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Judge Orders MP3.com to Pay $118M Damages
jbridleman writes "Fox News is reporting that MP3 must pay $118M to Universal Music Group for copyright violation. Much less than the $450M UMG wanted." They're calling it willful copyright violation. Says that if MP3.com is forced to pay this much for every album they made available with their beam box software, it could cost them over 3 billion dollars.
first off, most of the (>=+2) comments so far seem to agree with the judge, think that the ruling is fair (perhaps the fine is high). these people and the moderators, need to spend less time sucking on the mass media pipe, and more time thinking for themselves - better yet, given the results so far, they might be better off not thinking for themselves and just spend a bit more time listening to rms, because they have become victims of the riaa/bsa/... propaganda he has cautioned about. you are thinking way inside the box.
beam it allowed:
a user to listen to his/her collection of music
that is all. the judge, and the fools that agree with the decision, have been caught up in the concept that mechanism matters. it does not. so long as the owner is the listener, any number of miles of wire, copper or aluminum or fiber, any transport format, any means of display (speaker or eg braile), is fair use.
the complaint is that beamit was a performance because it played music from cds mp3.com owned. this is bull. totb.
beamit's use of the cd serial number is nothing more than a means of compression.
the copyrighted data was read from the cd, sent to the remote site where it was stored, and then sent to the owner in another location. the format and the compression scheme changed along the way, but the end result is that the owner is listening to his own music
My blog
The judge reduced the amount drastically because mp3.com was acting with much more care and responsibility than other internet start ups. And I believe the fact that UMG was the only label not to settle out of court, the judge made a ruling comparable to those other settlements.
The ruling, while sucking big time, is relatively fair.
This is not the way to build a lasting empire.
mp3.com did broadcast the music, albeit to a selected audience. However, according to current copyright law, it does not matter whether the person being distributed to has a valid license. It only matters whether the person doing the distributing has a valid license.
I repeat: under current copyright law, there is no such thing as a 'right to listen.' The only right that copyright law effects is the 'right to distribute.' And without an explicit right to distribute (such as that purchased through ASCAP or a similiar group), the only distribution rights that anybody has are those that fall under the notion of 'fair use.'
I don't buy for one second that my.mp3.com falls under any sort of fair use. And apparently, the courts did not either.
The artists don't see enough of the profits from a CD. And that's why we've flocked to Napster and Gnutella and the like.
While I agree with the overall tone of the poster, that line is so full of baloney.
People "flocked" to Napster because they could finally used their dormroom ethernet or cablemodem for something other than Porn or MMORPGs. People "flocked" to Napster because they could listen to music and decide if they liked the music without buying the CD [some did buy, some didn't buy].
You don't find ways of spending zero, if you're worried that one of the two selling parties is already getting shafted when you spend non-zero.
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I have a collection here at home, it is on CDs. Many radio stations digitize their CDs by loading them onto harddrives as part of their daily program. It is cheaper.
At this point, I guaran-damn-tee someone will bring up the "radio stations pay royalties" point.
Why do they pay royalties? Because the listeners might not have purchased a copy of the music being broadcast, and the station is running advertisements to make money. That first is especially important here. With radio, the listener more often than not does not have a legally-acquired copy of the songs being played, therefore the station has to pay for public broadcast of that music to people who haven't paid for the music.
Now, we come to my.mp3.com. I didn't use it, so I don't know if the client and any web pages involved in selecting songs had ads, or if the service itself cost anything - if so, mp3.com loses on that point for profiting from to copyrighted works without providing proper royalties to the copyright holders.. I'll come back to this point with regard to the punishment.
my.mp3.com and each listener legally purchased the CDs. Each listener had to prove they had the CDs before they could stream the songs from mp3.com. Therefore, both streamer and listener have legal copies, unlike traditional radio. This is where the radio argument falls down; my.mp3.com is not like radio. I can do the same thing by ripping my own CDs, setting up a shoutcast/icecast streamer, but requiring a password to activate the streaming so that not just any joe schmoe can abuse my collection. It's not public broadcast, and as long as no advertising without copyright holder approval is inserted, it can't be subject to broadcast royalties; you're all listening to the same song, it's a private directcast unlike radio that no one else can tap into, and all parties involved have paid for their copies and associated fair use rights. The only potential extra copy being made is the bits being sent from my.mp3.com to the listener, and those fall right back into the ether as soon as the player is done with them; they are not being stored.
Of course, the bigger reason the record cartel is going after MP3.com for this is so that they don't have any outside competition in the streaming arena; just watch as they all throw up their own Beam-it style services Real Soon Now. And you can bet they'll cost money to use.
mp3.com should be forced to compensate companies for any ad revenue/subscription fees they made in relation to my.mp3.com. On this point, I don't think "copyright infringment" is the proper term here. Unfortunately, I'm not sure there's a proper legal term for "unlawful profit from use of a copyrighted work". Copyright infringment sounds too much like selling extra copies, while here everyone had a copy, paid for them, and the only extra "copy" was a stream of bits that disappeared after passing through the player software.
Cyberspace is not meatspace, and should not be defined or limited by meatspace rules, because there are about 6 billion things you can do in cyberspace that are impractical or impossible in meatspace. Millions of copies of a chunk of data can be made and wiped out in a matter of seconds; this, I think, is the reality that nearly everyone - record execs, real-worlders, and geeks - still haven't come to fully realize. It works by different rules by default; therefore, it's absurd to force ethereal, ever-changing and infinitely malleable cyberspace to conform completely to meatspace rules. The implementation shouldn't be the problem here, only proper compensation. I don't think compensation here = $25k/CD, not by a long shot. A better solution would be to determine the ad revenue from my.mp3.com, double that, there's your punishment to be divided between all plaintiffs. Anything more is improper.
my.mp3.com was a great idea. If there hadn't been an ad near any part of the service, the record companies wouldn't have a legal leg to stand on. Never mind that a lot of legal wisdom and commonly-used analogy collapses when applied to bits, bytes and data structures that can be created and destroyed at will; law and the human habit of making bad comparisons will have the hardest time adjusting to the new world. As it stands, the cartel (actually, the artists, but that's another hill of beans) has a right to be properly compensated for money made off their holdings, but not for any sort of "piracy"; all copies (with the possible exception of one) were meatspace-defined legal.
What a mess. I guess in closing, I think lot of IP law will have to be rethought and retooled to ensure that what can be done in cyberspace isn't stifled by meatspace rules that make no sense in the ethereal. As long as the holders have been paid for copies and fair use rights, and are being compensated for any ad/subscription revenue, there shouldn't be a problem.
Someday, you're going to die. Get over it.
Mp3.com may very well be guilty under the law of copyright infringement. They do indeed seem to have distributed copyrighted works they didn't secure a license for.
However, compensatory damages could arguably be a sum total of.... $0. Why? If you're looking at lost revenues, then EVERYONE they distributed to ALREADY had the CD in hand. Everyone distributed to either already had purchased, or had the power to create unauthorized copies without the help of mp3.com. There is no such thing as the sale of a recording lost to mp3.com's service. So why any judge should award compensatory damages is beyond me. Absolute worst case scenario should be that mp3.com might have to give up the some large portion of an estimate of the amount of revenue they received from the BeamIt service.
Now, punitive damages might be different story....
Tweet, tweet.
I never did agree to their new artist agreement- slashdotter mp3.com artists, don't agree to it, it gives mp3.com perpetual rights to your stuff and is unilaterally changeable by mp3.com on five days notice and _you_ have to keep hunting for notices, they won't actually _inform_ you of a change. Anyhow _I_ didn't agree to this and I'm now busily taking over for what they used to do for me, with a twist.
I'll be getting rid of the mp3.com site ASAP- go ahead and download anything if you want but I don't expect to get a cent from this or from any current CD sales. The other local bands ought to be happy 'cos I tend to monopolise the top 20 charts in my town *g* sometimes my stuff has _been_ the top 20. Now they can feel like rockstars- paying a damned high price for it with that dangerous artist agreement. Again, mp3.com is no longer safe to host your music at- they're not as bad as farmclub but they could be just as bad in five days flat with no direct notice to you.
I've ordered a CD burner- and I'm making an order for 100 Mitsui gold/gold _printed_ CD-Rs. We're talking over three dollar media here- $3.29 _per_ _blank_. I'm setting up a situation where I have a 'house label' with _extremely_ posh impressive media and packaging- which has a lighter area, to silkscreen or simply _write_ in specific information about the CD. The place I'm getting the CDs from is synthemedia.com, let me get my orders in first now ;) there are some lovely details about this arrangement, for instance the full-bleed printed-white-surface CDs not only look terrific but Mitsui gold/gold is supposed to have better archival status than even commercial aluminum CDs, lasting for over 100 simulated years in destructive climate testing.
The neatest part is- instant super small pressing runs with flashy packaging. I'm going to start fishing for recording studio business at my usual $75 an hour- and each hour gets a free fancy CD of the final project. (haven't worked out the details on stuff like 'burn time' for large numbers of CDs- should talk to my bank about financing a duplicator if it becomes a serious constraint). For advertisement I can have a bunch of the CDs around town, with an audio demo recorded on it.
The overall idea is to assault the major label industry machine on a basis of quality- hit them with the appearance of indie CDs coming out, that are not only higher quality audio, but are flashier CD prints (a lot of major label CD prints seem to be one or two color prints! Cheap bastards...) and a range of music availability that (due to extremely low production runs) can afford to be absurdly eclectic and specialised- and the media is rated to last much longer under normal conditions- AND you're allowed to copy it and make mp3s of it and put it on your computer for noncommercial use- 'fair use'. (*g* I'm tempted to start talking in terms of warranty replacement of media. What kind of warranty do you get on major label releases? ;) )
Looks like airwindows will finally start to come into its own with all this- I have to be grateful to mp3.com for going down in flames at this time, because it gave me the massive kick in the butt to stop thinking like a musician (wanting to buy a Yamaha DX7 and rebuild my fretless electric guitar) and start thinking like a studio owner/indie label (buying the MEANS OF PRODUCTION). Looks like it's about time to revise airwindows.com to focus on the stuff I'll be doing along these lines, too. It's more fun sweeping the floor when it's your own store ;) and I hope to be doing stuff that slashdotters will find insanely cool.
Thanks mp3.com- it's been real- hope your bigwigs have good golden parachutes. Thanks for the $260, keep the change, and who _did_ you get to write up that new artists' agreement? Universal lawyers?
MP3.com did have an honest business distributing music in the MP3 format, and the RIAA was unable to touch them. That business involved distributing MP3s by musicians with the musicians' permission. It was great, too, and it openly defied the "music industry" while the industry could only look on in total frustration and impotence, not having a single legal argument against them.
And then mp3.com did something incredibly stupid: they started their my.mp3.com service, and "beamed" MP3s by musicians who were not signed with mp3.com. That was begging for trouble. I wish they had spun this ridiculous idea off to another company, since now the totally legitimate parts of mp3.com are now endangered by huge settlements.
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As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Yes, Sturgeon's Law still applies, and most unsigned acts are unsigned because they suck. But with thousands and thousands of acts to choose from, and the option of pre-listening via MP3 (with the artists' explicit consent), it's not hard to find the good stuff, either.
What the record companies are afraid of isn't piracy. It's the loss of mindshare and their inability, as large bureaucracies, to manage a future music business full of tens of thousands of performers with relatively small audiences instead of a hundred or so industry acts. What we're seeing is the battle between the music industry and the emergence of net-empowered musicians. The future belongs not to a few acts with millions of fans, but to many acts with thousands of fans.
It will be a shame if this is delayed -- it can hardly be stopped at this point -- by the music "industry".
--
Proud member of the Weirdo-American community.
Why don't we go for 15 minutes without thinking about Microsoft? Is that ok with you? Think you can handle it? Different case, different situation, different judge, different crime. Got it?
If I only had access to first-tier music distribution, I'd:
In the end, that's probably a win for the big music distributors. What little they'd lose in revenue from the non-mainstream music loving public they'd more than make up for in being able to more accurately predict music buying trends.
I'm pretty sure this is what they've figured out too, and they're working on that future.
Gotta go have some doubleplus goodthoughts.
This is the voice of World Control. I bring you Peace.
I bought a portable CD player the other day. I wouldn't have bought it if it weren't for the CD's that RIAA produces. The manufacturer profited from the RIAA's music by allowing me to listen to the RIAA's music in more places. The manufacturer didn't have an agreement with the RIAA to profit from their works. Yet they did it anyway.
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free money for the labels, but since this isn't from the sale of records, it won't go to the artists, and they will get fucked yet again.
- daniel
- daniel
Turn off your computer and go outside
The reason for the large damages? The judge wants to deter other people from "infringing on copyrighted materials". Anyone notice a drop in music sharing? Anyone? Bueller?
This is really stupid and I hope MP3.com approves it. There was already an analysis of the My MP3 protocol put up. There was no way to infringe. Period. MP3 is shelling out twenty five thousand dollars per CD - payment for what? If this is the modern definition of compensatory damages, I'm shocked.
It is currently very trendy in the legal circles to slam a technology company. These judges want to get a name. (I defended copyrights, can I be a Supreme court judge?) to get higher in their career as poloticians. Is it very obvious as to what is happening, and the mp3.com case was very weak at best. Napster is going to get slammed hard, and then they will try to go after hotline, and all the other "sharing" and "warez" systems that have been here a long time. NOW, if gnutella is able to Hash the searches and transfers or make it impossible to pin down who is offering what (disallow any identity in the system and set up "reflectors" for requests) things will go smoothly.
I dont care what judge you are and what army you have, you will never stop the sharing of music. We will always have tapes, cd-burners, etc... and the poor teenagers and college students, that when they get older will buy more audio, will probably think twice about actually buying that CD, based on the actions of the industry.
I know that I will never give money to a Country Club again, after the crap pulled on me in college. (Golfers are snooty buttheads anyways) and my son will think twice about giving a RIAA company money, after the shaft they give to the fans and artists.
It's a choice of the lesser of two evils.. and they are more evil than copying.
Do not look at laser with remaining good eye.
Maybe they should see if they could pay in stock options! that way Universal would atleast to be forced to take a look at MP3.com's buisness model, something they have obviously not done yet :)
Because.
mp3.com, internally, bought and copied tons of music to theri servers, to be served over beam-it.
Yes, it makes sense technically that only you can listen to music you own.. however....
The fact that you have the right to copy and listen to your own album does not mean that mp3.com has the right to profit off copying others work.
It's twisted.. but it's fairly straightforward as well.
They DID copy the artists music, and they DID distribute it, albeit selectively, to other people, and they did NOT have the express permission from the copyright holders.
I've always wondered, is there a difference in penalty for WILLFUL and UNWILLFUL violations? Really, I imagine there isn't..
Of course there's a difference. We recognize the motive in many crimes that are prosecuted -- if you kill someone by accident you'll probably get less time than if you do it on purpose.
Similarly, if you accidentally copy something (say you don't realize that what you're doing is a copyright violation), you'll likely be told to stop doing it.
If you do it over and over after being told to stop (and being informed it's a violation of copyright), it's pretty clear you're doing it IN SPITE of the law, and you'll get a harsher penalty...
I'm an investigator. I followed a trail there.
Q.Tell me what the trail was.
Recursive: Adj. See Recursive.
While I agree with you that it shouldn't be copywrite infringment, let me explain to you why it is. While it was of no cost to you, and you paid MP3 no money, and you could only use your own cd's. From the MP3.com side, they were making a profit (from advertising) from other peoples music that they wern't given any rights to. Kinda for the same reason I can't hold a party in which is sponsors where I make money and play a bunch of music foreveryone, even if I check to see if they bought the cd's themselves. Anyways, I digress, btw the reason its different from radio is that radio stations pay cd labels money for the rights to play the records. Its not a huge sum (nowhere close to $118M) but still pretty large.
$118M in fines sounds like a lot of damages - in fact it sound like a lot more money that can conceivably have been incurred by UMG. So are these punitive damages then? Given that market sales continue to rocket up despite all the RIAA media spin that seems to give the impression that the arrival of MP3s is the end of the world as they know it and that they are already having to beg on street corners in order to pay for the Ferrari, I'm not sure where this figure has come from.
Given that MS gets fined $1M dollars for attempting to put a company out of business by pulling a bait-and-switch, doesn't look like the world is flat on a legal basis does it? The software industry easily pulls into the $100Billion dollar category so I can't believe the stakes are 100 times higher for UMG...
Cheers,
Toby Haynes
Anything I post is strictly my own thoughts and doesn't necessarily have anything to do with the opinions of IBM.
No, $118M in CD's purchased from retail stores, opened and with the words "Used CD" written on them in black magic marker.
There is some truth in what you say, but you miss some important points. First-- developers like myself are paid by salary, not through some enormously complex royalty scheme like the record industry. I am paid the same as long as I do my job. There is no need for me to produce a "hit", and hence no need for a gigantic internet-programmer-record-label system to promote my work to the masses. Why don't musicians get paid salary? Why are they allowed to collect money from their works a zillion years after they die while my work as a programmer is of no use to me after I write it in most cases? I do not depend on copyright for income. Nor does my company. We depend on the ability to sell our custom software services to other people.
Second, most of my work is web programming that is quite easily available for download and study against the wishes of my company already. That's how the web design works-- my DHTML, javascript, etc... are all right there in your browser whether my company likes it or not.
Should we sue browser makers for including a "view source" button? All of our pages are copyrighted! What about the "save image to file" button? Or the ability to save the web page source to your hard drive? We are a profitable and quickly growing web company with hundreds of employees and 5 or 6 offices (I can never remember), yet our copyrighted works sit freely downloadable for the entire world.
Your argument that wages depend on copyright does hold some merit, but our copyrighted works are totally unprotected and my mom could "pirate" them with a mouse click, yet we have a very successful business model.
Why didn't MP3.com start a SEPERATE business for my.mp3.com? Wouldn't it have made alot more sense, considering that what they were doing was very questionable legally, and they KNEW that there would be some legal battle over what they were doing. All the damages accrued on behalf of my.mp3.com is going to pull down mp3.com, which is a great service. Could they have legally formed a seperate company that would have done the same thing but not effect the financial status of mp3.com should it all go down like it has? Is this going to bankrupt mp3.com? bah.
-WG
"America, I smoke marijuana every chance I get."
Burris
how much do Artists see from that penalty fee? Somehow I think I already know it: 0.00$ Thank you. Well at least the fat boss of can now buy another luxury Yacht in Monaco... Another reason not to buy any music anymore as long as artists and consumers are ripped off by mega-corps with lawyers...
It says that the judge is trying to send a message to the "Internet Community" that copyright infringement can not continue.
Who exactly does he think the "Internet Community" is? A limited bunch of hacker punks who are going to see this, get scared, and stop trading MP3?!
Does he not realize that the "Internet Community" is millions strong, and includes his neighbors, friends, co-workers, kids, and what not? These are the people using services like BeamIT.
As long as it's available, everyone will trade music and other media as long as it's practical to do so.
And I agree with previous messages that there really isn't any indication that any copyright infringement ever took place.
This whole situation is just wrong, and MP3.com is getting the shit end of the stick.
My first reaction was that it had to be punitive, since the RIAA's total loss in sales amounted to about $0.00. After all, despite the fact that my.mp3.com was technically distributing copyrighted content without permission, they were sending it to people who already had it. The challenge/response protocol really looked pretty good. I don't think hardly anyone got sent an MP3 from my.mp3.com who didn't already have the CD, unless it involved people sharing accounts, the way some pirates use iDrives, for example.
The problem is that we're fooling ourselves by just looking at album sales. RIAA didn't lose album sales, but they did lose royalties. For example, when the radio plays a song, they don't get off the hook for paying royalties just because you, the listener, happen to already own the album.
Could the lost royalties possibly add up to $118M? That's mind-bogglingly hard to believe, and still suggests that most of the damages are punitive. But I dunno... Consider that they are doing point-to-point transmissions instead of, say, MBONE broadcasts. What if each transmission is required to have the same amount of royalty paid that a radio station would pay (even though there's only one listener)? If so, then it is actually conceivable that they could accrue royalty liabilities at a rate several orders of magnitude faster than a radio station would.
Just something to think about. I don't know if the $118M figure was just pulled out of someone's ass or what, but it seems possible to me that it might be more compensatory that it first appears.
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As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Come on moderators.. Mark this guy up as funny. You can entertain the general public, and you get better moderator-karma points because it's an obvious non-flaming opinion.
-Michael
-Michael