Where are your lawsuits now, music industry?

Piracy was down by roughly a third in the UK in 2008, but streaming was way up in the same period. Savvy UK teenagers are using sites like Pandora, YouTube, Grooveshark and Spotify to stream content and music to their computers in lieu of filesharing. One former pirate and current streamer told the Guardian:

“I didn’t even realise it was illegal for a long time, until I heard that the government were trying to stop it. That did put me off, but one of the big reasons I stopped doing it was because I would get viruses, more pop ups on my computer. While I was at uni I started listening to streamed music using MySpace. Bands would be friends with other bands and it was a great way of discovering new music. I don’t really feel the need to own all that music, I know it’s always there.”

The shift seems largely inspired not by some moral obligation to maintain music industry profits, but rather, sheer convenience. As has been shouted at the music industry time and again, the business models that will flourish alongside technology are those that offer convenience and aren’t ripping consumers off left, right and center.

It seems that the music industry can accept that the entire revenue generating model has changed and change with it, using tangible merchandise like tour tickets, memorabilia and the like to boost profits alongside ad-supported streaming. Or they can continue to behave like litigious buggy-whip factories and keep trying to circumvent technologies that bring fans to music most efficiently. Which do you think it will be?

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Usenet.com is preparing for what may amount to “hundreds of millions of dollars” in damages after losing a case brought by the RIAA in New York against the internet dinosaur.

Ars Technica detailed the laundry list of grievances of which Usenet.com was found guilty:

“A federal judge yesterday found Usenet.com liable for just about every copyright infringement claim on the books: direct infringement, inducement of infringement, contributory infringement, and (just for good measure) vicarious infringement. Not content to be loud and proud about its pro-pirate agenda, Usenet.com also resorted to stonewalling legal questionnaires, sending employees to Europe to avoid depositions, wiping hard drives, and failing to turn over e-mail after being sued in 2007 by the music labels.”

Aside from the potential for ridiculous and imaginative fiscal penalties, the case is significant for many reasons. Usenet.com was denied use of the “Betamax” defense by U.S. District Judge Harold Baer, with which they could assert that their service had reasonable applications for use other than facilitating infringement. Baer also sanctioned Usenet from invoking protection under the Digital Millennium Copyright Act’s ”safe harbor” provision- a clause which protects internet service providers from prosecution due to unlawful acts committed by users.

CNet quoted Usenet.com attorney Charles Baker on another significant issue possibly defined by this case:

Another precedent set by Baer, according to Baker, is that distributing material within a closed network was a violation.

“This is something new the judge bought off on their argument,” Baker said. “The way Usenet.com works is there is copying going on in the servers, there’s multiple copies being made. When a user uploads a file it goes into a server and subsequently those binary files move from server to server as they go through the Usenet network. The court has held that was a violation of the right of distribution and no court has gone there before.”

RIAA lawyers successfully contended that Usenet.com engaged in several below board practices to circumvent their judicial efforts, including hiding witnesses in Europe and destroying data. Baer was not pleased with Usenet’s actions, clearly reflected in his findings. Without the “safe harbor” defense available to Usenet, their case was tanked and Baer issued a summary judgment to the RIAA. Damages will be determined in the coming weeks, and penalties could range as high as $30,000 per infringement.

RIAA General Counsel Stephen M. Marks gloated about the verdict in a statement:

“This decision is another example of courts recognizing the value of copyrighted music and taking action against companies and individuals who are engaging in wide scale infringement. We hope that other bad actors who are engaging in similar activity will take note of this decisive opinion.”

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Rapidshare has been fined $34m and ordered by a German court to proactively seek out copyright infringement on its servers.

German royalty collectors GEMA filed suit againist Rapidshare requesting that 5,000 tracks managed by GEMA be removed from Rapidshare servers and not be uploaded again. In April, Ars Technica reported that Rapidshare had begun handing over data on file sharers to record labels. And while Rapidshare removes copyrighted content immediately following a takedown notice, GEMA still wasn’t satisfied. In a statement, GEMA said:

“The judgment states that the hosting service itself is now responsible for making sure that none of the music tracks concerned are distributed via its platform in the future. This means that the copyright holder is no longer required to perform the ongoing and complex checks.”

As Mashable points out, this is a decision frought with fail from start to finish. Let’s just forget that it’s absolutely impossible to police gazillions of users who upload zipped, password protected files to Rapidshare worldwide on a daily basis. If you look at the recent case of Jammie Thomas-Rassert, who was ordered to pay nearly $2m for 24 songs, shouldn’t this fine be in the billions or trillions?

Rapidshare COO Bobby Chang appeared unruffled by the ruling when he commented on it, and pointed out what record labels have been trying to ignore since the RIAA sued its first pre-teen.

“We do not consider the court’s decision to be a breakthrough. As other proceedings in similar disputes with GEMA have shown, there is considerable disparity amongst the individual courts in some cases. Our experience is that the courts of appeal tend to restrict the scope of the decisions made by the lower courts. For this reason, we think that it would make more sense to work together to provide music fans with the right services at the right price and to open up a new source of income for music-markets on the Internet.”

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It’s an interesting concept in the day of closely guarded rights and constantly monitored filesharing: In addition to letting you stream an artist’s music, TrueAnthem offers you the option to download individual tracks or complete albums for free. The free versions come with a brief embedded ad at the top — or, if you want to pay the standard 99 cents per song rate, you can get the tracks ad-free.

TrueAnthem has about 5,000 active widgets around the Web right now. Bands on its roster include acts such as Nine Inch Nails, Hootie and the Blowfish, and Ryan Huston. The company, based in San Francisco, says it’s seen a 500 percent increase in usage since its April launch.

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The U.S. House of Representatives has just passed a bill called the Pro-IP Act with a whopping 410 to 10 vote. The bill would create a new “copyright enforcement division” at the Department of Justice, which would serve as the lair for our impressively titled “copyright enforcement czar.” He and his band of new-age cops would be empowered with tracking down illegal file-sharers and even seizing their property if they see fit.

“Intellectual property protection is among the key issues that will determine America’s competitiveness in the 21st century,” Rep. John Conyers, one of the bill’s authors, released in a statement.

“We feel it’s more important to spend millions of taxpayer dollars finding people who steal 99-cent songs rather than focusing on stopping actual dangerous, violent crime,” he forgot to add.

The Senate still has to sign off on the idea, then it’d go to the president’s desk for approval.

In other file sharing news, Napster guru Shawn Fanning is finally closing in on his long-awaited pay day, according to our friends over at TechCrunch. Fanning’s social network startup Rupture is said to be on the brink of a $30 million buyout by Electronic Arts. It’d be Fanning’s first big success since a five-foot-seven Danish drummer helped put his brainchild into the ground back at the turn of the century.

Image: Gareth Cattermole/Getty Images

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