Thoughts on Capitol v. Thomas

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Record labels have filed over 20,000 lawsuits related to file sharing since 2003, and the first one to go to trial received a verdict yesterday in Minnesota. The jury found defendant Jammie Thomas guilty and ordered her to pay the six record companies that sued her $9,250 for each of the 24 songs they decided to focus on.

It doesn’t take a rocket surgeon to realize that this is an extremely unfavorable outcome.

  1. The record labels will take this victory as “a validation of its “sue our fans” strategy, rather than realizing it’s finally time to try a different model.” (Techdirt)
  2. This case will have absolutely no effect on file sharing. “According to BigChampagne, an online measuring service, the number of peer-to-peer users unlawfully trading goods has nearly tripled since 2003, when the RIAA began legal onslaught targeting individuals.” (Wired)
  3. The record industry needs to stop fighting the inevitable. “Eventually, unless governments are willing to take drastic measures to protect the industry (such as a mandatory music tax), economic theory will win out and the price of music will fall towards zero.” (TechCrunch)

The case has potentially set a number of legal precedents favoring the record industry, such as “making available”, described by Declan McCullagh in his excellent analysis:

Jury Instruction 15 is more important. It says that the RIAA doesn’t need to offer any evidence that rapacious Kazaa users actually downloaded songs from Thomas’ computer. All they need to do is claim that Thomas left the songs in a publicly accessible directory where they could have been downloaded. Big difference.

Wired has more:

In proving liability, the industry did not have to demonstrate that the defendant’s computer had a file-sharing program installed at the time that they inspected her hard drive. And the RIAA did not have to show that the defendant was at the keyboard when RIAA investigators accessed Thomas’ share folder.

Also, the judge in the case ruled that jurors may find copyright infringement liability against somebody solely for sharing files on the internet. The RIAA did not have to prove that others downloaded the files. That was a big bone of contention that U.S. District Judge Michael Davis settled in favor of the industry.

That’s just wrong. Is it illegal to leave a music CD out in the open? Of course not, but anyone could come along and steal it or copy it. How is leaving music files out in the open any different? Copying media for personal use is considered Fair Use (though the RIAA is doing everything they can to change that). As I understand it, combining your Fair Use rights with an open Wi-Fi connection (the default setting on virtually all wireless routers) would then make you liable for copyright infringement, if the precedent set by this case holds.

I’m not sure the precedent will be upheld, however. Last December the judge in UMG v. Lindor ruled that the record labels would have to show that Lindor actually shared the files. Demonstrating that she made the files available for download was not enough. Actually, I’m not sure why that earlier decision was not used in this case against Thomas.

Another problem is the fine amount. I think $9,250 per song very clearly conflicts with the Eighth Amendment, which states: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” The songs in question are available in the marketplace for less than $1. Furthermore, wholesale pricing has been confirmed by record label executives as being close to 70 cents per track. From that perspective, the fine levied against Thomas is almost surely excessive.

These lawsuits are very clearly about money, not about protecting artists. I look forward to the day when record labels as we currently know them cease to exist. It’s only a matter of time.

There is a ton of commentary on this story at Techmeme. That’s how I found Michael Geist’s post, in which he explains the Canadian context. Definitely worth a read.

Radiohead shows us the music industry of the future

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What if you could set the price for an album you wanted to purchase? Wouldn’t it be great to have the ability to spend $5 to check out a new band, and $25 for a band you absolutely love? It might happen sooner than you think, with Radiohead leading the charge:

As expected, Radiohead has gone an unusual route for distribution of its seventh studio album, “In Rainbows.” The set will be available for digital download from the band’s Web site beginning Oct. 10, but with a twist — fans can name their own price for the purchase. “It’s up to you,” reads a disclaimer on the checkout screen.

Make no mistake, this is a big deal. Radiohead is obviously a very successful band with a huge fan base which allows them to experiment like this, but dammit someone has to. It might as well be Radiohead. I’ve written about making the music free before, and I’m glad to now see some action.

Techdirt notes that there is more to the story, in that Radiohead is also offering a “discbox” for $80 USD that contains the album on CD and vinyl, along with an additional CD with seven tracks, plus photos, artwork, and lyrics.

In this case, Radiohead isn’t really selling the “music.” After all, you can get that for free. They’re selling the full collection of stuff that comes with the music. Funny how it’s the musicians, and not the record labels, who seem to realize that adding value and getting people to pay for it is a business model that beats suing fans.

This is really cool. Music fans everywhere should be extremely happy about this giant leap forward! There’s more great stuff on the story at Boing Boing.

Read: Billboard

Starbucks Records featuring Sir Paul?

Post ImageThe New York Post seems to think that Starbucks is gearing up to launch a record label, called Starbucks Records. Creative, isn’t it? Of course a record label needs musicians, and to that end, Starbucks is going after none other than Sir Paul McCartney himself (via 901am):

Starbucks Records is expected sign, record and produce its own artists rather than licensing songs from other labels.

That’s where Sir Paul comes in. The wrinkly rocker not only fits with the Starbucks demographic, but also is a free agent not signed to any label, sources said.

The reason Starbucks thinks they can do this is their targeted, efficient distribution channel. I mean they have stores on just about every corner in major cities, and they attract a very specific clientele.

If it’s just putting CDs on racks in their stores though, Starbucks is missing a big opportunity. The Post article mentions a good idea:

There have been talks about putting kiosks in its shops so that customers can shop for music and create their own compilations while waiting for their $5 cup of joe.

That would be awesome! There should also be a DRM-free digital component to the project.

To say they are creating a “record label” sounds fairly antiquated to me. Starbucks should use this opportunity to redefine the term “record label.”

Read: New York Post

Make the music free and sell the show

Post ImageChris Anderson’s post today at The Long Tail is about the music industry and provides a really good analysis of what should be happening with music. Essentially, bands should give the music away for free and make their money on live shows. He explains:

Music as a digital product enjoys near-zero costs of production and distribution–classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.

He points out that the average price for a ticket increased 8% last year, reflecting demand. Indeed the fastest growing part of the music industry is live performances, up 16% in 2006 in North America.

And don’t think that live shows are not profitable. They are extremely profitable for the artists, just not for the record labels. Chris includes a list of the top ten grossing touring bands of 2006 – and their numbers total a truly astounding $970.3 million.

I say – goodbye record labels, hello free music and awesome not-free shows!

Read: The Long Tail