bought more games than those who didn’t. And in the music industry, lesser-know bands profit most from the sampling effect of file-sharing.

The Report also reviews some of the new digital regimes adopted in other countries, in particular the three-strikes law Hadopi now operating in neighbouring France. The Report points to the expense of such systems and questions whether a three-strikes law would be legal, with access to the internet having been deemed a human right by the UN Human Rights Council. Other measures such as filtering or blocking content and websites are also rejected, because these would impinge of the right to freedom of speech and violate privacy protection laws. The report notes that even if these measures were implemented, there would be several ways to circumvent them. In 2010 the Swiss Federal Supreme Court ruled that ISPs and content owners are not allowed to collect IP-addresses of file-sharers when Logistep AG was prohibited from collecting personal IP addresses of suspected pirates on behalf of music and film groups such as the RIAA and Motion Picture Association, making it impossible for rights holders to gather evidence. The case was brought by the Swiss Federal Data Protection and Information Commissioner

So the message to the content industries is this – adapt to changes in consumer behaviour - or die

http://torrentfreak.com/swiss-govt-downloading-movies-and-music-will-stay-legal-111202/

Logistep AG : http://jumpcgi.bger.ch/cgi-bin/JumpCGI?id=08.09.2010_1C_285/2009 (8th September 2010) cf the decision of the German Hanseatisches Oberlandesgericht (decision 5 W 126/10, 3 November 2010)

Artist’s digital royalty beef will go to court

A class action between a number of recording artistes and Universal Music over how digital royalties are calculated will go to court. A federal judge in California has given the green light for a class action lawsuit against Universal Music by a number of long established artists, led by White Zombie, Whitesnake, and the estate of Rick James. The music major had requested the case be dismissed. The case will be a major test of how artiste digital royalties are calculated by record labels in the absence of specific contract wording: The label would like to calculate the royalty based on the same accounting process as a normal (physical) sale – whilst artistes want a share of the income which will almost certainly be a substantially greater share of the revenues. Almost all pre-internet contracts make no mention of digital releases beyond CD (and many predate CDs) let alone downloads and streaming and artistes have argued that because digital removes label's manufacturing and distribution costs, the risks of sales are almost non-existent, and when a label makes its catalogue available to a service such as iTunes, it is actually a licensing deal and therefore the higher artist royalty should be paid.

There is a precedent here – the so called ‘Eminen’ case that actually involved FBT Productions, the production house involved in some early Eminem recordings, who took Universal to court over digital royalties and succeeded in achieving the higher royalty rate: FBT argued they had a right to a 50/50 split of profits with Universal on sales of digital music and ring tones through online retailers such as iTunes and Sprint as these 'Master Licensing' deals attracting the higher royalty. The contract did not specifically mention income from download stores like iTunes, or what share the artist (and therefore FBT) should get from such sales but Universal have been treating download sales as being equivalent to CD sales paying a lower rate of 12-20%% as if these were physical sales. Whilst a district court refused summary judgment saying the agreement was ambiguous, The U.S. Ninth Circuit Court of Appeals in San Francisco agreed with FBT saying that the higher royalty should apply.

The major insists that the FBT case related to the specific wording of the production company's contract, and the precedent in that case did not apply to every other pre-download record contract. That said, the new litigation means that all artists signed to Universal with pre-internet contracts could benefit from any positive outcome, with lawyers for the claimants saying that they believed Universal "engaged in a broad scheme to underpay numerous royalty participants, including formulating an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses and engaging in a sustained public relations effort designed to convince the public that it had employed 'groundbreaking' and 'enlightened' accounting practices that actually benefited (rather than cheated) the Class".

In a separate case, Sony have also been taken to court by a group of artistes including the Allman Brothers and Cheap Trick over how royalties should be calculated. The action, stated in 2006 in the United States District Court Southern District of New York, shows how the different parties calculate how the artist’s royalty should be paid. On the sale of 1000 downloads at 0.70c per unit (total income of $700) Sony BMG thought the appropriate payment would be a royalty payment based on 85% of all downloads sold after deducting mechanical royalties to the songwriters, a container charge of 20% and an audiophile reducer for new technology of a further 50%. This gave a total royalty payment of $45.05. The Allman brothers felt they should be paid one half of the income from 100% of all units sold, less just the mechanical royalty payable to songwriters. This gave a royalty due of by Sony BMG to the Allman Brothers of $315.50 with attorney Brian Caplan saying at the time "Sony Music is presently engaged in a widespread attempt to underpay its recording artists".

In the new Universal case the court said that the allegations were enough to justify the matter being treated as a class action.

Thank you Amanda for reminding me to post this blog!

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=31498&terms=%40ReutersTopicCodes+CONTAINS+'ANV'

Supreme Court confirms that a download is NOT a performance

The U.S. Supreme Court denied an appeal against an appellate court’s ruling that a traditional Internet download of sound recording does not constitute a public performance of the recorded musical work or the composition under federal copyright law. The Supreme Court denied the appeal without comment.

The American Society of Composers, Authors and Publishers (ASCAP) had appealed to the Supreme Court saying the ruling has profound implications for the nation's music industry, costing its songwriter members tens of millions of dollars in potential royalties each year. The federal government opposed the appeal and U.S. Solicitor General Donald Verrilli said that the ruling by the appeals court and the court of first instance were correct and comported with common understanding and sound copyright policy.

ASCAP argued that digital downloads were also public performances for which the copyright owners must be compensated. But a federal judge and the appeals court rejected that argument.

At issue was the section of the US Copyright Act stating that to perform a work means to recite, render, play, dance or act it either directly or by means of any device or process - with the appeals court ruling that "music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener" saying that the download it is simply considered a “reproduction” and thus not subject to performance royalties under the Act. A mechanical royalty for the delivery of a composition would be due for each download (though not payable to ASCAP).


ASCAP v. United States, No. 10-1337

Downloads and levies: it's Double Dutch Day!

In "Copyright owners better off in a regime that allows downloading from illegal sources" this weblog reported on the 15 November ruling of the Court of Appeal of the Hague in Eyeworks v FTD. Today the IPKat posted the an English translation of the judgment in full (here) together with a short note from Dutch copyright practitioner and scholar Dirk Visser.

Dirk has now been able to procure an English translation of an even more complex ruling, on some of the same issues and decided by the same court on the same day, in ACI Adam BV and others v Stichting de Thuiskopie and another (here).  Explains Dirk:

"Here is another decision by the same Court from the same day, parts of it are identical (on the private copying from an illegal source), but it is an entirely different case, between different parties, brought by the blank media industry against the home copying levy organisation in the Netherlands. This one is (even) more complicated.

The Court rules that downloading from an illegal source is permitted in The Netherlands -- and has to be compensated by ‘fair compensation’ (through levies or otherwise). The Court considers that this might be in violation of the Three-step test of article 5.5 of the Copyright directive, but also that an interpretation of Dutch national copyright law in line with the directive on this issue would result in an inadmissible interpretation ‘contra legem’".

Dirk feels disappointed that neither case got as far as a reference to the Court of Justice of the European Union and, in terms of clarifying the principles involved and ensuring that courts throughout the EU take the same line ie is quite right -- though a case can be made for saying that, if the Court of Appeal of the Hague could determine the issues before it without needing external help, it was right to do so.

Copyright Law, Getting in the Way of Getting Copyrighted Works

“The biggest barriers that consumers face in accessing copyright works
are those created by copyright law.”  And with that profound statement, Consumers International begins its exploration into how copyright and consumers interact, investigating the barriers consumers face when attempting to find information.

The book is Access to Knowledge for Consumers: Reports of Campaigns and Research 2008-2010, and it presents the findings of two years of studies conducted by Consumers International.  These studies included surveys of consumers across a wide variety of countries, in-depth reviews of the effects of enacting new flexibilities in the copyright laws of Australia and Israel, and reports from six country groups involved in advocacy at the national level.

Consumer Survey

The global survey looked at potential barriers to access (to knowledge) in four different categories: Political, Economic, Social and Technological.  The book includes a full copy of the survey questions, highlights of notable qualitative answers and full charts of quantitative breakdowns.  Unfortunately, the charts are a bit hard to read sideways on a computer screen.  A surprising finding of the survey was that African consumers have the highest respect for copyright law.  A not-so-surprising finding was that consumers are confused about FOSS (free and open source software) and open licensing.

However, in combination with the other studies, Consumer International also found:

Part of the solution to the access barriers that consumers face is the wider use of open content, such as Open Educational Resources (OER) and free and open source software (FOSS). Our survey found that most consumers are aware of these alternatives, and ready to give them a try.

Based on this information, Consumers International has identified “the need for education of consumers on the unique features of FOSS and (though not covered in the phase one survey) other forms of free licensing such as Creative Commons.” 

Copyright Law Flexibilities

Australia’s 2006 amendments to its copyright act added flexibilities that made time-shifting and formatting-shifting legal.  Before the enactment of the amendments, arguments arose that the amendments would interfere with the markets for legal downloads and a threat to nearly every type of copyright protected work.  Results of the research conducted revealed that the content industry’s nightmares did not come true. 

[T]here was evidence to suggest that the amendments may have increased compliance with the law – not only by legalising the common and harmless consumer practices in question, but by improving some consumers’ respect for the fairness of copyright law in general.

When looking at Australian’s perspectives on whether and when it is ok to download copyrighted material, the book again presents a mix of quantitative data and qualitative information. Some of the justifications of those who feel it is ok to download to their heart’s content are rather amusing.

“Because when I see what happens, when people like Britney Spears
get paid what they do and act like they do. This means to me the
entertainment industry can kiss my arse!!!!!!!!”

Israel introduced fair use into its British-based copyright act in 2007.  To study the effects of the introduction of this provision, researchers compared case law before and after 2007.  The concept of fair use existed in Israeli copyright before 2007, but it was not codified.  Results of the analysis was slightly disappointing but hopeful.  Finding that fair use claims rarely succeeded and that courts were applying the doctrine in disparate ways, the researchers also expressed belief that this will change with the progression of more cases.

In conclusion, we find the law in Israel, while evolving to meet the
new digital creativity landscape, still lacks the balance which will reflect the social understanding of what should constitute a fair use and how copyright can foster creativity and innovation.

Country Group Reports

The book includes reports on national advocacy from Brazil, Cameroon, India, Nigeria, South Africa and Zambia.  Each of these reports discusses activities done in the country to promote access to knowledge and the strengths and weaknesses of these activities.

 

Access to Knowledge for Consumers: Reports of Campaigns and Research 2008-2010 is a 336 page book, but it will not cause you back strain.  The entire book is available in pdf, released under a Creative Commons BY-SA license.

Internet rights, rates (and wrongs)

I have always been suspicious that the only reason that songwriter and music publisher collection societies the Performing Right Society (PRS) and the Mechanical Copyright Collection Society (MCPS) in the UK ever evolved into 'PRS for Music' was because that at that time no-one quite knew what a stream or a download was in law and that the merger only way they could sensibly (and legitimately) explain their right(s) to collect royalties from the use of their member’s songs on the internet. There was (and still is) much debate about what constitutes a 'stream' and what constitutes a 'download' and whether these form a public performance (whether a broadcast or a 'communication to the public') or more like the sale of a copy of a copyrighted work - a 'per unit' sale. There again, some ask whether they both? Or are they the same thing? Or is copyright law so hopelessly out of tune with the modern world that none of these definitions are actually applicable? Well now a US Federal appeals court has had a go at casting some much needed light on these issues and indeed on how the US collection society should be levying royalties for the use of (here) collection society ASCAP (songwriter and music publisher) members' works.

Looking at royalty rates first, The US Second Circuit Court of Appeals has overturned a District Court's decision that applied collection society ASCAP's streaming music royalty to Yahoo and RealNetworks’s activities and ordered a lower court to re-examine its findings. The Court of Appeals said that "in setting the royalty rate, the District Court must follow an approach more tailored to the varying nature and scope of Yahoo's music use" saying that "The district court did not adequately support the reasonableness of the 2.5% royalty rate applied to the value of the Internet companies' music use". The lower court was also ordered to "conduct a more complete analysis of the various uses of ASCAP's musical works by RealNetworks."

Judge John M. Walker, Chief Judge Dennis Jacobs and Judge Debra Ann Livingston said that the lower ("Rate") court’s establishment of benchmarks using the rates cable companies and broadcast stations pay for licensing music was inappropriate because the nature and scope of the online companies’ use of music differed significantly. The judges sided with Yahoo! and criticised the Rate court for relying on inconsistent sets of data sources when coming up with its music licensing formulae and said that the rate court’s attempt to come up with a simple 2.5% across-the-board license for the two online services was imprecise -and did not take into account the different kinds of services that both Yahoo! and RealNetworks offer. The three-judge panel also found that the Rate court did not give enough of a rationale for basing its licensing fee formula on the amount of time a piece of music is streamed, rather than on page views, which is the primary driver of advertising revenue. The appellate court also found that Yahoo can’t be compared to television stations because its business isn’t as reliant on music as the television industry with Judge Walker, giving the opinion of the Court, saying "Nearly every program on a television station somehow utilizes musical works,” adding “In contrast, only a fraction of the traffic on Yahoo!’s web site uses music — much of Yahoo!’s web site does not implicate any music whatsoever. Given that Yahoo!’s revenue base relies far less on ASCAP content than the television networks’ revenue base, we believe that comparing percentages of overall revenue bases is of little probative value in this benchmark analysis.” The judge also pointed to Yahoo!’s more specific licensing terms with BMI in the USA for the different kinds of uses of music as an example of how licensing agreements can be more reflective of the nature of the use of the music and noted that ASCAP’s own agreements with Turner Broadcasting for its various cable stations also accommodate different kinds of licenses depending on how each station uses music.

The appellate court did agree with the lower court on one separate, but key issue that ASCAP had appealed. The Court rejected the notion that a music download constitutes a "public performance" of a song. The Court held that downloads do not constitute a public performance of a work as defined under current US copyright law. The court said "In answering the question of whether a download is a public performance, we turn to Section 101 of the Copyright Act, which states that '[t]o ‘perform’ a work means to recite, render, play, dance, or act it, either directly or by means of any device or process'," ruling that "A download plainly is neither a 'dance' nor an 'act'. Thus, we must determine whether a download of a musical work falls within the meaning of the terms 'recite,' 'render,' or 'play'." Judge Walker then went on to say that the court would look at he ordinary sense of the words 'recite,' 'render,' and 'play' which refer to actions that can be perceived contemporaneously saying "Itzakh Perlman gives a 'recital' of Beethoven’s Violin Concerto in D Major when he performs it aloud before an audience .... Jimmy Hendrix memorably (or not, depending on one’s sensibility) offered a 'rendition' of the Star-Spangled Banner at Woodstock when he performed it aloud in 1969. Yo-Yo Ma 'plays' the Cello Suite No. 1 when he draws the bow across his cello strings to audibly reproduce the notes that Bach inscribed. Music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener."

The court held that "The downloads at issue in this appeal are not musical performances that are contemporaneously perceived by the listener .... They are simply transfers of electronic files containing digital copies from an on-line server to a local hard drive. The downloaded songs are not performed in any perceptible manner during the transfers; the user must take some further action to play the songs after they are downloaded."The ruling also made a clear distinction with the streaming of files which, like broadcasts, had to be licensed for their performance saying "[Yahoo! and Real's] stream transmissions, which all parties agree constitute public performances, illustrate why a download is not a public performance. A stream is an electronic transmission that renders the musical work audible as it is received by the client-computer’s temporary memory. This transmission, like a television or radio broadcast, is a performance because there is a playing of the song that is perceived simultaneously with the transmission".

The Court sent the case back to the lower court to reconsider the method of calculating the licence fees due to ASCAP.


http://www.dmwmedia.com/news/2010/09/28/appeals-court-music-downloads-not-039public-performances039

http://broadbandbreakfast.com/2010/09/ascap-music-licensing-fees-voided-for-yahoo-realnetworks/

http://www.out-law.com/page-11406