Music Industry Rocked on Multiple Fronts

In January 2008, Electronic Frontier Foundation's (EFF) Senior Intellectual Property attorney, Fred von Lohmann filed an amicus brief in Atlantic v. Howell, a case that hinged on the Recording Industry of America Association's (RIAA) contention that offering files on a P2P sharing network was in and of itself evidence of copyright violations, whether or not it could prove the files were ever downloaded by others.

That argument is called "making available" and several Federal Judges and the Supreme Court have rejected it, although Judge Michael Davis did accept it in Capitol v. Thomas.

On Wednesday March 5, Judge Wake heard arguments on the issue. Fred von Lohmann told Stereophile: "The argument went well, with the Judge spending more than an hour hearing from all sides—the record labels, the defendant (Mr. Howell), and EFF. The Judge plainly understood that there were unsettled and potentially important issues of law to be resolved, repeatedly noting that this case presented 'issues of first impression' (lawyer-speak for 'questions that prior cases haven't clarified yet')."

There was also discussion of whether, should the case go to trial, it should be held before a jury or determined by the judge. Von Lohmann was impressed by Judge Wake's "outstanding grasp of the facts and the law" and felt that Mr. Howell might be well-served by a trial without a jury. In fact, he commented, "If the trial goes to the judge, rather than a jury, it gives the Court an opportunity to issue a written opinion on the legal issues, which would provide useful guidance to the many other federal judges who are dealing with similar cases."

In an issues statement on the EFF's website, von Lohmann wrote: "It would make it quite a bit easier for the RIAA if they could go to court and simply say 'this person had our songs in their shared folder, we win. But that's not the law. If the RIAA wants to bring tens of thousands of lawsuits against individuals, they have to play by the rules and prove their cases. That means proving that actual infringing copies were made or that actual infringing distributions took place. It's not enough to prove that they could have taken place."

UMG v. Lindor is a case where a 57-year-old home health worker in Brooklyn was accused of "facilitating" P2P sharing—a charge Ms. Lindor denies, saying she didn't even know how to "turn a computer on." Who said Ms. Lindor was guilty? Media Sentry, a company whose "investigative services . . . gather evidence for civil/criminal litigation and prosecution against those who engage in unauthorized online content distribution." Sounds pretty straightforward, right. All UMG et al have to do is produce the evidence and Bob's your uncle.

When Lindor's lawyer Ray Beckerman requested printouts of the evidence against his client, Media Sentry refused, claiming its information is "proprietary" and "confidential." Beckerman demurs, responding with a subpoena duces tecum demanding a laundry list of documentation. The short version: Show us a crime or go away.

Interestingly, Entertainment Media Research, Europe's "foremost research consultancy for entertainment and music" released it 2008 Digital Entertainment Survey, which has a few surprises in it. Over 70% of people who confessed to illegally downloading music said they'd gone outlaw because they couldn't get the music of their choice from legal sites. Further, about one-third of the people surveyed said they'd downloaded illegal files, which would seem to be indicative of a market that is not being served—or one being thwarted by efforts to lock down its product.

One industry that seems to have taken the lesson to heart is the growing field of digital downloads of audio books. It’s a growing part of the publishing industry—one that generated nearly $1 billion last year—and publishers are increasingly dropping DRM, so that they can sell through a larger network of online retailers and eliminate confusion about which PDP platforms can play which files.

Random House was the first big publisher to abolish DRM, but Penguin seems poised to join it. Simon and Schuster is set to offer 150 titles without DRM and other publishers are watching closely.

Publishing seems to be more willing to experiment than the record labels. HarperCollins is putting entire books online free for a month, including popular ones, such as Neil Gaiman's American Gods. Gaiman says that people have always read books for free. Friends pass books on, libraries offer them—"I very much doubt that I discovered a single one of my favorite authors by buying a book," Gaiman wrote. Elaborating on that point on his own blog, Gaiman explained, "This is how people found new authors for more than a century. Someone says, 'I've read this. It's good. I think you'd like it. Here, you can borrow it.' Someone takes the book away, reads it, and goes, Ah, I have a new author."

Some in the recording industry do get this. To a large extent, that's what Radiohead's In Rainbows experiment was about. Nine Inch Nails did something similar with Ghosts offering it on the NIN website in five formats: as a non-DRM free download of 9 songs; as a $5 download of all 36 songs; as a $10 two-CD set; as a deluxe $75 set; and as a $300 limited-edition box set. Within two days, the entire run of 2500 box sets was sold out.

Kevin Kelly calls this phenomenon "1000 True Fans", arguing that an individual can make a satisfactory living by finding 1000 "true fans," which is to say 1000 people who will buy anything the artist produces. Content, Kelly argues, can be given away to the non-true fan, but the die-hard fan wants to feel a connection with the art that moves them. This is not a plan for creating hits, but rather a plan that supports artists who do not produce mega hits. Of course, it only works if the artist deals directly with his or her fans without an intermediary, such as, say, a record label.

And that is undoubtedly why the labels are so panicked right now. The small, fast-moving mammals have entered the picture. Watch out dinosaurs: adapt or die.