Microsoft, Yahoo And Real Sued For Failing To Get All Necessary Licenses For Music Stores

from the oops dept

Want to know just how incredibly confusing and impossible copyright law has become? Just take a look at this lawsuit, filed yesterday by some music publishing companies against Microsoft, Yahoo and Real Networks, claiming that the online music stores each of them runs (the Zune store, Yahoo Music and Rhapsody) infringe their copyrights (thanks Eric Goldman for sending this over). How can that be, you ask? Surely these companies properly licensed the music they offer in their streaming/download offerings, right? Well, the lawsuit doesn't provide that much in the way of detail (and I've spoken to a few copyright lawyers -- none of whom seem to agree with each other!), it sure looks like the claim is that Microsoft, Yahoo and Real may have licensed the copyrights on the recordings, but did not license the copyright on the compositions. It sounds like (though, again, the details are fuzzy) that the record labels did licensing deals with these music services, but publishers and labels are separate entities (even if the labels own many publishers), and the rights are separate.

It's pure speculation until more details come out, but one imagines that the licensing deals with the record labels included some sort of assurances that the publishing rights were covered as well -- and for songs whose publishing rights were covered by the major record labels, that's probably the case. But for songs where the publishing rights were owned by independent companies -- such as MCS Music America, the claim appears to be that the publishing rights were never cleared -- and thus, Microsoft, Yahoo and Real were streaming/downloading music to which they only held some of the rights. Yikes.

Most of the complaint details which songs were offered without (allegedly) having secured all the rights. And, of course, the publishers are claiming that every time a song was streamed or downloaded, it counts as a separate act of infringement. If the court agrees, this could represent a massive liability for Microsoft, Yahoo and Real, given the fines we all know can be issued over a single instance of infringement.

That said, this is yet another example of the convoluted house of cards that copyright has become. The idea that you can license a recording, but then need to get a separate license from a totally different party for the rights to the "underlying composition" (and don't get us started on the need to make sure you're covered for reproduction, distribution and performance rights -- three separate issues under copyright law), and you begin to get a sense of the problem. Basically, every time some new technology or innovation comes along, the copyright holders run to Congress to slap on another right, rather than actually innovating on the business model side. And on top of it, when new technologies like the internet come along, it's not at all clear which rights really apply and who controls/owns what rights. Suddenly, you have a massive mess for a company trying to do something as simple as let people listen to music. Just for that, you get a massive lawsuit like the following:

It's the sort of system only a greedy copyright lawyer could love: it's designed not to incentivize creation (copyright's stated purpose) or to facilitate the distribution of content -- but instead designed for the exact opposite: to confuse and hinder (but to keep copyright lawyers quite busy and gainfully employed).

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ASCAP's Bill Of Wrongs

from the stage-and-symptom-of-the-grieving-process dept

ASCAP has published a Bill of Rights for Songwriters and Composers, which, unfortunately, seems to be more like a bill of "wrongs."

Just as citizens of a nation must be educated about their rights to ensure that they are protected and upheld, so too must those who compose words and music know the rights that support their own acts of creation. Without these rights, which directly emanate from the U.S. Constitution, many who dream of focusing their talents and energies on music creation would be economically unable to do so - an outcome that would diminish artistic expression today and for future generations.

Which U.S. Constitution is ASCAP reading? The U.S. Constitution provision says, "the Congress shall have Power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." There is nothing in the U.S. Constitution to suggest that copyright law has anything to do with protecting artists' natural rights, copyright hardly exists for a limited amount of time anymore, and Thomas Jefferson and James Madison were quite skeptical of the concept.

And the claim that such laws are required to make a living as an artist is very debatable, and I'd beg to differ. There was art before copyright law existed, and many artists are making their living today despite copyright law (rather than because of it).

At this time, when so many forces are seeking to diminish copyright protections and devalue artistic expression, this Bill of Rights for Songwriters and Composers looks to clarify the entitlements that every music creator enjoys.

Who is seeking to devalue artistic expression? Price and value are not the same thing. Just because the economics of digital goods have pushed the price of music towards zero (the marginal cost) does not mean that music no longer has value. This sort of statement needs to be substantiated.

1. We have the right to be compensated for the use of our creative works, and share in the revenues that they generate.

Why? In what other industries do creators maintain control over their creations after they reach consumers? Lenovo has no right to be compensated for the use of my laptop or to share in the revenue I generate through developing software. This is not a given.

2. We have the right to license our works and control the ways in which they are used.

Again - why? How many other industries control the way their works are used? This is not a given.

3. We have the right to withhold permission for uses of our works on artistic, economic or philosophical grounds.

This is not the purpose of copyright law at all, especially since it’s supposed to be for a limited time. This, in fact, is a restriction on artistic expression. Though it may be troubling to have a work associated with something that you don't agree with, I believe that freedom of speech is more important for artistic expression than total control.

There are defamation and libel laws for serious abuses.

4. We have the right to protect our creative works to the fullest extent of the law from all forms of piracy, theft and unauthorized use, which deprive us of our right to earn a living based on our creativity.

Theft and copyright infringement are not the same thing. And the sharing and spreading of music through digital channels is natural and, more importantly, does not deprive artists of their right ability to earn a living.

Bad, out-dated, obsolete business models based on artificial scarcity deprive artists of their right ability to earn a living.

(I'm not sure if this is a "right" because they seem to be confusing royalties and salaries.)

5. We have the right to choose when and where our creative works may be used for free.

Why? Coca-cola doesn't have the right to determine whether its products can be given away for free as part of a promotion after a pizza store purchases them. This is not a given.

6. We have the right to develop, document and distribute our works through new media channels - while retaining the right to a share in all associated profits.

Wow, that started off great, but the ending sounds like Billy Bragg's whining in the New York Times. The phrase "all associated profits" seems quite overarching. This sounds like musicians claiming that MySpace and Bebo owe them money for their success, while denying that the reverse could ever be true, that a new media company would be entitled to share in "all associated profits" of an artist it enables to succeed.

Double standard much?

7. We have the right to choose the organizations we want to represent us and to join our voices together to protect our rights and negotiate for the value of our music.

Excellent! I actually agree with this whole-heartedly. I do not want ASCAP to represent me!

8. We have the right to earn compensation from all types of "performances," including direct, live renditions as well as indirect recordings, broadcasts, digital streams and more.

This sounds like Viacom's misunderstanding of the difference between content and communication. ASCAP is treating the Internet like other forms of broadcast, but the Internet isn't a broadcast medium. It's a communications medium. When it comes to communication, the idea of using copyright to restrict content gets weird in a hurry. Royalties are not the answer for the digital age.

9. We have the right to decline participation in business models that require us to relinquish all or part of our creative rights - or which do not respect our right to be compensated for our work.

Sure you do, but that doesn't mean you'll make any money. Economics aren't about what you want to happen, or what you think should happen. Economics are about what is happening. Business models that don't make sense given the economics won't succeed. Of course you have the right to choose whatever business model you like, but that doesn't mean it will be successful or that it should be protected by copyright law.

The end of that statement sounds like another case of confusing royalties and salaries.

10. We have the right to advocate for strong laws protecting our creative works, and demand that our government vigorously uphold and protect our rights.

Of course you do, but again, I don't think it's a great idea if you subscribe to this "bill of rights." Moreover, consumers also have the right to advocate for better laws that protect their interests and vigorously uphold and protect their rights, which our current laws fail to do.

Artists can advocate whatever they want, but it's a bad idea to advocate the opposite of what your fans want.

Conclusion

This supposed bill of rights is really just an assertion of the status quo by those who depend on copyright law to protect their obsolete business models. If people in the music business could only realize that they're in the business of providing an enjoyable experience surrounding music, rather than trying to control and monetize every possible use of art, they might open up to new business models that make sense rather than whine about the fact that their current business models don't work anymore.

This isn't a bill of rights. It's a stage and symptom of the grieving process.

Signing this and, worse yet, living by it, would be an economic and ethical mistake for any songwriter or composer.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

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