Volitional Science 12

Friday, January 28, 2000 - Who Owns It? MP3.com and "your" music.

A few days ago, MP3.com launched a new service called "Beam-It" which, according to MP3.com president Mr. Michael Robertson, allows consumers the opportunity to listen to "their" music anytime, anywhere, via the Web.

The way it works is that you download a small program to your PC. When the "Beam-It" software is running, you insert a CD into your CD-ROM drive and the Beam-It software looks up the CD registration number. This number identifies commercial CDs. It's this number that allows CDDB to look up the names of the tracks on your CD when you play it via WinAmp, MusicMatch, Real Jukebox, or other players.

Mr. Robertson, or someone else at MP3.com, got the idea that instead of just giving you access to the names of the tracks, he could give you access to the actual MP3 encoded tracks!

Mr. Robertson, in his open letter, very intelligently asks the following questions:

"But the question is, to whom does the music belong? When a consumer buys a CD, does the industry get to tell the consumer where she can listen to her music? The type of technology that she can use to play the CD? Whether she can use new Internet technologies?"

Unfortunately, while he has the question right, he has the answer wrong.

In the current world (in the US of A), the artist or creator of a work is allowed to control many of the conditions under which it is permissible to copy the work.

That's called copyright. You can assign or sell your copyright to someone else and you can also license it (rent or lease it).

Fundamentally, control over copying the work belongs to the creator of the work unless he gives, sells, or licenses the copyright to someone else. The courts have found that it's okay for individuals to make copies of copyrighted works for their own personal use. The big issue is redistribution of a copyrighted work.

"When a consumer buys a CD, to whom does the music belong?" The answer is that the CD (the piece of plastic) belongs to the consumer. The music, however, belongs to the artist or the artist's publisher. And yes, the artist or publisher does have the right to tell you whether you can share the music, subject to "fair use" allowances in the copyright law.

Radio stations buy CDs - but they also pay a license fee every time they play a tune live on the air. Just because the radio station "bought" a CD does not give them the right to broadcast it. Muzak pays significant fees to artists to cover the use of those artists' music in elevators and on telephone-hold lines.

So, the short answer is this: MP3.com's Beam-It software is violating the rights of artists and/or publishers everywhere. Just because MP3.com bought some CDs and encoded them and just because a consumer bought a CD and encoded it - which is probably okay if you don't share it illegally with your friends - doesn't give MP3.com the right to distribute the music (along with ads, no doubt) for commercial gain.

(You can read the Recording Industry Association of America position here.)

Yes, Mr. Robertson has a good point that the music industry should embrace MP3 distribution and find ways to milk it in the same way that the movie industry has managed to milk video rentals and sales to the point that movies don't even have to make money anymore in theatres. Sure. But should the artists and publishers "give" MP3.com the right to rebroadcast their work over the Internet?

No.

MP3.com should pay a little micro-transaction every time the music is broadcast. And the size of that fee should be negotiated between the RIAA and MP3.com to their mutual benefit.

Otherwise, forget it.

I read that the potential downside to MP3.com if they lose this case is staggering. In this story, I read:

"Bob Kohn, an expert on music copyright law and the chairman of MP3.com-rival Emusic.com Inc., agreed with the RIAA assessment. "This is a textbook case of copyright infringement," he said, adding that it is very similar to tape-copying services that have been determined to be illegal.

"If the suit is successful, MP3.com could be in dire straits. Each infringement of a copyright suit can be fined up to $10,000. With two copyrights covering each track of music, MP3.com's approximately 40,000 tracks could lead to a hefty, but unlikely, bill of $8 billion."

Basically, losing this case will probably bankrupt MP3.com. And since even according to current copyright law, never mind the goal of ownership in the "Natural Republic", MP3.com is wrong, you might want to unload any MP3.com stock you have now.

I'm disappointed, because personally I thought that the MP3.com folks were pretty innovative and doing a fine job riding a technology wave. And I like being able to post music from Above the Garage Productions there for free. And since MP3.com is likely to go bankrupt if they lose this case, that means they will have to settle with the RIAA (actually the publishing companies that are suing them), and the terms will not be good. MP3.com has no negotiating position. Worse, every day the "illegal transmissions" continue, MP3.com goes further into the hole.

So, the answer to the question, "Who owns it?", is "not MP3.com".

[2000/04/03 - Thanks to Jeff Petkau for encouraging me to be more precise about what copyright law covers.]