Business Matters: Are Takedown Requests More Hobby Than Solution?
— The numbers behind infringement takedown notices are staggering yet piracy continues unabated. Putting in a lot of work for little payoff is something a hobbyist does on weekends. But should the same effort/payoff ratio exist when it comes to piracy?
A new Annual Report 2011-2012 by the UK’s IP Crime Group says the British Recorded Music Industry (BPI), a trade group for UK record labels, “identified and removed 4,298,729 illegally hosted digital music files in 2011.” The group also identified and removed 61,232 illegally UK-hosted digital music files. The Publishers Association has to date issued over 200,000 takedown notices to over 5,200 infringing domains and has a removal success rate of around 90%.
But the 2012 numbers will blow away last year’s numbers. The report says the BPI has “already passed that figure [4,298,729] this year and are likely to be in excess of 12 million for 2012.”
Takedown numbers are similarly huge in the U.S., judging from numbers available at the Google Transparency Report. In the last month alone, nearly 1,600 copyright owners have asked Google to remove over 2.5 million URLs from 26,277 specific domains from its Google Search listings. RIAA member labels’ requests account for 393,796 of those 2.5 million URLs named in takedown requests. These numbers from Google don’t include takedown requests from Google’s YouTube or Blogger services, nor do they cover takedown requests sent to other sites that index download links or host files without permission.
People tend to look at these numbers in a couple different ways. One perspective is to see the DMCA (in America) and other legal mechanisms working as intended. This view considers a digital service provider to be an unbiased third party that is occasionally and unknowingly used by people for illegal purposes (hosting copyrighted content without permission). As such, takedown notices constitute the first direct knowledge these services have of single cases of infringement. Google said it removed 97% of search results specified in requests it received between July and December 2011. That’s proof of the system working, right?
But there’s another point of view that wonders why rights holders must continue to play whack-a-mole – at considerable expense of money and other resources – as digital service providers live up to their scant legal obligations. I’ve seen numerous emails sent by Sam Rosenthal of Projekt Records to various sites that link to music released by his label. Many of the emails included lists of songs that were uploaded after a previous takedown notice has resulted in their removal. “Please note that there are no guarantees that new similar torrents will not be indexed by our software,” one service noted in an email reply. “It is YOUR responsibility to monitor it and alert us of alleged copyright infringement, as per DMCA regulations.”
Some artists and labels, reluctant to play the role of the heavy, used to say things like, “Well, I’d rather people steal my music than not listen to it at all.” That sentiment was far more understandable before YouTube and other services provided would-be listeners with ample legal listening options. The sentiment still exists, but I am getting the impression its less common these days. Piracy used to be somebody else’s problem. These days it seems like everyone’s problem.
ReDigi’s Debt: Not Necessarily A Big Deal
— ReDigi, a startup that sells used MP3s at its website, has raised $763,000 of debt, according to a new SEC filing. It’s clear from some of the online reaction that people think it’s a big deal that a young company fighting a copyright infringement lawsuit brought by EMI is taking on debt. But debt is not necessarily a big deal.
Debt is not uncommon and doesn’t have to be undesirable. Take on some debt and you’ll have to pay back the debt along with interest. But take venture capital money and you’ll have to give up a share of the company. That’s why entrepreneurs tend rank venture capital last on the list of money you should take. Personal savings, money from friends and family and debt are better options than taking venture capital money in exchange for equity is at or near the bottom.
Check out this list from a hilarious and insightful post by entrepreneur/investor/author James Altucher: “In order,” he writes, “here is the easiest cash you can get for your business: Customers, borrow against receivables, borrow against your house, friends and family, angels, venture capitalists, the public. Note that the VCs are near the end. Maybe you never need them. Why does everyone chase big-time VCs all the time? Do you really need $10 million in the bank. You just started!” Read the entire post. It’s great.
Debt can be a good option when the startup has its feet on the ground and can expect to pay back the money – which may be the case with ReDigi since it doesn’t pay 70% of revenue to rights holders. “Equity should be raised when a company needs a 4+ year financing horizon and when cash flows are highly volatile,” wrote Tim O’Loughlin of Eastward Capital Partners, a firm that provides debt and equity financing to technology companies. “Less dilutive debt options can be considered when the business expects future cash flows or liquidity events in the two-to-three year time frame.”
SoundCloud’s New Look: Simpler, Social-er
— SoundCloud has been redesigned with a new look and new features. The “Next SoundCloud,” as the company is calling its new design, is simpler and more social. It will have a new, more interactive waveform with a different layout for comments that aims to reduce clutter. Profiles have been redesigned. Songs can be reposted similar to how Twitter allows a tweet to be reposted to a person’s followers. Listening has been tweaked, too. Users can create a single waveform that consists of multiple songs playable in sequence. Finally, the search field has been overhauled to suggest both people and sounds and improve the relevance of results. Next SoundCloud is currently in beta and new requests will be filled at some point in the future.