DIGITAL MUSIC NEWS

Judge Slashes $48 Million Verdict Against

MP3Tunes Founder Michael Robertson

 

     A federal judge this week slashed record label EMI’s $48 million jury verdict against defunct music storage service MP3Tunes and its founder by about $33 million, ruling many of EMI’s claims were “just too big to succeed” and were backed by very little actual evidence. U.S. District Judge William H. Pauley III tossed out most of the jury’s findings of secondary infringement against MP3Tunes and founder Michael Robertson under the Digital Millennium Copyright Act. The judge also cut common law punitive damages from $7.5 million to $750,000, and additional elements of the ruling could reduce the total amount to just over $10 million.

Earlier this year a Manhattan jury found MP3tunes and Robertson liable for copyright infringement and awarded $48.1 million in damages. EMI Group Ltd originally contended in its 2007 lawsuit that MP3tunes and another website known as Sideload.com enabled the infringement of copyrights in sound recordings, musical compositions, and cover art. Since that suit was filed EMI was split up, with Vivendi SA’s Universal Music Group acquiring its recording music business and a consortium led by Sony Corp purchasing its publishing arm in 2012.

In his ruling, Judge Pauley excoriated attorneys on both sides of the case. Slamming EMI’s lawyers, he wrote, “Despite this Court’s efforts to winnow the issues, the parties insisted on an 82-page verdict sheet on liability and a 331-page verdict sheet on damages that included dense Excel tables, necessitating at least one juror’s use of a magnifying glass. While the jury did its best, their assignment was beyond all reasonable scale.” Judge Pauley then turned his attention to Robertson, noting that he “created a business model designed to operate at the very periphery of copyright law.”

The plaintiffs now can either accept the decision or embark on a new trial on punitive damages, the judge said. He gave both sides until Oct. 17 to submit proposals for a final judgment. [Read more: Global Post Hollywood Reporter

Judge Hits Grooveshark In

Federal Copyright Infringement Case

 

Gavel      A federal judge in New York this week ruled that Grooveshark, an online music service long vilified by the major record companies, infringed on thousands of their copyrights. Judge Thomas P. Griesa of United States District Court in Manhattan said the digital music platform was liable for copyright infringement because its own employees and officers – including Samuel Tarantino, the chief executive, and Joshua Greenberg, the chief technology officer – uploaded a total of 5,977 of the labels’ songs without permission. Those uploads are not subject to the “safe harbor” provisions of the Digital Millennium Copyright Act.

The case stems from Grooveshark’s claim that the Digital Millennium Copyright Act protects websites that host third-party material (content posted by users and not company employees) if they comply with takedown notices issued copyright holders. Grooveshark and its parent company, Escape Media Group, insisted in court documents and testimony that all of the music files on its servers had been uploaded by its users.

But Judge Griesa didn’t buy that argument, and on Monday said, “Each time Escape streamed one of plaintiffs’  recordings, it directly infringed upon plaintiffs’ exclusive performance rights.” He also found the company destroyed important evidence in the case, including lists of files that Mr. Greenberg and others uploaded to the service.

As reported by The New York Times, the next step of the case will be to set damages, and the possibility of a multimillion-dollar ruling against Grooveshark puts the service’s future in doubt. When asked for a comment about the summary judgment decision, John J. Rosenberg, a lawyer for Grooveshark, said, “The company respectfully disagrees with the court’s decision and is currently assessing its next steps, including the possibility of an appeal.” 

Judge Rules Expert Testimony In Apple’s

Alleged “Monopoly” Case Can Be Included

 

Monopoly man      Unbelievably, the class action suit that claims Apple Inc. is guilty of monopolistic practices because of an iTunes update continues to move through the court system. According to Courthouse News Service, a federal judge has ruled the Cupertino, CA-based tech giant cannot exclude a key expert for the plaintiffs who are accusing it of monopolizing digital music and music players between 2006 and 2009.

The lawsuit, filed in 2005, alleges Apple illegally acquired a digital music player monopoly with an iTunes update that made it impossible for iPods to play songs purchased from another online music store. As part of their case, the plaintiffs asked Stanford economist Roger Noll to testify that the update made it more costly for an iPod user to switch media players because it would be harder to collect music that could be played on all devices. Noll said the update also encouraged iPod owners to only buy music from iTunes.

The resulting monopoly allowed Apple to charge more for iPods, causing $305 million in damages to the class, Noll told the court. Apple had asked the judge to exclude Noll’s testimony in December 2013, but U.S. District Judge Yvonne Rogers last week denied that motion. She also denied a motion by Apple for summary judgment. 

Digital Streaming Revenue Grew In First

Half While Overall Revenues Slipped 4.9%

 

     U.S. music revenues slipped to $3.2 billion in the first half of 2014, a 4.9% drop from the $3.35 billion the industry tallied in the first half of 2013. According to the latest figures released by the Recording Industry Association Of America (RIAA), digital music revenue declined about 0.5% to $2.203 billion, from $2.214 billion in the first half of 2013. Meanwhile, subscription revenue jumped 23.2%, to $371.4 million from $301.4 million, and ad-supported streaming jumped 56.5% to $164.7 million from $105.2 million. CD sales fell 19.1% to $715.6 million from $994.1 million, while the sale of vinyl product – an infinitesimal line item – jumped 41% to $6.5 million, from $4.8 million in the same period last year.

The RIAA says paid subscription services averaged 7.8 million U.S. subscribers in the first six months of the year, up from an average of 5.5 million subscribers in the first half of 2013. Download sales of albums and tracks fell 11.8% to nearly $1.3 billion from $1.47 billion. Distribution of performance royalties collected by SoundExchange grew 21.3% during the same period, from $266.5 million in the first half of 2013 2013 to $323.4 million in H1 2014.

As noted by Billboard, the RIAA for the first time also provided an overall market volume for wholesale. Typically, the RIAA numbers add up the value of units for each album by that album’s list price, not the wholesale price that the labels receive when they ship the albums to retailers. But converting their data to wholesale values for downloads and the physical formats, RIAA estimates the U.S. music marketplace at $2.2 billion, down from $2.3 million at mid-year 2013.

 

Spanish Broadcasting System, 7digital

Launch Digital Content Partnership

 

Handshake      Spanish Broadcasting System has entered into a partnership with 7digital to provide SBS’ LaMusica.com with secure content management technology and a royalty reporting system to support additional music products beyond the site’s current streaming content. LaMusica.com currently streams 14 of the broadcasting company’s Spanish-language radio stations, and also provides a variety of entertainment, news, and cultural offerings leveraged from SBS’ radio network, television, and live entertainment properties.

“We continue to invest in strengthening our LaMusica.com portal and extending the robust content offerings we provide to the nation’s Latino music fans,” SBS Chairman/CEO Raul Alarcón, Jr. said in a statement. “Our agreement with 7digital will provide us with additional tools to maximize the LaMusica.com experience, further building on our momentum as we seek to fully capitalize on our strong media brands and close ties to the vibrant Latino music community.”

“We are pleased to partner with fast-growing entertainment services such as LaMusica.com to enhance the infrastructure that is required to deliver comprehensive and seamless digital entertainment offerings,” Simon Cole, 7digital’s CEO, commented in the same statement. “SBS has an exceptional history in creating top-ranked media brands attracting large and loyal audiences in the nation’s biggest Hispanic media markets, and we look forward to playing a role in expanding LaMusica.com’s operating platform.”

 

Yes, eMusic Is Still Around…And

It’s Returning To Its Indie Roots

 

     For years eMusic – one of the first MP3 download services on the web – positioned itself as specializing in independent label content and, in fact, thrived (somewhat) as a music subscription service, whereby users paid a set fee each month to download a set number of tracks.

Over the years, however, the company grdually aligned itself with the major labels in order to survive, but iTunes and Amazon eventually cornered the mainstream download market, leaving eMusic to languish in the nether regions between major and indies. In fact, most industry execs more or less forgot eMusic still existed, except when it popped up as a sponsor at various industry events.

So imagine the surprise of eMusic’s small but loyal user base this week when they received an announcing the service was ending its partnerships with the majors, and returning to its roots as a hub of indie label content. In fact, the email said that beginning today (Oct. 1, the start of the fourth quarter), eMusic “will be exiting the mainstream music business and exclusively offering independent music. The company’s goal is to build the most extensive catalogue of independent music in the world.” While Complete Music Update calls that an admirable goal, it does raise the question of whether it’s too little, too late, for two reasons: 1) Much of eMusic’s small user base has drifted to the subscription streaming services, and 2) The indie labels that 10 years ago would have applauded this move are now focused on trying to get a piece of that same streaming revenue.

 

A publication of Bunzel Media Resources © 2014

How an Apple mega-deal cost Los Angeles classrooms $1 billion

Rotten to the Core:

Bad business and worse ethics? A scandal is brewing in L.A. over a sketchy intiative to give every student an iPad

 

Rotten to the Core: How an Apple mega-deal cost Los Angeles classrooms $1 billion

Technology companies may soon be getting muddied from a long-running scandal at the Los Angeles Unified School District (LAUSD), the nation’s second-largest system. A year after the cash-strapped district signed a $1 billion contract with Apple to purchase iPads for every student, the once-ballyhooed deal has blown up. Now the mess threatens to sully other vendors from Cambridge to Cupertino.

LAUSD superintendent John Deasy is under fire for his cozy connections to Apple. In an effort to deflect attention and perhaps to show that “everybody else is doing it,” he’s demanded the release of all correspondence between his board members and technology vendors. It promises to be some juicy reading. But at its core, the LAUSD fiasco illustrates just how much gold lies beneath even the dirtiest, most neglected public schoolyard.

As the U.S. starts implementing federal Common Core State Standards, teachers and administrators are being driven to adopt technology as never before. That has set off a scramble in Silicon Valley to grab as much of the $9 billion K-12 market as possible, and Apple, Google, Cisco and others are mud-wrestling to seize a part of it. Deasy and the LAUSD have given us ringside seats to this match, which shows just how low companies will go.

When the Apple deal was announced a year ago, it was touted as the largest ever distribution of computing devices to American students. The Los Angeles Times ran a story accompanied by a photograph of an African-American girl and her classmate, who looked absolutely giddy about their new gadgets. Readers responded to the photo’s idealistic promise — that every child in Los Angeles, no matter their race or socioeconomic background, would have access to the latest technology, and Deasy himself pledged “to provide youth in poverty with tools that heretofore only rich kids have had.” Laudable as it was, that sentiment assumed that technology would by itself save our underfunded schools and somehow balance our inequitable society.



When I heard about the deal, I felt a wave of déjà vu. I had sat in a PTA meeting at a public school listening to a similar, albeit much smaller, proposed deal.  An Apple vendor had approached administrators in a Santa Barbara County school, offering to sell us iPads. The pitch was that we could help propel our kids into the technological age so that they’d be better prepared for the world, and maybe land a nice-paying, high-tech job somewhere down the line. Clearly, a school contract would be great for Apple, giving it a captive group of impressionable 11-year-olds it could then mold into lifelong customers.

But parents had to raise a lot of money to seal this deal. “Is Apple giving us a discount?” asked a fellow PTA member. No, we were told. Apple doesn’t give discounts, not even to schools. In the end, we decided to raise funds for an athletics program and some art supplies instead.

To be fair, PTA moms and dads are no match at the bargaining table for the salespeople at major companies like Google, and Hewlett-Packard. But the LAUSD, with its $6.8 billion budget, had the brains and muscle necessary to negotiate something valuable for its 655,000 students. That was the hope, at least.

Alas, problems began to appear almost immediately. First, some clever LAUSD students hacked the iPads and deleted security filters so they could roam the Internet freely and watch YouTube videos. Then, about $2 million in iPads and other devices went “missing.” Worse was the discovery that the pricey curriculum software, developed by Pearson Education Corp., wasn’t even complete. And the board looked foolish when it had to pay even more money to buy keyboards for iPads so that students could actually type out their reports.

Then, there was the deal itself. Whereas many companies extend discounts to schools and other nonprofits, Apple usually doesn’t, said George Michaels, executive director of Instructional Development at University of California at Santa Barbara. “Whatever discounts Apple gives are pretty meager.” The Chronicle of Philanthropy has noted Apple’s stingy reputation, and CEO Tim Cook has been trying to change the corporation’s miserly ways by giving $50 million to a local hospital and $50 million to an African nonprofit.

But the more we learned about the Apple “deal,” the more the LAUSD board seemed outmaneuvered. The district had bought iPad 4s, which have since been discontinued, but Apple had locked the district into paying high prices for the old models. LAUSD had not checked with its teachers or students to see what they needed or wanted, and instead had forced its end users to make the iPads work. Apple surely knew that kids needed keypads to write reports, but sold them just part of what they needed.

Compared with similar contracts signed by other districts, Apple’s deal for Los Angeles students looked crafty, at best. Perris Union High School District in Riverside County, for example, bought Samsung Chromebooks for only $344 per student. And their laptop devices have keyboards and multiple input ports for printers and thumb drives. The smaller Township High School District 214 in Illinois bought old iPad 2s without the pre-loaded, one-size-fits-all curriculum software. Its price: $429 per student.

But LAUSD paid Apple a jaw-dropping $768 per student, and LAUSD parents were not happy. As Manel Saddique wrote on a social media site: “Btw, thanks for charging a public school district more than the regular consumer price per unit, Apple. Keep it classy…”

By spring there was so much criticism about the purchase that the Los Angeles Times filed a request under the California Public Records Act to obtain all emails and records tied to the contract. What emerged was the image of a smoky backroom deal.

Then-Deputy Superintendent Jaime Aquino had once worked at Pearson, the curriculum developer, and knew the players. It turned out that Aquino and Deasy had started talking with Apple and Pearson two years before the contract was approved, and a full year before it was put out to bid. The idea behind a public bidding process is that every vendor is supposed to have the same opportunity to win a job, depending on their products, delivery terms and price. But emails show that Deasy was intent on embracing just one type of device: Apple’s.

Aquino went so far as to appear in a promotional video for iPads months before the contracts were awarded. Dressed in a suit and tie, the school official smiled for the camera as he talked about how Apple’s product would lead to “huge leaps in what’s possible for students” and would “phenomenally . . . change the landscape of education.” If other companies thought they had a shot at nabbing the massive contract from the influential district, this video must have disabused them of that idea.

At one point, Aquino was actually coaching software devloper Pearson on what to do: “[M]ake sure that your bid is the lower one,” he wrote. Meanwhile, Deasy was emailing Pearson CEO Marjorie Scardino, and effusively recounting his visit with Apple’s CEO. “I wanted to let you know I had an excellent meeting with Tim at Apple last Friday … The meeting went very well and he was fully committed to being a partner … He was very excited.”

If you step back from the smarmy exchanges, a bigger picture emerges. Yes, LAUSD is grossly mismanaged and maybe even dysfunctional. But corporations like Apple don’t look so good, either. Google, Microsoft, Facebook, Apple, Hewlett Packard — the companies that are cashing in on our classroom crisis are the same ones that helped defund the infrastructure that once made public schools so good. Sheltering billions of dollars from federal taxes may be great for the top 10 percent of Americans, who own 90 percent of the stock in these corporations. But it’s a catastrophe for the teachers, schools and universities that helped develop their technology and gave the companies some of its brightest minds. In the case of LAUSD, Apple comes across as cavalier about the problem it’s helped create for low-income students, and seems more concerned with maximizing its take from the district.

But the worst thing about this scandal is what it’s done to the public trust. The funds for this billion-dollar boondoggle were taken from voter-approved school construction and modernization bonds — bonds that voters thought would be used for physical improvements. At a time when LAUSD schools, like so many across the country, are in desperate need of physical repairs, from corroded gas lines to broken play structures, the Apple deal has cast a shadow over school bonds. Read the popular “Repairs Not iPads” page on Facebook and parents’ complaints about the lack of air conditioning, librarians and even toilet paper in school bathrooms. Sadly, replacing old fixtures and cheap trailers with new plumbing and classrooms doesn’t carry the kind of cachet for ambitious school boards as does, say, buying half-a-million electronic tablets. As one mom wrote: “Deasy has done major long-term damage because not one person will ever vote for any future bond measures supporting public schools.”

Now, the Apple deal is off, although millions of dollars have already been spent. An investigation into the bidding process is underway and there are cries to place Deasy in “teacher jail,” a district policy that keeps teachers at home while they’re under investigation. And LAUSD students, who are overwhelmingly Hispanic and African-American, have once again been given the short end of the stick. They were promised the sort of “tools that heretofore only rich kids have had,” and will probably not see them for several years, if ever. The soured Apple deal just adds to the sense of injustice that many of these students already see in the grown-up world.

Deasy contends that that he did nothing wrong. In a few weeks, the public official will get his job performance review. In the meantime, he’s called for the release of all emails and documents written between board members and other Silicon Valley and corporate education vendors. The heat in downtown Los Angeles is spreading to Northern California and beyond, posing a huge political problem for not just Deasy but for Cook and other high-tech captains.

But at the bottom of this rush to place technology in every classroom is the nagging feeling that the goal in buying expensive devices is not to improve teachers’ abilities, or to lighten their load. It’s not to create more meaningful learning experiences for students or to lift them out of poverty or neglect. It’s to facilitate more test-making and profit-taking for private industry, and quick, too, before there’s nothing left.

 

Why Facebook, Google, and the NSA Want Computers That Learn Like Humans

Deep learning could transform artificial intelligence. It could also get pretty creepy.

lol cats

Illustration: Quickhoney

In June 2012, a Google supercomputer made an artificial-intelligence breakthrough: It learned that the internet loves cats. But here’s the remarkable part: It had never been told what a cat looks like. Researchers working on the Google Brain project in the company’s X lab fed 10 million random, unlabeled images from YouTube into their massive network and instructed it to recognize the basic elements of a picture and how they fit together. Left to their own devices, the Brain’s 16,000 central processing units noticed that a lot of the images shared similar characteristics that it eventually recognized as a “cat.” While the Brain’s self-taught knack for kitty spotting was nowhere as good as a human’s, it was nonetheless a major advance in the exploding field of deep learning.

The dream of a machine that can think and learn like a person has long been the holy grail of computer scientists, sci-fi fans, and futurists alike. Deep learning—algorithms inspired by the human brain and its ability to soak up massive amounts of information and make complex predictions—might be the closest thing yet. Right now, the technology is in its infancy: Much like a baby, the Google Brain taught itself how to recognize cats, but it’s got a long way to go before it can figure out that you’re sad because your tabby died. But it’s just a matter of time. Its potential to revolutionize everything from social networking to surveillance has sent tech companies and defense and intelligence agencies on a deep-learning spending spree.

What really puts deep learning on the cutting edge of artificial intelligence (AI) is that its algorithms can analyze things like human behavior and then make sophisticated predictions. What if a social-networking site could figure out what you’re wearing from your photos and then suggest a new dress? What if your insurance company could diagnose you as diabetic without consulting your doctor? What if a security camera could tell if the person next to you on the subway is carrying a bomb?

And unlike older data-crunching models, deep learning doesn’t slow down as you cram in more info. Just the opposite—it gets even smarter. “Deep learning works better and better as you feed it more data,” explains Andrew Ng, who oversaw the cat experiment as the founder of Google’s deep-learning team. (Ng has since joined the Chinese tech giant Baidu as the head of its Silicon Valley AI team.)

And so the race to build a better virtual brain is on. Microsoft plans to challenge the Google Brain with its own system called Adam. Wired reported that Apple is applying deep learning to build a “neural-net-boosted Siri.” Netflix hopes the technology will improve its movie recommendations. Google, Yahoo, Twitter, and Pinterest have snapped up deep-learning companies; Google has used the technology to read every house number in France in less than an hour. “There’s a big rush because we think there’s going to be a bit of a quantum leap,” says Yann LeCun, a deep-learning pioneer and the head of Facebook’s new AI lab.

What if your insurance company diagnosed you without consulting your doctor? What if a security camera could tell if the person next to you is carrying a bomb?

Last December, Facebook CEO Mark Zuckerberg appeared, bodyguards in tow, at the Neural Information Processing Systems conference in Lake Tahoe, where insiders discussed how to make computers learn like humans. He has said that his company seeks to “use new approaches in AI to help make sense of all the content that people share.” Facebook researchers have used deep learning to identify individual faces from a giant database called “Labeled Faces in the Wild” with more than 97 percent accuracy. Another project, dubbed PANDA (Pose Aligned Networks for Deep Attribute Modeling), can accurately discern gender, hairstyles, clothing styles, and facial expressions from photos. LeCun says that these types of tools could improve the site’s ability to tag photos, target ads, and determine how people will react to content.

Yet considering recent news that Facebook secretly studied 700,000 users’ emotions by tweaking their feeds or that the National Security Agency harvests 55,000 facial images a day, it’s not hard to imagine how these attempts to better “know” you might veer into creepier territory.

Not surprisingly, deep learning’s potential for analyzing human faces, emotions, and behavior has attracted the attention of national-security types. The Defense Advanced Research Projects Agency has worked with researchers at New York University on a deep-learning program that sought, according to a spokesman, “to distinguish human forms from other objects in battlefield or other military environments.”

Chris Bregler, an NYU computer science professor, is working with the Defense Department to enable surveillance cameras to detect suspicious activity from body language, gestures, and even cultural cues. (Bregler, who grew up near Heidelberg, compares it to his ability to spot German tourists in Manhattan.) His prototype can also determine whether someone is carrying a concealed weapon; in theory, it could analyze a woman’s gait to reveal she is hiding explosives by pretending to be pregnant. He’s also working on an unnamed project funded by “an intelligence agency”—he’s not permitted to say more than that.

And the NSA is sponsoring deep-learning research on language recognition at Johns Hopkins University. Asked whether the agency seeks to use deep learning to track or identify humans, spokeswoman Vanee’ Vines only says that the agency “has a broad interest in deriving knowledge from data.”

Mark Zuckerberg

Mark Zuckerberg has said that Facebook seeks to “use new approaches in AI to help make sense of all the content that people share.” AP Photo/Ben Margot

Deep learning also has the potential to revolutionize Big Data-driven industries like banking and insurance. Graham Taylor, an assistant professor at the University of Guelph in Ontario, has applied deep-learning models to look beyond credit scores to determine customers’ future value to companies. He acknowledges that these types of applications could upend the way businesses treat their customers: “What if a restaurant was able to predict the amount of your bill, or the probability of you ever returning? What if that affected your wait time? I think there will be many surprises as predictive models become more pervasive.”

Privacy experts worry that deep learning could also be used in industries like banking and insurance to discriminate or effectively redline consumers for certain behaviors. Sergey Feldman, a consultant and data scientist with the brand personalization company RichRelevance, imagines a “deep-learning nightmare scenario” in which insurance companies buy your personal information from data brokers and then infer with near-total accuracy that, say, you’re an overweight smoker in the early stages of heart disease. Your monthly premium might suddenly double, and you wouldn’t know why. This would be illegal, but, Feldman says, “don’t expect Congress to protect you against all possible data invasions.”

An NSA spokeswoman only says that the agency “has a broad interest in deriving knowledge from data.”

And what if the computer is wrong? If a deep-learning program predicts that you’re a fraud risk and blacklists you, “there’s no way to contest that determination,” says Chris Calabrese, legislative counsel for privacy issues at the American Civil Liberties Union.

Bregler agrees that there might be privacy issues associated with deep learning, but notes that he tries to mitigate those concerns by consulting with a privacy advocate. Google has reportedly established an ethics committee to address AI issues; a spokesman says its deep-learning research is not primarily about analyzing personal or user-specific data—for now. While LeCun says that Facebook eventually could analyze users’ data to inform targeted advertising, he insists the company won’t share personally identifiable data with advertisers.

“The problem of privacy invasion through computers did not suddenly appear because of AI or deep learning. It’s been around for a long time,” LeCun says. “Deep learning doesn’t change the equation in that sense, it just makes it more immediate.” Big companies like Facebook “thrive on the trust users have in them,” so consumers shouldn’t worry about their personal data being fed into virtual brains. Yet, as he notes, “in the wrong hands, deep learning is just like any new technology.”

Deep learning, which also has been used to model everything from drug side effects to energy demand, could “make our lives much easier,” says Yoshua Bengio, head of the Machine Learning Laboratory at the University of Montreal. For now, it’s still relatively difficult for companies and governments to efficiently sift through all our emails, texts, and photos. But deep learning, he warns, “gives a lot of power to these organizations.”

DIGITAL MUSIC NEWS

CA Judge Rules SiriusXM Is Liable For

Pre-1972 Turtles Performance Fees

 

Gavel      A federal judge in Los Angeles this week agreed with 1960s band The Turtles that the recorded music industry can collect performance royalty fees for copyrighted recordings made prior to 1972. In a summary judgment ruling published Monday (Sept. 22), U.S. District Judge Philip Gutierrez ruled SiriusXM had violated California state law by performing 15 recordings of The Turtles dating from before 1972 without a license. The original lawsuit, filed by singers Flo & Eddie, argued that even though Federal copyright laws only covered recordings made after 1972, various state laws provided copyright coverage for works prior to that year.

The Los Angeles ruling thus gives the music industry and its pre-1972 legal theory a major boost. In reaching his conclusion, Judge Gutierrez examined a California law that was enacted in 1982 and meant to address pre-1972 recordings. As reported by Billboard, the statute – passed in the aftermath of U.S. Congress’s decision to expand federal copyright law – was silent on whether “exclusive ownership” of pre-1972 sound recordings carries within it the exclusive right to publicly perform the recording. As such, the judge had to determine whether California’s law was inclusive or exclusive, and the judge’s reading of the law is that other than the exception for cover songs, there’s nothing exclusive about it.

GigaOm called Monday’s ruling the worst-case outcome for SiriusXM and other digital music services because it will likely expand the scope of music on which they must pay royalties. It also could add a further layer of costs for the digital services that traditional AM/FM radio stations do not have to incur. 

SiriusXM Pre-’72 Copyright Ruling

May Mean Nothing Outside California

 

Lawsuit      U.S. Federal Court Judge Philip Gutierrez’ decision that SiriusXM violated the Turtles’ pre-1972 master copyrights is considered a big win for the music industry…but does it have any meaning beyond California, where the original lawsuit was filed? Many legal experts today are scratching their heads and wondering whether Monday’s ruling has any significant implications for other ongoing court cases that argue state laws apply even though the master recording copyright didn’t exist until 1972 in federal law. SiriusXM, Pandora, and other digital music services say they have the right to play pre-1972 recorded music without licensing or paying royalties to record labels and the artists, while labels and artists maintain these services must comply with individual state laws, where they exist.

The Copyright Royalty Board originally said federal law exempts SiriusXM from making such copyright payments, but the CRB’s ruling doesn’t extend to state statutes. This led to the Turtles’ Flo & Eddie to claim copyright protection under California law; subsequent lawsuits also were filed in Florida and New York. Additionally, SoundExchange filed a claim against SiriusXM in federal court in the District of Columbia, while the three major labels filed a lawsuit on the same issue against the satcaster in California state court and against Pandora in New York state court.

Interestingly, last month a different judge ruled the wording in California state law on master recordings is ambiguous and may protect against unlicensed duplication and distribution. “Plaintiffs [the major labels] have not cited any authority for the proposition that the state law rights in pre-1972 sound recordings included rights in public performances of the sound recordings,” Judge Mary Strobel wrote.

“The Flo & Eddie judge [Gutierrez] surely read the interim ruling and said ‘balderdash,'” one senior label executive told Billboard

Apple Denies Rumors Of Beats Closure

 

     In what may have been a major Mark Twain moment, the reports earlier this week that Beats Music was dead may have been greatly exaggerated. While the social media blogosphere was buzzing that Apple Inc. had decided to shutter the service it acquired only four months ago for $3 billion, Hollywood Reporter says Apple claims the story simply is not true. In fact, Apple has been typically silent about how it plans to integrate Beats into its current iTunes offerings, and the service was largely ignored when executives took the stage at a special media event less than two weeks ago to reveal the new iPhone 6.

Still, HR says Apple’s Eddy Cue gave a wink to Beats during his presentation on Apple Pay, and CEO Tim Cook gave the streaming service a shout-out when announcing the launch of the new U2 album. That said, the Beats app, which allows people to access curated streaming music playlists, is noticeably absent from the new iPhones.

So what gives? Actually a source with “knowledge of the situation” says that Apple “is fully committed to offering a subscription service, though changes to any existing products are always a possibility.” Closing Beats Music would leave co-founders Jimmy Iovine and Dr. Dre available to focus on other initiatives for the tech firm, and would support reports that surfaced at the time of the acquisition that Apple paid a premium to sign the music moguls to long-term development deals.

Editor’s note: It’s been clear from the start that Apple has big plans for certain elements of the Beats technology and the team that brought it to fruition. CEO Tim Cook and the innovators in Cupertino obviously have a vision for the Beats technology that far exceeds simply plugging it into its existing iTunes Radio system. Keep in mind that, for every Apple product that has ever shipped in a box, there has been a team of minds that first thought outside that box. 

U2 And Apple Reportedly Are Developing

New Digital Music “Audiovisual” Format

 

     Expanding on the rumor that Apple Inc. has closed Beats Music, Time magazine this week reported the company actually is working with U2 to develop a new digital music format that “will prove so irresistibly exciting to music fans that it will tempt them again into buying music – whole albums as well as individual tracks.” Fresh off the surprise release (and subsequent partial recall) of U2’s new “Songs of Innocence” album, the band’s legendary frontman Bono told Time that the new music format is designed to be something that “can’t be pirated” and that could limit both illegal downloading and legal streaming, activities Rolling Stone says “have chipped away the music industry from a sales perspective.”

“It’s going to get very exciting for the music business,” Bono said, adding that the format will be “an audiovisual interactive format for music that can’t be pirated and will bring back album artwork in the most powerful way. You can play with the lyrics and get behind the songs when you’re sitting on the subway with your iPad or on these big flat screens. You can see photography like you’ve never seen it before.”

Bono said the new format is about 18 months away, which could potentially align it with U2’s planned “Innocence” follow-up “Songs of Experience.” While U2 is championing this new format, the files are more likely to help younger, lesser-known artists than global superstar acts, as the format gives listeners incentive to actually buy music. “Songwriters aren’t touring people,” Bono said. “Cole Porter wouldn’t have sold T-shirts. Cole Porter wasn’t coming to a stadium near you.” 

Japan’s Love Affair With CDs Boosts

Global Sales, But Could Slam Record Biz

 

     Japan is considered be one of the world’s perennial early adopters of new technologies, but its continuing attachment to the CD puts it sharply at odds with the rest of the global music industry. That’s the word from The New York Times, which reports that, while CD sales are falling worldwide, they still account for about 85% of sales in that country, compared with as little as 20% in some countries. By contrast, digital sales are quickly eroding in Japan, going from almost $1 billion in 2009 to just $400 million last year, according to the Recording Industry Association of Japan. Meanwhile, such streaming music services as Spotify and Rdio, widely seen as the industry’s best new hope for new revenue, have stalled in their efforts to enter Japan, where homegrown pop idols by far outsell Western acts.

Analysts contend peculiarities of Japan’s business climate have shaped its attachment to the CD, but cultural factors may also be at play. For instance, Japanese consumers have a love affair with collectible goods, which means that “Greatest Hits” albums do particularly well in Japan, perhaps because of the elaborate, artist-focused packaging. Cross-promotional activities also abound; for example, the hugely popular girl group AKB48 pioneered the sale of CDs containing tickets that can be redeemed for access to live events. This strategy is credited with propping up CD sales, because it can lead the biggest fans to buy multiple copies of an album.

Digital sales in the U.S. have surpassed physical sales a few years ago, but CDs still account for 41% of the $15 billion recorded music market worldwide. Much of this lingering sales strength comes from Japan (as well as Germany), an attachment that worries analysts who contend that if those countries do not embrace online music, an inevitable decline in CD sales will further damage the industry. “If Japan sneezes and Germany catches a cold, that’s it – we’re done,” Alice Enders, a media analyst with Enders Analysis, told the Times

Music Industry Could Learn A Thing

Or Two From Digital Marketing 101

 

     As the digital music industry becomes increasingly competitive (and, perceptually at least, disjointed), record labels wrestle with a disruped digital ecosystem made up of many seemingly disconnected parts. As a result, consumers have the potential to get lost in the mix, leaving many to wander aimlessly through a morass of traditional, digital, and social media in their quest to discover new music and even listen to what they already know. As Mashable noted earlier this week, music is a breed of its own, where cookie-like tracking tools simply don’t exist yet and artists don’t know their true reach and can’t discover comprehensive insights into their listeners.

To that end, the website offers several modern marketing concepts to see how they apply – or don’t – to the ever-changing music business:

  • Marketing technology. Deeper insight into user behavior is crucial for an industry that bears the brunt of every new disruptive technology.
  • Real-time reporting. Radio is a music research black hole. Activity on Pandora comprises a huge and growing percentage of listening in the United States, the world’s biggest music market. However, like offline radio, there’s no real-time or detailed tracking of  music consumption.
  • Building relationships on social. Marketing’s key theme also applies to the music industry: success is all about having a relationship with the consumer (in this case, the listener). As Taylor Swift pointed out in her recent Wall Street Journal op-ed, artists are starting to get record deals because they have fans, not the other way around.

As Mashable says, “The missing links that’ll ultimately power the business of the music industry will fall into place with innovation. Every individual stars in their own movie complete with the soundtrack to their life. By leveraging the innovation seen in digital marketing, artists can understand in which scenes their music is featured.”

 

A publication of Bunzel Media Resources © 2014

Are Apple and Google Really on Your Side Against the NSA?

  Civil Liberties  

http://www.techautos.com/wp-content/uploads/2010/03/AppleGoogleS.jpg

The tech giants’ tacit message: Open your wallet for the latest gadget and you’ll be safe from Big Brother.
 In the past couple of days both Google[i] and Apple[ii] have announced that they’re enabling default encryption on their mobile devices so that only the user possessing a device’s password can access its local files. The public relations team at Apple makes the following claim:

“Apple cannot bypass your passcode and therefore cannot access this data… So it’s not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8″

The marketing drones at Google issued a similar talking point:

“For over three years Android has offered encryption, and keys are not stored off of the device, so they cannot be shared with law enforcement… As part of our next Android release, encryption will be enabled by default out of the box, so you won’t even have to think about turning it on.”

Quite a sales pitch? Cleverly disguised as a news report no less. Though it’s not stated outright the tacit message is: open your wallet for the latest gadget and you’ll be safe from Big Brother. Sadly, to a large degree this perception of warrant protection is the product of Security Theater aimed at rubes and shareholders. The anti-surveillance narrative being dispensed neglects the myriad of ways in which such device-level encryption can be overcome. A list of such techniques has been enumerated by John Young, the architect who maintains the Cryptomeleak site[iii]. Young asks readers why he should trust hi-tech’s sales pitch and subsequently presents a series of barbed responses. For example:

Because they can’t covertly send your device updated software [malware] that would change all these promises, for a targeted individual, or on a mass basis?

Because this first release of their encryption software has no security bugs, so you will never need to upgrade it to retain your privacy?

Because the US export control bureaucracy would never try tostop Apple from selling secure mass market proprietary encryption products across the border?

Because the countries that wouldn’t let Blackberry sell phonesthat communicate securely with your own corporate servers, will of course let Apple sell whatever high security non-tappable devices it wants to?

Because they want to help the terrorists win?

Because it’s always better to wiretap people after you convince them that they are perfectly secure, so they’ll spill all their best secrets?

Another thing to keep in mind is that local device encryption is just that. Local. As Bruce Schneier points out this tactic does little to protect user data that’s stored in the cloud[iv]. When push comes to shove executives will still be able to hand over anything that resides on corporate servers.

Marketing spokesmen are eager to create the impression that companies are siding with users in the struggle against mass surveillance (never mind the prolific corporate data mining[v]). Especially after business leaders denied participating in the NSA’s PRISM program. Yet the appearance of standing up to government surveillance is often a clever ploy to sell you stuff, a branding mechanism. It’s important to recognize that Internet companies, especially billion dollar hi-tech multinationals like Yahoo[vi] and Cisco[vii], exist to generate revenue and have clearly demonstrated the tendency to choose profits over human rights when it’s expedient.

End Note

[i] Craig Timberg, “Newest Androids will join iPhones in offering default encryption, blocking police,” Washington Post, September 18, 2014.

[ii] Craig Timberg, “Apple will no longer unlock most iPhones, iPads for police, even with search warrants,” Washington Post, September 18, 2014.

[iii] John Young, “Apple Wiretap Disbelief,” Cryptome, September 19, 2014.

[iv] Bruce Schneier, “iOS 8 Security,” Schneier on Security, September 19, 2014.

[v] Bill Blunden, “The NSA’s Corporate Collaborators,” Counterpunch, May 9-11, 2014.

[vi] Bill Blunden, “Corporate Executives Couldn’t Care Less About Civil Liberties,” Counterpunch, September 15, 2014.

[vii] Cindy Cohn and Rainey Reitman, “Court Lets Cisco Systems Off the Hook for Helping China Detain, Torture Religious Minorities,”Electronic Frontier Foundation, September 19, 2014.

Bill Blunden is an independent investigator whose current areas of inquiry include information security, anti-forensics, and institutional analysis.

http://www.alternet.org/civil-liberties/are-apple-and-google-really-your-side-against-nsa?akid=12281.265072.xUwZXM&rd=1&src=newsletter1020319&t=19&paging=off&current_page=1#bookmark

The Alibaba IPO frenzy

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Symptom of a diseased economic order

22 September 2014

The initial public offering (IPO) of shares in the Chinese Internet trading company Alibaba, which led to a frenzy on Wall Street last Friday, is the latest, and one of the most spectacular, expressions of the parasitism that is now the dominant feature of the global financial system and the world economy more broadly.

Initially priced at $68 per share, the stock began trading on the New York exchange at $92.70, with 100 million shares changing hands in the first ten minutes, before closing at $93.89. The 38 percent rise took the market value of the fifteen-year-old company to $231 billion, more than Amazon, Proctor & Gamble and JP Morgan.

The IPO reportedly made Jack Ma, the company’s founder, China’s richest man, with a net worth of $26.5 billion. It is hard to ascertain what is more repugnant: the scale of the plunder or the extent of the hypocrisy that accompanied it. Ma told the CNBC business TV channel that the issue was not money, but getting “trust from the people.”

Silver Lake Management, which focuses on trading in technology firms, reaped five times its initial outlay on Alibaba. Silver Lake bought into the company in October 2011 in a series of deals that put Alibaba’s market value at around $30 billion. At the end of Friday’s trading, it had reaped profits of $4.6 billion. Likewise, Yahoo stands to gain about $5.1 billion after selling its 121.7 million shares in the company.

The 35 underwriters of the deal collectively raked in around $300 million in fees, with five major banks securing about $45 million each.

The entire operation was a graphic demonstration of the putrefaction of the profit system. The IPO itself was an exercise in insider trading, with some 25 institutions securing more than 50 percent of the shares and the biggest portion of the profits on offer.

Fabulous fortunes were made in a matter of minutes as a result of share trading in a company that produces nothing, but is engaged in e-commerce, that is, facilitating buying and selling through the Internet. The naked display of avarice occurred under conditions of stagnation and slump in the real economy and relentless attacks on the conditions of workers, justified by the claim that “there is no money” for jobs, decent wages or basic social services.

The overall indebtedness of the city of Detroit, now in bankruptcy and at the centre of the assault on the working class, including the shutoff of water to thousands of households, is put at around $18 billion—less than the profits raked in during the first hour of trading in Alibaba shares.

The parasitism involved in the IPO is underscored by a consideration of why the “market value” of Alibaba is so inflated. It is not because it has developed some new form of technology, facilitated an important innovation, or brought forward a more advanced production technique.

Its attractiveness flows from its monopolisation of Internet services in China. It dominates operations that in other countries are run by different companies. It owns Chinese firms that are the equivalent of Amazon and eBay and earns money from transaction fees flowing from the Chinese equivalent of PayPal.

This monopoly position has been facilitated by the company’s close connections to the Chinese Stalinist regime. An article in the Australian Financial Review noted that Jack Ma had fostered “warm relations” with Chinese President Xi Jinping. “Truth be told,” the newspaper reported, “Alibaba couldn’t have reached the heights it already has without the support of the upper echelons of the Communist Party.”

This is a striking revelation of the role played by the Chinese regime in propping up world capitalism, with all its socially destructive consequences, and the global character of the international financial aristocracy.

The Alibaba IPO came at the end of a week in which a report by Wealth-X and UBS showed that the world’s billionaires had an accumulated wealth of $7.3 trillion, an increase of 12 percent in the last year. This increase of wealth at the very top is accompanied by worsening social conditions for the working class in all of the major capitalist centres. These are not parallel processes, but causally connected.

Since the eruption of the global financial crisis in 2008, the economic policies of the ruling elites have proceeded on two main lines: the supply of ultra-cheap money to the banks and financial institutions to finance speculation, and the driving down of the social position of the working class.

The connection between the two has again been illustrated. Within a day of the Alibaba IPO orgy on Wall Street, halfway round the world at a meeting of G-20 finance ministers and central bankers in Cairns, Australia, International Monetary Fund Managing Director Christine Lagarde insisted on the necessity for so-called “labour market” reforms—code words for the destruction of what remains of legal protections for workers.

The frenzy on the financial markets, the surge in corporate stock buybacks, IPOs and takeovers, and the return of the same practices that led to the crisis of 2008 are themselves expressions of the deep and ongoing crisis of the world capitalist system.

The euro zone economies are either stagnating or in outright recession, with production levels still below where they were in 2007. The Japanese economy has experienced no growth this year, despite the massive financial stimulus package carried out under “Abenomics.” Chinese growth is slowing, with mounting questions arising over the stability of the country’s financial system. The American economy has failed to return to anywhere near the growth levels reached before the financial crash.

In other words, money is pouring into the financial system because it has nowhere else to go. The rise of speculation, parasitism and the monopolisation of socially produced wealth by a money-crazed and semi-criminal elite are manifestations of the deep-going historical crisis of the capitalist economic order.

The Alibaba IPO exemplifies the manner in which the capitalist market and monopoly domination turn the Internet, a technological advance that potentially opens up vast prospects for social advancement, into a means for generating fabulous wealth for a mere handful. It is another demonstration of the necessity for the complete overturn of the profit system and the reconstruction of the global economic order on socialist foundations.

Nick Beams