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Record Labels Sue Napster's VC
zemkai writes "From the "wtf?!?" department... Universal Music Group and EMI are suing Hummer Winblad Ventures for contributing to copyright infringement due to that firm's investment in Napster... I'd like to put something witty here, but I'm just speechless."
Napster was a tool for violating copyrights. They invested in it hoping to reap a reward from its users criminal activities.
It's like investing in a local street gang. You can be sued by their victims.
Quit with the mock shock every time something completely expected and sensible happens.
Napster is a tool that CAN violate copyrights. The program doesn't inherently do any of this though.
Unless of course you consider your car a tool for running people over, since that's but one of many options available to you...
So a CEO isn't liable for things that their company does, but investors can be held liable for actions of the users of their "investee's" products?
--Jeremy
Jesus was a liberal
...they'll be suing the individual investors of tobacco companies for wrongful death due to an individuals cancer.
Asininity at its finest. But hey, the more they keep digging, the deeper they get.
From the article:
In May 2000, Hummer Winblad invested about $13 million in Napster and took control of its business and legal liabilities, with Barry assuming an interim CEO role.
IANAL, but it sure as hell sounds like whatever Napster was legally responsible for will apply to Hummer Winblad (what a silly, cool name). They were hardly silent partners.
Modern capitalism is based very strongly on the concept of limited liability which means precisely that investors are not responsible for liabilities incurred by the companies they invest in. The companies are, and the investors can lose their investment, but they are not criminally liable for the company's actions (unless they participate directly in those actions) and they are liable only for the amount of their investment.
It's like investing in a local street gang.
No, it's like investing in Exxon before the Exxon Valdez or in Union Carbide before Bhopal. You can lose your investment. To suggest that it go any further undermines every principle upon which our economy is founded.
Brackets contain world's first nanosig, highly magnified:[.]
Sounds like grasping for straws to me, basically the dying gasps of an industry that knows it's fucked. Napster was just the messenger, and these idiots are going to try to squash everyone who helped the messenger. That's like suing the people who ran the colo where Napster hosted their servers - after all, they entered into a business deal that let Napster perpetrate their infringement! Ridiculous. Ain't gonna go nowhere.
Of course, my favorite part is:
Hummer Winblad knowingly facilitated infringement of plaintiff's copyrights for its direct financial benefit.
For some reason, I don't really think they made much money from this investment.
Holy crap, we're all next...
haven't they already started prosecuting college students ?
The RIAA sued Napster. The court ruled in the RIAA's favour, and awarded damages.
Now, my understanding is that the damages should offset 100% of the losses made by the RIAA, so that the books are balanced, and the side on the right side of the law doesn't make a loss.
If this has already happened, why are they now suing another party? Did they make a further loss because these people invested in the company? Aren't they claiming twice for the same injury?
If we want to make corporate responsibility a real thing in the post-Enron days, this sort of thing is going to have to happen. Lots of people want laws to enable us to go after people who lie to shareholders or pollute the environment, but the sword cuts both ways. If you want to make it more difficult for someone (either a real person or another corporation) to hide behind a corporation after engaging in illegal activity, you're going to have to accept that these laws will be used by people we don't like (RIAA) to go after people we do like (Napster) breaking laws we don't like.
How is this such a wrong thing anyway? Hummer Winblad knew that Napster operated by exploiting copyrights they did not own, but they gave them money anyway. Giving money to a terrorist group that will commit crimes is illegal; why shouldn't it be illegal to give money to a company that will commit crimes also? Ignore whether the law is just; as it stands right now, Napster was illegal.
You have a choice: tax and spend Democrats, or borrow and spend Republicans. Choose wisely.
Does Smith and Wesson think their product kills nobody?
That's not the point. The question is whether Napster, Smith and Wesson, and even the *investors* in these companies are responsible for what people do with their product.
If I have a company that sells sharp knives, and you stab somebody with it, I am not (or should not at least) be liable for your crime. Nevermind my investors.
"Ignorance more frequently begets confidence than does knowledge"
- Charles Darwin
"Record companies and music publishers have much to be concerned about, according to recent research. Worldwide sales of music CDs, records and cassettes fell for the third year in a row, hit largely by rising Internet piracy in the United States, according to figures for 2002 by the International Federation of the Phonographic Industry. Last year saw the steepest fall yet, with a 7 percent drop in global music sales and a 10 percent fall in units sold in the United States."
Piracy? Piracy? This is total bullshit.
I'm no Pirate and I stopped giving you Record Company Morons(TM) any of my money because I became aware that you're all a bunch of clueless, lawyer happy a-holes!
"A microprocessor... is a terrible thing to waste." --
GeneralEmergency
From the article:
Legal efforts by the recording industry and music publishers essentially crushed Napster two years ago. But now the music industry is seeking punitive damages from Napster backers, in a move that could portend further suits targeting assets of companies that back independent file-swapping services.
Uhhhmmmm... BMG invested money into Napster also. Even offered to buy them out and etc. Ahh so you will go after someone else, but not your own RIAA members???
WTF! @ssholes.
Sue the CDROM manufacturers that enabled music reading/playing for computers. Seriously. They could argue that the CDROM manufacturers should have only created them to read data CDs.
Maybe sound card manufacturers for having good quality line-in/mic jacks - they should have limited them to 22khz or something suitable for voice.
It probably won't go as far as suing the retailers for selling CDs to "pirates", however.
I agree as "invest" seems to be the wrong word for what Hummer Winblad (mmm Anne Winblad... rich, a geek, and a redhead) did. They did not invest. They essentially bought Napster.
/NO/ intellectual property (and some would say no intellect for that matter). It's members have some intellectualy property but the organization does not -- pendantic but correct. And B: Napster was not "designed to violate the law" any more than FTP or Dual Deck VCR's were designed to violate law. Users violate the law. Programmers write first amendment protected code.
I would disagree that Napster was "designed to violate the law and specifically exploting the RIAA's IP" for two reasons. One, the RIAA has almost
Look at what record companies are producing now: $17 or $18 CDs of bands that wouldn't have been allowed out of the garage in the 80s. Who is the best guitarist in alternative music? Who knows? Who cares? Alternative music doesn't require technical virtuosity to play. It's all about small acts. The record companies like this because it doesn't lock them in to paying prima donnas like Eddie Van Halen or David Lee Roth the big bucks, but it also means that alternative bands are far more interchangeable and can't demand as much of a premium over other bands.
Eventually, a record company will realize that it would be better off releasing a higher quality product at a lower price, its sales will go through the roof, and everyone else will follow. Until then, we will just have to listen to them whine about file sharing. File sharing is not the problem, price and quality are.
The people who really have something to lose are radio stations. They are a free music delivery mechanism, but why listen to a radio station that only plays music you like some of the time when you can download MP3s and listen to your favorites.
Perhaps the future weakness of the radio station is what really bothers the record companies. Radio stations are their promotion mechanism. Without them, they might have to actually produce a quality product to get people to buy it (instead of just playing it to the point that people feel vaguely uncomfortable when the radio is off because they are so accustomed to the sound of the song).
I'm still a bit confused with the pervasive attitude that there is nothing wrong with services like Napster and that trading music is okay. I'm in the entertainment industry myself and things are getting rougher by the day. Where does it say that all intellectual property should be free? Artist have a right to get paid for their work. Taking that work without compensation is stealing. Saying it is because the record companies over charge for CDs is rationalizing the act. If the government doesn't go after Napsterlike orginizations should they go after the individuals doing the trading? Would it be better to let Napster off and give everyone else two years probation? It may feel like you are getting away with something by swapping music but in the long run you aren't. Without the influx of money the record industry will have to downsize. It will be ten times harder for new bands to make it and the selection of music will be a fraction of what it is now. The record companies won't loose in the long run. They already got rich. You'll loose. And no I've never downloaded music.
No, people invest in companies because it is reletivly easy, it is a way to make money and (for the majority) it is a retirement plan (think 401k).
Slow the economy quite a bit? It would destroy it. People would be terrified to invest in a company, there would be no more mutual funds, no more retirement funds, it would be nearly impossible for anyone but the very rich to start a company (where would the funding come from?). This is not about "Dirk Billionaire" and his portfolio, this is about companies using stock as a form of profit sharing with employees, this is about average people planning for retirement, or someone simply speculating on a stock in a business they hope will grow. These people get fucked over enough when a mismanaged corporation screws up and renders their stock worthless, now you want them to be leagally liable for the company's actions as well??! Should all forms of lending be held to this standard? If I take out a house loan and do something illegal in my house should the bank be legally responsible?
I would suggest taking an economics class, you would likely find that limited liability this is the best way of doing things. Certainly there can be improvements. For example, make the board or directors personally liable for the companies they oversee, not the investors. The people who are actually paid to run the company.
Finkployd
I have one such suggestion: fix it so that you can't claim a loss of any kind unless you also made the same loss claim to the IRS.
That'll force these morons to sue only when incurring real losses, not on the basis of this fantasyland crap.
Use 'slashdot stuff' in the subject line in any email you send me if you want to get past the spam filter.
VCs are not quiet little investors like little old ladies or clerks with retirment accounts.
They run the show, hire the executives, micromanage the show in many cases. Further, when they shopped for this investment they didn't go to the market and comparative shop based on market statistics, etc... they specifically chose to invest because of the business model, which did happen to involve illegally trading music, like it or not. And in any other case the liability would stop at the corporation, maybe it will in this case after all is said and done.
It's like if VCs went to fund a chop shop knowing it was a chop shop. No protection from liability in that case.
-pyrrho
If you want to be all "RIAA/MPAA sucks!", fine- but don't mix up centuries-old legitimate law. If you fund a business you know is a front for a drug operation, are you gonna be "speechless" when the DEA comes and arrests you? Actually, being speechless in such a case might be an excellent idea, particularly given your understanding of legal matters ;-)
You're assuming Napster was doing something illegal, which they weren't. No violation of the law was made further than any other system that indexes files and provides their locations.
Why bother.
Let me first acknowledge that the person you're replying to is probably a little more extreme than a lot of people. BUT...
Even though I disagree with the way he expresses his opinion (telling you to get a job was rather childish) he is correct. The conglomerates themselves have invalidated the entire concept of copyright by acting outside the boundaries (and spirit) of the original intent of copyright. To ensure innovators innovated, and to insure that useful ideas weren't kept out of the public's hands forever... One of many measures essentially enacted to prevent the formation of an ultra-wealthy aristocracy.
They didn't intend to allow conglomerates to keep culturally enriching materials out of the public domain forever, yet that is essentially where we're at, and essentially the point of view you're arguing.
I can't wait for somebody to become a big star by financing his own recordings, promoting himself with unencumbered p2p delivered mp3 (or oggs or whatever) of songs, perhaps embedding his web-site name in one of the ID3 fields so people who really liked it could logon and buy cds, t-shirts, and tickets to see him in concert.
It will eventually happen, and if your music is good enough, it could be you. The critical difference is that somebody who becomes huge this way gets to keep all the profits, keep ownership (for a time) of the rights to his songs, and not be a slave to some idiot in a suit's concerns about your record and whether there are any "singles" on it. Every artist who sides with the RIAA and their ilk only lengthen their time of servitude under an oppressive regime.
Hello Apples, meet Oranges. A house is physical property. It can be taken away. A song can't be taken away unless I take all your tapes and erase your memory of it. The law plainly intends for copyrights to eventually expire, why can't you (and the RIAA) accept that rather than trying to sue everybody into submission?
Using your logic, how is playing the radio loud any different than Napster? I'm allowing many people to "enjoy" "your" music but only paying for one copy. For that matter, why is Napster different than a radio station? Sure, radio stations pay for the right to broadcast music, but the per song breakdown is pretty small. The reason the labels had this arrangement in the first place was PROMOTIONS.
Why won't the labels license Napster-like services to provide unlimited downloads? It would be the same as radio--better really because the user would hear exactly as much of what they are interested in as they want--lose interest fast? Decide the artist sucks? Erase file.
Every "starving musician" I've ever met who is vehemently anti-Napster invariably has some pie-in-the-sky dream of living the life of a rock star--fame, fortune, big money, and chicks everwhere. All of them desperately want to believe that those three things are achieved on merit, but they aren't. They're based on promotional budget, production budget, and access to good drugs.
Who did what now?
This whole plan of sueing VCs is a perfectly logical step for the music industry. Lets see... Napster provided illegal music file sharing services and was funded by company X. If they win, then the generic case if illegal music file sharing service has company X for funding then they can be sued will be viable. And hencely, then the VCs can be sued for their investment in Kazaa, and Kazaa will crumble and die, because VCs will be pulling out right and left. Its so obvious even I can see it.
Occam's razor is the blind faith in the natural selection of least resistance and in universal oversimplification. -- EF
What is wrong with simplicity? The site is very simple and gets it's point across in a simple manner with a simple layout.
X(7): A program for managing terminal windows. See also screen(1).
The **AA are at war.
Indeed. It is total war with their customers.
They are going to use every trick, every tool in the box to sew fear and uncertainty in all those who would act against their survival.
Then they might as well just shoot themselves in the head and get it over with, because it is they, themselves, that act against their own survival.
[/me nominates RIAA and MPAA for Darwin awards]
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