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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.
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.
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?
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 :)
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.
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.
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.
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