Back in June, we wrote about an odd lawsuit from a bunch of independent music publishers headed by MCS Music America against Microsoft, Yahoo and RealNetworks claiming that all three failed to secure licenses on the compositions. This seems strange, of course. You would assume that big companies like Microsoft, Yahoo and Real would make sure to secure all the necessary licenses for their music download and streaming operations. However, MCS and the others suggested that the three companies only secured the licenses on the recordings, but not the compositions. What appeared to have happened, was that Microsoft, Yahoo and Real licensed the songs from the major record labels, who also own many publishing operations, and in were told that they had received licenses for both the recording and composition. The problem is that not all of those major labels hold the composition rights. In some cases, those rights are still held by independent music publishers -- and there was a fair amount of confusion over who owned what. It was a perfect example of how ridiculous copyright law is today that even in setting up a big music operation from a major company with the major record labels, no one was exactly sure if all the proper rights were secured.

Either way, Microsoft, Yahoo and Real were quick to ask for the lawsuit to be dismissed and Eric Goldman sent over the rather short ruling from last month that does, in fact, dismiss the case stating (surprisingly) that the music publishers failed to show they hold the copyrights they were arguing over. That's rather incredible, seeing as the original lawsuit went on for pages and pages, claiming to hold various licensing rights. But the court wasn't buying it:

Defendants' Motion to Dismiss All Causes of Action of Plaintiff MCS Music America, Inc. ("MCS") is granted on the ground Plaintiff MCS has failed to state a legal claim for copyright infringement. To establish a claim of copyright infringement, two elements must be satisfied: (1) ownership of a valid copyright, and (2) unauthorized copying of the original work. Feist Publications, Inc. v. Rural Telephone Services Co., Inc,. 499 U.S. 340, 111 S.Ct 1282 (1991); Jones v. Blige, 558 F.3d 485 (6th Cir.2009).

MCS has failed to demonstrate ownership of any of the copyrights at issue. Plaintiffs allege MCS is a licensing administrator and an exclusive licensing agent of the copyrights at issue, but do not allege MCS to be an owner of such works. Without demonstrating legal ownership, MCS is not able to plead all of the necessary elements of copyright infringement.

Plaintiffs ask the court to consider the affidavit of Janice Bane with regard to MCS's rights. The court will not consider Ms. Bane's affidavit in deciding this issue. In ruling on a motion to dismiss, a court properly may consider only evidence contained in or asserted in the pleadings. As a general rule, matters outside the pleadings may not be considered in ruling on a motion to dismiss unless the motion is converted to one for summary judgment under Rule 56. Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir.1999). Weiner v. Klais & Co., 108 F.3d 86, 88-89 (6th Cir.1997). Furthermore, even if the court were to consider Ms. Bane's affidavit, it does not indicate any ownership on the part of MCS, thus rendering its consideration moot.

Defendants' Motion to Dismiss All Causes of Action of Plaintiff MCS is GRANTED.

On top of that, MCS requested the right to amend the lawsuit, and the court shot them down there as well:

Plaintiffs have moved to amend their complaint a second time. The Federal Rules of Civil Procedure state "... a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2). However. Plaintiffs have not demonstrated their amended complaint would show MCS has ownership of any of the copyrights at issue and would therefore be futile. For that reason, Plaintiff's Motion to Amend Complaint is DENIED.

So much for that, then. Somewhere along the line, it looks like these publishers got some really poor legal advice, as this case didn't last long at all, and to be tossed out so early is pretty bad.

PrometheeFeu writes "The French Minister of Culture Christine Albanel has just been assigned a mission to prepare the French publishing industry for the digital economy. The phrasing of the mission-letter makes it clear that while developing legal offerings and digitizing books is part of the plan, the focus is on getting the cooperation of publishers to enforce the 3-strike law (Google translation from the original). The language actually talks about inciting publishers to do so which leads me to wonder why the government should incite people to exercise their rights if they don't want to do so...

The letter makes it clear that IP enforcement is seen as the only way to distribute value to authors and distributors (consumers are not mentioned). Here is a choice quote:

"The government cannot accept to see another cultural industry threatened by the pillaging."

The letter also mentions the "damages observed for the music and film industries through the growth of illegal downloads." Obviously, no sources are given for that information. Most amusingly, the letter states that Christine Albanel (who kindly told us that OpenOffice comes with a firewall which would somehow block illegal downloads) should use in this mission her experience in working with the music and film industry. I like many French authors and I sincerely hope that they ignore whatever she says and instead try something which might actually work, but I'm not holding my breath..."

Late (very late) Friday, Google and groups representing publishers and authors squeaked in just under the deadline and put forth a revised Book Scanning settlement agreement, designed to address at least some of the concerns and complaints raised by people over the last one. If you want a good breakdown over the changes, check out Danny Sullivan's analysis or James Grimmelmann's. Not surprisingly, the Open Book Alliance is not happy, but seeing as it's a bunch of Google competitors, they were never going to be happy in the first place (and you know that press release was probably 95% written before the actual new terms were released).

In my mind, the biggest news is the new restrictions on countries from which it will scan books. From now on, the book scanning project will only scan books that have registered copyrights in the US, UK, Australia or Canada. This was mainly to address ridiculous concerns by some in Europe that this project -- to help make all books more accessible -- was somehow a threat to European culture. I was in Europe on Friday (well, Saturday there) when the announcement was made, and it actually pissed off the folks I talked to about it -- who felt that their politicians were doing serious harm to European books by having them excluded from such a useful resource.

Separately, a lot of the focus on this new agreement, as with the old agreement, is over how Google treats orphan works. Again, I have to admit that I think most people are making a much bigger deal of this than it warrants. The orphan works stuff really covers a very small number of works. And giving rightsholders ten years to claim their rights seems more than adequate to me. I just don't see what the big deal is here. The real issue is that we have orphan works at all. Under the old (more sensible) copyright regime, you actually had to proactively declare your copyright interest. The only reason we have orphan works at all is that we got rid of such a system in the ongoing effort of copyright maximalists to wipe out the public domain.

Anyway, I think this is all something of a sideshow. I still stand by my original feeling towards the settlement, which is that I'm upset anyone felt it was necessary at all. Google had a strong fair use claim that I would have liked to have seen taken all the way through the courts. And, of course, this settlement really has nothing at all to do with the main issue of the lawsuit (that fair use question) and is really a debate over a separate issue: how to take the books Google scans and trying to turn them into a "book store" rather than more of a "library." And, in doing so, the important fair use question gets completely buried -- which I find unfortunate.

Reader OG points us to this NY Times article about how libraries are increasingly offering ebooks for download. This, of course, seems like a good idea, and fits in with the purpose of a library, but where the article gets either laughable or head-bangingly annoying is where it starts discussing how publishers have serious problems with this whole concept. Some publishers are refusing to allow libraries to lend out their ebooks...which makes me wonder why the publishers have any say in the matter. Thanks to the right of first sale, a library should be able to lend out an ebook if it's legally purchased it without having to get the publisher's permission.

Furthermore, the rest of the discussion is just silly. There are arguments about how many ebooks can be "checked out" at once or how the DRM works (which blocks the most popular ebook readers from being supported). There's also an issue of publishers charging libraries much higher prices for ebooks, and scoffing at a librarian who suggests that libraries should be allowed to offer as many copies as needed of an ebook to lend at the same time, and just pay the publishers a nominal fee.

It's hard to describe how insane this whole discussion sounds. Here you have a fantastic tool to support a library's main purpose in the world, and we're arguing over what sorts of artificial restrictions to set up to limit that tool from actually being useful? It's as if we discovered a way to make all the food the world ever needed, and we sit around talking about how to make sure that most people don't get fed. It would make me laugh if it weren't so disturbing that people seem to think this is a good thing.

In digging deeper into the request from music publishers and songwriters' representatives after they started demanding performance royalties for the 30-second previews in iTunes, Greg Sandoval was able to get a copy of the letter that was sent to the Senate Judiciary Committee concerning copyright laws from the National Music Publishers Association, ASCAP, BMI and the Songwriters Guild. Reading the quotes is stunning, in that you could basically paraphrase them as saying "we are luddites -- do not let technology change the way the world works." Here's one quote:

"Technology should not be used to strip rights from songwriters, composers and music publishers. The choice of certain audiovisual delivery systems or methods over others should not result in a diminution of creators' rights or royalties."

Read that one carefully. They are saying that as technology changes, and as the market changes, their royalties should never be allowed to drop. Notice that they're not taking responsibility for adapting to a changing market. They're not saying that they need to adjust and put in place smarter business models. No, they're saying that Congress somehow needs to guarantee that no matter what happens in the market, their royalties remain the same.

What's really revealing is that this quote highlights the fact that these representatives view their royalties as "rights" to be protected -- not revenue to be earned.

No wonder they're lashing out and doing all sorts of ridiculous stuff like trying to get extra royalties on embedded videos, ringtones and 30 second previews. These are the same groups that have publicly decided they need to try to start a PR campaign against people who are trying to protect user rights and fair use. Since that time, we've noticed various people associated with ASCAP and the Songwriters Guild putting up various blogs attacking copyright skeptics in the most ridiculous ways. There's one, which isn't worth pointing out, where a lawyer who works with these groups regularly mocks Larry Lessig, William Patry, Michael Geist and myself -- using nicknames and making up fanciful stories about us. It's the sort of activity you'd expect from a 12-year-old.

It looks like these groups simply feel entitled to having the government force everyone to hand over money. Songwriters who belong to these organizations are being led down a dangerous path. It seems like there's room in the market for groups to represent songwriters' interests without being anti-fan or anti-technology. Quite clearly, ASCAP, BMI, NMPA and the SGA do not fall into that category. Instead, they're pretending that the world owes them money just for existing, and they're going to lash out anyone who tries to suggest otherwise.

In August, we wrote how music publishers were suing lyrics sites (and their owners) for daring to "profit off the backs of songwriters." That, of course, makes no sense. People go to find lyrics to music because they already like it and want to find out more about it and the creators behind it. It's good advertising. And yet, publishers have been going after lyrics sites for years. Apparently, the guy behind LyricWiki worked out a deal whereby technically he's shutting down LyricWiki (found via Fan History) but is instead rebuilding the project for Wikia (the company associated with Wikipedia). Wikia has purchased a license from the publishers. While it's good that a lawsuit is being avoided and that the project will continue (sort of), it's still rather troubling that the publishers were able to force LyricWiki into Wikia's arms. Apparently, independently repeating lyrics of a song you like isn't allowed unless you buy a license. Careful singing along... that'll be next.

If you're a bored journalist, it's easy to create a sensationalistic story about "piracy." Just find some pre-internet industry that's dealing with the shift to online content, get a few quotes about how awful "pirates" are, and then find a company to blame for all of it. That seems to be what the Times of London did with its story about publishers freaking out over people uploading books to Scribd. Scribd responded by pointing out numerous factual errors in the original article (specifically the parts that seem to try to place the blame on Scribd, despite it being a third party platform that actually has a pretty advanced anti-infringement system in place). However, this is the quote that struck me:

Peter Cox, a literary agent and editor of the Litopia blog, said: "These people are pirates. We don't have to give in to this. We can't afford to make the same mistakes the music industry did."

Apparently Mr. Cox hasn't been paying attention. The "music industry" (he means the recording industry) didn't give in on this. It fought it consistently. And lost pretty much every battle -- often making things worse for itself by simply never adjusting to the changing marketplace. So, Cox's response is to follow their exact mistakes by "fighting" this? That's exactly the mistake that the music industry made.

Instead, he might want to take a look at what folks like Paulo Coehlo discovered when he "pirated" his own books and saw sales jump. Or what Baen books has done. Or what tons of authors have found after they put their books online for free and combined it with a smart business model. Otherwise, Mr. Cox is making the exact mistake the recording industry made while thinking (incorrectly) that trying to "stop piracy" is somehow a workable solution.

Back in 2005, we noted that Apple's dominance over the online music space, which upset the record labels tremendously, was actually the record labels' own fault for demanding DRM. That single demand created massive lock-in and network effects that allowed Apple to completely dominate the market. If the record labels had, instead, pushed for an open solution, then anyone else could have built stores/players to work as well, and it could have minimized Apple's ability to control the market. Yes, everyone is now opening up (including Apple), but it took a long time, and Apple had already established its dominant position.

So why are book publishers doing the same thing?

Farhad Manjoo has an interesting article in Slate where he notes that publishers are worried about Amazon turning into "the Apple of the book industry," yet at the same time, they're the ones who are pushing for DRM and limitations that will effectively lock users in to Amazon's ebook platform for a long time. If the publishers had insisted on more open solutions, then a real competitive market could develop. That would be better for everyone. As great as the new Kindle is, it's still rather expensive. Allowing others to enter the market would lead to greater innovation -- making it easier for more people to get into the ebook reader market, and open up plenty of new opportunities for publishers. But the dumb and pointless infatuation with "DRM" and "protecting" works will basically hand the market over to Amazon for many years, and get many folks locked into to Amazon's Kindle platform, even when more open solutions finally start to become popular.

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

The folks who run The Pirate Bay sure do seem to have quite a bit of fun. The latest is that, in response to a report from Swedish book publishers about how they scraped TPB's results for a period of time and noticed that 85% of Sweden's best sellers could be found on the site, the folks from TPB are threatening to sue the publishers for copyright infringement. Hypocritical? Yes. But, clearly, the TPB guys are merely making the point of just how silly copyright laws are. The TPB guys aren't big believers in copyright, obviously, so any such lawsuit isn't so much hypocritical as it is pointing out the absurdities of such a system to those who seem to think that copyright systems make perfect sense.