The National Association of Recording Merchandisers, the music business trade association, presented its latest Entertainment & Technology Law Conference on Thursday in New York City. Part of an ongoing series that encourages dialogue between the music and legal communities on the most pressing policy issues, this installment focused largely on the complex licensing issues involving cloud-based music services.
Setting the tone, moderator of the first panel Kenneth Steinthal of Greenberg Traurig, which hosted the event in its law offices, said, “The issues are obvious, but the resolution is not clear.”
Attorneys Michael Elkin of Winston & Strawn, Jennifer Pariser of RIAA, Gary Greenstein of Wilson Sonsini Goodrich & Rosati, and moderator Steinthal first touched on cases of precedent, including Cartoon Network v. Cablevision and EMI v. MP3. Both cases inform the potential legal entanglements of popular cloud-based streaming music services now being offered by such companies as Amazon, Google and Apple.
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While the scan and match model iTunes is planning to offer ensures a license has been secured for content, panelists pointed out that services such as Amazon’s user upload model does not. Yet Amazon’s service, Steinthal argued, “operates within the provisions of Cablevision and MP3 Tunes that would suggest that this is a lawful service.”
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“The first thing I noticed about the Amazon model,” said Chris Castle, managing partner at Christian L. Castle Attorneys, “was that they were so proud of it that they launched it in the dead of night without talking to anybody – which is of course how I always do everything that I’m proud of.”
The comment drew guffaws among the audience.
He added, “The message really is, ‘We’re way bigger than you and we’re going to do what we want to do and you’re never going to sue us. So we’ll let you know what you’re deal is at some point.'”
Elkin agreed with Greenstein that the DMCA safe harbor, which protects content providers from liability for copyright infringement perpetrated by its users, is “one of those cases where Congress may have gotten it right.” But Pariser countered, “I think Congress got it right. I think the courts are getting it wrong.”
The next panel discussed cloud media deals and licensing issues.
Jason Pascal, associate general counsel at The Orchard, a physical and digital distributor of independent music and video, was blunt in his assessment of the power of the big three players in this space.
“Google, Amazon and iTunes tell us largely what’s going to happen,” said Pascal.
Lee Knife, interim executive director and general counsel for the Digital Media Association, said, “There’s a race to the marketplace right now…and companies are willing to pay a very high price for that.”
Among central licensing issues, senior director of music licensing Adam Parness of Rhapsody, the streaming digital media service, noted, “Frankly, the biggest problem with licensing is actually finding all the publishers you have to pay.”
On the issue of piracy, the panelists largely agreed that it will always be around in some form.
“It’s clearly a social problem,” Parness opined.
But according to Pascal, even with the surge of cloud-based music services, “We’ve seen no evidence that streaming is cannibalizing downloads.”
First underscoring the success of Apple’s digital music services, Matt Laszuk, president of IRIS Distribution, summed up his stark view of the road ahead in this space.
“After nine years, I see direct correlations between services that are willing to negotiate important points and services that fail.”
A final panel focused mainly on copyright termination in light of the 2013 opportunity for artists and songwriters to reclaim assignments of copyright.
Lisa Alter, a partner at Alter & Rosen, described the issue as the tension between “the right of the author versus the right of the corporate sponsor.”
But another panelist, Charles Sanders, who represents numerous music industry clients including the Songwriters Guild of America, strongly disagreed.
“I don’t believe the tension in the Constitution or the copyright act is between the creator and a third-party middleman,” argued Sanders. “I think James Madison and Thomas Jefferson were very well aware of the tension that they were addressing. They were preserving the rights of authors [because] in order to have a robust marketplace of ideas you have to pay people for writing.”
Panel moderator Jon Potter of RPG Strategies questioned, however, if this copyright termination is “a good idea or a Pandora’s box,” which may result in a torrent of endless litigation.
Joel Schoenfeld, a former general counsel of BMG Worldwide, RIAA and eMusic, said, “It depends on a case-by-case basis.”
A key point of contention, the panel agreed, will center on whether an individual attempting the copyright termination is legally considered a “work-for-hire” or an original creator of the sound recording.
For more information on NARM’s Entertainment and Technology Conference Series click here.