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Music Industry

by Mike Masnick

Fri, Dec 17th 2010 10:57am




Filed Under:
copyright, damages, file sharing, statutory rates

Companies:
limewire, riaa


Judge In Limewire Case Wants To Explore How Much File Sharing Really Costs Record Labels

from the this-could-be-interesting... dept

With Limewire officially shutting down following its (totally expected) legal loss earlier this year, you might have though the case was totally over. However, the record labels quickly claimed that with the loss, Limewire should have to pay a billion dollars, which seemed a bit extreme. In typical RIAA fashion, the labels didn't feel like they should have to prove any damages at all, but that the judge should just order statutory rates. However, Limewire asked the judge to have the record labels actually prove their losses -- and, somewhat stunningly -- it appears the judge has agreed, despite the record labels' claim that trying to prove damages would represent a "crushing burden":
On Tuesday, Judge Freeman said tough noogies, with some interesting language written in the margins of a court-endorsed memo to the parties. She scribbled -- barely legible -- that Lime Wire should enjoy enough discovery to mount a defense on the damages issue. Both Lime Wire and the labels must pick 100 works -- 80 songs and 20 albums -- that each believes to be representative of the damage (real or not) that file-sharing has on the record companies. In addition, 100 more works -- another 80 songs and 20 albums -- will be selected at random.
It's not entirely clear, from there, how each side will go about showing damages, but it is interesting that the plan seems to be to look for empirical evidence to determine actual damages. I'm really surprised by this -- since my understanding was that with statutory rates, the whole idea was that the copyright holder never had to bother proving any actual damage (something I disagree with -- but it's what I thought the law said...). Either way, it certainly would be nice if there were some reasonable data to work with, so this should be worth following.

51 Comments | Leave a Comment

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  •  
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    The eejit (profile), Dec 17th, 2010 @ 10:01am

    I hope to whichever Deity wants my soul that they cannot prove that there was actual damages.

     

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    •  
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      :Lobo Santo (profile), Dec 17th, 2010 @ 11:13am

      Re:

      Well, if you start with the amortized cost of the initial work sans profit made since then upon same said work, then proceed to factor in the cost of the ones and zeros stolen from them, the big total comes out to an incredibly fat ZERO.

      Unless they can somehow prove that when I buy a pizza from Pizza Hut then Domino's should have the right to sue me for 'lost profits' or some such bullshit.

      On a separate note, LimeWire should've used the Chewbacca defense...

       

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  •  
    icon
    Free Capitalist (profile), Dec 17th, 2010 @ 11:08am

    They'll get back to them with a crayon scribbled construction paper bearing the proof of losses:

    1 song @ $1 x 1 billeeon pirates = 1 Billeeeonon per song!

    'Proof of losses has been duly noted and requested damages increased accordingly'.

     

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    •  
      identicon
      Simon, Dec 17th, 2010 @ 11:13am

      Re:

      Sadly this is probably more 'insightful' than 'funny'.

       

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    •  
      identicon
      Timothy, Dec 17th, 2010 @ 1:44pm

      Re:

      Uh... Record label's don't get $1 per song. They are not the one selling the songs. iTunes, Napster, Amazon, or Microsoft are. I guarantee you they don't get $1 per song. Plus, they have to measure how many people actually downloaded that song. I doubt that 1 billion people actually downloaded a single track.

      I have my reservations about this lawsuit. It seems like they are making this company pay for the illegal activities of other people. It's like having my brother convicted of murder when my sister is the one that did it. True, they are the gateway that these people used to commit the crimes, but does that mean they should be held responsible???

      Google wasn't when Viacom sued them for other people posting their content on Youtube.

      So why should Limewire be considered guilty? What's your take?

       

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        Anonymous Coward, Dec 17th, 2010 @ 2:59pm

        Re: Re:

        Do I think what they are doing is illegal, no. They are only providing a service which facilitates both legal and illegal usage. But the moment they started playing up the illegal usage, is the moment I stopped feeling sorry for them.

        If they'd have just said, "We're a gnutella and torrent tracking service, and the only interaction we have ourselves is to remove dead links reported to us...", I'd see them as having a similar case to what Google has with YouTube. They didn't do that though. Same reason I don't feel sorry for TBP. They flaunted it.

         

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        Killer_Tofu (profile), Dec 20th, 2010 @ 1:26pm

        Re: Re:

        The labels won't be able to reach the 1 billion mark unless they use the math above. I am not sure they are intelligent enough to figure out another way to hit a billion in losses from Limewire.

         

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    paul, Dec 17th, 2010 @ 11:09am

    Wouldn't it be nice if ...

    ... Limewire could show that sales went *up* because of their users sampling music, and the judge ordered the RIAA to pay damages to LW :-).

     

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      Jose_X, Dec 18th, 2010 @ 1:04pm

      Re: Wouldn't it be nice if ...

      Yes, negative damages. Limewire helped them so they must pay for the suit and royalties.

       

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    Anonymous Coward, Dec 17th, 2010 @ 11:13am

    It should be noted that the "Crushing burden" is in regards to showing Royalty Payments and Profits.

    Which is true. The last thing the Recording Industry wants to show is any of their $$ figures, especially for 80-100 works. Imagine if the judge sees how much they've been screwing people over?

    I expect this case to be dropped pronto now. Oh wait, it's already reached a judgment...does that mean they can't drop this?

    I eagerly await the fallout.

     

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  •  
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    The Infamous Joe (profile), Dec 17th, 2010 @ 11:14am

    Backfire

    Will the defence get to dispute the claims made by the prosecution? So when they start double dipping the dollars or ignoring the increased benefits someone can call them on it? IANAL, so I don't know how these things work.

    PS- Can we please have a TD mobile site? Pleeeease?

     

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    •  
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      Mike Masnick (profile), Dec 17th, 2010 @ 11:16am

      Re: Backfire

      PS- Can we please have a TD mobile site? Pleeeease?


      http://www.techdirt.com/index_lite.php

       

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      •  
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        :Lobo Santo (profile), Dec 17th, 2010 @ 11:24am

        Re: Re: Backfire

        Yay!!!
        Can we get mobile browsers to redirect to it automagically?

         

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      •  
        identicon
        Anonymous Coward, Dec 17th, 2010 @ 11:30am

        Re: Re: Backfire

        O_O

        Can I please have a pony?

         

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        •  
          icon
          Hephaestus (profile), Dec 17th, 2010 @ 11:36am

          Re: Re: Re: Backfire

          "Can I please have a pony?"

          No!! But if you want I have a slightly used camel with a broken back ...

           

          [ reply to this | link to this | view in chronology ]

          •  
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            Dark Helmet (profile), Dec 17th, 2010 @ 11:38am

            Re: Re: Re: Re: Backfire

            "No!! But if you want I have a slightly used camel with a broken back ..."

            Are all the straws that killed it still usable?

            ...I'm on a girl.

             

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            •  
              identicon
              Anonymous Coward, Dec 17th, 2010 @ 11:40am

              Re: Re: Re: Re: Re: Backfire

              Oh please, we all know you're the bottom in the relationship.


              ....See what you've done Mike? You give us good news, and we get all giddy. Bad Mike. Bad news from now on.

               

              [ reply to this | link to this | view in chronology ]

            •  
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              Hephaestus (profile), Dec 17th, 2010 @ 11:52am

              Re: Re: Re: Re: Re: Backfire

              "Are all the straws that killed it still usable?"

              Yes they are. They are yours for the taking. I am sure the recording industry will create more than enough straws to kill my new Camel.

              "...I'm on a girl."

              The whole "I'm on a horse" thing seems kind of distrubing now ;)

              I'm not scottish, but, I'm on a sheep ...

               

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      •  
        icon
        The Infamous Joe (profile), Dec 17th, 2010 @ 11:39am

        Re: Re: Backfire

        I did know about the lite version but you can't post comments or replies. Also, auto redirect would be lovely, but only if I can comment.

        Holy hell, I'm needy.

         

        [ reply to this | link to this | view in chronology ]

        •  
          icon
          Mike Masnick (profile), Dec 17th, 2010 @ 12:15pm

          Re: Re: Re: Backfire

          I did know about the lite version but you can't post comments or replies. Also, auto redirect would be lovely, but only if I can comment.

          A more functional mobile offering is on the list of things to work on, but not an immediate priority right now. We're working on a bunch of new things to launch next year, and then we'll look at other priorities.

          One of the issues with the mobile site is that it's a lot of work, and it's not clear that it would impact *that* many people. It is something we'd like to do, but it may take a little while.

           

          [ reply to this | link to this | view in chronology ]

          •  
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            The Infamous Joe (profile), Dec 17th, 2010 @ 12:43pm

            Re: Re: Re: Re: Backfire

            Eh, you're probably right. My droid 1 handles TD just fine, but typing is somewhat of a hassle-- especially editing text. Mobile platforms seem to work much better for that type of thing.

            Sorry about threadjacking, btw. I'm done now. :)

             

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  •  
    icon
    Hephaestus (profile), Dec 17th, 2010 @ 11:33am

    Question what magazine and periodicals do judges read?

    I am wondering because judges seem to have smartened up on copyright related issues recently.

     

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  •  
    identicon
    Anonymous Coward, Dec 17th, 2010 @ 11:48am

    Meh. The record labels will probably find some made up number of how many downloads there where and use the old 1 download = 1 lost sale formula, and that will be it. Not really useful to prove our point.

     

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      identicon
      Anonymous Coward, Dec 17th, 2010 @ 11:59am

      Re:

      Except Limewire is also required to present the opposite argument, and will (hopefully) present the Official GAO Report that calls out those BS numbers.

       

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        Anonymous Coward, Dec 17th, 2010 @ 12:21pm

        Re: Re:

        Yeah. Been there, done that. The industry always makes up numbers, knowledgeable people always refute them. The corrupt judiciary system accepts whatever the industry says. It's more difficult to present evidence of no damage than to present evidence of damage. The judge will probably see "no damage" as wishful thinking by Limewire and award something "reasonable", like a few million dollars instead of the full billion.

         

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    interval (profile), Dec 17th, 2010 @ 12:01pm

    Exsessive Burden my ass...

    Next the RIAA will be claiming that the public owes every RIAA exec a car wash on Saturdays.

     

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  •  
    identicon
    Mark Montgomery, Dec 17th, 2010 @ 12:01pm

    The RIAA and the Record Companies

    The RIAA and the record companies are blood-suckers who can't accept the fact that their model of 1 CD for $18 is long dead. FACE IT!!!!! Music is now free and has been since 1999!!!!! We will dance on the graves of the record companies and the RIAA!!!!
    Mark montgomery NYC, NY boboberg@nyc.rr.com

     

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  •  
    identicon
    hmm, Dec 17th, 2010 @ 12:50pm

    given whats happened so far..

    RIAA politely requests judge to just accept their version of "losses".
    Judge refuses.
    RIAA gives a bribe to someone in power.
    Government threatens to either sell judge's children as sex slaves in afghanistan, or list them as "unlawful combatants" for an argument they had in the playground and threatens to have them executed).
    Judge sides with RIAA.

     

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  •  
    identicon
    Dr. Evil Says, Dec 17th, 2010 @ 12:54pm

    (pinky to mouth)...one Billion dollars

     

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    Anonymous Coward, Dec 17th, 2010 @ 1:04pm

    The risk in this that the whole thing could backfire on the pirating community, and create a court sanctioned proof of loss scenario, one that could potentially play out in other cases.

    If that happens, you are looking at a process that would make judging losses much easier, and make it easier for the courts to assign a cost to it. It would also potentially make it easier to get lawyers to do the work on percentage, because they have an idea what a guilty outcome will bring.

     

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      Anonymous Coward, Dec 17th, 2010 @ 1:30pm

      Re:

      How would it backfire?

      Any number that is determined will be magnitudes smaller than the $600k or $1.9mil that have been handed out.

      Right now all of their legal bluster is BECAUSE they can hand out multimillion dollar lawsuits for minor infringement. The numbers can only get smaller from there.

       

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        identicon
        Anonymous Coward, Dec 17th, 2010 @ 5:32pm

        Re: Re:

        Not really. It is very easy to come to the conclusion that a single share can lead to many violations.

        The Avast story is a great example, with a single pirated serial number being used almost 775,000 times to install their software illegally. From a single share (the person with the license) comes 35 million dollars worth of illegally installed software.

        There is no minor infringements on torrents. Once you put it out there, it is out there pretty much forever and never goes away. You may no longer seed the file, but the file you seeded continues to move along. Your single seeded file for a week can end up with millions of people in that time, and millions more after you stop seeding.

        It is fairly easy to show how a single file moves, and how many people can end up with it. At even pennies a copy (which is way lower than retail) it still can easily run into the millions.

         

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          The Infamous Joe (profile), Dec 17th, 2010 @ 6:05pm

          Re: Re: Re:

          You're falling into the same trap they do. You can't prove every download is a so-called "lost sale". Have you never turned down something until you learned it was free? Just because someone downloads something for free doesn't mean they would pay money for it.

          Furthermore, it is impossible using bit torrent technology to tell with any amount of certainty how many people download a file.

          In short, you can't *prove* any actual damages at all.

           

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          techflaws.org (profile), Dec 18th, 2010 @ 6:15am

          Re: Re: Re:

          The Avast story is a great example, with a single pirated serial number being used almost 775,000 times to install their software illegally

          Right, it's a great example of a company pulling a number out of thin air using it as advertizing for their goal.

           

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    Karl (profile), Dec 17th, 2010 @ 1:12pm

    Statutory damages

    my understanding was that with statutory rates, the whole idea was that the copyright holder never had to bother proving any actual damage

    There's an unwritten tradition in case law that statutory damages should bear some relationship to actual damages.

    So, the RIAA will certainly get statutory damages. But there is a huge range in statutory awards - from $750 to $30,000 per infringement. (Assuming it's not "willful," which I don't think was proven.)

    I'm guessing that since the RIAA can't come up with any actual numbers, they'll get a much lower award, probably less than five grand per song.

     

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    Anonymous Coward, Dec 17th, 2010 @ 2:50pm

    I don't understand, how is that companies the fleece the government on taxes never get called on those ridiculous numbers?

    The RIAA and MPAA are notorious for "creative accounting", heck the MPAA even shutdown an initiative to trade stocks on movies and my guess is because it would require an amount of scrutiny on their accounting books that they don't want to have, it would mean they would have to be honest and pay more taxes and who would like that?

    If they are loosing billions I want to see how much taxes do they pay, I want to see the books. Basically I want proof and so should the government because I don't think they are being entirely honest here.

     

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    Anonymous Coward, Dec 17th, 2010 @ 3:34pm

    This is great strategy by Limewire. Anything that forces the RIAA labels to open up their books is great settlement leverage.

     

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    Anonymous Coward, Dec 17th, 2010 @ 5:20pm

    The judge must be from STL

    Crushing burden huh? Well if you don't want to prove it then you don't want your money - go fuck yourself.

     

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    identicon
    BrianR, Dec 17th, 2010 @ 6:35pm

    Sharing?

    Sharing? Is that what you are calling it? Be honest, how many of you and sharing your music files via Limewire with ONLY your friends?

    Better yet, how many people do you think would "Share" their music files on Limewire if they couldn't use the file themselves until the person that they shared the file with gave I back?

    We were at a property recently where our company offers free Wi Fi & has been having problems with people using it to share music and our regional manager was expressing her displeasure with the fact that people were sharing stolen music that put us at risk and someone asked her where she got her music, to which, she replied:

    "I get all of my music from LIMEWIRE!"

    Now that is what I call sharing!

     

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    Brian Corber, Dec 17th, 2010 @ 10:39pm

    good idea: at least shows if any damages did occur

    If it were up to the RIAA (the copyright fascists) they'd want to write a simple complaint, file it for free and get an immediate judgment). In this way they'd be subverting the whole legal system which is okay with them so long as they get the big bucks. Jurisprudence? Irrelevant, just give us our money! They never want to be held accountable.

     

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    Allan Masri (profile), Dec 18th, 2010 @ 1:48pm

    proof of loss

    I think Limewire should try a statistical approach: for each song, what was the income before Limewire, what was it during Limewire, and what was it after Limewire. If the income did not decrease significantly during Limewire (likely) and did not increase significantly after Limewire (very likely) then there were no losses caused by Limewire. Limewire should also pay close attention to royalties paid to artists. If record companies did not pay royalties, they can't claim that amount of money as "lost revenue", since it was fraudulently obtained revenue. Finally, they should try to show a pattern of fraud in the record companies' dealings with artists. The evidence could be used to bring a "criminal cartel" charge against the record companies and their representative organizations.

    I doubt whether the record companies want to reveal any of this information to Limewire. Even though the judgment has already been delivered, the parties could agree on a settlement. The RIAA could announce that they can't prove damages and the case would be over. The only question is, how much will Limewire charge to let that happen?

     

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    needy, Dec 20th, 2010 @ 2:35pm

    and just how are the labels going to PROVE that the figures they give the judge are GENUINE? they will, i am sure, produce greatly inflated figures as they normally do, trying to use the 'one download equals one lost sale' example. i hope the judge doesn't simply accept them as being actual. i also hope that the judge isn't doing this to only appear as being unbiased, then do as the courts have, eg, in Sweden. decide on a verdict, then have a token look at the 'evidence' from both sides, ignore the defense, accept the BS from the plaintiffs and go with the original decision, as has been decreed by the US government! i read that the Swedish government were threatened with sanctions by USA if they didn't convict TPB, guilty or not!

     

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    identicon
    NEVER BUY MUSIC, Dec 22nd, 2010 @ 11:37am

    NEVER BUY MUSIC

    I propose we strike buying music altogether.

    I'm not just a listener, but I'm also an artist and this is a slap in the face to everyone. It's bad enough that Limewire is shutting down, but they want a BILLION DOLLARS?

    As in the words of Trent Reznor: "Steal it... Steal away and steal some more. Steal it and then give to your friends. Keep on stealing"

     

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    identicon
    shamikagainey, Dec 28th, 2010 @ 9:32pm

    im big fan of limewire

    it all about make these artist rich they should know that people is not buyin cd no more i know im not the music suck these days im not wastin my money on 20 dollar cd and the music is trash they now talkin about anythin so im happy with the downloadin music i love it to point they got to understandin that they is not stop downloadin i repeat THEY CANNOT STOP DOWNLOADIN thats how that people saling cd on the street for 5dollars cause you know people is not goin to the store and buy the music they getin off the street.I DONT AGREE THEM SHUNTIN LIMEWIRE DOWN THATS NOT KOOL....

     

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