Judge Admits Mistake in RIAA Piracy Victory
Last year, the record industry won a major battle when a jury found Jammie Thomas liable for piracy for making tracks available on Kazaa. This was the the first case against an alleged file-sharer to go to trial, and the outcome made headlines and bolstered the RIAA's fight against it's customers.
But now, the federal district court judge who presided over the trial may have changed his mind. Judge Michael Davis of Duluth, Minn., has stated that he might have "committed a manifest error of law." He is considering negating the RIAA victory and ordering a new trial.
What changed his mind? In the original case, judge Davis instructed jurors that they could find Thomas guilty of piracy for having made tracks available for downloading via Kazaa -- whether or not it was shown anyone actually downloaded the files. According to Davis, he originally planned to instruct jurors that tracks actually had to be downloaded in order to prove copyright infringement. But at the last minute, the RIAA convinced him to change his instructions -- and he told jurors that merely making tracks available could constitute copyright infringement.
The jury found Thomas guilty of making 24 tracks available on Kazaa. They ordered the single mother to pay the RIAA $220,000 for infringement.
A lot has happened since then. In April, the record industry lost a major court battle,when a federal judge in Phoenix ruled that placing music in a Kazaa folder doesn't in itself infringe on the owners' copyright. "Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder's exclusive right of distribution," wrote judge Neil Wake in an RIAA suit against Arizona resident Jeffrey Howell. Wake also ruled that simply offering to distribute music does not infringe on the copyright owner's rights.
Last month, A federal district court judge sided with the record industry on the same issue. Judge Kenneth Karas in New York ruled that placing tracks in a shared folder can violate copyright law because such activity constitutes publication and an offer to distribute. The ruling allowed an RIAA suit against gainst Denise Barkerto go to trial.
Now the scorecard stands at 2 to 1, in favor of music consumers.
Oddly enough, although it may be necessary to show that music was actually downloaded to prove piracy, it's not necessary to show that the music was downloaded illegally. In many instances of alleged piracy, record industry agents are the people downloading the files. Defense lawyers argue that such downloads are authorized and legal -- and therefore they don't violate copyright law. But Wake in Arizona didn't buy that argument, and said any downloading could be evidence of illegal distribution.
A spokesperson for the RIAA stated that judge Davis "got the issue right the first time." They vowed to continue the fight, returning to court if needed. "This technicality does not change the overwhelming facts and evidence that ultimately proved Ms. Thomas' liability," the spokeswoman stated.
Although this raises an interesting question -- how does the RIAA determine liability in this instance? If they have not shown that any downloading occured (or at most, that RIAA agents download some tracks) how can there be a determination of damages to the record labels? Seems that damages are determined by the volume of lost sales to the labels -- which might be 99¢ per download. In this instance, Thomas allegedly made 24 tracks available on a shared file at Kazaa. A judgement of $220,000 ($9,166 per track) implies a lot of downloading.
Judge Davis might want to take a look at that penalty. I suspect the amount represents a punitive award rather than actual damages to any plaintiff. In fact, it's easy to argue that the entire lawsuit has been punitive, becase the RIAA's strategy is not to recoup losses from pirated music, but to deter future, potential P2P downloaders by raising the fear of prosecution (and outrageous fines).
Meanwhile, judge Davis is considering the new trial. He has asked each side to submit additional briefs, and oral arguments will be heard July 1.
Bill Houghton
in Internet, Music
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Social Network Users Want Better Targeted Ads
About 87% of Social Network users feel that the ads they see on social networking sites are irrelevent to their personal interests, according to a Prospectiv study. Meanwhile, most said the quality of their online experience would be better if social networking sites provided more targeted advertisements and offers tailored to their specific interests and preferences.
Prospectiv conducted the poll of nearly 3,000 users of social networking sites such as Facebook, MySpace, Friendster, Hi5 and others. The results showed that 56% believe targeted ads would make the experience better. As it is, members don't click on ads for the simple reason that the ads hold no personal interest.
All this comes on the heels of News Corp's quarterly report, in which Rupert Murdoch admitted not being able to monetize his MySpace traffic. The company admitted they would not make their projected revenues because selling ads is tougher than originally thought.
How tough? Even while MySpace and all of the other FIM sites continued to grow, FIM revenues dropped from $233 million in Q2 to $210 million in Q3; about a third of that total came from a 3-year guaranteed deal from Google.
Bill Houghton
in Business Analysis, Internet, Social Networks, Facebook, MySpace
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Music Democracy or Anarchy: Whose Side are You On?
Is music undergoing democratization, or anarchization? I've argued before that P2P sites are a populist movement in the music industry, to the dismay of the major music labels. But I was taken to task recently by a friend who compares the use of P2P against recording labels to the use of technological weapons by the Bush administration. I like the analogy of the music industry to a government, but is BitTorrent really the same as a Smart Bomb? Are P2P sites really akin to the Bush/Cheney White House?
A reader and friend responded to a previous post of mine about the “democratization” of the recording industry. In particular he objected to technology advocates who advocate P2P sites in favor of retail music. You can read my original post. Here are some excerpts from his comments, which I find representative:
Technology provided new consumer outlets, but never provided Label services like some would inappropriately claim. I knew the technology sites would one day have to pay to become "retail stores," just as Napster was advocating at the time. But they were never trying to become "Record Labels." Labels are banks who give artists money to record, tour, buy equipment, advertise, publicize, sell, distribute, hire attorneys, accountants, assistants and more, all of which are still needed, even with Internet "retail stores" like iTunes…
The notion of "democratization" as used by technologists toward music seems as absurd as when used by the Bush regime, and I find them similar. We live in a world, for better or worse, driven by "capitalization" which technologists seem hellbent to overthrow when practiced by the music industry. Yet, if the technologists do not 'capitalize" their own companies and VC funding dries up, there is no "democratizing" technologists employed there any longer.
I personally find P2P users bombing the legal music industry to be no different than Bush bombing with technology in illegal wars and using illegal wiretaps that overthrow even more rights guaranteed by the American Constitution. Those same "democratizing" technologists provide the wiretaps, provide the smart bombs, and agree with right-wing politics most of the time, as suggested in an article about Facebook published by The Guardian in which the author refers to those technologists as "neo-conservative libertarians." Maybe you are one too? The last 8-years of all this bombing by Bush and his technology friends may have done more to overthrow Democratic Rights than to provide the "democratization" of anything.
As anyone who ever befriended a struggling artist, I’m sympathetic to the plight of musicians. I’m sympathetic with those trying to get recording contracts; and I’m sympathetic to those who have recording contracts and find their careers going nowhere.
But I have less sympathy for major record labels. First, I believe generally they are in the business of generating “stars”, rather than promoting artists. To this end, they spend a huge amount of capital on “artist development” and then maximize their investments by focusing on highly-profitable artists while allowing the bulk of their portfolio to go unsupported. The result is homogenization and a dead-end career for many very talented artists.
But mostly, I believe major labels have become so entrenched in their money-making system that they are unable to accept and take advantage of the changing technology landscape to benefit their clients. Make no mistake, even if albums disappeared and the price of a song fell to 25¢, there are still profitable business models for artists and labels – but rather than adopt to these models, major labels find it easier to abuse their customers and their clients in order to squeeze every penny from each constituent. In this, major labels are serving shareholders rather than artists or consumers.
Bill Houghton
in Internet, Web 2.0, Music
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The "Democratization" Misnomer in the Music Industry
What follows is a comment sent to me regarding my earlier post about the Music Industry, and certain other questions I posed about the eventual "democratization" of music. The author is a friend and colleague.
Dear Bill:
I welcome discussing this notion by some technologists claiming "democratization" when applied to the music industry. My own experience is that Musicians want their creations, inventions and writings to produce "capitalization."
As I told the magazine Red Herring when I was interviewed back in 2000, it's not the Labels that will be destroyed by Internet Technology P2P, it will be the music retail stores like good old Tower Records, beginning with the illegal and unfair competition from Napster and Kazaa technology giving away Tower's products for free. Technology provided new consumer outlets, but never provided Label services like some would inappropriately claim. I knew the technology sites would one day have to pay to become "retail stores," just as Napster was advocating at the time. But they were never trying to become "Record Labels." Labels are banks who give artists money to record, tour, buy equipment, advertise, publicize, sell, distribute, hire attorneys, accountants, assistants and more, all of which are still needed, even with Internet "retail stores" like iTunes. And the artists usually do not have to declare bankruptcy if they don't pay the Label back, which happens over 90% of the time.
What's the Web For, Anyway?
Most consumers worldwide still use the Internet mostly for email, according to a Gartner survey. The study of Web users in 18 countries confirmed that for most users, the Internet remains fundamentally a communications medium. But divergent usage patterns for younger users could point to future changes.
That Email is #1 is not surprising. And nobody should be surprised that Search is the other big traffic driver (although I consider search to be a navigational tool rather than a destination -- so it's #2 spot is largely irrelevant. ) What's surprising is that Online Banking placed third, followed by photo, video and data sharing; mapping & directions; and online shopping.
Gartner's findings generally held up across all regions, educational levels and income levels, with one major exception: Teenagers. For teens, the survey found that music downloading jumped into second place, while instant messaging appeared in fifth place.
Apparently, teens have greater interest than other demographics in using the Internet to download music, stream video and play games. But the younger demo also was more likely to use wider and varied communications features, including instant messaging, file sharing, communicate via social networks, chat rooms, message boards and blogs.
Bill Houghton
in Web 2.0, Facebook
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