Thursday, October 06, 2005

State of Play III: Social Revolutions conference begins tonight

The conference "State of Play 3 -- Social Revolutions" begins tonight. I've attended the first two and the topics covered are really fabulous -- it's all about real world law and the development of virtual worlds (i.e. the ultimate development of a Metaverse). Check out their website here. Also, Terra Nova is the official SOP3 blog, check there for blogging about the conference.

I'll bring my computer and will perhaps do some live blogging of certain panels at the conference over the weekend.

Wednesday, October 05, 2005

Satellite Radio Companies Face Suit Upon Releasing Devices that Copy Music

XM & Sirius, the satellite radio companies, are reportedly to release new devices that allow the copying of the songs coming through the devices. To no one's surprise the RIAA is threatening suit for copyright infringement, presumably under the "inducement" to infringe bits of the Grokster opinion. If a suit actually progresses through the court system it would be an interesting battle that could force the courts to determine a more clear vision of what the language on the Grokster opinion meant and will again push against the old Sony-Betamax "non-infringing uses" doctrine.

The courts will have to consider whether digital music via satellite radio is truly different than music that arrives via the regular radio. Both can be copied very easily, but only one sounds digital. Regular radio is obviously covered by the non-infringing uses doctrine, but is digital radio? Will the digital radio just be viewed as an internet device or as a broadcast device like a regular radio? Any determination will probably rely very much on the exact specifications of these devices, there would be questions such as -- do they allow the copied music to be moved off of the device and on to a computer or CD, etc. Here's a snippet from the article:

In late July, XM announced a partnership with Samsung to produce a portable device that allows users to record songs from satellite radio broadcasts and then catalog and save favored songs while deleting others.

Sirius later announced a similar device, called the S50. The device will be about the size of an iPod and released in October.

The music industry argues the recording capability — essentially Tivo for radio — is a clear copyright violation and could take revenue away from paid download music stores, such as iTunes. One executive argued the devices give users "permanent ownership of copyrighted material without paying for it."

XM has a deal with the paid service Napster, which allows user to click and buy songs they hear on satellite radio broadcasts. The deal was welcomed by the industry, yet raises the question, one music executive said, "Why would anyone use the Napster platform to buy it if XM is giving it away for free?"

Some record executives expect an ugly battle if XM and Sirius don't modify the devices.

"They can't do this without being sued," said another music executive involved in the discussions.

The rupture over the portable devices comes as the music industry is gearing up to demand higher licensing fees from the satellite radio industry once the current seven-year contract expires at the end of the year.
Slyck News -- RIAA Takes On XM Over Copyright Infringement

Digital Music Sales Triple from 2004 to 2005

BBC: Digital music revenue 'triples'

The article says that 6% of music sales are now digital -- worth $790 million.

At the same time revenue from physical format music sales (CDs) fell 6.4%. Seems pretty much like an even change between 2004-2005 then, people are just buying MP3s instead of CDs. Of course that music sales have fallen over the years in general and are lower than they were in years prior to 2004, which is the point of comparison here.

There was a $.2 billion global drop in music sales overall from 2004 to 2005. Piracy, competition from other forms of entertainment (probably mostly video games), and lower retail prices for music are blamed for the drop. I think they also forgot to add that most pop music being released these days is drivel. I would also think that industry watchers should not be surprised that there is some drop in sales overall as people move to digital purchases because many people in-the-know will refuse to buy iTunes style low bit rate and DRM'ed music but will instead turn to possibly illicit sources where they can get non DRM'ed and higher quality stuff. I doubt this is something many people consider when they're shopping for digital music, but I know it is an issue for some.

Here's a snippet:

IFPI said the surge in digital music sales was being driven by the increased use of broadband, 3G mobile phones and portable music players.
The IFPI said the decrease in digital revenue was due partly to lower retail prices, a decline in DVD music video sales and music piracy.

Release schedules and competition from other entertainment sectors were also factors, it added.

Story of a U.S. IP Pirate Busted in China

This month Wired has a story of an American citizen who worked as an intellectual property pirate out of China and how he got busted. It's the story of Randy Guthrie, heir to the Guthrie-Phipps fortune and a grad degreed ivy leaguer who came up with a great scam -- he moved to China and set up a site called "3 dollar DVDs" and made loads of cash sending to US customers. Wired has a 6 page story on how the discovery of a few fake DVDs at a flea market by a low level agent led all the way to Guthrie's ultimate take-down through Chinese-US cooperation. The bust is analyzed as a red herring though -- allowing the US to say they're getting Chinese cooperation in the fight against piracy and allowing the Chinese to take credit for enforcing IP rights, when in fact Guthrie was more or less a small-time player who did absolutely nothing to cover his tracks (he put his return address on the envelopes of DVD for crissakes!). He was just an easy target who provided some political points for all involved in his arrest while Chinese authorities basically either ignore, or even profit from, IP theft. Randy Guthrie ended up with a 2.5 year sentence in China, but when he gets deported to the US it will probably get eveb worse for him. Here's an interesting snippet from the article:

In fact, piracy is the unofficial official policy [in China]. The state licenses many retailers of pirated DVDs and collects taxes on their sales. And, in a country where the economy is still tightly monitored and regulated, there's every reason to believe that the government has some control over the illicit DVD market.

Certainly the Chinese government has shown little interest in widening the net to prosecute anyone beyond Randy's immediate circle. In April, he was convicted of violating China's intellectual property laws, was fined $60,500, and began serving a two-and-a-half-year sentence in Chinese custody. (Randy's Chinese lawyer was able to convince the court to drop the charge of operating an unlicensed business, which carries a prison term of 15 years.) After that, he'll be deported. Two of Randy's employees were arrested and jailed. The shopkeepers who sold him the discs were also arrested.

But the authorities didn't follow the trail any further. They didn't arrest the middlemen. They didn't trace the discs back to the factories that produced them. They didn't investigate the sources of the original digital files. The extensive network that supplied Randy's business is healthy and intact.

Meanwhile, the US government continues to pursue Randy's prosecution. On July 13, the office of Jay Golden, the assistant US attorney in Mississippi, indicted Randy on 17 counts of smuggling, copyright violations, and interstate trafficking of counterfeit goods. The government is also seeking approximately $1.1 million in cash. "A lot of the time, people can't pay the penalties," Golden says. "This case might be different."
Wired: The Decline & Fall of Randolph Hobson Guthrie III

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