Facilitated infringement

The demise of YouTube-MP3 leaves a hole in the sea of audio ripping sites. Leslie Zigel, partner at Greenspoon Marder, discusses the effects

What will be the immediate effect of the YouTube-MP3 settlement on stream ripping?

YouTube-MP3 was responsible for upwards of 40 percent of all audio ripping. As a result of the settlement, ripping should go down 40 percent. More importantly, the amount of publicity surrounding this is going to help people understand that what they are doing is in fact illegal.

On YouTube, there is music that is officially licensed from record labels and therefore high quality.

YouTube-MP3 took advantage of this and converted those audiovisual files into MP3s (audio only) that consumers could then store on their devices.

People will start looking at this settlement and the fact that the site has gone down, and see that this is infringement. Whether they’ll move on to another streaming service, I can’t say, but it will definitely make an impact.

Other stream ripping sites will see this as a loss. The fact that this was such a big public settlement, and that YouTube-MP3 got such a black eye on this will, it cause other stream ripping sites concern.

There is certainly the opportunity for copycat sites and what was unique about YouTube-MP3 is that they were monetising their infringement through advertising revenue, it wasn’t just a situation of pirates putting something online for free.

There is a financial motivation to do this, but with this precedent, it makes it much easier for the International Federation of the Phonographic Industries and other trade organisations to file suits against copycat sites. It also keeps the advertising community on notice that this is illegal activity. This is the beginning of a change.

Is this a wider problem with sites such as YouTube? How can we remedy this?

YouTube is making an effort, but there are some people who are quick to discount it. It’s imperfect, but they’ve created an infrastructure there for them to improve upon. The problem is, if you only have a finite number of advertisers and a finite number of quality videos for them to advertise on, it’s difficult to make a business model out of that. With its YouTube Red service, YouTube is trying to have a subscription-based model, much like Spotify, which will help bring some regularised cash flows and hopefully allow more money to flow downstream. I think YouTube can do a better job, but it’s important to realise that this is hard work and YouTube would be well served to work more closely with the labels and publishers to collectively find solutions.

Are there any way rights holders can battle this problem out of court?

Rights holders can continue to talk about and publicise this. I don’t think people fundamentally want to steal things, they just don’t necessarily understand the problem. They might think music should be free. Back in the Napster days, people would talk about justifying Napster on the basis that record labels were ripping off and exploiting the artists. Those sorts of simplistic categorisations did not take into account the fact that record labels spent quite a bit of money on marketing, more than they do now and they gave artists chances. They made big bets and lost a lot—but also had great hits.

Was the record label system perfect? Absolutely not, but there was this kind of animosity towards the industry that helped to justify this perverse notion that you were setting the artist free by making music free, without realising that the artists still get paid by the record labels.

With record sales, not everyone is going to be making big money, but it does flow in the pipeline, and by pirating, you’re taking all of that money out of the artist’s pocket. Then, they end up working at 7/11 instead of writing the love song that will be the soundtrack of your life. I don’t think the consumers are making that connection. It’s important for people to understand that musicians make their livelihood off of music and by using these ripping services you are literally taking the money out of the mouths of these musicians. Having a robust creative environment means that artists need to be able to make a livelihood.

Is this something that the government needs to look at?

In the case of the stream ripping type services, I think they are governed well by copyright law. The larger issue, where I think there needs to be some governmental oversight or review, is the problems with social media services and internet service providers (ISPs).

Internet service providers, by virtue of the Digital Millennium Copyright Act and the safe harbour provision, aren’t responsible for anything that goes across their internet highway. As long as it’s taken down under DMCA procedures, the ISPs can’t be held liable; it’s not their problem.

There is some value to that argument that ISPs can’t be responsible for everything that goes through their internet highways.

However, if they know that 40 percent of their traffic is generated by music files being downloaded, a good portion of which is illegal, and they are making a ton of profit on this, I don’t think there is anything wrong with some sort of tariff or tax on them to pay the music industry, for the rights for that music to go across there. They must understand that their business is driven by illegal activity. We aren’t going to make them responsible for consumer behaviour, but they can’t profit off of this illegal activity going across their airways without giving some money to the losers of that bargain, which are easily identifiable (i.e., artists and publishers).

I think the ISPs should be taxed something and maybe we should be discussing this on other parts of the internet, like social media. That’s where I see the role of the government being useful, because these things aren’t contemplated by the current judicial structure.

Finally, rights holders were successful in getting Facebook to agree to pay royalties when publishers and labels issued takedown notices when Facebook users would upload their content.

This effort will bear millions in new revenue for artists, songwriters, labels and music publishers.

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