Leaked Documents Show How The RIAA Plans To Spend The Limewire Settlement

from the it's-not-75-trillion-but-it's-a-start dept

The RIAA believes it is on the cusp of victory in its lawsuit against Limewire, thanks mainly to its large selection of damaging charts. However, it seems to be expecting the worst, if these leaked documents are any indication. All evidence below indicates that the RIAA will be willing to settle for only $15 billion (out of a possible $55 billion). Not only that, but it already has plans in place for the dispersal of the Limewire settlement.

Explanatory Notes

First and foremost, the legal war chest must be refilled. It never sleeps and it is always hungry. Copyright won't protect itself and every battle to secure these rights has become long, uphill and against the wind.

A $15 billion payout doesn't come around every day and our executives are justly entitled to a large chunk of that ($3.15 bil.). As an added bonus (to the bonuses), all executives will be treated to a celebratory blimp ride ($2.25 bil.). This dollar amount seems high until you consider that each executive will be requiring their own blimp. Previously, the executives had shared one blimp, but in the post-Napster environment, "sharing" is obviously no longer a legal option.

Other line items include the ongoing efforts in Washington to impose the RIAA's will on the internet, research and development and the opaquely-named "Other Expenditures."

 

(1) Other Expenditures
Having run the "Stealing a Song = Stealing a Car" analogy into the ground, we need a new "go to" catchphrase. Hence, $1.05 billion should be earmarked for development of a new anti-piracy metaphor. Suggestions include:

• Stealing a song is like stealing a yacht.
• You wouldn't steal popcorn, would you?
• There's no such thing as a free lunch, free song or an infinite good.
• File sharing is as un-American as immigration, outsourcing and opium production.
• You wouldn't steal a blimp, would you?
• Stealing a song is like kidnapping an artist's children and is punishable by a sentence of 25 years to life.

Other incidental expenditures include a much-needed re-upholstering of the executive suites and a celebratory hot tub full of money to splash around in with various members of the escort community, each of whom will be paid in full for their services, including any fees due for public performance.

 

(2) Research and Development
A lion's share of the payout will go towards the ongoing development of a time machine/wormhole to 1991 ($450 million). Many recent efforts have come close but the RIAA has yet to reach the pre-Napster days and develop a parallel timeline in which CD sales increase forever. On the plus side, it did manage to get our mom to hook up with our dad, thus ensuring our continued existence.

Other products/services on the way:

• A computer-unfriendly music delivery system, much needed in this time of digital theft. Wax cylinders have been discussed as well as a partnership with RealPlayer, whose clumsy, bug-ridden software would likely prevent music from being enjoyed on a wide variety of operating systems.
• "Lost Sales" calculation improvements, which should allow the RIAA to seek even larger damages from various file sharing services. It is hoped that we will finally reach the trillion dollar mark within the next decade. In addition, breakthroughs should also be sought in the "Shocking Graph" field, what with the recent success of the "Napster Ruined Everything" line graphs.
• A partnership with the developers of The Club to prevent music from being stolen. A possible route would be some sort of clamp that could be tightened around an ethernet cable to prevent uploading. In other words, not so much "throttling" as "strangling."
• Domain seizure technology, via the RIAA's partnership with ICE, which has already proven its ability to take thousands of sites offline despite lack of evidence or proper investigative techniques. On the front burner: cooperating with ICE's takedown of many large pharmaceutical companies who continue to make themselves rich off various anti-seizure remedies, including the weirdly-named Antivan and Dilantin.

Royalty Payments

Royalty disbursements, as expected, will be delivered in a "top down" fashion. Those artists with the most sales will receive a disproportionately large share of the proceeds. After the "Big 3" are taken care of (and a chunk of money thrown towards Paul McGuiness in hopes that some of it lands in his mouth), the remaining funds will be dispersed to yet more lawyers and an appreciable amount ($300,000 ) put towards the ongoing health of Jon Bon Jovi's remaining hair. It is hoped that he will be able to put off his eventual "Trump Hair" for another 7-10 years, thus ensuring his continued success in the field of "fairly attractive frontmen." See footnotes for royalty dispersals.

*Charting Artists

$300,000 will be divided evenly among those artists currently in the Top 40 at the point of dispersal. If said artist happen to include any of the "Big 3," well, I suppose the rest of you should just write better hits, right? There's no crying in the music industry, especially if you're unrecouped.

*Non-Charting Artists

The remainder of the RIAA's roster will split $150,000. To qualify for payment, bands/musicians must have a viable Wikipedia page (stubs and pages slated for deletion do not count) and a web presence that includes more than just a long-abandoned MySpace page. (Try Facebook.)

Filed Under: leaks, satire, settlement, spending
Companies: limewire, riaa

New RIAA Evidence Comes To Light: Napster Killed Kerosene Too!

from the i-can-math-like-the-music-industry dept

The RIAA has stepped up its game in the final stages of its lawsuit against Limewire, where the focus is on determining damages. As part of this, it has cranked out an illuminating chart showing that the decline of the music business rests entirely on file sharing. Nowhere among the multi-colored lines will you find any references to an aging record-buying demographic, the proliferation of thousands of independent labels or even the ultimate game-changer itself, the internet.

As you well know, the internet was invented in 1991 by billionaire tycoon, Al Gore. In its infancy, the internet was nothing more than a forum for conspiracy theorists to exchange anti-government writings and ASCII porn. However, everything changed in 1998 with the simultaneous debut of Napster and the mp3, both invented by Shawn Fanning. With this new "distribution system," the music industry could no longer afford to ignore the looming force of the internet, at least not for more than the next half-decade. Now, with billions at stake, the RIAA has unleashed its ultimate weapon: the line chart. Below is their devastating "Exhibit A:" filed in the lawsuit against Limewire:

Broken down bizarrely into "Albums per Capita," the RIAA's chart takes care to point out two things:

1. Napster.
2. All else being equal, record sales will grow indefinitely.

But that's not all. The number crunchers over at the RIAA have also entered the following charts as eye-catching evidence of the havoc wreaked by file sharing. 

Exhibit B: Napster vs. Kerosene Sales

Kerosene usage dropped off considerably before the 1990's, but was still growing slowly for most of the decade. As this previously unpublished RIAA chart clearly shows, 1999 (1 P.N.*) was kerosene's peak, which was then followed by a decade-long slide. Consulting economists from George Mason University have stated that Napster's arrival "didn't have a goddamn thing to do with kerosene's decline." This testimony has been stricken from the record as "irrelevant," as no economist consulted was a former employee of the major labels. Conclusion: the world would be a better (if slightly more odorous) place if Napster had never existed.

*Post-Napster

Exhibit C: The Internet vs. Vehicle Theft

With this chart, obviously the RIAA intends to show a clear correlation between the internet's introduction and the decline of vehicular theft, an unfortunate situation that has put many honest car thieves out of work. It is also hoping to prove the old adage that "illegal downloading is exactly like stealing a car -- which is why car theft declined as file sharing increased."

As the data shows, vehicle theft followed the music industry's decade-long climb from 1986-1996. Or tried to, anyway. Vehicle theft peaked in 1991 at an unsustainable level of .0066 vehicles stolen per capita. Unfortunately, the web turned these hard-working car thieves into lazy music thieves, thwarting a vehicular theft pattern that should have risen to epidemic levels over the next decade. The data points to one damning fact: you can do more financial damage with a single internet connection than has been done in the entirety of human history up to 1998.

Exhibit D: The RIAA and the Honest American Farmer

As everyone knows, Real Americans Don't Share™. And nothing is more American than farming, one of the first victims of the internet's cruel efficiency. The American farm has been on a decline since well before records were kept (ca. 1992, apparently), and the arrival of file sharing decimated both of the U.S.A.'s prime cash crops: compact discs and popcorn.

The fate of these declining industries are apparently forever intertwined, much like the essentially meaningless overlaid chart above. Both lines run downhill in an indictment of, well, everything un-American. In fact, if you look closely enough, you can see the two graph points bravely embracing each other as they weather the onslaught of progress.

And there you have it: incontrovertible proof that copyright infringement is killing American institutions one download at a time.

Filed Under: evidence, extrapolation, trend lines
Companies: limewire, riaa

RIAA Lawyer In Limewire Lawsuit Recommended As A Federal Judge

from the judicial-capture? dept

We've talked plenty about "regulatory capture," when people from industry shift back and forth into the federal government and help make the laws that impact the very industries they once took paychecks from (and likely will again in the future). But what about "judicial capture"? There was a lot of buzz recently about the former RIAA lobbyist who became a federal judge for the District Court in DC, and who is now ruling on copyright cases that could have an eventual impact on the RIAA. There may be some other similar situations coming up as well. Someone who prefers to remain anonymous pointed out that Senator Chuck Schumer recently recommended Katherine B. Forrest to serve as a judge in the SDNY district court. Among Forrest's recent cases? Representing the major record labels in their lawsuit against Limewire.

Now, this is not to say that Forrest wouldn't make a good judge. She very well might. This also isn't meant to single out Forrest. It's just that this particular situation, combined with the Howell situation, at least raises some questions about whether or not judicial bias is an issue. It's just not a topic that's discussed all that often. I would imagine that if she did become a judge, she would recuse herself from any RIAA related cases that might come her way. However, at a time when judges are becoming increasingly important in keeping things like copyright lawsuits from getting completely out of hand, shouldn't there at least be some exploration of whether or not judges' previous work experience might bias them in a particular direction?

Filed Under: copyright, judges
Companies: limewire

Did Limewire Shutdown Increase Music Sales?

from the digging-in dept

Last week, we had a post following the report from NPD suggesting that file sharing in the US had dropped off significantly due to the Limewire shutdown. While there are some serious questions about NPD's methodology, we assumed that it was at least mostly accurate, and then asked if there had been a corresponding increase in music sales. After all, despite what you hear from the RIAA/MPAA, the end game should be about business being stronger, not about "reducing piracy." And if "reducing piracy" doesn't end up with more sales, then what good does it do, really?

In the comments to that article, commenter artistrights pointed to a report from Soundscan that music sales had been up for five straight weeks, and separately to another report claiming that Taylor Swift's album sold well after Limewire shut down, selling a million albums in its first week of availability.

I think this is worth exploring, because I've been asking for some actual empirical evidence and we have some. If it's really true that reducing piracy leads to greater sales, that would surprise me, but it would be good to know. If it turns out that reducing piracy leads to more revenue than could have been made otherwise (such as by embracing file sharing) then that would likely cause me to change my opinion on the best strategy for the RIAA to take in this fight. As for the Taylor Swift example, I don't think that proves much of anything, frankly. Throughout the file sharing era, there have been a bunch of releases that sold over a million copies in their first week. In fact, prior to Napster, there had been only two such releases. The rest all came post-Napster. So I'm not sure we can really learn too much about that. Big hit albums still sell. I'm not sure that's got anything to do with Limewire.

As for the other link to sales being up for a five week period, that's definitely worth noting, though, it does not correspond to the same quarter that the NPD study covered. NPD looked at Q4 of 2010. The link above is talking about February and March of 2011. Now, it's entirely possible there's a lag, and people who stopped using Limewire did nothing for 3 months and then suddenly started buying. Perhaps that's the case. If anyone has more info on what was actually selling during these past five weeks, that would help us dig a bit deeper into this information. Some might also point out that SoundScan is not the most trustworthy source of data on music sales -- but it wouldn't surprise me if it were accurate "enough" for the type of music that people used Limewire for, so I wouldn't write it off just because it's Soundscan.

I'm not yet convinced that these two data points are necessarily connected, but it is certainly worth noting the recent bump, and it would be great if folks here were able to dig in a bit deeper and see if we can unpack the reasons for the bump in music sales over the past few weeks.

Filed Under: file sharing, music, sales
Companies: limewire

Drop In P2P File Sharing Due To Limewire Shutdown A Pyrrhic Victory For The Recording Industry

from the all-those-interested-people...-gone dept

A whole bunch of folks have been submitting NPD's latest report, which notes an apparently large dropoff in P2P file sharing in the fourth quarter, which it attributes to the closure of Limewire. I had hesitated to get into this, because NPD's numbers and analysis have historically been suspect, so I always take anything that comes from them with a pretty large grain of salt. They also work for the usual suspects, calling into question some of their objectivity.

And, indeed, there are certainly some questions about the accuracy of the report, which involves self-reported user surveys -- generally not the most reliable method of getting accurate data on something like file sharing (especially in the wake of something being shut down for being "illegal.") That said, the numbers are big enough that even if they're a bit off, it certainly does suggest something happened, and just to be nice, I'll even grant the basic premise that file sharing in the US slowed down when Limewire shut down. Limewire historically has been popular, though not with the more technically savvy folks, but with a more general crowd, who tended to treat it much more like radio than as a way to "obtain" music.

But here's the big question: assuming we accept this massive dropoff in P2P file sharing, was there a corresponding jump in music sales?

I am pretty sure that we won't see a corresponding giant leap in music sales for the same quarter. And that's kind of the point that we've been making all along. For all this talk of enforcement, why can't anyone provide any evidence that it actually leads people to go back to buying stuff? In the case of Limewire, since most users didn't really look at it as a replacement for sales, but as a replacement for radio, it's not likely that they're suddenly going to run to start paying. Instead, they'll switch to other options, whether it's YouTube, Pandora, GrooveShark or something else. If Spotify were actually available in the US, I would bet that it would sop up many ex-Limewire users.

And that's really the major point here. Rather than seeing this decrease as a "victory" for the RIAA (as some have suggested), it highlights what an astounding lost opportunity it has been. Limewire, whatever its faults, was very eager to work with the recording industry to monetize the massive user base it had. And the record labels refused, just as they refused to negotiate with Napster a decade ago (something many in the industry now claim to regret -- despite the fact that they've done it again and again and again). So rather than taking that opportunity, it's been squandered. Similarly, if the record labels got their act together, services like Spotify would have launched in the US long ago. But the labels keep demanding more and more ridiculous conditions on the deal, and thus, the people go elsewhere... often to places where the labels won't get paid at all.

This is what happens when you mistakenly think that the thing to focus on is stopping infringement rather than making more money. It's the "but... but... piracy" argument all over again, where people get so focused on that, they forget the endgame. So, sure, the shuttering of Limewire may have stopped people from using P2P to obtain files. But will it actually get people to buy? Unlikely. And that's a massive squandered opportunity.

Filed Under: file sharing, opportunities, us
Companies: limewire, npd

Judge Rejects RIAA's Attempt To Claim 'Trillions' In Damages From Limewire

from the try-again dept

The judge in the Limewire case has rejected the record labels' attempt to say that Limewire should pay statutory damages based on each time an unauthorized file was shared, instead pointing out that, at a maximum, each song is only subject to a single statutory damage amount, no matter how often it was shared. The judge pointed out that the labels were being ridiculous:

"Plaintiffs are suggesting an award that is more money than the entire music recording industry has made since Edison's invention of the phonograph in 1877," Wood wrote, citing a Lime Group court filing referring to the inventor Thomas Edison. She called this an "absurd result."

Filed Under: copyright, damages
Companies: limewire, riaa

Music Publishers Settle With Limewire; Afraid To Have To Prove They Actually Owned Copyrights In Question

from the ah,-discovery... dept

We were a bit surprised last summer when the major music publishers piled on to the bandwagon and sued Limewire. After all, the major record labels (who own most of the major publishers anyway) were already involved in a lawsuit with Limewire and had won a pretty complete victory over the file sharing system. Having the publishers sue as well seemed like just a way to try to squeeze even more money out of a dead shell. Apparently, the publishers just figured that whatever they got out of this was easy money. What they didn't expect was that Limewire, dead as it is, would fight back pretty hard and during discovery demand actual evidence that the publishers really hold the copyrights they claim to hold (something that isn't always clear once you dig into the details). So it's interesting to see that a settlement has been reached, and the publishers' portion of the lawsuit is effectively over. Many reports seem to be assuming that Limewire gave up here, but there's a good chance that it was the publishers who backed out, realizing they had no interest in opening up a discovery process that might prove a large segment of their business is based on pure fiction. In the meantime, they'll leave it to their parent companies to continue the battle to try to get whatever cash they can out of Limewire.

Filed Under: copyright, discovery, publishers
Companies: limewire

Limewire Seeking All The Recording Industry's Secrets

from the not-backing-down-easily dept

While Limewire lost its lawsuit in a big way to the record labels (as pretty much everyone expected), the ensuing legal fight has remained quite interesting. We've already covered the surprising move by the judge to try to explore the "real costs" of file sharing to determine damages, and in response, it looks like Limewire is trying to drag tons of other companies into the fight. Limewire is claiming that just relying on the recording industry's own documents concerning "costs" and royalties isn't enough. This makes sense, given RIAA accounting practices. However, its efforts to get others to jump in may be pretty difficult as well. A court has already rejected a request to subpoena MediaDefender, one of the industry's favored "anti-piracy" outfits, and another court is reviewing Limewire's request to compel Amazon to hand over royalty information. The indications are that it's also seeking (or will seek) similar info from Apple. While I doubt the courts will let Limewire go through with most of these subpoenas, if they do happen to get the info, we could see quite the airing of dirty laundry and details concerning various music licensing deals -- which is the last thing the RIAA wants to see happen.

Filed Under: deals, recording industry, royalties
Companies: amazon, apple, limewire, mediadefender, 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.

Filed Under: copyright, damages, file sharing, statutory rates
Companies: limewire, riaa

PC Mag Responds To Legacy Recording Industry's 'Complaint' Letter

from the hello,-we're-the-press dept

We recently wrote about a bizarre and mis-targeted complaint letter sent by the bosses of pretty much every old school legacy music industry lobbying/trade group, officially sent to Ziff Davis to complain about two articles concerning Limewire alternatives, suggesting that the articles were promoting unauthorized copyright infringement. Of course, as we noted, these old school recording industry bosses were so upset, they failed to notice that one of the articles in question wasn't even published by PC Mag (the target of the letter), but by PC World, a competing publication put out by an entirely different company, IDG.

Apparently, in their haste to send a complaint to the wrong publisher, these geniuses of the recording industry also failed to leave an address for a reply letter, so PC Mag's Lance Ulanoff responded with a public response letter, which basically tells all of those organizations to learn what it means to be the press reporting on a topic, as opposed to an advocate pushing a particular viewpoint:

The story isn't encouraging or discouraging anything. That's not our role. PCMag's job is to cover all aspects of technology, which includes the products, services and activities that some groups and individuals might deem objectionable. We covered these Limewire alternatives because we knew they would be of interest to our readers. We understand that some might use them to illegally download content. We cannot encourage that action, but also cannot stop it. Reporting on the existence of these services does neither.

We have, obviously, written about many online and offline services, including some that these groups might consider legitimate or "legal." However, the fact is that some users store and manage illegally gained content in music applications like iTunes. We would not stop covering these utilities simply because some users place illegal or even inappropriate content in them.

More importantly, Ulanoff points out the same thing we did in questioning what the hell these industry groups thought they would accomplish in suggesting the press not cover a story:

It worries me that the music industry took this action, because it reeks of desperation. The RIAA and other music industry organizations have spent the better part of the decade fighting the digital transition, with only a shrinking business to show for it. In recent years, though, the fist of anger has turned into at least one open hand as the music industry embraces the once shunned digital music industry. Unfortunately, that warm embrace, and the change that comes with it, are not happening fast enough. Clearly the music industry is still losing money to music piracy and even the recalibrated profit margins brought on by legal music sharing services.

It's time for these music execs to pull their collective heads out of the sand and fully acknowledge and accept all the ways their industry has changed. They also have to understand that nothing will stop technology's inexorable march forward. Things will continue to change. Music downloads and sharing will never go away. These execs have to find a way to use all that technology allows and make a business that rivals the good old days of vinyl, cassette tape and even CDs.

We will continue to cover it all--as we must.

Not a particularly surprising response, but kudos to PC Mag for sticking to its principles, and not feeling bullied by these industry folks.

Filed Under: complaints, pc mag, riaa
Companies: limewire, riaa, ziff davis