Yet Another Court Says IP Addresses Are Not Enough To Positively Identify Infringers

from the time-for-some-venue-shopping,-it-would-appear dept

The neverending misadventures of Prenda Law and its various attachments have led me to consider retiring this phrase when writing about them: "just when you thought it couldn't get any worse..." Prenda's situation obviously can (and will) likely get much worse, well past the point of any reasonable person's expectations.

Fresh off a judicial smackdown from Judge Otis Wright, in which he singled Brett Gibbs out for possible incarceration and laid waste to the Prenda "business model" by torching its argument that an IP address alone is enough to positively identify an infringer, Prenda Law finds itself on the receiving end of another smackdown, from another California judge, for the exact same issue.

Southern District of California Judge Barry Moskowitz has found that an IP address, alone, is insufficient to support a complaint for copyright infringement. The lawsuit is AF Holdings v. Rogers (CASD 12-cv-01519) brought by the infamous Prenda Law Firm http://fightcopyrighttrolls.com/category/clans/prenda/. The complaint alleges copyright infringement, contributory copyright infringement, and negligence...

Addressing the copyright infringement and contributory copyright infringement, the judge notes that:

[...] the Court is concerned about the lack of facts establishing that Defendant was using that IP address at that particular time. Indeed, the FAC does not explain what link, if any, there is between Defendant and the IP address. It is possible that Plaintiff sued Defendant because he is the subscriber to IP address 68.8.137.53. (The Court notes that it is actually unclear whether the IP address is registered to Defendant). As recognized by many courts, just because an IP address is registered to an individual does not mean that he or she is guilty of infringement when that IP address is used to commit infringing activity.

More and more courts are coming to this same conclusion, which doesn't bode well for those in the copyright trolling business. While they still may see some limited success collecting on threatening letters, the chances of them winning anything via the proper legal route is beginning to approach zero.

As Judge Otis Wright pointed out, Prenda's use of IP addresses to "identify" infringers boils down to nothing more than finding someone in the household that best matches its idea of who the likely infringer is, which seemed to involve nothing more than "blindly picking a male resident from the subscriber's home."

Judge Moskowitz lays it all on the line, making it perfectly clear that he won't be accepting IP addresses (alone) as evidence.

Due to the risk of “false positives,” an allegation that an IP address is registered to an individual is not sufficient in and of itself to support a claim that the individual is guilty of infringement.

Once again, Prenda's business model is getting kicked while it's down. As Wright pointed out in his order, properly identifying infringers takes both time and money, two commodities Prenda seems unwilling to part with. Moskowitz apparently won't be entertaining these dubious claims any further. He also takes aim at the same issue that resulted in a setback/smackdown for AF Holdings (friends of Prenda): so-called "negligence" on the part of the subscribers.

Plaintiff’s claim fails because there is no underlying duty. One who fails to act to protect another is generally not liable for breaching a duty unless there is a special relationship giving rise to a duty to act. [...] There is no special relationship between Plaintiff and Defendant which gives rise to a duty on the part of Defendant to ensure, through heightened security measures and hawkish monitoring of internet usage, that nobody uses his internet connection to infringe Plaintiff’s copyright.

The end result? A dismissal of Prenda's claims of copyright infringement and contributory infringement without prejudice. This leaves the door open for refiling, but considering how many doors in California are being slammed shut elsewhere by various judges, it seems unlikely that Prenda will push its luck, at least for the time being. This dismissal adds another court to the growing list of judicial entities that are unlikely to push forward on copyright infringement cases where the evidence of wrongdoing is nothing more than an IP address. How much sway this dismissal holds elsewhere remains to be seen, but it's another blow struck against the settlement letter "business model."

Filed Under: california, identification, infringement, ip addresses, prenda
Companies: prenda, prenda law

Germany's Curious Income Divide On Infringement Remedies: High-Earners Support Content Blocking, Oppose Disconnection

from the copy-culture dept

Recently, the American Assembly released Copy Culture In The US & Germany, a report based on an extensive survey about attitudes and practices surrounding media consumption and piracy in the two countries. (Disclosure: We supplied the design and layout work for the report.) It contains lots of interesting facts, and some very surprising ones—such as more support for content blocking than one would expect given the public reaction to things like SOPA and ACTA. We've already discussed one of the important broad takeaways—even more evidence that pirates buy more media—but amidst the smaller details in the survey are several other points that are worthy of a closer look.

First up is a curious trend that emerged in Germany: when asked if copyright infringers should face disconnection of their internet access as a penalty, opinion was roughly split among low-income respondents, while opposition was higher among those who earned more:

Opposition to disconnection also rises sharply with income (which in turn correlates with the propensity to buy media). Among penalty supporters who make more than €3000/month, 20% support disconnection; 74% oppose it.

Should Infringers Face Disconnection? (Germany, By Income)

As the report notes, this could have something to do with the fact that higher earners also buy more media—though that still doesn't make it entirely clear why this should be the case. Even more curiously, high-earners were more likely to support content blocking by ISPs, search engines and social networks, but still more likely to oppose internet monitoring.

It seems like there's a lot of room for conjecture as to what these patterns mean, if anything, so I'm throwing this open to our readers, especially those in Germany: what social, economic or other factors that correlate with income might explain this trend?

Filed Under: content blocking, disconnect, germany, infringement, remedies

Iceland's MPAA Pirates Software; Tries To Defend Itself On Facebook; Runs Away

from the so-much-for-that-plan dept

Via TorrentFreak we learn that SMAIS, the Icelandic equivalent to the MPAA, was recently called out for pirating some software. The software, made by Dutch company NICAM, is apparently used for setting up a labeling/rating system for content including movies, video games and more. SMAIS agreed to license the software, which it received, but then it failed to make the payments. Any of them. At all. A NICAM exec is quoted as saying:

From the moment the contract was signed, everything went silent. There was no contact between SMAIS and us, unfortunately. We tried to contact them, but it didn't work.

This, as you might imagine, caused a bit of an uproar in Iceland, with people speaking out against SMAIS. In response, someone there (apparently without very much internet experience) decided the right thing to do would be to set up a Facebook account for SMAIS. Now, if they could actually discuss the various issues, that might not be a bad idea. But... that's not what happened. After being bombarded with critical comments from others, SMAIS shut down the Facebook account with a snarky note about how they needed to hire someone to run the account, and also about how they have "lots to learn." Though, they also claimed that "some freedom fighters think that only some voices have a place on Facebook." Probably not the right spot for a bit of snarkiness, but perhaps it's not so surprising.

Filed Under: conversation, copyright, iceland, infringement, software
Companies: facebook, nicam, smais

USTR Pushing Excessive SOPA-Style Liability In China

from the the-chinese-understand-massive-secondary-liability dept

We've pointed out that the spectacular public uprising that led to the death of SOPA has made it such that Congress is now quite worried about pushing copyright legislation. But... we fully expected there to be attempts to sneak things through in other ways, including through international treaties and agreements. Over at the Disruptive Competition Project site, Matt Schruers has noted that the US Trade Rep (USTR) -- who is responsible for things like ACTA, TPP and other trade agreements -- has been using some of the most controversial language from SOPA in discussions about trade policies with China. Specifically, the USTR press release notes that part of the effort for the US-China Joint Commission on Commerce and Trade (JCCT) will include this whopper:

Building on an existing JCCT commitment to develop a Judicial Interpretation making clear that those who facilitate online infringement will be jointly liable for such infringement, China announced that its Supreme People’s Court will publish a Judicial Interpretation on Internet Intermediary Liability before the end of 2012.

As we had discussed while SOPA was still around, the use of liability for mere facilitation is hugely problematic, and goes way, way, way beyond anything in the law today. Tons of useful technology can facilitate infringement. In fact, historically, nearly every important technological innovation that has helped grow the entertainment industry has first been accused of "facilitating" infringement: the record player, the player piano, the radio, cable tv, the photocopier, the VCR, the DVR, the MP3 player and YouTube... every single one of them was accused of facilitating infringement. That's part of the reason why SOPA was so troubling. But rather than move away from such language, the US is now pushing that same language in its trade agreements with China. As Schruers explains, expanding secondary liability to include "facilitation" has massive problems:

For good cause, existing secondary liability law... does not extend to facilitation – it requires more knowing, culpable conduct, or direct financial benefit. A pirate's utility company arguably facilitates piracy by providing electric power to the pirate – and indeed, benefits from the added electricity consumed. We don't penalize utilities for piracy committed by their customers, however: since its inception, secondary liability has been wisely limited exclude such sweeping application.

The term seems particularly inappropriate in relation to commitments extracted from China regarding Internet policy. Construed broadly, "facilitate" could encapsulate any website or web service that allows users to communicate information freely. Given the ambiguity of the term, China could potentially interpret the word broadly to engage in censorship of its own, not only for IP infringement offenses, but for other activities "illegal" in China as well. If censorship concerns were sufficiently problematic in the U.S., they should be at least as problematic in China.

What Schruer's doesn't even mention, but which seems fairly important, is that China has tons of experience with broad secondary liability clauses and their ability to stifle speech and censor critics. The entire Great Firewall of China is mostly built on this principle of secondary liability, whereby ISPs can get into trouble for "facilitating" negative speech. Chinese officials argue in support of the Great Firewall by saying that it protects the public and they've even argued that it's needed to stop piracy.

So, among other things, by spreading this ridiculous "facilitation" language to a US-China agreement, the USTR is handing that much more ammo to the Chinese government not just to support political oppression, but also to argue that it's doing so because of what the US demanded in its trade agreements. Once again, it looks like, as the USTR carries the water of the legacy entertainment industry, it's undermining the State Department and playing right into China's hands in terms of enabling it to continue to censor the internet and repress political speech. And... of course, once that language shows up within US/China agreements, it won't be long before the USTR starts pushing it elsewhere as well, all in the name of "harmonization." In other words, watch out, the USTR is looking to push parts of SOPA through the backdoor yet again.

Along those lines, USTR boss, Ron Kirk, has announced that he's leaving the position. His leadership has been an absolute, unmitigated disaster. He's responsible for the mess that was ACTA and has kept the TPP negotiations extremely secret. If the Obama administration wants to look forward, not backwards, it needs to nominate a replacement who isn't in the legacy industry players' pockets, but who is dedicated to real transparency and who recognizes that innovation comes from new sources, not from overprotecting obsolete players.

Filed Under: china, copyright, facilitates, infringement, sopa, ustr

Embedding And Linking Deemed Infringing In The Netherlands; Downloading... Not So Much

from the odd-choices dept

Here are two copyright stories coming out of the Netherlands, one good and one bad. The first is that the Dutch government has rejected an effort to make downloading copyrighted works for personal use infringement. There is, of course, an existing "you must be a criminal" tax on blank media there, which is part of the reason why such downloads are considered okay. Of course, now we only have to wonder how long it will be until the Netherlands shows up on the US's Special 301 report for "naughty" countries who don't follow Hollywood's extreme maximalist positions.

Of course, the entertainment industry may be much happier about a different copyright issue in the Netherlands. A court ruling in The Hague found that "embedding or linking to radio-streams without a license constitutes a violation of copyright." This is particularly crazy because it includes linking to a station's own stream. Yes, you read that right. This isn't talking about pointing to infringing streams, but to legitimate ones. And the court still found it to be infringing.

‘Nederland.fm’ embeds radio-streams from other (official) radio websites, while ‘Op.fm’ offers hyperlinks to those streams. Buma/Stemra argued that the websites enable users to listen to the music offered on the streams, and that this should be constituted as a ‘publication’ of the music to the public. The court followed this reasoning, primarily based on the fact that ‘Nederland.nl’ and ‘Op.nl’ not only offer streams or links, but they capture the consumer on their page, by playing the music within their own environment and because this environment, including ads, stays visible after clicking the links and buttons of radio stations.

That makes no sense at all. Just because someone makes money in some other manner doesn't mean they automatically owe money to someone else when they were using their legal streams. Unfortunately, we keep seeing wacky rulings like this around the globe that just muddy the picture when it comes to creating sensible copyright policies.

Filed Under: downloading, embedding, infringement, linking, netherlands

EMI Was Actively Giving Away MP3s It Accused Michael Roberston Of Downloading Illegally

from the oops dept

You may recall EMI / Capitol Records ongoing lawsuit against MP3Tunes and its founder/CEO Michael Robertson. The initial ruling in that case went almost entirely against EMI, with one small exception that we'll get to soon. EMI asked the court to reconsider the ruling, claiming that it had made some mistakes, but the court slammed EMI for some questionable behavior, including taking a number of quotes completely out of context as an attempt to mislead the court. The latest on that case is that following the appeals court ruling in the YouTube/Viacom case that sent that case back to the lower court, EMI pretended that the ruling changed everything and required a new ruling. The two sides are currently filing motions back and forth over that, with MP3Tunes pointing out that nothing in that ruling actually changes anything, and EMI claiming otherwise. Given the narrow aspects of the Viacom ruling, I think that EMI is still unlikely to get very far. Still, it's fairly amazing how much time, money and effort it has spent on this case, even as the company itself got into serious trouble and was sold off in, effectively, a fire sale.

Which then brings us to the other aspect of the case. The one area in which EMI "prevailed" in the original case was in the part they filed against Robertson personally. The court had ruled on summary judgment that Robertson was liable directly for 47 songs that he had personally "sideloaded" into MP3Tunes. However, even that part of the case was strange. Initially, EMI had claimed that it had never, ever, ever authorized any MP3s to be given out for free for promotional purposes. In response, Robertson crowdsourced examples of over 1,400 cases where EMI was clearly giving away MP3s for free. However, the court still ruled that he was liable.

In the latest filing about that, Robertson hits back on a number of points, starting with the fact that the court ruled on summary judgment on the issue, even though EMI and Robertson had already agreed that the summary judgment part of the dispute wouldn't cover Robertson's personal liability. Because of that, he didn't present the full argument for why he shouldn't be liable, and thus he's asking that the court allow that part to go to trial in order to show that the evidence of his own infringement is lacking.

In order to support that, Robertson's filing demonstrates a few important things. First, it shows a bunch of evidence that EMI purposefully and deliberately marketed its music to various sites asking them to give away MP3s and even to share the music widely. Second, it shows that, despite being asked for this info during discovery, EMI did not provide it. Instead, Robertson got it later from other sources. This is a big no-no, and EMI may run into some issues for failing to hand over the required information during discovery. Still, what the filing shows is that EMI regularly and frequently hired companies to distribute MP3s for free, and encouraged them to be put up on various websites and shared widely. And this includes some of the songs that Robertson is accused of infringing and some of the sites he's accused of downloading the songs from.

Reading pages five through nine in the motion he filed demonstrates this over and over again, including in an email from an EMI Publishing employee, who not only is planning a promotional download but says part of the plan is to "encourage as many third party online zines, podcasts, blogs, major web portals to host the MP3 for free download on their site." Here's just a snippet of some of the examples Robertson turned up of EMI using free MP3s in marketing (which they did not properly disclose):

For example, Definitive Jux (an EMI label) entered into an agreement with viral marketing firm, Better Propaganda, which granted Better Propaganda the right "to use, copy, distribute, display and perform [a specified song] on and through the Internet and the World Wide Web..."). This song remains available on the Better Propaganda site. Plaintiffs did not produce this document....

Similarly, Astralwerks (another EMI label) engaged Toolshed, Inc. ("Toolshed"), a Viral marketing firm, to distribute sound recordings pursuant to a marketing program by which Toolshed would virally distribute free MP3 downloads through various blogs and Toolshed's own website. Importantly, Toolshed's webpage for downloads notes clearly that "All songs . . . are pre-licensed for use on your site. Simply browse, find music you like, and copy it to your page." .... Toolshed has done projects for numerous labels, including EMI labels Astralwerks, Capitol Records, Caroline Records and Definitive Jux Toolshed distributed free MP3s for numerous of Plaintiffs' artists -- including Air, Willy Mason, Bat for Lashes, Pacificl, Carbon/Silicon, The Perceptionists, and Amos Lee -- including one of the same artists that Robertson is accused of wrongfully sideloading.... Plaintiffs did not produce documents they exchanged with Toolshed relating to those projects.

One project by Toolshed is especially important: as emails (dated March 5, 2007) provided to Robertson from Toolshed indicate, Astralwerks paid Toolshed to get websites to give away MP3s for the new release of the album "Pocket Symphony" by Air, to be released on March 6, 2007.... Toolshed achieved coverage, including free downloads of a track and/or video placement, with numerous sites, including 3HiVe, Donewaiting, Kevchino, Music for Kids Who Can't Read Good, Muzzle of Bees, PopMatters, Sixeyes, Stereogum, Antville, and Kingbline..., some of the same sites and the same artist from which Robertson is accused of wrongfully downloading Plaintiffs' songs and which Plaintiffs have alleged are unauthorized sources of MP3's.... Plaintiffs did not produce such documents.

In many ways, this is reminiscent of the whole Dajaz1 situation, in which the lawyers are insisting that the distribution on various blogs is infringing, at the very same time that their marketing people are begging those same sites to offer up the songs as a promotion.

Separate from all of this, but in the same filing, Robertson hits back on the claims that the use of cover art in MP3Tunes infringed. The filing notes that MP3Tunes had licensed all the cover art from Amazon and that EMI never even bother to show that it held the copyright in the cover art. All they showed was that the company had copyrights in the songs, but that's different from the cover art (and made more complicated by the fact that the copyright in the cover art might belong to the artists who created the art, rather than EMI).

All in all, the filing reinforces what's already come out in the earlier rulings: which is that EMI seems to have an incredibly weak case here, but due to what appears to be a random infatuation with going after Robertson personally, is just throwing everything it can at him.

Filed Under: copyright, downloads, infringement, michael robertson, promotions

Creators: Kill The Hobbit To Save Regular Earth, And Win!

from the with-apologies-to-martin-freeman dept

Last week, we wrote about an article by Joe Karaganis discussing the huge tax subsidies and political concessions wrested from the New Zealand government by Warner Bros. in order to film The Hobbit in the country. The editorial was entitled Kill The Hobbit Subsidies To Save Regular Earth, which inspired an editorial cartoon that Bloomberg View attached to it, which in turn has inspired Joe to launch a contest for creative interpretations of The Hobbit as an allegory for the situation.

First, I confess I hadn't fully thought through how to map the various heroes and villains of ‘Kill the Hobbit’ back onto ‘The Hobbit.’ But on reflection, this drawing seems a bit off. In my version of the story, the hobbit is the villain, stealing gold from the people of New Zealand (I guess to take back to Hollywoodshire?) This would make Smaug the dragon the public, and Smaug’s giant pile of gold the commonwealth (that’s why it’s so large). Smaug should be casting the Expecto Patronum (EP) spell to banish the Hobbit, not the other way around.

But hey, people may see it differently, and their right to publish those perspectives on our common culture is part of what’s at stake in ‘Kill the Hobbit to Save Regular Earth’ (pivoting here to New Zealand’s support for the IP-enforcement-on-steroids Trans-Pacific Partnership Agreement).

So with that in mind, I am happy to announce the ‘Kill the Hobbit to Save Regular Earth’ Initiative– KH2SREI for short (pronounced Kisstory, after the ancient Elven admonition to beware Hobbits bringing gifts).

I invite you to flesh out the Kisstory allegory in whatever direction makes most sense to you. If you send me pictures, I will publish them here (as long as they are not obscene or gratuitously nasty). I will even try to talk the good people at Bloomberg View into running them. And if we get enough submissions we will have a public vote to award copies of the “semi-epic” Media Piracy in Emerging Economies to the two most worthy entries (plus whatever other awards we can accumulate in the meantime.)

As for those "other awards", we're throwing a Techdirt t-shirt into the mix. So if you're a creator, whatever your medium, we hope you'll submit something! Head on over to the contest page for more details and some "extra points" guidelines, including a "Special award for the best pro-Hobbit, pro TPPA, pro Warner Bros art, if we get any" because hey, political cartoons can cut both ways.

Filed Under: hobbit, hollywood, infringement, movies, new zealand, subsidies

Patently Absurd: Intellectual Ventures Claims It's Easy For Companies To Know If They're Infringing Any Patents

from the because-they're-not-being-intellectually-honest dept

We've obviously been highly critical of Intellectual Ventures over the years, as the company is doing tremendous harm to the innovation world by effectively setting up tollbooths and legal threats that take money away from actual innovation and funnel it into inefficient uses. Recently, we wrote about how another firm, IP Checkups, was planning to unveil Intellectual Ventures' infamous web of shell companies, which it uses to shuffle patents around, to hide who the real beneficial holders of the patents are. In response to this, the Spicy IP blog did interesting interviews with both IP Checkups and with Intellectual Ventures. Intellectual Ventures was represented by Nicholas Gibson, International Marketing Director at the firm. You can read the two interviews, but I just wanted to focus on one of the more ridiculous, and blatantly intellectually dishonest statements of Gibson's. IV management is somewhat infamous for these kinds of things, but they really ought to be called out on their bullshit more frequently. Spicy IP points out that IV claims to hold 40,000 patents and growing... and wonders how any technology company could figure out if they're infringing and how they should go about getting a license. Gibson responds by pretending this is easy.

Any company selling a technology and wanting to try and check if the product is infringing someone else's patents, need only go to the USPTO (or corresponding websites for the Japan Patent Office, Chinese Patent Office, etc.) and look up patents and publicly available patent applications that fall in the same technology category and class. When they are doing their search for prior art and pre-existing patents in particular fields, they should be looking for the technology represented in the patents, not for who owns the particular technology. If IV happens to own one of the patents they discover, by all means please come and talk to us about taking out a license.

Simple, right? Ignoring, first of all, just how many international patent offices one would really need to go to, the idea that it's somehow easy to look up what patents you might infringe is a complete joke. And anyone who's serious about the patent system admits that. First of all, it assumes (totally incorrectly) that by reading through a patent application you can just tell if what you do is infringing. That's a riot. Most patents are written for lawyers to understand, not actual developers or designers. Second, they're written so broadly and so opaquely, so that they can only be deemed infringing after a product has come to market successfully. It's nearly impossible to track down the patents you might infringe on.

A few months ago, we highlighted a careful study by Tim Lee and Christina Mulligan (at Yale) about why it's mathematically impossible to actually look through all relevant patents when it comes to software. While Gibson and Intellectual Ventures are pretending -- against all evidence -- that patent boundaries and classifications are clear, well-defined and easy to figure out, the reality is quite the opposite. As the Lee/Mulligan paper noted, if software companies actually wanted to do a real prior art search through the patent database, we'd need a lot more patent lawyers:

we estimate it would take at least 2,000,000 patent attorneys, working full time, to consider whether all these software-producing firms have infringed any of the software patents issued in a typical year. Even if firms wanted to hire that many attorneys, they couldn't; there are only 40,000 registered patent attorneys and agents in the United States.

The thing is, nearly everyone in the space, on any side, seems to recognize that the broad and fuzzy boundaries of patents is a real issue to be dealt with. That Intellectual Ventures feels it's okay to pretend that the system works just fine, when all of the evidence shows that's not even close to true, suggests just what kind of company it is.

Filed Under: infringement, patent trolls, patents
Companies: intellectual ventures

Recording Industry Could Catch More Flies With Honey, But Keeps Betting On Vinegar

from the chasing-8%-at-the-expense-of-the-other-92%-is-just-more-bad-math dept

As Mike covered earlier, Ofcom, the UK's media regulator, has just released a new report on online piracy containing information it has been gathering for the Intellectual Property Office (IPO) ahead of the Digital Economy Act's eventual rollout. (Surprise! Pirates buy lots of stuff!) Andy Malt, editor of Complete Music Update (CMU) and freelance writer/copywriter for music and tech companies, has a look at the numbers and arrives at the conclusion that they're hardly discouraging.

Of the 5099 people surveyed between May and July this year, 47% weren’t able to distinguish with certainty between legal and illegal services, while only 16% actually admitted to accessing unlicensed content, and only 8% said they relied on illegal sources of music.

When those infringers were asked why they went to unlicensed content sources instead of legitimate sites or services, the most common responses were that the illegal sites were free, convenient and/or quick. Asked what would convince them to stop accessing illegal content, the three most common answers were that they would do so if legal services were cheaper and had all the content they wanted, and if it was clearer what was legal and what was not.

Malt points out that there are several legal services, most of which are inexpensive, including ad-funded streaming services which give listeners access to thousands of tracks for free. ("Inexpensive" is, of course, relative. Ofcom's study shows that music retailers and streaming services would convert a majority of casual infringers by cutting prices 50-70%. resulting in 2-3x the number of purchases.)

Of course, Malt's speaking about music services in the western world. Worldwide, the situation isn't nearly as seamless. And TV/motion pictures are a completely different situation. While there are several services available, the content is much more fractured and more expensive. Most streaming services (Netflix, Amazon, Hulu) suffer from major studios' unwillingness to license their output at reasonable rates, and pricing on digital products isn't all that competitive.

But as for music services in the US, it's mostly good news, even if it took much longer than it needed to get to this point. Still, Malt then goes on to point out an area where these services disappoint, often through no fault of their own:

The missing content point is a stronger argument, providing file-sharers relying on it really are trying to access tracks that artists or labels have failed to make available through legit routes. And this is something the music business really ought to have solved by 2012.

AC/DC joined the digital party just within the past couple of weeks and a handful of other holdouts have chosen to stay CD-only. The list of holdouts for streaming services is much, much longer, however. But while these holdouts may be giving themselves a slight sales boost, they're doing so at the expense of their own industry.

[W]hile artists perhaps should have the power to control where their music is distributed, many of the Spotify resisters are acts who have made their millions already, and really should be thinking about the good of the wider music community. Because every artist shunning the streaming services is providing ammunition to the aforementioned self-confessed infringers.

The world has moved on, music consumption has changed, and the Napster generation are now at an age where they should be becoming the music industry’s biggest customers, but that’s not going to happen if the legit services they are embracing are lacking catalogue.

Here's where these artists make one of the worst assumptions -- that withholding their music from streaming services will result in a corresponding boost in sales. While there may be a few fans who opt to purchase rather than do without, a majority will find other options, none of which involve purchasing the album.

[A]n increasing number of people, when then can’t find an album on their streaming service of choice, will not just fall in line and go buy the record from the three shops that the artist or label has dictated can sell their music.

When I can’t find ‘Red’ by Taylor Swift on Spotify, I don’t think, “Gosh darn it, I’ll just have to go and buy it from Papa John’s pizza parlour“. I think, “Well fuck it, I’ll just not listen to it then, cos I’ve listened to enough sixteen track pop albums lately to know that a good chunk of it will not be very good. Also, Ed Sheeran co-wrote one of the tracks on it”. Meanwhile those others not willing to take the financial risk of being lumbered with a handful of filler tracks will Google ‘Red for free’ and download it off someone else’s hard drive for nothing.

So, while some artists may despise the Spotifys and Pandoras of the world, withholding their music cedes ground to infringers and other artists. Even if the bump in sales is bigger at this point in time, that won't always be the case. The law of diminishing returns is going to kick in as a new generation of music fans raised on always-on internet and streaming services is just going to bypass artists that aren't available on the services they use.

He then goes deeper into the numbers, looking at what it takes to convince infringers to utilize legitimate services -- and it's here that the involved industries continue to shoot themselves in the wallet. Yes, there are some people who are never going to use legitimate means and will never pay for music, movies, etc. So, why spend so much time worrying about something you can't fix?

OK, some of the infringers who complained about being confused may be taking the piss again. After all, most people finding content online via a search engine with ‘pirate’ in its name know there’s a very high chance the content they download isn’t legal, even if they plead ignorance. So education probably won’t work with this group. Then again, these are also the people who know how to hide their file-sharing from the three-strikes police, and to circumvent the web-blocks put up in front of The Pirate Bay, so there’s probably not much you can do about them.

But remember, this was only 8% of those surveyed, so I say fuck em. Let’s focus on the 47% who implied that they want to do the right thing, but find the whole thing too confusing. Let’s stop handing over cash to lawyers and technology whizzes who want to go after the 8% and focus on doing some decent education with everyone else. Because if OfCom’s research tells us anything, it’s that the music industry’s current educational initiatives, including the Music Matters programme, which expanded into the US this week, just aren’t working in the slightest.

If you've got approximately 92% of the population to work with, why on earth would you spend your time trying to legislate, sue or otherwise inconvenience the other 8%? The thought process seems to be that only 0% piracy is acceptable and that accepting less is ceding the battle. Taking a hardline against file-sharing will only alienate potential customers. File sharing isn't limited to an "unlawful" fringe. A full 2/3rds of the study's respondents admitted to infringing activity, but if the content industries insist on treating customers as thieves, they're just going to end up with fewer and fewer customers.

The half-assed "educational" programs are a joke as well, with most of the effort going into telling people how file sharing is wrong, rather than playing up the advantages of legitimate services (please -- no more of the "your illegal download is probably a virus" ridiculousness). Or better yet, move that time, money and energy into convincing rights holders to work with existing services to make them better, by adding more content, reducing idiotic, arbitrary restrictions that make no sense with digital goods and negotiating rates that work for everyone involved.

Malt has a couple of excellent points on how to do education right. As he says, the Music Matters campaign is a farce. It fails to do anything resembling "education," preferring to use guilt as negative reinforcement rather than give the undecided a reason to choose legitimate services. Not only that, but the Music Matters mark isn't even displayed by the two largest music services (iTunes and Spotify).

I suppose Music Matters is better that the American record industry wheeling out millionaire pop stars to complain about how file-sharing is depriving them of record sales, but it still feels decidedly mediocre for an industry that, when it comes to selling artists and albums, is actually pretty good at engaging and enthusing consumers. It’s easy for me to sit here and criticise, and I don’t claim to have the answers. But for a start, perhaps instead of forcing ISPs to send out angry letters to those consumers mistakenly downloading unlicensed music files, the labels could start sending thank you letters to those who inadvertently use a legal store.

There's an idea. Thanking your customers for purchasing from you rather than taking alternate routes to the same content. It would make for some great PR and maybe start altering the general image of the average record exec as a grouchy, out-of-touch robber baron with dollar signs for eyes, surrounded by lawyers and starving musicians.

Education can be a good idea, but it needs to be handled with a much defter touch than any of the content industries seem able to manage. Think more carrot, less stick. And try to let bygones be bygones. You can't keep bemoaning the post-Napster climate when you've got a whole new generation of potential customers who are accustomed to streaming services, low prices and instant access across multiple devices. Like it or not, streaming services and single track sales are here to stay. Ad-supported apps may not bring in great money, but that's the new reality. There's no going back, no matter how much legislation you throw at the internet. A continued preference for enforcement over engagement is only going to make things worse. 

Filed Under: customers, infringement, music industry, opportunities, pirates