Copyright: THE LAW

Unauthorized Copying is Against the Law

Copyright law protects the value of creative work. When you make unauthorized copies of someone’s creative work, you are taking something of value from the owner without his or her permission.  Most likely, you’ve seen the FBI warning about unauthorized copying at the beginning of a movie DVD.  Though you may not find these messages on all compact discs or music you’ve downloaded from the Internet, the same laws apply.  Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution, rental or digital transmission of copyrighted sound recordings. (Title 17, United States Code, Sections 501 and 506).

What the Law Says and What it Means

Making unauthorized copies of copyrighted music recordings is against the law and may subject you to civil and criminal liability.  A civil law suit could hold you responsible for thousands of dollars in damages. Criminal charges may leave you with a felony record, accompanied by up to five years of jail time and fines up to $250,000. You may find this surprising. After all, compact discs may be easily be copied multiple times with inexpensive CD-R burning technology.  Further, when you’re on the Internet, digital information can seem to be as free as air.  U.S. copyright law does in fact provide full protection of sound recordings, whether they exist in the form of physical CD’s or digital files.  Regardless of the format at issue, the same basic principal applies:  music sound recordings may not be copied or distributed without the permission of the owner.

What the Courts Have to Say

A long series of court rulings has made it very clear that it’s against the law both to upload and download copyrighted music without permission. It doesn’t matter whether you’re dealing with sound recordings, pictures, software or written text. The courts have consistently ruled that many peer-to-peer (P2P) programs and other unauthorized uploading and downloading inherently amount to copyright infringement and therefore constitute a crime.

Common Examples of Online Copyright Infringement:

• You make an MP3 copy of a song because the CD you bought expressly permits you to do so. But then you put your MP3 copy on the Internet, using a file-sharing network, so that millions of other people can download it.
• Even if you don’t illegally offer recordings to others, you join a file-sharing network and download unauthorized copies of all the copyrighted music you want for free from the computers of other network members.
• In order to gain access to copyrighted music on the computers of other network members, you pay a fee to join a file-sharing network that isn’t authorized to distribute or make copies of copyrighted music. Then you download unauthorized copies of all the music you want.
• You transfer copyrighted music using an instant messenging service.
• You have a computer with a CD burner, which you use to burn copies of music you have downloaded onto writable CDs for all of your friends.
• Somebody you don’t even know e-mails you a copy of a copyrighted song and then you turn around and e-mail copies to all of your friends.

Do The Crime, Do The Time
If you do not have legal permission, and you go ahead and copy or distribute copyrighted music anyway, you can be prosecuted in criminal court and/or sued for damages in civil court.

• Criminal penalties for first-time offenders can be as high as five years in prison and $250,000 in fines.
• Civil penalties can run into many thousands of dollars in damages and legal fees. The minimum penalty is $750 per song.

The "No Electronic Theft Law" (NET Act) is similar on copyright violations that involve digital recordings:

• Criminal penalties can run up to five years in prison and/or $250,000 in fines, even if you didn’t do it for monetary or financial or commercial gain.
• If you did expect something in return, even if it just involves swapping your files for someone else’s, as in MP3 trading, you can be sentenced to as much as five years in prison.
• Regardless of whether you expected to profit, you’re still liable in civil court for damages and lost profits of the copyright holder.
• Or the copyright holders can sue you for up to $150,000 in statutory damages for each of their copyrighted works that you illegally copy or distribute.

If you make digital copies of copyrighted music on your computer available to anyone through the Internet without the permission of the copyright holder, you’re stealing. And if you allow a P2P file-sharing network to use part of your computer’s hard drive to store copyrighted recordings that anyone can access and download, you’re on the wrong side of the law.

Having the hardware to make unauthorized music recordings doesn’t give you the right to steal. Music has value for the artist and for everyone who works in the industry.

What the Courts Have to Say About Illegal Uploading and Downloading…
…and Copyrighted Sound Recordings:

"As stated by Record Company Plaintiffs in their brief, "Aimster predicates its entire service upon furnishing a 'road map' for users to find, copy, and distribute copyrighted music." …We agree. Defendants [Aimster] manage to do everything but actually steal the music off the store shelf and hand it to Aimster's users."
Aimster Copyright Litigation. 01-C-8933, MDL # 1425 (Memorandum Opinion and Order, September 4, 2002).

"…they [Aimster] apparently believe that the ongoing, massive, and unauthorized distribution and copying of Record Company Plaintiffs' copyrighted works by Aimster's end users somehow constitutes "personal use.’ This contention is specious and unsupported by the very case on which Defendants rely."
Aimster Copyright Litigation. 01-C-8933, MDL # 1425 (Memorandum Opinion and Order, September 4, 2002).

"Napster users infringe at least two of the copyright holders’ exclusive rights . . . .Napster users who upload file names to the search index for others to copy violate plaintiffs’ distribution rights. Napster users who download files containing copyrighted music violate plaintiffs’ reproduction rights….[V]irtually all Napster users engage in the unauthorized downloading or uploading of copyrighted music . . ."
A & M Records v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).

"Although defendant [MP3.com] seeks to portray its service as the ‘functional equivalent’ of storing its subscribers’ CDs, in actuality defendant is re-playing for the subscribers converted versions of the recording it copied, without authorization, from plaintiffs’ copyrighted CDs. On its face, this makes out a presumptive case of infringement under the Copyright Act . . . ."
UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y. 2000).

…and Copyrighted Images:
"Distributing unlawful copies of a copyrighted work violates the copyright owner’s distribution right and, as a result, constitutes copyright infringement. . . . . [Unlawful distribution occurs where] [f]iles of [copyrighted] information are stored in the central system, and subscribers may either ‘download’ information into their[computers] or ‘upload’ information from their home units into the central files . . . ."
Playboy Enterprises v. Russ Hardenburgh, Inc., 982 F. Supp. 503 (N.D. Ohio 1997).

"[The Copyright Act] provides that an owner of a copyrighted work has the exclusive right to reproduce the work in copies . . . [and] to distribute copies of the work to the public . . . . [A]nyone who violates any of the exclusive rights of the copyright owner … is an infringer of the copyright."
Playboy Enterprises v. Webbworld Inc., 991 F. Supp. 543 (N.D. Tex. 1997).

…and Copyrighted Software:
"Uploading is copying. Downloading is also copying. Unauthorized copying is an unauthorized use that is governed by the copyright laws. Therefore, unauthorized uploading and unauthorized downloading are unauthorized uses governed by the copyright laws . . . ."
Ohio v. Perry, 83 Ohio St. 3d 41, 697 N.E.2d 624 (Ohio 1998).

"The unauthorized copying of copyrighted computer programs is . . . an infringement of the copyright . . . . [U]nauthorized copies . . . are made when such games are uploaded to the BBS [Bulletin Board Service] . . . [and] when they are downloaded to make additional copies by users . . . ."
Sega Enterprises v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994).

"‘[C]opying,’ for the purposes of copyright law, occurs when a computer program is transferred from a permanent storage device to a computer's random access memory. In this case, copies were made when the Sega game files were uploaded to or downloaded from [the defendant’s] BBS [Bulletin Board Service]."
Sega Enterprises. v. Sabella, 1996 U.S. Dist. LEXIS 20470 (N.D. Cal. 1996).

…and Copyrighted Text:
"Defendant Free Republic is a ‘bulletin board’ website whose members use the site to post news articles to which they add remarks or commentary . . . . The Plaintiffs' [Los Angeles Times and Washington Post] complaint alleges that unauthorized copying and posting of the articles on the Free Republic site constitutes copyright infringement . . . . [P]laintiffs' motion for summary adjudication with respect to fair use is granted . . . ."
L.A. Times v. Free Republic, 2000 U.S. Dist. LEXIS 5669 (C.D. Cal. 2000).

"When a person browses a website, and by so doing displays the [copyrighted] Handbook, a copy of the Handbook is made in the computer's random access memory (RAM), to permit viewing of the material. And in making a copy, even a temporary one, the person who browsed infringes the copyright. Additionally, a person making a printout or re-posting a copy of the Handbook on another website would infringe plaintiff's copyright."
Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 75 F. Supp. 2d 1290 (D. Utah 1999).

When It Comes to Copying Music, What’s Okay … And What’s Not:

Technology has made digital copying easier than ever. But just because advances in technology make it possible to copy music doesn’t mean it’s legal to do so. Here are tips on how to enjoy the music while respecting rights of others in the digital world. Stick with these, and you’ll be doing right by the people who created the music.

Internet Copying

• It’s okay to download music from sites authorized by the owners of the copyrighted music, whether or not such sites charge a fee. 
• Visit our list of Legal Music Sites or Music United for a list of a number legal and safe sites where permission is granted and content is available for downloading.
• It’s never okay to download unauthorized music from pirate sites (web or FTP) or peer-to-peer systems. Examples of peer-to-peer systems making unauthorized music available for download include: Ares, BitTorrent, Gnutella, Limewire, and Morpheus.
• It’s never okay to make unauthorized copies of music available to others (that is, uploading music) on peer-to-peer systems.

Copying CDs

• It’s okay to copy music onto an analog cassette, but not for commercial purposes.
• It’s also okay to copy music onto special Audio CD-R’s, mini-discs, and digital tapes (because royalties have been paid on them) – but, again, not for commercial purposes.
• Beyond that, there’s no legal "right" to copy the copyrighted music on a CD onto a CD-R. However, burning a copy of CD onto a CD-R, or transferring a copy onto your computer hard drive or your portable music player, won’t usually raise concerns so long as: 
  • The copy is made from an authorized original CD that you legitimately own
  • The copy is just for your personal use. It’s not a personal use – in fact, it’s illegal – to give away the copy or lend it to others for copying.
• The owners of copyrighted music have the right to use protection technology to allow or prevent copying.
• Remember, it’s never okay to sell or make commercial use of a copy that you make.

Are there occasionally exceptions to these rules? Sure. A "garage" or unsigned band might want you to download its own music; but, bands that own their own music are free to make it available legally by licensing it. And, remember that there are lots of authorized sites where music can be downloaded for free. Better to be safe than sorry – don’t assume that downloading or burning is legal just because technology makes it possible.

Enjoy the music. By doing the right thing, you’ll be doing your part to make sure that the music keeps coming.

* This site is intended to educate consumers about the issues associated with the downloading, uploading and consumer copying of music. It is not intended to offer legal advice or be a comprehensive guide to copyright law and the commercial uses of music.

SOURCE:
http://www.riaa.com/physicalpiracy.php?content_selector=piracy_online_the_law

WHAT IS ONLINE PIRACY?

Music theft is a real, ongoing and evolving challenge. Both the volume of music acquired illegally without paying for it and the resulting drop in revenues are staggering. Digital sales, while on the rise, are not making up the difference.

Common Examples of Online Copyright Infringement:

• You make an MP3 copy of a song because the CD you bought expressly permits you to do so. But then you put your MP3 copy on the Internet, using a file-sharing network, so that millions of other people can download it.
• Even if you don’t illegally offer recordings to others, you join a file-sharing network and download unauthorized copies of all the copyrighted music you want for free from the computers of other network members.
• In order to gain access to copyrighted music on the computers of other network members, you pay a fee to join a file-sharing network that isn’t authorized to distribute or make copies of copyrighted music. Then you download unauthorized copies of all the music you want.
• You transfer copyrighted music using an instant messenging service.
• You have a computer with a CD burner, which you use to burn copies of music you have downloaded onto writable CDs for all of your friends.
• Somebody you don’t even know e-mails you a copy of a copyrighted song and then you turn around and e-mail copies to all of your friends.

Financial Firm Rates Spotify as 'Unsustainable,' 'Alarming,' 'Broken...'

Financial data firm PrivCo raised some serious questions about the sustainability of Spotify's financial model, based on year-2011 losses of nearly $60 million.  "Spotify's financials show that the bigger the company gets, the bigger its losses," the company assessed.  

"...while Spotify's revenue growth is impressive, its overall financial results are alarming."

PrivCo treated this as a disaster area, with urgent issues surrounding content licensing, ballooning personnel costs, unworkable subscription tiers, and revenue gains that disguise a drastic financial sinkhole.  "While Spotify's revenues grew 151 percent in 2011 to $244 million, Spotify was unable to generate any material improvements to its cost of sales margin," the company continued.  

"In fact, virtually every new dollar of revenue went directly to music companies as royalty payments, evidencing the fact that the more members Spotify adds, the more money the company loses.  In almost a one-for-one scenario, every dollar Spotify is generating immediately exits the company due to licensing fees..."

PrivCO CEO Sam Hamade urged drastic and immediate changes to this model: "Spotify's 2011 results indicate that drastic changes must be be made quickly to its business model in order to generate growth while actually improving operating margins so that break-even, let alone profitability, is somewhere, anywhere, on the horizon," Hamade warned.  "Either the online music royalty payment model to artists and music companies needs to change, which is highly unlikely in the near term given that digital royalties are record companies only growing revenue stream, or Spotify needs to ASAP introduce a tiered subscription system, as opposed to its current flat monthly fee model, which is clearly a broken business model."

"No matter how we slice the math, it is patently clear that something's gotta change soon on Spotify's business model if the company is to survive."

The 20 Most Profitable Pieces of Merch...

Here's a detailed breakdown of the twenty most profitable merchandising items - pound for pound - based on average costs and expected retail price tags. The data comes from top merchandising provider Jakprints, which compiled and averaged the data from multiple band and retail sites.       

Here's a top-level look based on profit margins, specifically expressed as how much larger the retail price is than the cost.

And, here's the more detailed breakdown of average cost and retail price. 

But what do you do with this data? The wrong answer is to focus entirely on the highest-margin stuff, simply because there may not be a match with your audience. But faced with limited choices on what to sell and focus on, this can help guide choices.

Jakprints also offered a number of other tips of maximizing returns, and reducing upfront spending:

(1) Start off with smaller minimum quantities to see what your fans react to. Scale up your production when you know what works.

(2) Know your fans, find out what they want and see what they buy so you can offer products that fit your fan base.

(3) Smaller accessories that fit into pockets or bags are a great way to increase your exposure.

(4) Giveaways such as stickers or patches with a larger dollar purchase creates a fan base that will come back for more.

(5) Keep track of what's selling, what isn't, how much you've invested and what you are selling it for. Track your profits for intelligent future investments in merch.

(6) Pre-sales! See how many people are interested in the product and help quantify what quantity to purchase from your printer.

(7) Space at a premium on your tour? Don't take your entire inventory with you, lots of printers offer drop shipping options. Have your merch meet you in Cleveland.

(8) As you get bigger, don't forget about online merchandising companies. They can take care of your online sales, warehousing, drop shipping, invoices, even printing your merchandise. You'll spend a little bit more money, but you'll have pros stressing about overnighting a t-shirt to Tulsa on Christmas Eve while you relax with your family.

After 14 Million Plays, the Dead Kennedys Received a Few Hundred Dollars from YouTube...

YouTube absolutely eclipses Spotify when it comes to the amount of music streamed. But YouTube's payouts on those streams appear to be substantially worse, with similar problems in transparency.       

We've seen some really sad numbers for YouTube superstars like Susan Boyle and even Rebecca Black.  But when it comes to depressingly-low YouTube royalties, Dead Kennedys may take the cake.  According to stats just shared by the group, YouTube paid just 'a few hundred dollars' on an aggregate of 14 million streams.  And, the band has no idea how they arrived at that number.

Here's what guitarist Raymond Pepperell (aka 'East Bay Ray') told NPR .

"I don't know — and no one I know knows — how YouTube calculates the money.   What YouTube claims is irrelevant until they produce how much they've made off my band and how much they've shared with my band.  Don't let them bulls--- you that it's too complicated."

In discussions with YouTube, the Dead Kennedys were told they'd receive 45 percent of ad revenue on their plays.  But Pepperell says the band is yet to receive any information related to those calculations.

On a broader scale, Dead Kennedys' earnings have dropped by more than half over the past few years alone.

"[Users] should ask YouTube and Google to pay the artists. Yes, the students are getting free music, but they should still care."

What a 'Successful' Artist Can Expect to Make These Days...

Are the expectations around what an artist should be making simply misguided?  Boldly taking a crack at this question is New York Magazine, which compiled this earnings estimate for an average, 'successful' do-it-yourself band, as well as an 'indie darling'.  They based this research on interviews with both artists and knowledgeable industry execs.   

Here's one look at a totally do-it-yourself artist with some traction...  

...and this is what a successful, Pitchfork-lauded, 'indie darling' signed to a small label might expect, under the same methodology.

Become A Successful Indie Musician

I’m often asked about the pros and cons of becoming an independent artist, music professional, or label in today’s music industry. Entrepreneurs often creatively thrive in independent environments, but it’s important to understand the large gap between becoming independent by description and excelling professionally as an independent. Simply put, separating the hobby from a full fledge profession. If you fall in the indie group that constantly blames shortfalls on managers, bands, agents, and essentially “not getting product in the right hands,” you’re chasing a hobby. To the other extreme, individuals that blaze their own path and create business as opposed to wait for business become the successfully indie professionals. However, in today’s internationally driven industry, tactics that prove successful domestically may be harder to apply on a global level. To achieve international music industry nirvana as an indie professional, collaboration is key. Whether you’re an independent artist looking for international exposure, entertainment attorney seeking international clients, or a manager looking to expand your roster, here are 4 “must have” traits in order to efficiently expand in the globalized industry: (1)You Don’t Know Everything, (2) Remain Flexible, (3) Achieving Successful Collaboration, and (4) Don’t Be Selfish.

A quick preface before exploring each topic in order to highlight the importance of collaboration. I recently become involved with a team of individuals around the globe sharing one common objective, to help one Australian artist accomplish her musical goals. The team consists of managers in Asia, producers/managers in Europe, creative experts in L.A., business managers in Australia, and entertainment attorneys in the States. Each and every person brings something unique to the table. The industry, for better or worse, is global. No one individual on this team could accomplish global success in the timeframe the group may undertake. As the market continues to grow, this willingness to embrace other specialties that compliment (or trump) your professional niche is a necessity for success. This is an essential mindset in becoming a successfully “independent.” You can’t accomplish it own your own. Nobody – musician or professional. Even if you posses the skills, achievement will take longer if you hold cards close to your chest, and you may run yourself ragged trying to accomplish success on your own. Independent in 2010 means accepting help, talents, and expertise other than your own.

1. You Don’t Know Everything
Step 1 – Embrace the fact you don’t (and can’t) know everything about the industry. The entertainment world is so vast and it’s important to create niches. Musicians create niches by unique musical fusions that spawn new genres; and professionals seed niches by becoming experts in specific areas. Step 2- collaborate with experts who have different niches than your practice area. Creative juices flow when teams collaborate, all of which bring different specialties to the table. Musicians, this can often be uncomfortable letting go of the creative reins because it is easy to become settled into a musical genre. Let it go and you’ll be amazed at the new ideas you’ll tap into. Professionals, on the other hand, enjoy carrying the persona they know everything on every topic. They don’t. By dropping “the know it all” arrogance, clients may become more attracted to your honesty and willingness to explore new creative outlets with them as opposed to feeling forced into a mold.

2. Remain Flexible (To an Extent)
It is important to have an overall goal, an objective that keeps the drive alive, but collaboration calls for flexibility. When working with individuals who all have different professional and creative ideas, unlikely thoughts will emerge that would otherwise be impossible to plan for. Roll with it.

3. Achieving Successful Collaboration Takes Time
Collaboration isn’t an immediate characteristic, be patient and expect months to years to build a creative community. Take full advantage of social networking sites that are specific to business such as LinkIn. Explore networking sites not with a specific objective, rather to explore and see what unique specialties jump off the page. For example: musicians in the States may want to explore a tailored search to France’s entertainment economy. The search may generate a variety of topics from labels, managers, web designers, and venues all unique in their own right. Find something interesting, then think- “what can I do to help that person in the States, and what can they do to help me in France.” A professional bartering system if you will. You’ll be surprise at the willingness of both parties to explore new and interesting avenues for cross cultural promotions.

4. Don’t Be Selfish
Becoming selfless is a difficult character trait, but an essential one today’s industry. If you develop contacts, share them willingly. Retaining the role of gatekeeper is fine, but remain eager to connect people from around the globe because it only leads to more contacts for your personal rolodex. Further, without even purposely promoting yourself, you unknowing become a global billboard through word of mouth and international collaboration. The trouble for bands and professionals is they want to constantly receive credit for relationships or achievements. Let it go. More will be achieved with professional contacts or music exposure by allowing things to flow in a nature course.