How The Financialization Of Music Could Lead To Demands For Perpetual Copyright

from the just-another-asset-class? dept

Back in October, I noted the huge amounts of money pouring into music copyrights, largely driven by the global rise of online streaming. Since then, that trend has continued, most notably with Bruce Springsteen's sale of his recordings and songwriting catalogue to Sony, for a rumored $550 million. As I pointed out in the post, one of the problems with this "financialization" of the sector is that music copyrights become completely divorced from the original creativity that lies behind them. They become just another asset, like gold, petroleum or property. On the Open Future blog, Paul Keller has pointed out a plausible – and terrifying – consequence of this shift.

As Keller notes, the more the owners of copyrights become detached from the creative production process, the less they will care about the nominal balances within the system. In particular, the central quid pro quo of copyright – that a government monopoly is granted to creators for a limited period, after which the work enters the public domain – will be perceived simply as an obstacle to greater profits. The financialization of the music world means that an artist's ability to use the public domain as a foundation for future creativity, or to take advantage of copyright exceptions, will be of no interest to the corporations and private equity firms that are only concerned about the value of their own assets. For Keller, the end-game is clear:

From the perspective of financial investors, copyright is not much more than a bundle of rights created out of thin air that structure financial flows and it follows that there is absolutely no reason why they should not push for governments to make these rights last longer. Once the slate of recording artists that entered into these deals have passed away and will not be able to speak up anymore – or complain that they have been shafted – it will only be a question of time until financial investors start pushing for longer term durations or – more likely – perpetual copyright. Compared to this new class of cultural predators, the good old Walt Disney company will quickly start looking like an innocent schoolboy.

It has been hard enough in the past to make copyright a little fairer for members of the public. If Keller is right – and I fear he is – it will become close to impossible to continue that process in the future unless people start defending vociferously what few rights that they currently have in the world of copyright.

Follow me @glynmoody on Twitter, Diaspora, or Mastodon.

Republished from the Walled Culture blog.

Filed Under: assets, bruce springsteen, copyright, financialization, perpetual copyright, publishing

Giganews Sues Perfect 10 For $20 Million For Trying To Play 'Hide The Assets' After Jury Award

from the perfect-20 dept

If you're not familiar with Perfect 10 by now, it is a company that billed itself as a smutty porn magazine that was actually mostly in the far more immoral business of copyright trolling. Rather than peddling skin, Perfect 10 mostly peddled laughably frivolous copyright lawsuits against roughly everyone, managing in this process to suffer legal losses to Google, CCBill, Amazon, and Visa among others. One of those others was Usenet provider Giganews, which won big in its court battle with Perfect 10 to the tune of the latter being ordered to pay over $5 million in attorney's fees to the former. Perfect 10 immediately cried poor at that point, stating it didn't have the money to cover the award, leading the court to put its assets in receivership. At the time, Mike wrote:

In the most recent Perfect 10 case, we noted that Perfect 10 lost big time earlier this year. It had sued Usenet provider Giganews, but the court found that Perfect 10's legal arguments made no sense at all, and sided completely with Giganews. Most importantly, the court upheld the multimillion fee award that the court had dumped on Perfect 10 for filing such a bogus lawsuit. It turns out that Perfect 10 doesn't seem to have that kind of money, so all of its assets are now controlled by a court-appointed receiver.

Those assets were supposed to be sold off in order to pay the court ordered award to Giganews. According to a new lawsuit filed by Giganews against Perfect 10 not a single cent has been paid, with the porn company instead choosing to play a silly game of hide-the-assets in order to avoid having them sold off.

The claims center around an alleged conspiracy in which Perfect 10 transferred its funds and assets to Zada.

“As of now (over two years since the judgment), Perfect 10 has not voluntarily paid any amount of the judgment,” the complaint begins. “Instead, Perfect 10, through the unlawful acts of Zada and in conspiracy with him, has intentionally avoided satisfaction of the judgment through a series of fraudulent transfers of Perfect 10’s corporate assets to Zada’s personal possession.”

Norman Zada would be the owner of Perfect 10. The suit seeks $20 million for fraud and punitive damages, detailing how Zada made a habit since 2014, when the lawsuits including that against Giganews began to clearly go south for Perfect 10, of selling Perfect 10 physical assets for below-market sums of money and transferring company cash into his personal bank accounts. We're talking about millions of dollars in cash and assets moving around, as a court order to pay Giganews loomed over it all. This, to be as clear as possible, is not the sort of thing that the court looks favorably upon.

Giganews says that Perfect 10 transferred at least $1.75m in cash to Zada. Then, within weeks of the court ordering Perfect 10 to pay $5.6m in attorneys fees and costs, Giganews says that Zada “fraudulently transferred substantially all of Perfect 10’s physical assets” to himself for an amount that did not represent their true value. Those assets included a car, furniture, and computer servers.

Zada, for his part, has the following defense for himself on the record.

When Zada was questioned why the transfers took place, he admitted that “it would have been totally disruptive to have those [assets] seized” in satisfaction of the judgment. Indeed, the complaint alleges that the assets never moved physical location.

That's a fairly clear admission for defrauding the court with regard to its order to pay Giganews. Giganews is asking for the $1.75 million in cash that had been transferred and interest beginning from March of 2015. The fangs are clearly out, but one can hardly blame Giganews, which had to defend itself against what was clearly a frivolous lawsuit filed on behalf of a company that can't seem to figure out how to look anything other than shady in the extreme. To that end, Giganews is asking for another $20 million in punitive and exemplary damages. Here's hoping they get it.

Filed Under: assets, copyright, copyright trolling, norman zada
Companies: giganews, perfect 10

German Court Sees Through The DOJ Fairy Tale, Rejects Attempt To Seize Megaupload Assets

from the a-string-of-failures dept

We've covered a series of embarrassing setbacks for the US government's case against Megaupload over the past few months. It's a pretty stunning trail of errors by US officials who seemed to think that a scary story about a "bad man" would trump a lack of actual evidence or following legal procedure. While the case may hold up in the long run, it seems like everywhere you look there's evidence of highly questionable activity by the government.

The latest setback comes from Germany, where the US sought assistance from officials in seizing various assets of Dotcom's or Megauploads. However, the court has now rejected the request:

The Frankfurt judges have since rejected this request, because it contains insufficient evidence. The US legal team failed to demonstrate that a web hosting service for the illegal upload of copyrighted files, amounts to a criminal offence.

According to the German 'Telemediengesetz' (communications legislation), a hosting service for foreign files will generally not be accountable unless the host had active knowledge of illegal activity. The judges also emphasised that the concept of knowledge is limited to positive knowledge. Therefore if the service provider believes that it is possible or likely that a specific piece of information is stored on their server, this is not sufficient evidence of knowledge of abuse.

According to the court ruling, there is no legal obligation to monitor the transmitted data or stored information or to search for any illegal activity.

Of course this was the same point that we raised the day that Megaupload was shut down. While it may be true that many Megaupload users have infringed on copyrights, there's a massive leap from that point to the idea that Megaupload is a criminal enterprise -- yet the US government's case basically skips over any details to make that leap. Thankfully cooler heads are recognizing that a significant amount of the US's case seems to be based on a fairy tale that US officials -- under the influence of Hollywood -- keep telling.

Tip to DOJ officials under the sway of Hollywood's version of the internet: remember, these people make their livings telling fairy tale stories. You know those opening credit lines about how something is "based on a true story"? Yeah, quite frequently the actual truth is a long way from what's shown. It seems that you may have been taken in by another such Hollywood "true" tale.

Filed Under: assets, copyright, criminal, doj, germany, hosting, kim dotcom, liability
Companies: megaupload

DOJ Argues That Even If Case Against Megaupload Is Dismissed, It Still Can Hold Its Assets

from the well-of-course dept

As the fight over whether or not the US can even charge Megaupload under criminal law continues, the US Justice Department continues to make quite extraordinary claims. If you don't recall, the US filed criminal charges against Megaupload and a bunch of its execs. However, as a US judge noted back in April, under US law it might actually be impossible for the case against Megaupload to proceed, because criminal law requires "serving" the defendant, and the law also says you can only serve companies at their US address. Megaupload is not based in the US and has no US address. The DOJ is trying to tapdance around what the law actually says, but (as Megaupload points out) they can't point to a single real legal citation that supports their position. The DOJ is basically arguing that the law should be what they want it to be... because otherwise the DOJ wouldn't like it very much.

Tim Lee continues his always excellent reporting, by providing some details of the latest court hearings on the matter where the judge definitely seems to recognize that Megaupload may be legally correct:

[Judge O'Grady] noted that the "plain language" of the law required sending notice to the company's address in the United States. "You don't have a location in the United States to mail it to," he said. "It's never had an address" in the United States.

Perhaps even more interesting is the claim by the DOJ that even if the Judge rules against them on this issue, they should still be able to freeze Megaupload's assets, because the cases against the individuals will continue.

Not only that, but the government believes it can continue to freeze Megaupload's assets and paralyze its operations even if the judge grants the motion to dismiss. That's because in the government's view, the assets are the proceeds of criminal activity and the prosecution against founder Kim Dotcom will still be pending. The fact that the assets are in the name of Megaupload rather than its founder is of no consequence, the government claimed.

That's a trickier argument to make, though, not a totally crazy one. It's more or less based on the same controversial theory under which the Justice Department seizes and forfeits things like hip hop blogs because someone might possibly get some infringing music from them. But here it's even more complex, because there is supposed to be a separation between the corporation as an entity and the execs who work there as entities. It's part of the reason why "limited liability" corporations exist. There are, of course, ways to get past that, but the government would need to make that case, and they may have a hard time doing so. Either way, it does appear that they're legitimately worried about this rather massive error on their part in bringing the case.

Perhaps, next time, the DOJ won't rush into highly questionable lawsuits just because the MPAA is upset about a website.

Filed Under: assets, copyright, doj, frozen, jurisdiction, service
Companies: megaupload

Obama Administration Told It Should Return The Crystal-Covered Michael Jackson Glove It Illegally Seized

from the seriously? dept

We've talked repeatedly about the federal governments' overly-aggressive nature in seizing and forfeiting things like domain names, but the government's abuse of forfeiture and seizure laws goes way beyond just seizing digital assets. Basically, law enforcement often sees seizure and forfeiture laws as an excuse to steal from the public with little to no recrimination.

Thankfully, it looks like the courts may be starting to push back a bit. The Obama administration appears to be losing its case in which it seized millions of dollars worth of assets from the son of the president/dictator of Equatorial Guinea. Included in the haul is an original Michael Jackson crystal covered "glove" from the Bad tour. The feds are claiming that these were ill-gotten gains from corruption. That may be true, but the guy, Teodoro Nguema Obiang Mangue, hasn't been convicted of any crimes either at home or in the US, so the courts are wondering why it should let the US just take his stuff. The feds have a chance to amend their argument, but it's good to see that the judge is quite skeptical that such seizures are legal.

This kind of thing seems all too common with such in cases, where law enforcement goes after the stuff, but never goes after the actual people involved. And, of course, sometimes they make big mistakes. Either way, hopefully cases like this lead to fixing (or getting rid) of the ridiculous process of asset seizures without due process or without any charges being filed. It's not just that it's open to abuse, but that it is, clearly, regularly abused to either enrich law enforcement or just to hassle people the government doesn't like. That shouldn't be allowed.

Filed Under: assets, equatorial guinea, forfeiture, michael jackson, obama administration, seizure

Righthaven.com Domain Auction Has Begun

from the place-your-bids dept

As promised last week, it appears that the auction of the righthaven.com has begun over at SnapNames. The auction will apparently run until January 6th at 12:15 PT. So if you were planning to take up a collection to buy it for yourself, start counting those pennies. There have already been a few bids, and at the time I'm writing this, they're asking a bit over $1,000.

Filed Under: assets, auction, domain, hoehn, righthaven, righthaven.com
Companies: righthaven

Who Wants To Own Righthaven.com? Domain Seized, About To Be Auctioned

from the start-the-bidding dept

The latest in the continuing Righthaven saga is that as part of the efforts by the court to hand over Righthaven assets to satisfy the court order for Righthaven to pay legal fees in the Hoehn case, the righthaven.com domain has been seized and will be auctioned off. While the domain is currently listed as being in the possession of Hoehn's lawyer, Marc Randazza, Randazza says that it's actually been given to the court-appointed receiver, Lara Pearson, who is planning to auction it off. According to Vegas Inc.:

Pearson added Thursday, “If all goes well, I intend to put the domain name up for auction before the holiday break begins tomorrow, though I have not yet made a firm decision as to where the domain will be auctioned.”

So, get out your checkbooks if you'd like to own a piece of copyright trolling history...

Filed Under: assets, attorneys fees, copyright, hoehn, marc randazza, steve gibson
Companies: righthaven

US Marshal Service Told To Go After Righthaven's Assets

from the is-it-over-yet? dept

The saga of Righthaven continues... and may finally be nearing a close. With Righthaven failing to get a court to change the requirement to put up a bond for the $34k it owes in legal fees for its bogus lawsuit against Wayne Hoehn, the deadline for Righthaven to pay up (or post such a bond) has passed. As such, it appears that the court has now signed off on a writ of execution for the US Marshal Service to seek to get from Righthaven the money owed, including additional accrued costs to make the total at stake: $63,720.80. In fact, they're "authorized to use reasonable force in the execution of this Judgment/Order." It seems that missing deadlines for filings may be the least of Righthaven's problems at this point.

Filed Under: assets, hoehn, righthaven, us marshal service
Companies: righthaven

New Music Format File Can Be Updated Remotely

from the well,-there's-that dept

For quite a while now, we've been hearing how many in the recording industry don't like selling pure music digital files, because they leave out the rest of what people like to get with an album: the booklet, images, lyrics, etc. Lately there have been a few different attempts (with a whole bunch more on the way) to add that sort of information to digital music files. Not so long ago Apple introduced its iTunes LP which hasn't exactly taken the world by storm yet. Now there's another competitor in the space, called MusicDNA, which includes all that additional content. It's main differentiator, though, is that the content can be regularly updated -- but only if you have the official copy, rather than an unauthorized one. I certainly understand the thinking here (it's an attempt to create a "freemium" type situation which encourages people to buy the version with all that other (updating) content. But I do wonder if the updating will freak some users out -- knowing that they want to buy something that isn't going to change over time in any way. I like the basic idea that content could be added to (which certainly could be a reason to buy) so long as old content can't be tinkered with/deleted (it's not clear in either article here). Another article suggests that the updated content would be for things like concert listings or Twitter feeds, which actually makes sense. Though, seeing all that, I wonder if this file format actually competes with the new trend for musicians to put out iPhone apps that sound like they basically do the same thing as this new MusicDNA format does.

Filed Under: assets, mp3, music, updates