Category: Legal

Items involving the law or legal action

Channel 4.5?

Channel 4 and five (formerly Channel 5) in the UK have been looking at the benefits a merger between the two channels would bring, particularly in the face of new competition from ITV plc.

Carlton and Granada merged last year to become ITV plc, placing pressure on the remaining commercial channels to compete for advertising: ITV now has a single huge advertising sales mechanism.

Five is jointly owned by United Business Media and Germany’s RTL – but as Channel 4 is publicly owned, any change of this scale must be approved by an act of parliament.

Naturally both Channel 4 and five dismiss the reports of talks as speculation.

“Channel 4 might be interested in it because they are declining and we are growing” said a five spokesperson. Five claim a 6.5% share of all viewers – three quarters of the UK population watch Channel 4 in the course of a week.
More about Channel 4’s ownership

More about five

Microsoft Rethinks Japanese Contracts

Microsoft has announced changes to its contracts with PC suppliers in Japan after its Tokyo offices were raided in the middle of the week.

The part of the contract that the Fair Trade Commission was so concerned about related to a clause preventing manufacturers from suing Microsoft over patented technology. If manufacturers did not agree to the clause, then they could not sell PCs with Windows preinstalled.

Microsoft’s statement

Microsoft’s Tokyo Offices Raided

Microsoft (MS) received a visit from fifteen members of Japan’s Fair Trade Commission (FTC) at 9am Tokyo time. The FTC are looking for evidence of unfair and monopolistic practices in the company’s dealings with PC suppliers in Japan. It’s actually their second visit – the FTC last knocked on MS’s doors in 1998, when they confiscated documents relating to their OS range, browser and office suite.

This second raid isn’t too surprising – over the months Microsoft has had the same thing happen in the US and Europe, and its operating system and software bundling deals with PC hardware manufacturers have long been regarded as anti-competitive in Japan. After a slow start, the country is now the third largest market for PCs in the world, with annual sales of about 13m units.

In Europe, Microsoft could face millions of Euros in fines in March when it reaches an agreement with officials over the way that Windows Media Player is tied to its range of operating systems. Microsoft claims its legal bills for such cases came to US$1.55bn in 2003, though the recent US Department if Justice settlement is regarded as ineffective by many in the industry.

The BBC on the Raid

Eminem Sues Apple Over Unauthorised Use of Song

Because of what seems to be a rather surprising error by Apple, rap star Eminem is suing the computer company for featuring lyrics from the song “Lose Yourself”, sung in the advert by a ten year old boy, in their 2003 campaign for the iTunes music service.

Eminem’s company Eight Mile Style said “Eminem has never nationally endorsed any commercial products and … even if he were interested in endorsing a product, any endorsement deal would require a significant amount of money, possibly in excess of $10 million”.

The ad was shown multiple times on MTV, and it seems odd that Apple would feature the song without first seeking permission. Apple Computer has yet to comment.

Slashdot on Grey Tuesday, Slim and Apple

Midem Report: Focus on the Mobile Music Forum

By Paul Hosford, partner, New Media Law

In another crammed auditorium full of music industry and mobile phone industry delegates, keynote speaker, Takeshi Natsuno, MD of i-mode strategy at Japan’s NTT DoCoMo in revealed that its straightforward, entertainment-based service had attracted 40 million users to its subscription based model, because it is an utterly consumer focused offering. He urged his European and North American counterparts to leave behind current industry specific perspectives and to develop viable marketplaces for mobile content, where the key to overall success would be equal roles for all types of hardware manufacturers, content providers, and service providers.

His advice to the music content owners was to translate pricing models into the world of the packaged IT product – lower price higher volume, but to consider that the mobile operators need business models that address their industry’s concerns as well. Service providers should stay user-centric ensuring that even the most unsophisticated user is comfortable with, and enjoys using the product, for it to be properly commercially viable. DoCoMo’s model is to only take 9% commission on sales for themselves – preferring that “the revenue must go to the content providers”. In fact Natsuno said when other people within his organisation had suggested that they took a higher percentage, “I fired them”. This is a refreshingly different approach to current income sharing with many mobile service providers, particularly in the UK, where the operator takes as much as 40% of some services. His expectation is that their 40 million paying subscribers in Japan and 1.5 million active subscribers outside Japan will grow to a target of 100 million by 2010.

“Making Money from Mobile Music, Today” panel
In the panel session “Making Money from Mobile Music Today”, these different industry perspectives were apparent in the lively discussion of how ringtones and their increasingly musical offspring, “Hi-Fi tones”, had proved to be massive money spinners for the mobile operators. HiFi tones are near perfect reproductions of music. Representatives from T-Mobile International (Germany), Comverse (Israel), Musiwave (France), EMI Music Publishing (UK), Sony Music (UK), and Faith West (US) debated the future growth of “real” mobile music content with the development in mobile technology and the increase in personalisable ring-tones of various kinds beyond the mono and polyphonic tones that most of us are used to hearing. From the music industry’s side, as the quality of ringtones reproduction increases, record companies and publishers will overcome their initial reluctance to put their music on what they say has, up to now, been a platform with inadequate reproduction quality (they say they have been protecting their artists from low quality renditions of the music). The operators and service providers view is that it is clear that business models that take into account airtime and subscription considerations may or may not work for the rights owners. The record labels and publishers whilst obviously keen to collect revenues for themselves and artists from this potentially massive distribution opportunity will have to continue to develop open licensing policies across many territories. And if the operators follow Takeshi Natsuno’s advice, they will lower resale rates from the 10 to 40 % currently talked about.

Conclusion
As in the online environment, the on-demand mobile music world that will come to consumers in the near future will require the multiple rights relationships that exist within the music industry to be simplified and standardised – this in itself is a large task. As ever, what is all too apparent is that there are many expecting their slice of the pie – at an extreme the list could be as long as record company/label, music publisher, possibility the artist (depending on their contract), content aggregator, mobile service provider and payment system provider. One of the challenges facing the mobile music industry is whether the pie will be as big enough for everyone to get their slice.


         

MidemNet 2004 report

By Paul Hosford, partner, New Media Law

The fifth MidemNet 2004 opened the week long international music industry’s conference in Cannes. In heavily attended sessions this year, it appears, at least on the surface, that the industry is at last grasping on-demand digital distribution of music – the legal variety that is.

MidemNet is the music industry’s international forum that attracts players from every corner of the business to get together and discuss the issues confronting an industry severely impacted by the illegal distribution of millions of copies of its product.

Ted Cohen, EMI Music’ s senior VP of digital development and distribution, opened with the positive pro-industry message – commercial downloads represent the ultimate way forward for music consumers. He feels that it will come of age in 2004, and when legal battles are overcome and the consumer is empowered by commercialised P2P delivery, the industry’s bad reputation will begin to improve.

Keynote interviewee Eddy Cue of Apple’s Internet services announced what everyone suspected, the iTunes Music Store would launch in Europe at some point. iTunes throws into relief these challenges for the music business. Launched in April 2003 as a proprietary platform download service, the Music Store leverages Apple’s existing back-end infrastructure to offer a flat fee of 99 cents per track, and now offering 0.5 million tracks, made available by the Major record labels under recent licensing, but only available to US consumers. The delay in the European launch has been put down to resolving licensing across countries.

Setting out to develop “a better Kazaa” by 5 January 2004, iTunes has sold more than 30 million tracks in all kinds of genres, predominantly to an over-21 demographic. This has moved the Majors on from a proposition that only 2 and a half years ago was not on their list of potential licensing opportunities.

Whilst we all know and covet that beautifully packaged piece of must-have hardware that is the iPod, the reality is that Apples share of the 99 cents may not, in isolation, be sufficient to rev-up their share price. What is clear is that sales of iPod are going through the roof.

There has been a lot of discussion here about iTunes downloads not being platform-independent and that ultimately this may become a sticking point for the device-rich consumer who wants the flexibility to listen to their paid-for music on any device they own. In the meantime, iTunes sales still represent small numbers when compared to the world of illegal P2P sharing.

The European iTunes delay has highlighted a major problem. What will remain firmly as the principal challenge for any pan-European initiative is an industry with differing product release dates, differing licensing and rights collection mechanisms across the European territories – and differing price models. The message is clear – the industry must push through change in these licensing and publishing practices across the major markets.

In the panel sessions representatives of OD2, EMI Music, RealNetworks, French ISP Wanadoo and mmO2, debated the very real technical problems of delivering to consumers a single product where the industry’s marketplace and accounting mechanisms are territorially divergent and a very long way from uniformity. Whilst EMI’s goal is obviously, to sell more music by making it available in multiple formats on any platform, corralling all the various rights holders that share in recorded music remains the Major Labels most immediate challenge.

For the content aggregators, the ISP’s mobile networks and digital music intermediaries, the problems are different, but equally complex. They must deal with multiple payment mechanisms, differing pricing regimes and a complex value chain that makes it very challenging to deliver cost effective alternatives to paying consumers demanding of quality content. What will be critical to delivering a successful consumer experience is cross-platform transferability of the downloaded track that is paid for once.

In the meantime, the disc media formats are very much alive and kicking representing over 90 percent of music bought today. Your correspondent for one is looking forward to experiencing SACD recordings – real surround sound.

TiVo Claim Patent Infringment by EchoStar

PVR pioneer, TiVo, has filed a patent infringement suit against US satellite TV provider, EchoStar. They are claiming that EchoStar are using technology that violates their patent, “multimedia time warping system”, that enables viewers to “store selected television broadcast programs while the user is simultaneously watching or reviewing another program” that they filed for in 1998 and were granted in 2001.

The headline is clear, TiVo start to see the PVR world become accepted by the general public and want to start gaining income from their patents – they have 40 awarded and a further 100 applications pending. It is also in TiVo business plan to increase their income from patents and reduce their reliance on selling boxes.

We wonder if there is another, less immediately obvious, intention. One of TiVo’s largest customers is US satellite TV provider DirecTV, who were recently taken over by Rupert Murdoch and amongst the many companies that Mr Murdoch has as interest in is NDS. NDS market a PVT, the XTV PVR, which could be a major threat to TiVo and their continuing relationship as a supplier to DirecTV – unless DirecTV know legal action would following the changing of suppliers.

EchoStar PVR

NDS XTV PVR

DVD-Jon Officially in the Clear

Norwegian computer programmer, Jon Lech Johansen will be relieved to hear that his countries state prosecutor that handles computer crime, ØKOKRIM, today that they will not appeal the court ruling clearing him of wrong doing on 22.Dec.03.

His alleged crime was that he circumvented the copy protection scheme on his film DVD. His plea was that he wanted to play his legally purchased DVD on his Linux computer, and as there was no software that enabled him to do this, we wrote deCSS that removed the protection enabling him to play it. This is not normally something the general public would hear about, but DVD-Jon, as he became known as, uploaded the software to the Internet enabling others to use it.

In January 2000, he was awarded the Karoline Prize, a prestigious national prize in Norway, given annually to a high school student for academic excellence and making a significant contribution to society outside of school for deCSS.

When he turned 18, ØKOKRIM Chief Prosecutor Inger Marie Sunde indicted Johansen for violating Norwegian Criminal Code section 145(2), which outlaws breaking into another person’s locked property to gain access to data that one is not entitled to access. The US MPAA gave considerable support to ØKOKRIM.

On 22 December 2003 the Norwegian courts came to the decision that DVD-Jon could not be held accountable or punished for others’ use of his program and that “DVD is so vulnerable to damage that the purchaser must be entitled to make a copy, for example of a movie he is particularly interested in preserving”. Today ØKOKRIM confirmed that they would not be appealing the decision to a higher court.

Hollywood will not be pleased with the outcome of this. It will be seen as a now legal “leak” for their DVD content in Europe.

Aftenposten report

ØKOKRIM

Canada OK’s P2P Music Downloads

The Copyright Board of Canada has decided that the downloading of music for personal user from peer-to-peer networks is legal, but uploading files to them is not. Canada’s copyright law allow making a copy for personal use and does not address the source of that copy or whether the original has to be an authorised or non-infringing version.

Clearly the recording industry does not like or agree with the opinion. Richard Pfohl, general counsel for the Canadian Recording Industry Association said, “This is the opinion of the Copyright Board, but Canadian courts will decide this issue.”

Currently Canadians, and a number of other countries, pay a levy on recordable media; audio tapes (29¢C, ~$0.22, ~€0.18, ~£0.13), MiniDisc (77¢C, ~$0.59, ~€0.48, ~£0.34) and blank data (21¢C, ~$0.16, ~€0.13, ~£0.09) and audio CDs (77¢C, ~$0.59, ~€0.48, ~£0.34). Non-removable memory permanently embedded in MP3 players have now been added to this list, with C$2 (~$1.52, ~€1.24, ~£0.87) up to 1Gb of data, C$15 (~$11.41, ~€9.27, ~£6.54) for between 1Gb – 10Gb and C$25 (~$19.02, ~€15.45, ~£10.89) above 10Gb.

Interestingly, Digital Audio Tape (DAT), micro-cassettes, rewritable DVDs, removable memory cards (such as SmartMedia, CompactFlash and Secure Digital Memory cards) and removable micro hard drives are not currently covered.

The levies will be collected from the manufacturers and distributed to music companies and rights holders via the Canadian Private Copying Collective, a non-profit agency. It is expected that the levies will be passed on to the consumer.

Copyright Board’s Private Copying 2003-2004 Decision

Canadian Private Copying Collective