"BitTorrent was created for legitimate distribution of large media files, and we stand by that philosophy as a search engine and aggregator."
"...and at the same time, we know that 99% of what our customers are looking for is pirated, and we've made handsome advertising revenue. We'd like to keep making money off of the huge demand for piracy -- it's not like copyright owners have a monopoly on the concept of 'greed', you know -- so we're going to keep doing it, and keep throwing around that 'legitimate distribution' phrase, just because we enjoy the irony."
At least TPB is a little more honest and straightforward in their goals. "legitimate distribution." Right, that's exactly what the typical isohunt customer is after, and that's exactly why they were purportedly sued by copyright holders. All that "legitimate distribution."
...showing that current DRM efforts to prevent illegal sharing of copyrighted content are still futile and fighting an uphill battle.
Well, I just happen to know:
Lots of retail stores have anti-theft measures -- tags on the merchandise, cameras, store detectives, and so on.
Yet probably somewhere in your town, somebody has shoplifted something within the past hour.
Does this mean that all of those Sensormatic tags, all of those cameras, and so on are "futile?" Not hardly. You wouldn't make such a ridiculous statement because you know that retail anti-theft mechanisms are meant to be a deterrent. Nobody -- least of which the retail industry -- expects these measures to prevent 100% of retail theft.
And so it goes with DRM. If we pretend that the content industry expects it to prevent 100% of piracy, then yes -- we can have a jolly laugh at their expense. Why then, "futile" does sound like a good word, and after this little warm-up straw man exercise, we're ready to hit Burning Man. But it's intellectually dishonest.
"Now I understand why they have those annoying warnings that you're forced to sit through at the beginning of DVDs. No matter how big the font, or how long you're forced to watch it, there are still people who don't understand what they [video777.com] say."
I think a lot of people who argue the "copyright violation is not a criminal offense" position tend to get their movies via BT, in a form which has the standard FBI warning removed. So, they're not being disingenuous; they might actually be unaware that there are criminal penalties.
"That's out of order, people should have to continue working if they want to continue making money."
Lots of people share your opinion -- at least when they are specifically referring to artists.
I invested in some stock a while back which continues to provide me income, years later. My house has increased in value about $50K since I bought it earlier this year. These are hardly uncommon situations -- lots of people invest in stocks, bonds, real estate, you name it.
My guestion -- for you or anybody else who agrees with you -- is this: does this also bother you? Do you think it's unfair that I and other people make money on investments without actually working?
I imagine that if you were Emperor for one day, you'd revoke the laws that allow artists to make money on selling a record 20 years later if they're lucky enough to produce something that still has commercial value after. But would you also stop people from making money in stocks and real estate?
As you can guess, I'm fine with the idea. If I'm lucky enough to produce something that people still enjoy and are willing to pay for 20 years from now, then I deserve that money. Likewise, if I buy a house or some stocks now and people are willing to pay me more for it 20 years from now, then I deserve it, as well.
The music industry is a speculative market just like the stock and real estate markets. My concern is that people don't have a problem with not "sitting back and letting the money roll in" per se, but specifically with artists and other holders of IP going for that dream. In other words, it's a luxury that those of us who invest in stocks or real estate deserve to have a chance at, but not if our investment is the time putting our blood, sweat and tears into a song.
"Copyright infringement is not theft. The most obvious and conspicuous difference is that the former is civil and the latter criminal law."
This is another popular Slashdot conversation:
Person A: copyright isn't criminal, it's civil!
Persons B..N: No, it's both.
Person A: I knew that! What I meant was that civil copyright infringement isn't criminal. I wasn't talking about criminal copyright infringement.
it's about a pointless discussion as the "it's not acceptable to use the term 'steal' when discussing piracy" arguments.
"Now, these are obvious, relevant, basic facts about a topic which is important and much-discussed on Slashdot. And yet there a largish population (maybe 15% of those who express an interest) on Slashdot of people who just physically cannot learn them."
I know what you mean. Section 506 is even called "Criminal offenses" and people still don't get it that you can go to the big house if you pirate enough. Heck, cases of people getting jail time for piracy regularly come up on Slashdot, and there are still people who'll try to tell you that copyright violation doesn't fall under criminal law.
"I had no idea the Brits were so forward-thinking in this area. Of course, the RIAA would never agree to legitimizing downloads like that...at least not until several more management changes happen and they get someone in their leadership who's actually owned an iPod."
Huh? Billboard in the USA has been publishing the top digital albums/tracks for months now, if not years. Not to devalue what they're doing in the UK now... but they're late to the party.
The RIAA-member labels have also been tracking illegal downloads (for marketing purposes, I mean, not just to figure out whom to sue) for years now; BigChampagne is the leader here.
At any rate, even if you weren't aware of this, I'm not sure why you don't think RIAA-affiliated labels would be interested in tracking online sales. My guess is that the labels make the same or better margin on downloaded tracks than on CD sales.
"Wait a minute, let me get this straight. If those fees don't come out of the "artist's cut" then the labels are promoting/producing/etc... for free? The big name artists are getting $0.20 on the dollar. What the hell is the label doing with their $0.80?"
I see the confusion here. The record company does not solely use the artist's royalty to pay for the album. The label pays whatever it costs, and the artist starts making money when the record starts making money. If the production costs ultimately net out to 0.40 or 0.60 or 0.80 per track, that's what the label pays. Most records lose money.
"(I know, I know... Cocaine and hookers.)"
I've often wondered about this: do Slashdotters really believe this, or is it just a way to justify piracy? Of the short list of people I've met who were fond of the "cocaine and hooker" lifestyle, most of them were in the computer industry. The only record executive I've ever met ran a 10-person indie label. He paid himself $25,000 a year, and when Napster came on the scene and his sales dropped, he had to lay off his friends. I understand that this isn't the image you want to have in mind while you're Torrenting music.
"Except where exactly is the transaction taking place? Is it in the purchaser's home, or where AllOfMP3's server's are located? This sounds like something that needs to be defined by international treaties, and not US law [but of course US judges would never think of that]."
The transaction is taking place between a US citizen and the Russian outfit -- that's what counts. When this goes to trial, a key point will be whether allofmp3 is actively soliciting business from the US. Allofmp3 will say they aren't; the record companies will point to the stuff that the GP mentioned (listing prices in US dollars, putting American flags on the site, etc.) and claim that they are. It'll be interesting!
"What about 'regular' criminal law? You live in State A, which outlaws perfoming or possessing the depiction of some specific sexual act. You order a DVD containing said depiction from Company B located in State C, which does NOT outlaw said depiction. Which party is committing the criminal act, you, Company B, or the shipping company?"
These types of questions are typically difficult to answer in the abstract. In fact, that's exactly why we have courts. You and I can have our own opinions of whether the fictional Company B or the very real allofmp3 are liable, but ultimately what matters is what the court decides.
"Not that I support the way labels do business, but of course those expenses are taken from the artist's cut. Do you propose that the record labels promote/produce/etc. for free? Any fee they do charge comes out of the "artist's cut". And if the label spends all that money promoting/producing/etc. and it makes no money, those costs are NOT taken from the artist's cut (because they have no cut, the revenue being 0). It's not like the artist is then expected to get a day job and pay back the initial costs (well, maybe some seedy labels work this way, but they are more on the level of "agents" who convince you to buy expensive headshots)."
Well put. The record industry is hugely speculative, and the record company takes all of the risk. There's a lot of appeal to foregoing a record contract and getting a bank loan to finance your own production (so that at least you'll own the masters) but if your project isn't profitable, you still owe the bank the money. If the record company loses money on you, they just drop you.
Magnatune pays much higher royalties than traditional record companies and doesn't deduct anything from royalties for expenses -- but that's because Magnatune makes no investment in the artist. The artist must provide their own masters.
If some enterprising Slashdotter can come up with a way to start a record company that (a) completely funds the production of the CD and (b ) pays royalties regardless of whether the record makes money, then great -- they'll crack the industry wide open and put both Magnatune and the traditional labels out of business.
"If you take a step back and put this into perspective you are able to really get a clear picture of how much money this companies are making on a per track basis. If they are charging.70 to music retailers then consider the following:.99 = iTunes (cheaper if CD is purchased).93 = CD of 15 songs priced at $16 I recently came across an article suggesting that artists on average get paid around.25 per song. This computes into an estimated profit of roughly.45 per song."
It's misleading to use the term "profit" here, as readers might confuse it with the money that the record company actually gets to keep. THe correct term for that $0.45 is "gross profit" or "gross margin."
Record companies are a lot like Apple, Microsoft, your local grocery store, Toyota, and other "real" companies: they take that gross margin and slice it up and give it to lots of employers, contractors, and suppliers. Some they do keep, but not much.
"I would find it difficult to do much complaining about profit loss when I am bringing in something like that from one person. All the smaller artists you have can cover costs."
It tends to be the other way around (the smaller releases lose money; and the knock-em-out-of-the-mark double platinum example you give pays for the rest), but when in doubt, look at the numbers. Warner Music made a gross profit of $1.69B last year -- about 40% of their gross sales -- but only managed a profit margin of 1.71%. If you'd like to think of it in terms of track sales, for each track they sold in at $0.70, they only ended up with about one cent at the end of the year. By comparison, Apple and Logitech got to keep about ten cents of each dollar's worth of product they sold last year, and Microsoft about $0.30. A 1.71% profit margin at the end of the year is actually pretty shitty as profitability goes when you look at all industries.
If anybody's boggled by this, just keep in mind that record companies do pay people other than musicians, and it's often the royalty payments that are one of the cheapest things involved in selling a CD.
"What I always find funny about this argument are that the main people that complain about DRM are also the main ones that are essentially stealing the digital content that DRM is supposed to protect from (albeit doing a poor job in the process)."
Well put. If I were with the MPAA and read all these messages that state (in effect) "I pirate because I don't like the DRM," this wouldn't be a huge motivation for me to drop the DRM.
You see, saying "I pirate because I'm cheap" makes you look... well, just cheap. "I pirate because I don't like DRM" makes you a savvy freedom fighter on the forefront of digital rights. In the 1950s, these were the people who stated that they read Playboy for the articles.
When the day comes that there's ample content available DRM-free, many pirates will simply find another rationalization for not paying for it... then they'll take the official, authorized, studio-released DRM-free movies and put them in their share directory.
"And whose lives have been "destroyed" by RIAA lawsuits? I mean, come on, if the worst thing that's ever happened to you is you lose a few thousand dollars in a lawsuit you're living a charmed life, my friend."
When arguing about music piracy, allofmp3, the RIAA, and so on, the key is to go over the top:
A $3,500 settlement "destroys your life."
Everybody who works in the record industry is a cokehead with a pathological fondness for prostitutes.
Artists are rich and greedy. (except for the ones who are kept in indentured servitude by the record company. There's apparently no middle ground.)
P2P users are freedom fighers performing a civil disobedience.
As an aside, the interesting thing about those $3.5K settlements is that the RIAA, as I understand it, attempts to target the "whales" who have in excess of 1,000 tracks in their share directories. Assuming for a moment that they are not simply sharing their vast CD collection (after all, these are P2P enthusiasts; they probably don't roll with "buying CDs"), the net result is that you end up paying $3.50 per track shared (and possibly much less if you were caught sharing more than 1,000 tracks). Given that a new CD with eight tracks on it often goes for around $13 or $14 nowadays, that's not too bad... it's almost a "download now, pay later" plan.
"The CEO of the RIAA isn't a lawyer. Neither, I presume, are a lot of the members and officers."
The CEO, Mitch Bainwol, doesn't have a JD, but he does have an MBA, which I believe makes him just as hated by Slashdotters. However, the RIAA"s president, one Cary Sherman, is Harvard Law '71, and was an IP lawyer for several years. FWIW, he's also dabbled in software copyright; he wrote this book which I'm sure is a thrilling page-turner.
By the way, I ran into Cary Sherman a few years back at CES. He's about 5'8". I could probably take him in a fight.
"Where was it that you missed the fact that these companies have offices and employees in those Germany amd a.de domain name? The German operations of eBay and Amazon were vulnerable to being prosecuted in Germany."
I figured that'd be a source of confusion, which is why I mentioned that you can be nailed for non-compliance of local laws even if you're simply importing items (such as cars in my example). I covered that in the last paragraph, so I can see how you may have missed it. You don't need to have office space or an appropriate domain name to be considered doing business in a country... you just have to be offering your product for sale.
If this goes to court, I think this will be a key issue: is allofmp3 actively offering their products for sale in the US? The record companies will say that they are, since they're publishing their site in English and making no efforts to prevent sales to US citizens beyond a caveat emptor statement which, in the past, often hasn't offered as much protection to sellers as they've hoped. Allofmp3 might claim that their offering their site in English isn't an explicit offer of sale to US citizens (as English is spoken everywhere) and that their disclaimer about checking local laws protects them (I'm inclined to disagree). They might also claim that they lack the technical ability to block sales from the US.
"yielding a payment to the Sony Music recording artists of approximately 4 1/2 cents per digital download"
Which is 3X the maximum that artists could get from an allofmp3 sale, provided that the artists applied to ROMS for their royalties and actually got paid (so far there are no cases of an artist asking allofmp3 for sales data and actually getting it).
At first glance, "the record companies pay at least 3X what allofmp3 pays" runs counter to the notion of allofmp3 being the good guys here, but there are a couple of ways you can rationalize it:
If you take the "the artists are greedy" route and just assume that all recording artists are millionaires, then you can look at allofmp3 as putting them in their place: if artists were to get these theoretical royalties, then they might only be able to buy one Bentley this year vs. the three Bentleys they'd buy if those had been legitimate sales.
If you prefer the "the artists are needy" route and assume that this delta in royalty payments means the difference in, say, $150 a month in royalties vs. $450, you can tell yourself that $450 isn't really that much better than $150. Another common rationalization here is that if the artist is really concerned about making $450 vs. $150 in royalties per month, then they are a businessperson, and not an artist.
"I'd rather pirate the track and give the artist the buck directly. If only there were a way to do that..."
This makes sense if everybody else involved with the production of the music worked for free. This is correct in some instances (e.g. self-produced music where everybody works on a volunteer basis) but in most cases, it is not.
"Why is it that the best online music store (in terms of reasonable price, freedom of use, and audio quality) is the one of questionable legality?"
Maybe that was a rhetorical question, but generally speaking, US law states that you owe a minimum of around $0.08 per track to the composer and songwriter for each track you sell; they're called mechanical royalties and there are usually additional royalties that the performer (ie. the celebrity whose name is on the CD cover) expects if they're not the composer and the songwriter. This is one reason why, say, emusic and Magnatunes (two somewhat well known purveyors of DRM-free tracks) could not sell tracks for $0.10 in the USA even if they wanted to.
"but I'd like to see the EFF or similar get involved with somehow using allofmp3 as an example of a reasonable distribution model.. because seriously.. this is the best system I have heard of."
Frankly, I don't see the EFF lobbying the government to lower the statutory royalty rates. It's not really their area. For what it's worth, there was news about a month ago that the RIAA was trying to lower the statutory royalty rates; Slashdotters (presumably the half that are not allofmp3 fans) got extremely irked at this notion -- for good reason, IMHO.
"Anybody else agree?"
I do not. I think composers and songwriters are underpaid as it is. However, I acknowledge that this isn't a popular opinion around here -- many allofmp3 fans think that artists make too much money.
"OK, RIAA astroturfer, what Russian law is allofmp3.com breaking?"
When allofmp3 made that "we are operating in accordance with Russian law" they were using a little clever wordplay of their own. They probably are operating within Russian law, but that's not the issue. They're trying to change the goalposts on you. The issue is that they are selling their product to US citizens. How far they're going to encourage business from the USA is something that I'm sure will be a key factor if this goes to trial.
You remember how Amazon and ebay have gotten nailed for selling Nazi-related stuff in Germany? Amazon and ebay are US-based companies; yet they didn't try the "we are operating under US law" trick. The point is that they were doing business in Germany and (at least according to Germany) broke German law.
There are also more mundane examples: Ford is a US-based companies; yet if they solicit business in another country (even if they're simply importing rather than building the product there), they have to produce cars that meet those countries' various regulatory requirements; if Country X has stricter requirements than our own, they can't sell US-spec cars in that country and use the "we are operating in accordance with US law" excuse.
"No, it's making an unimportant distinction. From the point of view of a copyright holder, a person who has, instead of purchasing a legal copy of their work, has instead made a copy of someone else's copy, is depriving them of the money they were owed for that copy. From their point of view, it's theft. This is why most people have no problems at all describing copyright infringement as theft, except for a minority of extreme Slashdotters. Most people understand the concept, even if we believe the world would be a better place with 100% GPL'd software, or whatever."
Precisely. We (as the collective Slashbot) have no problem with "stolen kisses" or "stealing your thunder" or possibly even "theft of service," but if the word is applied to something that we regularly do, all hell breaks loose.
It's simply human nature. The human brain is extremely adept at rationalization, and virtually everybody wants to believe that they are a good person at heart.
Apple says: "don't steal music."
To which we say: "It's not stealing, it's copyright infringement." (see? I'm not a bad person. I'm no thief.)
The record company says: "you are hurting the record company and the artist."
To which we say: "The record companies have enough money already." and (pick one) "artists aren't hardly paid anything by the record company, so they won't miss the meager royalty payment they would have gotten from the sale" or "artists make too much money. If they're trying to become a millionaire from music, they're a businessperson, not an artist." (see? I'm not a bad person... I'm just correcting some financial inequity.)
The artist says: "I'd really rather you not copy my music without paying for it."
To which we say: "How dare you claim that I owe you a living." (see? I'm not a bad person. I'm putting a clueless, greedy person in their place.)
"Someone should set a trap for the RIAA by creating a shared folder of text files with the names of the songs of approximately the size of an actual.mp3 of the same name and then when they are attacked by the RIAA show that no infringement took place and that the RIAA is not doing their homework and thus burdening the courts, law-enforcement and the general public with their witch hunts."
"This is where most of the money for a track should be going--to the creative talent. If you look at the breakdown for the $1 that gets spent on an iTunes track, about $0.70 goes to the RIAA member [cite: Fox]. They have to give $0.08 - $0.16 out for mechanicals (by law you say)."
I believe that the $0.08 statutory is split among the composer and songwriter, so it's not doubled to $0.16 if a song has one of each. Those are just the statutory royalties -- there are often contractual royalties above and beyond that if the performer didn't write the song.
"That means, at worst they get to keep $0.54 per track for producing nothing (especially true in the case of digital distribution)."
The rest of the money isn't "kept" in the sense that I think you mean. It pays for the production of the music. Until the day when everybody involved with the production of the music can be cajoled into working for free, those costs will be there. If a record sells 10,000 copies and has ten tracks: if the artist paid to do the cover art got $1,000 (a low figure), that's a penny per track. If the recording and engineering cost $10K start-to-finish (again, a low figure), that's another dime per track. If the record company invests $10K into promoting the album, that's another dime. The difference between the gross margin and the net margin is a real devil bitch, no matter what business you're in.
Others have suggested that digital tracks be sold for at or near the cost of the bandwidth and royalties because the music production costs can be burdened into the physical CD sales. That might work well today, when digital sales are (say) 30% of your revenue. But what happens tomorrow when they're 40%, 60%, 80%?
"Especially if you offered non-DRM, variable bit-rate files (like eMusic)--I have to imagine a service like this would crush Apple and be highly profitable for the recording industry. I also imagine that if the RIAA itself was the digital distributor that they could offer distribution at much less than $0.25 / track, and could make even more profit there. I firmly believe that the reason this doesn't happen is because all of the labels are run by old-time executives that fear change and want to maximize their profits while minimizing their efforts. They don't even see that with a little bit of effort they could double their profits."
I believe the point you're making here is that many Slashdotters understand pricing theory and the supply curve better than anybody in the record industry. And, in fact, it's conceivable that no record company has ever hired smart people with econ degrees or MBAs to do this calculation for them. Or, perhaps the record labels haven't really taken the "maximize profits" (ie. pick the best point on that curve) thing seriously enough. The impression I get from reading lots of Slashdot posts is that if only a few Slashdotters had the desire to set up their own record labels, they'd do it right, and -- as you say -- double profits. For example, you might even be able to operate your own record company at a 4% net margin, vs. the 2% net margin that Warner Records managed last year.
Magnatunes is a great example of a record label done right -- I think it fits the model of how many Slashdotters would run their own label:
DRM free
Buyers are encouraged to make copies for their friends
A generous revenue split -- I think artists get 50% of the sale price
But, this raises some questions:
Why are they so little-known? By comparison, the record labels who just "don't get it" move millions of tracks a month on iTunes.
Why do even they sell CDs for $8 or more each? That's still $0.80 or so per track. Keep in mind that Magnatunes, unlike traditional record companies, don't fund the production of the music -- if you want to sign with them, you've got to handle the production yourself. So if anybody'd be able to make money at $0.25 a t
"(Russian Organization for Multimedia and Digital Systems a.k.a. similar to the RIAA in Russia)."
Not really. A much closer analogy would be our BMI or ASCAP. Allofmp3 is working their magic by paying the licensing rate for broadcasts. Here in the US, it is BMI and ASCAP who collect money for broadcast licensing. BMI and ASCAP represent artists and are unaffiliated with the RIAA.
FWIW, despite the fact that ASCAP and BMI are run by and for artists, they are often just as hated by Slashdotters as is the RIAA; particularly when it makes the news that they are suing a business owner for unlicensed public performance. It seems that around here we love and respect the artists, except when they get a little too uppity about being paid.
"What I'd heard is that allofmp3 PAYS royalties, but the American firms refuse them, as they're "not enough"."
Well, one issue is that by law, composers and songwriters must be payed "mechanical royalties" which are typically $0.08 per track. That is, of course, much less than ROMS is getting per track -- if allofmp3 is paying ROMS 10%, then that's about a sixth of a cent per track. I sure the hell ain't no lawyer, but if the record companies start taking that sixth of a cent per track, the publishing companies (which collect the mechanicals on behalf of the composers and songwriters) might sue to collect their $0.08. When you make a sixth of a cent per track and must pay $0.08 per track in royalties, there is absolutely no way to make that back in volume. You will lose money on every track sold.
The ironic thing here is that a common sentiment around here is that the record companies should take a cue (and/or clue) from allofmp3 and sell tracks for around $0.10 a song. Yet the current law, which dictates $0.08 for mechanicals, would not allow that to happen. And when a few weeks ago it made the news that the record companies were trying to lower mechanicals, the news was not well received by the Slashbots.
My guess is that the "the artists are needy" crowd are OK with the statutory rates staying as they are -- but they'll still download from allofmp3 anyway, with the logic that if composers and songwriters are only making $0.08 a track, there's not much difference between $0.08 and zero. The "the artists are greedy" crowd are probably hoping for the day that the record companies can get that statutory rate lowered. That might open up the possibility of record companies recognizing ROMS or other third-party licensing organizations that pay at less than the US statutory rate.
"What we don't understand is the point of law that he used to justify his ruling. What we don't understand is how we are protected from this kind of charge when we are not trying to do anything related to music."
I don't understand the first part, either, since I'm not familiar with Australian law. But I can offer some advice on the second.
Due to the nature of their profession, many people who read Slashdot have trouble coming to terms with the fact that the law is often rather soft and mushy. We works with ones and zeros in our own profession, and it makes much more sense to us if something can be declared to be either illegal or not illegal. In many cases it is indeed quite clear, but in civil law, it's often not. And that is precisely the reason why we have courts.
To get to your point -- say you're thinking of starting a web site and you want to protect yourself from civil liability. You can start by asking yourself these questions:
"Am I possibly infringing on somebody else's copyright in a way to which they would object?"
"Is providing access to copyrighted content in an unauthorized manner a possible use for my site, or the primary use?"
"If I were to ask the copyright holder for permission, would they likely give it? Would my web site's business model still be valid if it relied on getting permission?"
"If my web site has user-submitted content, am I building in the proper technical controls so that I can remove content if presented with a DMCA takedown request?"
And if you're particularly cynical, you can ask yourself:
"If I'm infringing on somebody else's copyright or allowing my users to do the same, do I have plausible deniability if I am accused of this?"
So, a site like, say, legaltorrents would pass the test, as would, say, a book review site which posted excerpts of text for critical purposes and provided links to where the user could purchase the book. Google would pass, as well. But mp3sforfree.com, as it was operated by the fellow in TFA, would not... he failed on all five points.
"Weeeell, mp3s are not illegal. There are a LOT of music out there, that is free, so mp3s4free could easily be a site linking to those specific mp3s."
If you've any doubt, the Internet Wayback machine is a good source. Here's one of the fina l incarnations. Take a look at the "popular downloads." If you're lucky enough to not be exposed to popular music regularly, I'll translate: Britney Spears, Nickelback, Dido, Ludacris and Matchbox 20 are not unsigned acts who allow their music to be distributed freely.
"So if I link to Google and Google links to something illegal, then I can get sued?"
Very doubtful. Intent and scope are a big part of it. If you were to create a site exclusively dedicated to providing links to Google search results pages which contained exclusively unauthorized copies of copyrighted works, then you might expect a C&D. In other words, the "common sense test" works here.
"As I read this, this means that I am infringing if I think it's okay that you infringe. Which also means that if I argue that it should be legal to infringe on copyrighted material, then I am already infringing."
That's a pretty slippery slope. Do you really think that?
Slashdot Mirror
"BitTorrent was created for legitimate distribution of large media files, and we stand by that philosophy as a search engine and aggregator."
"...and at the same time, we know that 99% of what our customers are looking for is pirated, and we've made handsome advertising revenue. We'd like to keep making money off of the huge demand for piracy -- it's not like copyright owners have a monopoly on the concept of 'greed', you know -- so we're going to keep doing it, and keep throwing around that 'legitimate distribution' phrase, just because we enjoy the irony."
At least TPB is a little more honest and straightforward in their goals. "legitimate distribution." Right, that's exactly what the typical isohunt customer is after, and that's exactly why they were purportedly sued by copyright holders. All that "legitimate distribution."
From the writeup:
Well, I just happen to know:
Does this mean that all of those Sensormatic tags, all of those cameras, and so on are "futile?" Not hardly. You wouldn't make such a ridiculous statement because you know that retail anti-theft mechanisms are meant to be a deterrent. Nobody -- least of which the retail industry -- expects these measures to prevent 100% of retail theft.
And so it goes with DRM. If we pretend that the content industry expects it to prevent 100% of piracy, then yes -- we can have a jolly laugh at their expense. Why then, "futile" does sound like a good word, and after this little warm-up straw man exercise, we're ready to hit Burning Man. But it's intellectually dishonest.
"Now I understand why they have those annoying warnings that you're forced to sit through at the beginning of DVDs. No matter how big the font, or how long you're forced to watch it, there are still people who don't understand what they [video777.com] say."
I think a lot of people who argue the "copyright violation is not a criminal offense" position tend to get their movies via BT, in a form which has the standard FBI warning removed. So, they're not being disingenuous; they might actually be unaware that there are criminal penalties.
"That's out of order, people should have to continue working if they want to continue making money."
Lots of people share your opinion -- at least when they are specifically referring to artists.
I invested in some stock a while back which continues to provide me income, years later. My house has increased in value about $50K since I bought it earlier this year. These are hardly uncommon situations -- lots of people invest in stocks, bonds, real estate, you name it.
My guestion -- for you or anybody else who agrees with you -- is this: does this also bother you? Do you think it's unfair that I and other people make money on investments without actually working?
I imagine that if you were Emperor for one day, you'd revoke the laws that allow artists to make money on selling a record 20 years later if they're lucky enough to produce something that still has commercial value after. But would you also stop people from making money in stocks and real estate?
As you can guess, I'm fine with the idea. If I'm lucky enough to produce something that people still enjoy and are willing to pay for 20 years from now, then I deserve that money. Likewise, if I buy a house or some stocks now and people are willing to pay me more for it 20 years from now, then I deserve it, as well.
The music industry is a speculative market just like the stock and real estate markets. My concern is that people don't have a problem with not "sitting back and letting the money roll in" per se, but specifically with artists and other holders of IP going for that dream. In other words, it's a luxury that those of us who invest in stocks or real estate deserve to have a chance at, but not if our investment is the time putting our blood, sweat and tears into a song.
"Copyright infringement is not theft. The most obvious and conspicuous difference is that the former is civil and the latter criminal law."
This is another popular Slashdot conversation:
Person A: copyright isn't criminal, it's civil!
Persons B..N: No, it's both.
Person A: I knew that! What I meant was that civil copyright infringement isn't criminal. I wasn't talking about criminal copyright infringement.
it's about a pointless discussion as the "it's not acceptable to use the term 'steal' when discussing piracy" arguments.
"Now, these are obvious, relevant, basic facts about a topic which is important and much-discussed on Slashdot. And yet there a largish population (maybe 15% of those who express an interest) on Slashdot of people who just physically cannot learn them."
I know what you mean. Section 506 is even called "Criminal offenses" and people still don't get it that you can go to the big house if you pirate enough. Heck, cases of people getting jail time for piracy regularly come up on Slashdot, and there are still people who'll try to tell you that copyright violation doesn't fall under criminal law.
"I had no idea the Brits were so forward-thinking in this area. Of course, the RIAA would never agree to legitimizing downloads like that...at least not until several more management changes happen and they get someone in their leadership who's actually owned an iPod."
Huh? Billboard in the USA has been publishing the top digital albums/tracks for months now, if not years. Not to devalue what they're doing in the UK now... but they're late to the party.
The RIAA-member labels have also been tracking illegal downloads (for marketing purposes, I mean, not just to figure out whom to sue) for years now; BigChampagne is the leader here.
At any rate, even if you weren't aware of this, I'm not sure why you don't think RIAA-affiliated labels would be interested in tracking online sales. My guess is that the labels make the same or better margin on downloaded tracks than on CD sales.
"Wait a minute, let me get this straight. If those fees don't come out of the "artist's cut" then the labels are promoting/producing/etc... for free? The big name artists are getting $0.20 on the dollar. What the hell is the label doing with their $0.80?"
I see the confusion here. The record company does not solely use the artist's royalty to pay for the album. The label pays whatever it costs, and the artist starts making money when the record starts making money. If the production costs ultimately net out to 0.40 or 0.60 or 0.80 per track, that's what the label pays. Most records lose money.
"(I know, I know... Cocaine and hookers.)"
I've often wondered about this: do Slashdotters really believe this, or is it just a way to justify piracy? Of the short list of people I've met who were fond of the "cocaine and hooker" lifestyle, most of them were in the computer industry. The only record executive I've ever met ran a 10-person indie label. He paid himself $25,000 a year, and when Napster came on the scene and his sales dropped, he had to lay off his friends. I understand that this isn't the image you want to have in mind while you're Torrenting music.
"Except where exactly is the transaction taking place? Is it in the purchaser's home, or where AllOfMP3's server's are located? This sounds like something that needs to be defined by international treaties, and not US law [but of course US judges would never think of that]."
The transaction is taking place between a US citizen and the Russian outfit -- that's what counts. When this goes to trial, a key point will be whether allofmp3 is actively soliciting business from the US. Allofmp3 will say they aren't; the record companies will point to the stuff that the GP mentioned (listing prices in US dollars, putting American flags on the site, etc.) and claim that they are. It'll be interesting!
"What about 'regular' criminal law? You live in State A, which outlaws perfoming or possessing the depiction of some specific sexual act. You order a DVD containing said depiction from Company B located in State C, which does NOT outlaw said depiction. Which party is committing the criminal act, you, Company B, or the shipping company?"
These types of questions are typically difficult to answer in the abstract. In fact, that's exactly why we have courts. You and I can have our own opinions of whether the fictional Company B or the very real allofmp3 are liable, but ultimately what matters is what the court decides.
"And "piracy" means violently taking over a ship at sea. What's your point?"
Type "dict piracy" into your Firefox URL bar. You might be surprised!
This is what's known as a "homonym," or a "homophone." Other examples are "bark" and "desert."
"Not that I support the way labels do business, but of course those expenses are taken from the artist's cut. Do you propose that the record labels promote/produce/etc. for free? Any fee they do charge comes out of the "artist's cut". And if the label spends all that money promoting/producing/etc. and it makes no money, those costs are NOT taken from the artist's cut (because they have no cut, the revenue being 0). It's not like the artist is then expected to get a day job and pay back the initial costs (well, maybe some seedy labels work this way, but they are more on the level of "agents" who convince you to buy expensive headshots)."
Well put. The record industry is hugely speculative, and the record company takes all of the risk. There's a lot of appeal to foregoing a record contract and getting a bank loan to finance your own production (so that at least you'll own the masters) but if your project isn't profitable, you still owe the bank the money. If the record company loses money on you, they just drop you.
Magnatune pays much higher royalties than traditional record companies and doesn't deduct anything from royalties for expenses -- but that's because Magnatune makes no investment in the artist. The artist must provide their own masters.
If some enterprising Slashdotter can come up with a way to start a record company that (a) completely funds the production of the CD and (b ) pays royalties regardless of whether the record makes money, then great -- they'll crack the industry wide open and put both Magnatune and the traditional labels out of business.
"If you take a step back and put this into perspective you are able to really get a clear picture of how much money this companies are making on a per track basis. If they are charging .70 to music retailers then consider the following: .99 = iTunes (cheaper if CD is purchased) .93 = CD of 15 songs priced at $16 I recently came across an article suggesting that artists on average get paid around .25 per song. This computes into an estimated profit of roughly .45 per song."
It's misleading to use the term "profit" here, as readers might confuse it with the money that the record company actually gets to keep. THe correct term for that $0.45 is "gross profit" or "gross margin."
Record companies are a lot like Apple, Microsoft, your local grocery store, Toyota, and other "real" companies: they take that gross margin and slice it up and give it to lots of employers, contractors, and suppliers. Some they do keep, but not much.
"I would find it difficult to do much complaining about profit loss when I am bringing in something like that from one person. All the smaller artists you have can cover costs."
It tends to be the other way around (the smaller releases lose money; and the knock-em-out-of-the-mark double platinum example you give pays for the rest), but when in doubt, look at the numbers. Warner Music made a gross profit of $1.69B last year -- about 40% of their gross sales -- but only managed a profit margin of 1.71%. If you'd like to think of it in terms of track sales, for each track they sold in at $0.70, they only ended up with about one cent at the end of the year. By comparison, Apple and Logitech got to keep about ten cents of each dollar's worth of product they sold last year, and Microsoft about $0.30. A 1.71% profit margin at the end of the year is actually pretty shitty as profitability goes when you look at all industries.
If anybody's boggled by this, just keep in mind that record companies do pay people other than musicians, and it's often the royalty payments that are one of the cheapest things involved in selling a CD.
"What I always find funny about this argument are that the main people that complain about DRM are also the main ones that are essentially stealing the digital content that DRM is supposed to protect from (albeit doing a poor job in the process)."
Well put. If I were with the MPAA and read all these messages that state (in effect) "I pirate because I don't like the DRM," this wouldn't be a huge motivation for me to drop the DRM.
You see, saying "I pirate because I'm cheap" makes you look... well, just cheap. "I pirate because I don't like DRM" makes you a savvy freedom fighter on the forefront of digital rights. In the 1950s, these were the people who stated that they read Playboy for the articles.
When the day comes that there's ample content available DRM-free, many pirates will simply find another rationalization for not paying for it... then they'll take the official, authorized, studio-released DRM-free movies and put them in their share directory.
"And whose lives have been "destroyed" by RIAA lawsuits? I mean, come on, if the worst thing that's ever happened to you is you lose a few thousand dollars in a lawsuit you're living a charmed life, my friend."
When arguing about music piracy, allofmp3, the RIAA, and so on, the key is to go over the top:
As an aside, the interesting thing about those $3.5K settlements is that the RIAA, as I understand it, attempts to target the "whales" who have in excess of 1,000 tracks in their share directories. Assuming for a moment that they are not simply sharing their vast CD collection (after all, these are P2P enthusiasts; they probably don't roll with "buying CDs"), the net result is that you end up paying $3.50 per track shared (and possibly much less if you were caught sharing more than 1,000 tracks). Given that a new CD with eight tracks on it often goes for around $13 or $14 nowadays, that's not too bad... it's almost a "download now, pay later" plan.
"The CEO of the RIAA isn't a lawyer. Neither, I presume, are a lot of the members and officers."
The CEO, Mitch Bainwol, doesn't have a JD, but he does have an MBA, which I believe makes him just as hated by Slashdotters. However, the RIAA"s president, one Cary Sherman, is Harvard Law '71, and was an IP lawyer for several years. FWIW, he's also dabbled in software copyright; he wrote this book which I'm sure is a thrilling page-turner.
By the way, I ran into Cary Sherman a few years back at CES. He's about 5'8". I could probably take him in a fight.
"Where was it that you missed the fact that these companies have offices and employees in those Germany amd a .de domain name? The German operations of eBay and Amazon were vulnerable to being prosecuted in Germany."
I figured that'd be a source of confusion, which is why I mentioned that you can be nailed for non-compliance of local laws even if you're simply importing items (such as cars in my example). I covered that in the last paragraph, so I can see how you may have missed it. You don't need to have office space or an appropriate domain name to be considered doing business in a country... you just have to be offering your product for sale.
If this goes to court, I think this will be a key issue: is allofmp3 actively offering their products for sale in the US? The record companies will say that they are, since they're publishing their site in English and making no efforts to prevent sales to US citizens beyond a caveat emptor statement which, in the past, often hasn't offered as much protection to sellers as they've hoped. Allofmp3 might claim that their offering their site in English isn't an explicit offer of sale to US citizens (as English is spoken everywhere) and that their disclaimer about checking local laws protects them (I'm inclined to disagree). They might also claim that they lack the technical ability to block sales from the US.
"yielding a payment to the Sony Music recording artists of approximately 4 1/2 cents per digital download"
Which is 3X the maximum that artists could get from an allofmp3 sale, provided that the artists applied to ROMS for their royalties and actually got paid (so far there are no cases of an artist asking allofmp3 for sales data and actually getting it).
At first glance, "the record companies pay at least 3X what allofmp3 pays" runs counter to the notion of allofmp3 being the good guys here, but there are a couple of ways you can rationalize it:
"I'd rather pirate the track and give the artist the buck directly. If only there were a way to do that..."
This makes sense if everybody else involved with the production of the music worked for free. This is correct in some instances (e.g. self-produced music where everybody works on a volunteer basis) but in most cases, it is not.
"Why is it that the best online music store (in terms of reasonable price, freedom of use, and audio quality) is the one of questionable legality?"
Maybe that was a rhetorical question, but generally speaking, US law states that you owe a minimum of around $0.08 per track to the composer and songwriter for each track you sell; they're called mechanical royalties and there are usually additional royalties that the performer (ie. the celebrity whose name is on the CD cover) expects if they're not the composer and the songwriter. This is one reason why, say, emusic and Magnatunes (two somewhat well known purveyors of DRM-free tracks) could not sell tracks for $0.10 in the USA even if they wanted to.
"but I'd like to see the EFF or similar get involved with somehow using allofmp3 as an example of a reasonable distribution model.. because seriously .. this is the best system I have heard of."
Frankly, I don't see the EFF lobbying the government to lower the statutory royalty rates. It's not really their area. For what it's worth, there was news about a month ago that the RIAA was trying to lower the statutory royalty rates; Slashdotters (presumably the half that are not allofmp3 fans) got extremely irked at this notion -- for good reason, IMHO.
"Anybody else agree?"
I do not. I think composers and songwriters are underpaid as it is. However, I acknowledge that this isn't a popular opinion around here -- many allofmp3 fans think that artists make too much money.
"OK, RIAA astroturfer, what Russian law is allofmp3.com breaking?"
When allofmp3 made that "we are operating in accordance with Russian law" they were using a little clever wordplay of their own. They probably are operating within Russian law, but that's not the issue. They're trying to change the goalposts on you. The issue is that they are selling their product to US citizens. How far they're going to encourage business from the USA is something that I'm sure will be a key factor if this goes to trial.
You remember how Amazon and ebay have gotten nailed for selling Nazi-related stuff in Germany? Amazon and ebay are US-based companies; yet they didn't try the "we are operating under US law" trick. The point is that they were doing business in Germany and (at least according to Germany) broke German law.
There are also more mundane examples: Ford is a US-based companies; yet if they solicit business in another country (even if they're simply importing rather than building the product there), they have to produce cars that meet those countries' various regulatory requirements; if Country X has stricter requirements than our own, they can't sell US-spec cars in that country and use the "we are operating in accordance with US law" excuse.
"No, it's making an unimportant distinction. From the point of view of a copyright holder, a person who has, instead of purchasing a legal copy of their work, has instead made a copy of someone else's copy, is depriving them of the money they were owed for that copy. From their point of view, it's theft. This is why most people have no problems at all describing copyright infringement as theft, except for a minority of extreme Slashdotters. Most people understand the concept, even if we believe the world would be a better place with 100% GPL'd software, or whatever."
Precisely. We (as the collective Slashbot) have no problem with "stolen kisses" or "stealing your thunder" or possibly even "theft of service," but if the word is applied to something that we regularly do, all hell breaks loose.
It's simply human nature. The human brain is extremely adept at rationalization, and virtually everybody wants to believe that they are a good person at heart.
Apple says: "don't steal music."
To which we say: "It's not stealing, it's copyright infringement." (see? I'm not a bad person. I'm no thief.)
The record company says: "you are hurting the record company and the artist."
To which we say: "The record companies have enough money already." and (pick one) "artists aren't hardly paid anything by the record company, so they won't miss the meager royalty payment they would have gotten from the sale" or "artists make too much money. If they're trying to become a millionaire from music, they're a businessperson, not an artist." (see? I'm not a bad person... I'm just correcting some financial inequity.)
The artist says: "I'd really rather you not copy my music without paying for it."
To which we say: "How dare you claim that I owe you a living." (see? I'm not a bad person. I'm putting a clueless, greedy person in their place.)
"Someone should set a trap for the RIAA by creating a shared folder of text files with the names of the songs of approximately the size of an actual .mp3 of the same name and then when they are attacked by the RIAA show that no infringement took place and that the RIAA is not doing their homework and thus burdening the courts, law-enforcement and the general public with their witch hunts."
This has already happened, sorta.
It would be fun to imagine that they haven't learned from this, and haven't stepped up their diligence... but I seriously doubt it.
"This is where most of the money for a track should be going--to the creative talent. If you look at the breakdown for the $1 that gets spent on an iTunes track, about $0.70 goes to the RIAA member [cite: Fox]. They have to give $0.08 - $0.16 out for mechanicals (by law you say)."
I believe that the $0.08 statutory is split among the composer and songwriter, so it's not doubled to $0.16 if a song has one of each. Those are just the statutory royalties -- there are often contractual royalties above and beyond that if the performer didn't write the song.
"That means, at worst they get to keep $0.54 per track for producing nothing (especially true in the case of digital distribution)."
The rest of the money isn't "kept" in the sense that I think you mean. It pays for the production of the music. Until the day when everybody involved with the production of the music can be cajoled into working for free, those costs will be there. If a record sells 10,000 copies and has ten tracks: if the artist paid to do the cover art got $1,000 (a low figure), that's a penny per track. If the recording and engineering cost $10K start-to-finish (again, a low figure), that's another dime per track. If the record company invests $10K into promoting the album, that's another dime. The difference between the gross margin and the net margin is a real devil bitch, no matter what business you're in.
Others have suggested that digital tracks be sold for at or near the cost of the bandwidth and royalties because the music production costs can be burdened into the physical CD sales. That might work well today, when digital sales are (say) 30% of your revenue. But what happens tomorrow when they're 40%, 60%, 80%?
"Especially if you offered non-DRM, variable bit-rate files (like eMusic)--I have to imagine a service like this would crush Apple and be highly profitable for the recording industry. I also imagine that if the RIAA itself was the digital distributor that they could offer distribution at much less than $0.25 / track, and could make even more profit there. I firmly believe that the reason this doesn't happen is because all of the labels are run by old-time executives that fear change and want to maximize their profits while minimizing their efforts. They don't even see that with a little bit of effort they could double their profits."
I believe the point you're making here is that many Slashdotters understand pricing theory and the supply curve better than anybody in the record industry. And, in fact, it's conceivable that no record company has ever hired smart people with econ degrees or MBAs to do this calculation for them. Or, perhaps the record labels haven't really taken the "maximize profits" (ie. pick the best point on that curve) thing seriously enough. The impression I get from reading lots of Slashdot posts is that if only a few Slashdotters had the desire to set up their own record labels, they'd do it right, and -- as you say -- double profits. For example, you might even be able to operate your own record company at a 4% net margin, vs. the 2% net margin that Warner Records managed last year.
Magnatunes is a great example of a record label done right -- I think it fits the model of how many Slashdotters would run their own label:
But, this raises some questions:
"(Russian Organization for Multimedia and Digital Systems a.k.a. similar to the RIAA in Russia)."
Not really. A much closer analogy would be our BMI or ASCAP. Allofmp3 is working their magic by paying the licensing rate for broadcasts. Here in the US, it is BMI and ASCAP who collect money for broadcast licensing. BMI and ASCAP represent artists and are unaffiliated with the RIAA.
FWIW, despite the fact that ASCAP and BMI are run by and for artists, they are often just as hated by Slashdotters as is the RIAA; particularly when it makes the news that they are suing a business owner for unlicensed public performance. It seems that around here we love and respect the artists, except when they get a little too uppity about being paid.
"What I'd heard is that allofmp3 PAYS royalties, but the American firms refuse them, as they're "not enough"."
Well, one issue is that by law, composers and songwriters must be payed "mechanical royalties" which are typically $0.08 per track. That is, of course, much less than ROMS is getting per track -- if allofmp3 is paying ROMS 10%, then that's about a sixth of a cent per track. I sure the hell ain't no lawyer, but if the record companies start taking that sixth of a cent per track, the publishing companies (which collect the mechanicals on behalf of the composers and songwriters) might sue to collect their $0.08. When you make a sixth of a cent per track and must pay $0.08 per track in royalties, there is absolutely no way to make that back in volume. You will lose money on every track sold.
The ironic thing here is that a common sentiment around here is that the record companies should take a cue (and/or clue) from allofmp3 and sell tracks for around $0.10 a song. Yet the current law, which dictates $0.08 for mechanicals, would not allow that to happen. And when a few weeks ago it made the news that the record companies were trying to lower mechanicals, the news was not well received by the Slashbots.
My guess is that the "the artists are needy" crowd are OK with the statutory rates staying as they are -- but they'll still download from allofmp3 anyway, with the logic that if composers and songwriters are only making $0.08 a track, there's not much difference between $0.08 and zero. The "the artists are greedy" crowd are probably hoping for the day that the record companies can get that statutory rate lowered. That might open up the possibility of record companies recognizing ROMS or other third-party licensing organizations that pay at less than the US statutory rate.
"What we don't understand is the point of law that he used to justify his ruling. What we don't understand is how we are protected from this kind of charge when we are not trying to do anything related to music."
I don't understand the first part, either, since I'm not familiar with Australian law. But I can offer some advice on the second.
Due to the nature of their profession, many people who read Slashdot have trouble coming to terms with the fact that the law is often rather soft and mushy. We works with ones and zeros in our own profession, and it makes much more sense to us if something can be declared to be either illegal or not illegal. In many cases it is indeed quite clear, but in civil law, it's often not. And that is precisely the reason why we have courts.
To get to your point -- say you're thinking of starting a web site and you want to protect yourself from civil liability. You can start by asking yourself these questions:
And if you're particularly cynical, you can ask yourself:
So, a site like, say, legaltorrents would pass the test, as would, say, a book review site which posted excerpts of text for critical purposes and provided links to where the user could purchase the book. Google would pass, as well. But mp3sforfree.com, as it was operated by the fellow in TFA, would not... he failed on all five points.
"Weeeell, mp3s are not illegal. There are a LOT of music out there, that is free, so mp3s4free could easily be a site linking to those specific mp3s."
If you've any doubt, the Internet Wayback machine is a good source. Here's one of the fina l incarnations. Take a look at the "popular downloads." If you're lucky enough to not be exposed to popular music regularly, I'll translate: Britney Spears, Nickelback, Dido, Ludacris and Matchbox 20 are not unsigned acts who allow their music to be distributed freely.
"So if I link to Google and Google links to something illegal, then I can get sued?"
Very doubtful. Intent and scope are a big part of it. If you were to create a site exclusively dedicated to providing links to Google search results pages which contained exclusively unauthorized copies of copyrighted works, then you might expect a C&D. In other words, the "common sense test" works here.
"As I read this, this means that I am infringing if I think it's okay that you infringe. Which also means that if I argue that it should be legal to infringe on copyrighted material, then I am already infringing."
That's a pretty slippery slope. Do you really think that?