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Russell Rains of St Edwards on 4 Cases You Need to Know About and How They Affect The Music Industry, Part 1

In May, I traveled to Arhuus, Denmark where I attended and spoke at The SPOT Festival. On the first day, the welcome luncheon speech was delivered by Russell Rains, who is the Program Director for the Digital Media Management MBA program at St. Edwards University, (the only university that offers MBAs in this discipline).

At the top of his talk, Russell mentioned something that made me sit up in my seat: “Everyone in the music industry is watching these four cases very carefully.”  I’m not, I thought to myself, and neither are the hundreds of artists who I speak to globally and represent at Ariel Publicity.  In fact, I had not really heard a lot about these 4 cases more than in brief mentions.  So I fired up my trusty flip cam and taped his talk.

Russell was more than generous to co-contribute to this piece by providing a little more insight on why you my dear independent community of artists should care.

These four legal cases in the US are incredibly important to know about and understand because they demonstrate the war between the content creators and the people who deliver it.

No one needs to tell anyone in and around the music industry that consumer behavior has changed. This is not necessarily a bad thing, as people will always want to have music and they will always be willing to pay for it directly and indirectly. The tough nut to crack is that there is no longer a single way to think about selling music in the future. Forecasting the future of the music business is impossible when you don’t know what the technology is going to be.

But first let’s take a look at the past, before there was commercial art as we know it:

Content was king for 200 years, but now technology is the dominant player. The content is no longer the issue, it’s the delivery. In turn, the median shifted and now delivery is king.

So what does this mean, other than the fact that it’s disruptive and we can’t predict the future (which means it’s very hard to have a business model). That time is going away too.

Case 1: YouTube Viacom vs. YouTube/Google

YouTube is 5 years old and was purchased recently by Google.

Viacom is currently suing YouTube and Google alleging copyright infringement in a one billion dollar lawsuit.

Viacom has hired 18 different companies to post video content to YouTube to help them promote their own properties on the service, but now they are suing them.

1. What the official name of each case?

Viacom International, Inc., Comedy Partners, Country Music Television, Inc., Paramount Pictures Corporation, and Black Entertainment Television, LLC vs. YouTube, Inc., YouTube, LLC., and Google, Inc.

2. Why the case happened / What caused it to get to the courts?

One of the main tenets of the Digital Millennium Copyright Act [DMCA], is the safe harbor provision that protects ISPs and apparently similarly situated parties from liability arising from third party use of the Internet.  The policy seeks to encourage the continued growth of the Internet and one of the main ways this could be realized is by protecting those entities who facilitate the transfer of information from liability arising from the content of that information provided by a third party.  Viacom and other content owners felt that YouTube [now owned by Google] was liable for copyright infringement as a result of the large number of infringing videos appearing on YouTube in its first few years of existence. 

3. What it means for an independent artist?

For better or for worse depending on viewpoint, it means that YouTube will continue to be a main forum for video music performances.  Especially after acquisition by Google, YouTube has diligently lived up to its notice and “take down” obligations under the DMCA relating to those works apparently perceived as violating another’s copyright.  On the one hand, this could to some degree reduce the broadcast of those works not approved by the owner or publisher, while on the other hand may impede the occasional viral spread of works facilitated by YouTube.

4. How this will affect the music career of an independent artist?
YouTube will continue to survive and thrive. Otherwise, the response is the same as above in that those works perceived as unauthorized will continue to be removed which supports notions of copyright, while possibly reducing the viral spread of some videos.

5. Anything you may want to say about why this case is so important?

The court ruled in favor of YouTube June 23, 2010 granting summary judgment.  This came as a surprise to many in the industry and will likely be appealed to the U.S. Second Circuit.

Case 2: Limewire vs. RIAA

The RIAA has created a highly publicized amount of bad will by suing customers. However, when they pursued Limewire the case never went to court because the judge ruled in the RIAA’s favor without hearing the case. What the judge found was: Limewire knew what they were doing and there is a lot of evidence that backs that up (98% of content was illegal).

In June 2010 we will know the damages and they will be unbelievably large.  It will shut down Limewire.

1. What the official name of each case?
Arista Records LLC; Atlantic Recording Corporation; BMG Music; Capitol Records, inc.; Elektra Entertainment Group, Inc.; Interscope Records; LaFace Records, LLC.; Motown Record Company, L.P.; Priority Records, LLC; SONY BMG Music Entertainment; UMG Recordings, Inc., Virgin Records America, Inc., and Warner Bros. Records, Inc. Vs. Lime Wire LLC; Lime Group LLC; Mark Gorton; and Greg Bildson

The case is usually referred to as either RIAA vs. Limewire or Arsta vs. LimeWire

2. Why the case happened / What caused it to get to the courts?
For 10 years, peer-to-peer networks have facilitated the generally unauthorized transfer of music, film and other files.  Limewire, the heir to Napster, Grokster, Aimster, KaZaa and others is currently the largest remaining such entity.  

3. What it means for an independent artist?
At least initially, if Limewire is shutdown fewer unauthorized or illegal music files will be transferred between peers.

4. How this will affect the music career of an independent artist?
One of the main portals or tools of copyright infringement will either be shut down or forced to comply with copyright law.  Theoretically, there will be fewer incidents of works transferring between non-paying consumers.

5. Anything you may want to say about why this case is so important?

LimeWire has been found guilty of copyright infringement along with its founder.  The recording industry is asking that the court shut down the peer-to-peer network and freeze its assets.  Damages may be in the billions of dollars.  This case is important because the legal arguments, issues and holdings continue a long line of cases going back to Napster.  The courts have consistently found that the peer-to-peer networks are liable for inducing others to infringe copyright.  Recently, related to the unauthorized transfer of films, similar arguments have been levied against BitTorrent search engines.

Reader Comments (10)

Any law that prevents artists from seeking the lowest cost of distribution (including sharing), or the lowest price they desire to sell at (including free) is a law that is anti-competitive. The "industry" solutions all seek to prevent rather than to re-invent, and I find all these solutions to be beneficial to established stakeholders and not overly beneficial to independents. Price and distribution should not be a level playing field that's defined by the RIAA. Independents need every advantage they desire to pursue. Don't let the old industry throw the baby out with the bathwater. Think before you take sides. The best solutions have not been put on the table yet.

August 5 | Unregistered CommenterBruce Warila

The hopeful, best outcome of vaicom v google, would be google/youtube and Viacom to settle out of court with google agreeing the create digital DNA filtering software and registry which would notify the registered copyright holder of possible infringement.

The best case scenario of the Spotify case is to crush them like a bug, liquidate their assets and let legitimate re-sellers and distributors fill the market void.

August 5 | Unregistered CommenterCrowfeatheR

I'm still listening to the marvelously named Russell Rains as I type.

There is a strange, almost uniquely American perspective to Youtube, free downloading, the existence of 'pirate' facilitators like Limewire and the rights of both artists and major music companies. It reflects the fear of socialism and the enshrining of apparent liberty which allows a kind of dualistic mindset: leave the pirates and free downloaders (the little guys) alone and allow them to become successful, even if they are stealing from the mouths of poor musicians. It's so hard to just come out and say it: how we get our music is just one tiny aspect of lots of wrong things, neatly encapsulated by the story of the CD longboxes...

Bootleg era capitalism in effect: the musos are the moonshiners, the free downloaders are the punters and the pirates are the mob, who pay the moonshiners a pittance for taking most of the chances and doing most of the work. The RIAA are the cops and... I'll stop there.

I note that even that paragon of online accessibility, Bandcamp, reserves the right to start charging for their 'service' at some point. This art distribution is as hidebound with financial strictures as the old fashioned, van-based music distribution of ten years ago, and under those circumstances it's wise to acknowledge the basics...

In a world inhabited by various types of meat-eating monsters, even the pretty ones need to adhere to the 'eat or get eaten' rule. The little ticks and mites who live on the backs of the most successful monsters have a life of sorts.

And from that mess of metaphor choose your cypher.

August 5 | Registered CommenterTim London

@Tim, Don't confuse my comments. The only side I take is the one of choice. Artists should be able to choose; governments should not make the choice for them. As I said, the best solutions (IMHO) have not been tabled.

August 5 | Unregistered CommenterBruce Warila

The story of the longboxes - as it was told to me. In the early 90s I noticed that American CDs came in boxes twice the size of the CD jewel case, a long-box.

My first time in a US music store I also noticed that there were large bins by the store exits for customers to chuck their ripped off long boxes into. Which meant that the packaging went from the display shelf, to the till to the bin, as the customer didn't want the cumbersome, extra sized package to take home, for whatever reason.

This was a lot of cardboard. And bear in mind that musicians had to (still do?) pay for CD packaging.

I asked a major label guy what this was about. He said that the labels were completely aware of this total waste of money and effort and its impact on the environment but none of them would move first to single jewel case size because that would mean the stores would have to splash out on new display shelves and this would piss them off so they might not stock their CDs. Breath. After a while they were phased out, but the temporary paralysis over a few years sums up the negative driving force of the music industry: don't expect intelligence. Do expect brute commerce.

Much as I love the great ideas and the hope some people express on this site for a more intelligent way for musicians to make a living, if we aren't honest about the environment (competitive capitalism) in which we try to do that then we are pissing in the wind.

The court cases listed above are just various sized monsters fighting for dominance, with a bit of collateral damage to various ticks and fleas along the way. Nothing noble going on. Nothing righteous.

August 5 | Registered CommenterTim London

I didn't fully appreciate how YouTube is transforming music copyright until I watched a recent video explaining how the YouTube Content ID system works.

I then started to research what happens when you upload unauthorized material, more specifically songs you haven't written but are performing on YouTube. As we all know, covering famous songs on YouTube has launched some careers so it's a popular promotional tool for unsigned artists. I'm pretty sure that virtually all of them haven't obtained permission to cover the songs, yet most of the songs are allowed to stand. And in fact some of these artists are then featured on YouTube.

Tracking down much information on the subject was hard, but I pulled together what I could find (I didn't ask people I know who have covered songs on YouTube if they have gotten permission because I didn't want to put them on the spot).

Music, Copyright, and YouTube

@ Tim London

Longboxes...competitive capitalism...various size monsters fighting for dominance...what a buzzkill. Too bad you're right.


with the technology now available (and constantly developing), allowing independent artists more reach than ever, today is still a good time to be a tick or flea.

August 5 | Unregistered CommenterDg.

While I agree with Russell that "delivery is king" I say that "content is God". Anyone with a computer and time can deliver content in all the different delivery mediums that are available, which makes for a huge distribution of "crap".

Unless your content is of top quality (both in production & entertainment value), it will simply be more trash flowing through the "pipes".

August 6 | Unregistered Commenterguscave

The real problem for the vast, vast, vast majority of artists and labels is not unauthorized copying, it's obscurity, in most cases extreme obscurity. Just do the math and you'll see that only a microscopically razor thin slice benefits from any of these copyright wrangles.

Do I care if Lady Gaga makes only half a gazillion bucks instead of the full gazillion because a bunch of teenagers swap files instead of buying her swill? Uh, no. What I do care about is that there's bands and labels out there making much better music and struggling just to be heard at all.

Yes, there's a lot of clutter and din to try to be heard above these days, but the barn door is wide open and the horses have disappeared over the hill. It will be very difficult to pull things back to the strict control of content that we had a few decades ago, and I'm afraid that the only ones hurt in the process would be the huge majority of the unknown and barely known, whose access will be severely restricted. Instead, we should be looking for new business models that don't depend on strict control. Remember "home taping is killing music"? Now that campaign succeeded, didn't it?

August 10 | Unregistered Commentertak

Valuable article, Arial, thanks. I look forward to reading the rest.

But ... what Bruce said: "The best solutions have not been put on the table yet."

I disagree completely with one thing in the article's initial summary. You said: "Content was king for 200 years, but now technology is the dominant player." I beg to differ.

In my free e-book I begin to outline the case that content was NEVER king. Music has always been used to sell other things (cars, candidates and crap) but the music itself has not - cannot - be sold. The entire edifice of the record industry (starting with the printing press) has been based on the assumption that the supply of music would always be technologically scarce. Now that technology has removed the artificial scarcity the game is radically changed, and Bruce's summary is self-evident.

Not only has the rug been pulled out from under the record companies' business model - the floor and the building's foundations have collapsed as well. No amount of IP Law based on technological representation can protect music creators. No wonder they are struggling to find their feet ...

Bring on the evolution! :-)

Dr Huge

August 10 | Unregistered CommenterDr Huge

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