Ignoring RIAA Lawsuits Cheaper Than Going to Trial

Jammie Thomas-Rasset and Joel Tenenbaum captured the nation's attention when they were defendants in the RIAA's first two trials against accused online infringers. But here's the mind-warping reality: both defendants would have been far better off monetarily if they had simply ignored the complaint altogether and failed to show up in court.

That counterintuitive logic played out again this week in Massachusetts, where federal judge Nancy Gertner issued four default judgments against accused P2P file-swappers who never bothered to respond to the charges against them. Their failure to appear meant an automatic loss, and though the judge does have some discretion in setting penalties, judges often pick the minimum awards in such cases.

That was true in all four cases, where Gertner accepted the record labels' claims and awarded them the minimum statutory damages of $750 per song. The defendants were accused of downloading an average of ten songs, putting total awards in the $7,500 range, in addition to a few hundred more for court costs.

Having $7,500 in damages assessed against you by a federal court is no picnic, but it pales in comparison to the two twenty-somethings who actually showed up to court, got attorneys, went through a multiyear process and a nationally covered trial, and came out the other side owing far more money.

The chart below illustrates the point by graphing the various damage awards per song:



When it comes to total damages, the disparities are even greater. Thomas-Rasset's retrial ended up with a $1.92 million award, while Tenenbaum faces $675,000 in damages. Those who didn't show up owe around $7,500.

In fact, this might well have been Tenenbaum's fate. He was actually included in a massive complaint consolidated into a single docket, and it was only when he showed up to a court hearing that Gertner stopped the default judgment proceeding against him and actually helped find him a lawyer—Harvard Law prof Charles Nesson. Now, Tenenbaum faces a life-altering damage award and the prospect of bankruptcy if not reduced or overturned on appeal.

Update: I was interested more in what happens within the federal court system for this article, but several commenters rightly point out that "not showing up" isn't the cheapest way out of such situations. Settling with the RIAA usually leads to payments of between $3,000 and $5,000, lower than the default judgments issued here by Judge Gertner. Convincing a jury that you're innocent could be cheaper still (if you find a pro bono lawyer), though it comes with certain obvious risks.

Jury Awards $675K in Boston Music Downloading Case

A federal jury on Friday ordered a Boston University graduate student who admitted illegally downloading and sharing music online to pay $675,000 to four record labels.

Joel Tenenbaum, of Providence, R.I., admitted in court that he downloaded and distributed 30 songs. The only issue for the jury to decide was how much in damages to award the record labels.

Under federal law, the recording companies were entitled to $750 to $30,000 per infringement. But the law allows as much as $150,000 per track if the jury finds the infringements were willful. The maximum jurors could have awarded in Tenenbaum's case was $4.5 million.

Jurors ordered Tenenbaum to pay $22,500 for each incident of copyright infringement, effectively finding that his actions were willful. The attorney for the 25-year-old student had asked the jury earlier Friday to "send a message" to the music industry by awarding only minimal damages.

Tenenbaum said he was thankful that the case wasn't in the millions and contrasted the significance of his fine with the maximum.

"That to me sends a message of 'We considered your side with some legitimacy,'" he said. "$4.5 million would have been, 'We don't buy it at all.'"

He added he will file for bankruptcy if the verdict stands.

Tenenbaum's lawyer, Harvard Law School professor Charles Nesson, said the jury's verdict was not fair. He said he plans to appeal the decision because he was not allowed to argue a case based on fair use.

The Recording Industry Association of America issued a statement thanking the jury for recognizing the impact illegal downloading has on the music community.

"We appreciate that Mr. Tenenbaum finally acknowledged that artists and music companies deserve to be paid for their work," the statement said. "From the beginning, that's what this case has been all about. We only wish he had done so sooner rather than lie about his illegal behavior."

Tenenbaum would not say if he regretted downloading music, saying it was a loaded question.

"I don't regret drinking underage in college, even though I got busted a few times," he said.

The case is only the nation's second music downloading case against an individual to go to trial.

Last month, a federal jury in Minneapolis ruled that Jammie Thomas-Rasset, 32, must pay $1.92 million, or $80,000 on each of 24 songs, after concluding she willfully violated the copyrights on those tunes.

The jury began deliberating the case Friday afternoon.

After Tenenbaum admitted Thursday he is liable for damages for 30 songs at issue in the case, U.S. District Judge Nancy Gertner ruled that the jury must consider only whether his copyright infringement was willful and how much in damages to award four recording labels that sued him over the illegal file-sharing.

In his closing statement Friday, Nesson repeatedly referred to Tenenbaum as a "kid" and asked the jury to award only a small amount to the recording companies. At one point, Nesson suggested the damages should be as little as 99 cents per song, roughly the same amount Tenenbaum would have to pay if he legally purchased the music online.

But Tim Reynolds, a lawyer for the recording labels, recounted Tenenbaum's history of file-sharing from 1999 to 2007, describing him as "a hardcore, habitual, long-term infringer who knew what he was doing was wrong." Tenenbaum admitted on the witness stand that he had downloaded and shared more than 800 songs.

Tenenbaum said he downloaded and shared hundreds of songs by Nirvana, Green Day, The Smashing Pumpkins and other artists. The recording industry focused on only 30 songs in the case.

The music industry has typically offered to settle such cases for about $5,000, though it has said that it stopped filing such lawsuits last August and is instead working with Internet service providers to fight the worst offenders. Cases already filed, however, are proceeding to trial.

Tenenbaum testified that he had lied in pretrial depositions when he said his two sisters, friends and others may have been responsible for downloading the songs to his computer.

Under questioning from his own lawyer, Tenenbaum said he now takes responsibility for the illegal swapping.

"I used the computer. I uploaded, I downloaded music ... I did it," Tenenbaum said.

Associated Press writer Jeannie Nuss contributed reporting from Boston.

Sell It Yourself.....

The system is bullshit that you only make about 77,000 dollars from sales topping 2 million.....let's say each copy was sold for 15 bucks each. At 2 million copies, that is 30 million dollars. And she only sees 77 grand? She is right, someone is getting rich off those sales and it sure as hell aint the one who wrote the material.

Lily Allen Angry for Not Earning Enough Money From Album Sales

Lily Allen is unhappy when finding out that she has earned only 50,000 pounds from her debut album "Alright, Still" despite its impressive selling point, which reached almost two million copies worldwide. "I don't make any money out of record sales at all. I make money out of touring and syncs, publishing," she says during an interview in Q Radio.

"My songs being put on 'Grey's Anatomy' things like that," Lily reveals further. "I don't make any money at all from selling an album, which is probably why I feel so angry about doing all this promotion because I am not earning any money out of it, someone else (is) and they don't have to live with the lasting effects."

In related news, Lily Allen has hinted to make a live appearance at this year's Glastonbury Festival during an interview with Absolute Radio Hometime DJ Geoff Lloyd. "I will be playing lots of festival this year. I'm not allowed to say which. But yes, one begins with a G," she states.

Lily's second studio album "It's Not Me, It's You" meanwhile is due to hit the U.K. market on February 9. Its sounds will reportedly range from jazz, country to dance music.

Major Labels Need To Rethink The 360 Deal

The music industry needs a rethink of the new business model of the `360 Deal` if they ever want it to work, according to speakers at the Big Sound music conference.

The 360 Deal is an idea based on a record company taking a percentage of all revenue streams of an artist, such as tickets, merchandise and publishing. But, as the speakers agree, it is not that simple.

Eleven Records founder John Watson, whose roster includes Silverchair and Missy Higgins, says that until the label has its own merch company or publishing company or ticketing company, then it is not in the interests of an artist to enter into a 360 deal.

“There are no rights without responsibility,” he said. “You have to deliver what you promise.”

Dew Process founder Paul Piticco, who has Powderfinger and The Living End on his roster concurs. “There is better value in getting bread from a baker and meat from a butcher.” he stated. “You won’t get the best results if you give all the rights to one person.”

Michael Parisi, Managing Director of Mushroom Records and Head of A&R for Warner Music said, “If I was a young band right now, I would be every concerned where the majors are going. But there are artists who will take the cheque book every time.”

Parisi can see the sea-change occurring in the industry. “We will start to see the word ‘partnership’ more in deals with artists,” he said.

Piticco also sees the change happening but isn’t prepared to predict the outcome. “No-one can say what the format of the industry will be so for my company it is about creating options for the artist,” he said. “An artist doesn’t need to give away his merch so we have options and solutions.”

While the future was blurry, the past was crystal clear. “The major record company was the major force,” John Watson said. “The record company co-owned the recording rights and the record company screwed the artist and then the artist was screwing everyone else so everyone was happy.”

“Young artists aren’t interested in record deals anyone,” he said. “”It might just be a better deal to sign to a publishing deal with someone who can help you develop your career. It is not about selling plastic. It is about building a touring career”.

The Big Sound music industry summit and showcase attracted over 300 delegates from the international music industry. The conference, presented by Q Music, happened from September 10-12 in Brisbane.

17,000 Illegal Downloads Don't Equal 17,000 Lost Sales

If a song has been downloaded from a torrent site 17,000 times, it doesn't necessarily equal 17,000 lost sales, according to US District Judge James P. Jones. The judge recently ruled against using this kind of reasoning in determining restitution in a criminal copyright case, though it doesn't necessarily affect civil cases against downloaders.

Record companies cannot collect restitution for every time a song has been illegally downloaded, a US District judge has decided. Judge James P. Jones gave his opinion on United States of America v. Dove, a criminal copyright case, ruling that each illegal download does not necessarily equate to a lost sale, and that the companies affected by P2P piracy cannot make their restitution claims based on this assumption.

Daniel Dove was originally found guilty of criminal copyright infringement for running a torrent group called "Elite Torrents" between 2004 and 2005. The jury in the case had found Dove guilty of reproduction and distribution of copyrighted works, as well as conspiracy to commit criminal copyright infringement. At the time, Judge Jones sentenced Dove to 18 months in prison for each count, plus a special assessment of $200 and a $20,000 fine ($10,000 per count).

However, the RIAA and Lionsgate Entertainment had both submitted requests for restitution—they had argued that each individual copy of content downloaded through Elite Torrents was the equivalent of a lost sale. For example, the RIAA said that 183 albums were transferred through Dove's server 17,281 times, then multiplied that by the wholesale price of a digital album in 2005 ($7.22) to conclude that its member companies were owed almost $124,769 in restitution, or $47,000 if Dove agreed to be part of an RIAA "public service announcement" about piracy. Similarly, Lionsgate said that it owned copyrights to 28 of the 700 or so movies that Dove served up—Lionsgate argued that Dove caused the movie industry to lose some $22 million, and since Lionsgate owned copyrights to about 4 percent of the available movies, it was owed $880,000.

Jones wrote in his opinion that equating each download with a lost sale is a faulty assumption. "Those who download movies and music for free would not necessarily purchase those movies and music at the full purchase price," Jones wrote. "[A]lthough it is true that someone who copies a digital version of a sound recording has little incentive to purchase the recording through legitimate means, it does not necessarily follow that the downloader would have made a legitimate purchase if the recording had not been available for free."

It's important to note that this decision does not directly affect the thousands of civil cases that the RIAA has launched against accused copyright violators. Dove was convicted as a criminal copyright offender where restitution is a consideration, while the RIAA's civil suits can ask for monetary damages determined on an entirely different scale. For example, Jammie Thomas was found liable for $222,000 in damages in 2007 after "making available" only 24 songs (that verdict has since been overturned, however, as the "making available" theory has been riddled with holes via different rulings). "The factors that go into the calculation of restitution are different than the ones that go into the calculation of statutory damages in civil cases," the Electronic Frontier Foundation's Fred von Lohmann pointed out to Wired.

Still, the Dove ruling is reassuring in that it emphasizes once again the concept that a sheer number of downloads doesn't necessarily equal monetary losses. This is the same assertion made by software groups about piracy, such as the Business Software Alliance (BSA), and it keeps getting shot down.

Henry Rollins on File Sharing

http://www.djmixhosting.com/user_uploads/504prob83c/1-02firstonthelist.mp3

How Creativity is Being Strangled by the Law

Lawrence Lessig Interview - Author of "Remix"

Bands Favoring Web Over Major Labels

Thousands of fans. A jam-packed tour schedule. A CD for sale. And no record label behemoth behind it all?

That’s today’s music business, according to Chris Bowes, the drummer for the Connecticut band Columbia Fields. And such independent success is fast becoming music industry standard for up-and-coming musical acts trying to build a brand, a following and a sound.

Columbia Fields, whose sound Bowes describes as a sort of Dave Matthews Band meets John Mayer, is among a growing number of musical groups making music independently, without a record label.

All on its own, Columbia Fields has amassed more than 14,000 fans on Myspace.com, booked shows in venues across the state and landed airtime on local radio stations WTIC 96.5 FM and KISS 95.7.

Over the past decade, the music industry has changed. It used to be that a band needed a record label to hit it big. Labels had the power to finance, distribute and promote new music.

New Opportunities
But starting with the days of Napster, technology has given emerging acts new opportunities. Now, artists can amass a substantial following through Internet music downloads, social networking sites like Myspace.com and individual artist Web sites. They can produce CDs in the comfort of home and sell them through online record stores like Cdbaby.com.

“I’m one of those guys who, when I was a kid, always saw myself up on stage, playing in front of thousands of people,” said Bowes, who’s been with Columbia Fields for about two years. The band’s first CD, “When the Night Falls,” has sold about 750 copies at shows and through online distribution with Cdbaby.com.

“The industry’s a little different now,” he added. “Bands don’t necessarily need labels to get in front of large audiences.”

“The heart of all the [industry] changes is definitely technology, bottom line,” said Adam Gootkin, co-owner of the recording studio Onyx Soundlab in Manchester. Half of his studio’s business is with major labels, artists and corporations, like Dell; the other half is with independent artists.

Gootkin’s latest project is a new track for R&B artist Brandy.

Marketing Tools
The music industry is going all digital, said Gootkin. Album sales are down, he added, and that means less income for labels, which are set up to sell CDs. Without the need for distribution, record labels become little more than banks, he said. Large labels have yet to adjust their business model to fit the digital times.

Declining revenues from CD sales has had one immediate impact on the industry, namely that labels are becoming more selective in whom they choose to sign, Gootkin said. That means musicians who are looking for the financial backing of a major record label need to come to them prepared, pre-packaged with an image, a brand and a following, he said.

“The closer you are to helping them see the vision, the closer you are to getting a deal,” Gootkin said.

Part of that challenge for young musicians is marketing, said Sheri Ziccardi, public relations manager for The Hartt School, the arts school at the University of Hartford. Ziccardi has spent years helping students in creative fields market themselves. The tools certainly have evolved, she said.

“Thinking about marketing and promoting themselves can be a challenge for creative types, who do not necessarily want to think about the ‘business’ side of the industry they choose to enter,” Ziccardi said in an e-mail. “Fortunately, today’s students have been raised in a techno-heavy culture and are comfortable with utilizing technology for self-expression and communication, so marketing themselves may become easier for them in some ways than it was for their predecessors.”

Staying Independent
If musicians can grasp the ins and outs of the industry, staying independent can be a viable option.

Music industry veteran and songwriting instructor Bill Pere maintains that it only takes a band about 10,000 fans to be able to make music full-time and remain independent of a label. He’s seen it happen, when musicians are industry-savvy.

“A person is now able to get their material to a wide audience,” said the Mystic-based Pere, who has put out 16 CDs but makes most of his royalties from digital downloads. “The trade-off is that in the old school … the record label basically does everything for you,” he added. “And all you have to do is your music.”

But artists attached to a label get a small piece of the pie, if anything at all, he said.

For example, a band signs a contract with a label and gets a $500,000 advance to make an album. Any royalties that come from the sale of the resulting album must first go to pay back that advance, Pere said.

“If you don’t sell enough, you don’t get anything,” Pere said. “It takes a heck of a lot of sales to make any money.”

Keeping Profits
The independent market doesn’t offer the connections or the budget. “But you get to keep 100 percent of everything you make,” said Pere, who has remained independent throughout his musical career. “You are the one issuing contracts to other people to do work the way you want it done.”

Downloadable music has also created the need for a more strategic approach to songwriting, Pere said. Sometimes listeners only get to sample the first 30 seconds of a song before deciding whether or not to purchase it. Long intros won’t get a song downloaded; those first 30 seconds have to rock.

“It’s a totally transformed world, with its good sides and bad sides,” he added. “It’s not a matter or right or wrong. It’s about having your eyes wide open.”

Tech N9ne on the Industry

At about 3:45 he starts on about the industry...

What the RIAA Thinks of Music Downloaders!

From Music Business to Musician Business