Wednesday, April 30, 2008

If a Copy Falls in the Forest, Does it Make a Sound? Court Challenges Music Publishers on File Sharing

There's been quite a rumble in the publishing community in the wake of this week's ruling by the U.S. District Court in Arizona in favor of Pamela and Jeffery Howell, defendants against a lawsuit raised by the Atlantic Recording Corporation for their alleged role in copyright infringement. Atlantic, with RIAA backing, was seeking a summary judgment against the Howells claiming that they had put music files on the KaZaa file sharing service, and by doing so violated Atlantic's rights to distribution under copyright law. That word "distribution" turns out to have become the pivotal point in a key decision that puts copyright law in its true perspective.

The key finding by U.S. District Judge Neil Wake is a simple but fairly profound observation. Wake notes that although statues and court precedents state clearly that a distribution of content is a publication, not all publications are distributions. Specific to file sharing, the defendants claim that they did not put any music in the KaZaa file folder designated for file sharing - and that the record company's claim that more than 4,000 files had been designated by them for download was due to a glitch in the KaZaa software that made their music files, present in a folder not designated for sharing, identifiable by others in the KaZaa network. So although these songs were made to look as if they were available for distribution by KaZaa, they were not by any intent of the defendants. The Howells also pointed out that their computer was accessible by others who could have made their files exposed to the KaZaa network.

The judgment reasserts that copyright is really not about the right to make copies but rather about the right to distribute copies of protected works for use by others. Implicit in that position is that individuals or institutions making copies for purposes other than distribution are not subject to copyright law. In other words, if you're using copies for your own licensed purpose, you're not a distributor: distribution is when you willingly make a work available for distribution and it's actually distributed. In the instance of the Howells, the judge perceived that through whatever happenstance an index saying that copies were available for distribution was not the same as saying that any specific person was actually distributing copies.

Though there is already a growing body of legal decisions that seem to be weighing against RIAA efforts to discourage individual consumers from copying content, the Howell decision is notable in that the judge went to particular pains to delve into the technological "hows" of file sharing as well as into legal precedents. In doing so, Judge Wake has challenged publishers pursuing such suits to recognize that the more that they go into these suits the more that they create a wide portfolio of rulings that begin to flesh out the full reality of electronic content use - a portfolio that over time has weakened rather than strengthened their claims to inhibit content copying. Put simply, the more that these suits continued, the more circumscribed their claims become and the more that their presumption of complete power over copying will weaken.

Already many in the music industry have recognized that trying to inhibit copying per se is counterproductive, as it weakens their ability to build brand value with consumers swapping from one platform to another at will to consume content. If your customer gets a new mobile phone, do you really want to hassle digital rights management issues when they try to transfer their music files to the new phone or do you want them to still be able to love the artists that you have in your stable? Increasingly being able to sustain passion for a brand is winning out over the absolute right to prevent copying. Distribution enables a relationship with a content brand: once that relationship is established, the relationship becomes more marketable than the content itself over time.

Music publishers are beginning to get a far stronger sense of building marketable relationships with audiences as the key to their future profits. Digital watermarking techniques are one key element of moving away from fortress-like content packaging and towards being able to understand the value of the relationships being formed with content as it moves from one context to another. If a CD is copied but nobody cares about it, that's probably a bigger problem in the long run than someone copying a CD and discovering that people care about it very much - and will give you opportunities for revenue that spring from that distribution. Managing copyright via asserting distribution rights is still a very key mechanism for enabling revenues, but the future is in recognizing that you're far better off in the long run taking advantage of free distribution to get content into the hands of people who are likely to be your most valuable customers. Once it's there, have your content packaging ready and able to start the value conversation.
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