Everybody fretted about Universal Music suing YouTube for copyright infringement given the threats lobbed in that direction by Chairman Doug Morris. But Universal cut a deal with YouTube and that settled that.
The other company that got under Morris’ skin was MySpace. Following talks that apparently broke down yesterday, Universal filed suit this afternoon accusing the social networking giant of copyright infringement of music by Universal artists that is included in the site’s user-generated videos.
The two companies had apparently been in talks up through yesterday but those talks fell apart. Perhaps not so coincidentally, News Corp. also announced yesterday that Fox Interactive Media CEO Ross Levinsohn, who oversees MySpace, is leaving the company.
MySpace issued a statement calling the suit “meritless” because there are procedures for copyright holders to request that their content be removed from the site, namely the take-down provisions in the Digital Millennium Copyright Act.
Universal, however, is taking a hard line.
“Businesses that seek to trade off on our content, and the hard work of our artists and songwriters, shouldn’t be free to do so without permission and without fairly compensating the content creators,” Universal Music said in a statement.
Despite fears that this litigation may spur about the health and growth of video sharing on the Internet, Universal’s lawsuit is probably a good thing. With two giants duking it out in the federal courts, the likelihood is good that some kind of legal precedent will be set. Maybe video file sharing sites (and other video-enabled Internet businesses) can finally get definitive legal ground rules, whatever they may be, providing a higher degree of certainty so that the industry can move forward.
The issue, of course, is one of timing. The wheels of justice move achingly, maddeningly slow and this suit could go on for years, reaching all the way up, perhaps, to the Supreme Court. But the law is going to have to become clear to both Internet companies and content creators and then maybe we can all end this chatter about whether YouTube will get sunk by infringement lawsuits.
Update: Stacy Kramer has more details on the failed negotiations. MySpace’s testing of an automated take-down tool provided by Gracenote was supposed to be the last hurdle before the two companies struck a license deal. But Universal apparently wanted to be paid for MySpace’s prior use of its content, not just going-forward use, and MySpace was afraid of the precedent this would set. News Corp. apparently also offered a check to Universal, but it didn’t hit an eight-figure sum that Universal sought.
Posted by Cynthia Brumfield at 5:33 PM | Print | Comments (0)EFF has flagged a lawsuit filed by the MPAA against a small New York company called Load-N-Go Video. Load-N-Go sells both DVDs and iPods, and offers its customers a service which copies the purchased DVDs onto the iPods. Load-N-Go then ships both the pre-loaded iPod and the physical DVDs to customers.
The MPAA’s member studios have sued Load-N-Go for violating their copyrights and for violating the Digital Millenium Copyright Act. What’s interesting here is that the MPAA seems to be arguing than any attempt to bypass its CSS encryption technology, which is, in fact, not permitted by the DMCA, is illegal, even if Load-N-Go or consumers, for that matter, merely wish to copy content for personal uses, which is legal under the copyright law’s “fair use” doctrine.
In essence, the MPAA’s theory in this case is that if consumers purchase DVDs, they cannot copy those DVDs onto any other device, period (assuming, of course, the DVDs are encrypted). An extension of this theory is that consumers must pay an additional fee (say, via iTunes or some other outlet) if they want to watch the same movie on a mobile device.
If consumers could bypass the studios’ security technology embedded in a DVD to copy the contents onto a mobile device, say, for watching films on road trips, those consumers would be in violation of the law, the DMCA. If they purchased the same film from iTunes and downloaded the movie onto their iPods, they wouldn’t be in violation of the law.
This DMCA “loophole” seems to allow the MPAA to invoke one law in order to limit what is fairly common legal activity — the copying of copyrighted material for personal use. As EFF’s Fred Von Lohmann notes “this lawsuit is just the latest example of the entertainment industry taking aim not at ‘pirates,’ but at the legitimate fair use rights of music and movie fans.”
Posted by Cynthia Brumfield at 10:52 AM | Print | Comments (0)Ross Levinsohn, President of Fox Interactive Media since it was formed last year when News Corp. hit the Web 2.0 world running, is being replaced by Peter Levinsohn, most recently President of Digital Media in the Fox Entertainment Group. Supposedly R. Levinsohn is leaving because he’s an entrepreneur and P. Levinsohn is coming on board because he’s an operations guy.
Om has word that R. Levinsohn really is an entrepreneur and is planning to start a new online media aggregation company. As he also points out, it seems that major media companies these days are pushing out the new media guys in favor of the old media guys (to wit, AOL’s dismissal of Jon Miller in favor of Randy Falco).
it seems to me that the old media companies are putting old media guys in charge of their new media empires, a move as risky as skating on a lake. You just don’t know where the ice is thin!Posted by Cynthia Brumfield at 10:00 AM | Print | Comments (0)
Radio, TV and billboard giant Clear Channel Communications announced yesterday one of the largest, if not the largest, buyout in the media and entertainment industry’s history. Private equity firms Thomas H. Lee Partners and Bain Capital Partners agreed to buy the traditional media conglomerate in a deal valued at $26.7 billion - $18.7 billion in cash plus $8.0 billion in debt assumption.
The New York Times’ Andrew Ross Sorkin and Peter Edmonston have this piece today about whether the mega-deal, and the general trend of private equity firms purchasing traditional media companies, raises any red flags in terms of media ownership issues.
Although Sorkin and Edmonston don’t go into this level of detail, the big concern is whether these private equity firms, which are buying the old media companies as investments not for growth but for the cash they throw off, can be considered as holding “cognizable interests” in the broadcasting companies they buy under the FCC’s ownership rule. These rules limit just how many broadcast stations any “cognizable” owner may have in a given market.
As it turns out, Thomas H. Lee Partners is part of the consortium that bought Spanish-language broadcasting company Univision for $12 billion and Bain, Thomas H. Lee and another private equity firm, the Blackstone Group are investors in Cumulus Media Partners, which bought the radio broadcasting business of Susquehanna Pfaltzgraff in May for $1.2 billion.
So, Thomas H. Lee, at least, will probably end up with ownership interests in TV and radio broadcast stations that bump up against, if not exceed, the FCC ownership caps in some markets. But, is this a problem?
Private equity buyouts of broadcast stations (and newspapers, for that matter, which are covered in the Commission’s cross-ownership rules) are such new phenomena that no one really knows. In 1999, the FCC modified its rules regarding equity or debt owners of media properties so that a “cognizable” ownership interest is recognized when the equity or debt owners can exert “significant influence” over the media companies’ operations.
Thomas H. Lee, Bain, Blackstone and other private equity owners are likely to say they plan to remain hands-off in terms of the companies’ operations, and therefore, their ownership interests shouldn’t apply to the local market limits. These firms, after all, are looking to extract whatever cash they can out of declining growth media businesses and don’t aim to reinvent the wheel.
One possible problem: when the FCC revamped its ownership attribution rules, its main concern was to ferret out cognizable ownership interests particularly as they applied to program suppliers. Thomas H. Lee Partners and Bain are part of a private investor group that controls Warner Music, and Warner Music is a big supplier to Clear Channel Communications.
Posted by Cynthia Brumfield at 8:57 AM | Print | Comments (0)
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