Category: Copyright

Dragon Box Sued by New and Traditional Film Studios

Picking up on the piracy-doublespeak theme of my last post, let’s highlight a favorite talking point among piracy advocates and apologists, the one that goes like this: If the major producers were just smart enough to make works available conveniently and affordably, people would stop pirating. That was always a lie. And it’s been proven a lie by the filmed-entertainment industry because a huge volume of content—more than any normal person has time to watch—has been made conveniently and affordably available, and yet piracy continues to increase. More than that, piracy has become so sophisticated that potential new users of pirate sites don’t have to be sophisticated at all.

Until fairly recently, a user generally had to be aware that he was visiting an infringing site to illegally download or stream a motion picture or TV show. If he was committed enough to his piracy, he’d have to follow some of the trends, know which pirate sites are doing what, invest in a VPN to hide his tracks, and spend some time searching for specific titles. Now, the process is made much easier with device-based piracy, often referred to generically as “Kodi Boxes,” after the name of one of the first products to enter this market. Essentially, these devices work like an AppleTV or Roku, but because they’re built on open-source operating systems, third-party “add-on” software was made available almost immediately to turn these devices into piracy boxes.

With add-on software, the user gets a Neflix-like graphic interface offering nearly any title he can think of for free. What the device does in the background is locate the target material on a pirate site’s server somewhere in cyberspace and then stream it from that infringing location via the box to the user’s screen. It’s all very clean and prettied up just like a legit product, requiring no more savvy than the use of a TV remote. It’s so easy that a small child can steal cartoons in her pajamas on Saturday morning without waking Mom and Dad for help.

Enter Dragon Box

On January 10, a complaint was filed in California District Court against developer Paul Christoforo and reseller Jeff Williams of Dragon Box—a device pre-loaded with piracy software and which is overtly advertised to consumers as a substitute for paying for cable, Netflix, Hulu, or any legal supplier of filmed entertainment, including online gaming. Plaintiffs, which comprise Netflix, Amazon, and six major motion picture studios, allege that Dragon Media Inc. intentionally facilitates and induces mass infringement of their works via the function of Dragon Box and the manner in which it is marketed to the public. Here’s the sample ad cited in the complaint:

That ad alone is sufficient to imply that this case probably won’t last very long—meaning Dragon Media Inc. won’t last very long because they don’t seem to have a claw to stand on. Advertising a device that delivers on a promise to enable consumers to watch subscription-based content without said subscription is about as clear-cut as selling bootleg DVDs out of a warehouse. I’m frankly surprised the defendants imagined they’d get very far with this one, operating out of Carlsbad, CA and blatantly promoting illegal access to just about every kind of media content available. Beyond the eight plaintiffs in this litigation, Dragon Box’s advertising implicates the sports and news interests, the cable and satellite providers, and so much more! Their interface even offer a menu selection called “In Theaters,” thus facilitating and promoting access to pirate streams of movies weeks or months ahead of their release on digital platforms. Because freedom I guess.

I imagine this case will conclude rather quickly with a summary judgment for the plaintiffs. It’s very hard to imagine Dragon Media sustaining a reasonable defense, let alone a prolonged one against basically the entire film and TV-producing universe, both large and small. In fact, because these devices are sold as a for-profit venture, providing a product designed to enable mass copyright infringement, the defendants should be glad not to facing criminal charges, rather than a civil suit. Of course, this probably won’t stop the piracy advocates from concocting some theory as to why Dragon Box is perfectly legal.

Piracy Boxes Change the Landscape

One of the reasons, piracy advocates convince themselves and others that their actions are harmless is that the damage done thus far tends to be relatively obscure. When piracy causes an independent filmmaker to lose the margin between profit and loss, her story is dwarfed by reports that Hollywood’s millionaires are still making millions. Or when producer Martha de Laurentiis blames piracy as a major factor in the cancellation of a hit TV show, and it’s just one anecdote in a market that is clearly replete with content.

The big picture gives lie, the pirates will say, to the premise that piracy does much harm at all. And this conclusion then justifies the claim that copyright enforcement in the digital age is inherently draconian. These are the climate-change deniers among piracy advocates—the ones who cannot imagine how relatively small examples of harm imply that piracy, like all forms of harm, has a tipping point. Clearly, the millions of dollars invested in new production depend on a substantial majority of the market not pirating.

Meanwhile, we are currently witnessing an expansive and speculative period when companies like Netflix and Amazon are spending a lot of debt capital to produce new works and grow market-share, with only their subscription/rental platforms as revenue sources. I stands to reason that if a piracy-box market attained a certain volume, this would be an even greater threat to the digital-only producers than it is to the traditional studios releasing movies in theaters etc.

And, no I don’t care about Jeff Bezos either. In fact, I’m not a fan. But I do care about the creative professionals Amazon has to hire to make the recent Golden Globe winning The Marvelous Mrs. Maisel, or whatever else they produce next. And it’s patently absurd to assume that production will simply continue to grow and innovate if piracy continues to increase toward the tipping point, wherever it may be.

In this regard, devices like Dragon Box have tremendous potential to accelerate piracy toward the threshold of more demonstrative market harm because these boxes make access to pirate sites so easy, seamless, and invisible. Presumably, a plug-and-play device marketed in this way will draw consumers who would not otherwise engage in piracy. And if it were allowed to mature, this is a dragon that could easily burn up all the crops. Fortunately, I predict this case will conclude rather quickly and serve as a deterrent to the next “entrepreneur.”

TorrentFreak Still Selling Piracy as Ideology

I guess it’s pick on Andy at TorrentFreak week.  (Sorry, Andy. ) But a recent blog of his titled No Level of Copyright Enforcement Will Ever Be Enough For Big Media begs a response.

Citing TF’s decade of experience covering the piracy battles, Andy repeats a familiar narrative that because piracy will never stop, and because pirates will continue to innovate, the major rights holders will never stop wanting more “draconian” copyright laws—laws that will threaten internet freedom but will not mitigate piracy.  He says that history teaches us these laws will fail in their purpose but will continue to fuel “justifiable” outrage among users, making enemies of prospective consumers for creative works.  “No one wants a minefield of copyright law. No one wants a restricted Internet. No one wants extended liability for innovators, service providers, or the public. But this is what we’ll get if this problem isn’t solved soon. Something drastic needs to happen, but who will be brave enough to admit it, let alone do something about it?” he writes.

But brave enough to do what about what exactly?  Andy describes a landscape in which pirate technology is becoming more sophisticated and more accessible—even while he credits piracy with fostering affordable, legal services like Netflix, Spotify, Hulu, etc.  Aside from being historically inaccurate—because these streaming platforms were not a response to piracy—Andy doesn’t seem to notice that there is no solution to the problem he describes.  Because the crux of what he’s saying leads one to the conclusion that no matter how affordable and accessible a vast library of works becomes, people will still pirate—a lot.  So, the real title of his post should be No Amount of Free Content Will Ever Be Enough For Some Consumers.

The major flaw with the post is that it’s predicated on a longstanding bit of revisionist history written by the “file-sharing community,” which continues to repeat the campfire legend that piracy was a market response to the excesses and greed of Big Media.  But although the 1990s did reveal plenty that was wrong with major media corporations, I’m calling bullshit on the post hoc assertion that this was a significant factor in the adoption of Napster beginning in 1999.  People used Napster because it was cool and free, not because there was a collective sense of rebellion against corporate producers of music and movies.

I’m from the 80s. We bought a lot of music on vinyl and CD, and I don’t remember any of my peers feeling particularly ripped off by the industry—at least not any more than young people feel ripped off by everything.  But if Napster had been introduced while we were in college, I have every confidence we would have been all over it. A technology that turns a personal computer into a free jukebox?  Hell yes a bunch of teens and young adults are going to think it’s the coolest thing ever invented. And it will only be after some ethical doubt about stealing music creeps into someone’s consciousness that the rationalizations will follow—including the self-affirming lie that we’re only stealing from greedy corporations and not the artists. Right after a new band called the Red Hot Chili Peppers played our dining hall, we’d have been “Napstering” their songs and devising elaborately lame explanations for why “sharing” their music was better than buying it.

The false narrative that piracy represented a socially conscious response to corporatism morphed into the mantra per ad nauseaum that any measure proposed to mitigate piracy will always be the antithesis of “internet freedom.”  The underlying hypocrisy of this point of view is that it willfully ignores the fact that far from being an anti-corporatist “movement,” piracy merely enriched two different categories of corporatists—one, a group of outright thieves; the other, stakeholders in giant internet platforms.  As musician/activist David Lowery wrote in 2012, the new boss (Google, Spotify, etc.) is worse than the old boss (traditional labels, studios, etc.); and if Andy and the “file-sharing community” want to take credit for something, they can take credit for that.

Ultimately, though, Andy fails to recognize that as long as any rule of law—from copyright enforcement to a right-to-be-forgotten to an anti-trafficking provision—is described as anathema to “internet freedom,” there is no conversation to be had.  At least not with anyone who thinks as he does.  Because the logic he presents is that these harms are the price we pay for “freedom,” which is some ultra-libertarian, techno-centric nonsense long overdue for tossing into the Failed Ideas bin.  2017 demonstrated for many (though probably not enough) that the wildwestness of the internet isn’t exactly healthy for democracy—that just like democracy in physical space, freedom is actually sustained by certain boundaries.

Meanwhile, on a purely practical note—one I’ve alluded to the past—who are all these leisure-class consumers with so much time on their hands that they need to pirate content?  Just for filmed-entertainment, I can think of at least a half-dozen new titles that I haven’t had time to watch yet on Netflix, Amazon Prime, and Hulu; and by the time I get to those, there will be more material released.  The market is growing very rapidly, with the new streaming platforms developing some of the best new work ever made. But we can assume that piracy is also a greater threat to the streaming-only platforms than it is to traditional producers with other avenues of distribution.  Note that Netflix and Amazon top the list of plaintiffs in a lawsuit filed January 10th against the makers of Dragon Box—the latest in sophisticated piracy devices to enter the market.

More about Dragon Box in a future post; but for now, I can’t help but think that editorials like this one from Andy are sounding a little out of touch—a bit “clinging to old models” if you will. Piracy itself may not be on the wane, but the rationales used to justify it sound weaker than ever in context to the changing media market and in context to some of the hard realities of what many call “internet freedom.”  So, to the extent Andy’s post is a call to action, whatever action he imagines cannot proceed based on a history that never really happened.  It’s time to put away the childish thing that says piracy = freedom.

Photo by cienpies.

Can Streaming Ever Work for Songwriters?

Yesterday, David Lowery’s The Trichordist published an article by singer/songwriter Blake Morgan—one which the Huffington Post apparently refused to run.  In the piece, Morgan describes meeting with Spotify executives to whom he tried to explain that their product isn’t Spotify itself but is in fact music.  “And by the way,” Morgan said, “stop calling your subscribers ‘users.’ They’re not ‘users,’ they’re listeners––our listeners in fact. You’re the ‘user.’ You’re using our music to monetize our listeners for your profit.”  This apparently confused and frightened the Spotify exec, who became defensive with an arrogance familiar to anyone who follows the internet industry. “You don’t get it at all!” the guy declared before leaving in a huff.

The night before reading Blake’s story, I met with a group of musicians in New York, and one songwriter showed up with a stack of papers in his hand. These were notices of intent (NOI) filed by a single entity on behalf of all the major streaming platforms for the purpose of obtaining compulsory licenses for use of dozens of the writer’s compositions. Based on reporting by Chris Castle, I wrote for the union publication Allegro back in March about major platforms doing this—using their overwhelming computing power to mass-file NOI, exploiting a loophole in Sec. 115 of the copyright law, in order to essentially blanket license all compositions for streaming platforms.  This living example of the songwriter with physical notices in hand hit home for me.  The songwriter explained that if he goes to the notice-sender’s website and fills out all the forms, there might be as much as $50 in it for him as compensation for thousands of streams of his work across multiple platforms.

American songwriters are unique among copyright holders because they are the only creative artists subject to a combination of compulsory license (i.e. anyone can use their work if they pay the license fee) and a consent decree, with roots in the early 20th century, whereby a federal rate court determines what the license fees will be for various uses, including public performances.  And because the average rate for a digital public performance is $0.005, this is why millions of streams are worthless to songwriters, despite the fact that streaming has largely displaced their other sources of revenue.

With Spotify poised to announce an IPO this year and make Daniel Ek and his colleagues even wealthier than they already are, a New Year’s Eve lawsuit with a price tag of $1.6 billion was filed by Wixen Publishing against Spotify for its unlicensed use of  hundreds of songs, including famous writers like Neil Young, Tom Petty, Stevie Nicks, and Donald Fagen.  The complaint alleges that 21% of the 30 million tracks on the platform are being used without mechanical licenses, and this number seems reasonable given the available anecdotal evidence and the grounds for previous litigation.

In the Lowery/Ferrick class-action suit for this same failure to license, Spotify’s defense amounted to claiming an intent to pay the license fees but for the lack of an efficient means to locate the songwriters due the royalties.  That suit settled for a modest $43 million fund, amounting to just a few dollars per infringement. Then, in response to a pair of lawsuits filed in September last year, Spotify came very close in its initial motion to asserting that streaming services were not even subject to mechanical licenses.  This drew immediate fire from the music world, notably National Music Publishers Association CEO David Israelite who said that Spotify was asking for a fight with “all songwriters.”

Fast-forward to the end of 2017, and the event that triggered Wixen’s 11th-hour litigation was the release just before Christmas of a draft bill titled the Music Modernization Act.  Sponsored by Representatives Doug Collins (R-GA) and Hakeem Jeffries (D-NY), the bill reflects about 4-5 years of legislative work trying to secure the interests of music-makers in the streaming market—even if, as Blake Morgan describes, the bros at the streaming companies don’t understand that they’re in the music business.

The MMA is endorsed by multiple music rights organizations, including NMPA, ASCAP, BMI, SONA, RIAA, A2IM, and several others.  The proposed legislation addresses a number of issues have long divided musicians and streaming platforms by creating a new digital licensing collective that has been compared to SoundExchange by some observers.  But the reason the bill triggered the Wixen lawsuit is that, if passed this year—and this seems feasible—the law would foreclose any new lawsuits over mechanical licensing infringements (including past infringements) because its core agreement is predicated on a blanket, compulsory license in exchange for an improved system of royalty distribution.

Key improvements include a new database funded by the digital platforms that would, in principle, more accurately identify and locate songwriters and composers to receive; and a new rate-setting process that is expected to raise the overall rates paid to songwriters.  Nevertheless, as written to date, the bill contains three areas of concern for songwriters. These have been publicly noted by Rick Carnes, CEO of the Songwriters Guild of America, though my understanding is that other parties share some of these concerns, and they will be raised as amendments to the bill are proposed in coming weeks and months. The issues Carnes raises are the following:

First, the immediate end of all litigation for past infringements seems to unfairly limit the remedy options for independent and small-publisher rights holders.  Carnes says he fully understands the need for a safe harbor in exchange for collective licensing going forward, but “why are songwriters who have seen their works infringed hundreds of thousands of times in the past having their right to sue for damages cut off arbitrarily on January 1, 2018?”

Second, the board overseeing this new digital licensing collective would currently comprise eight publisher representatives to two independent songwriter representatives.  Carnes argues that representation should be 50/50 just like the board overseeing SoundExchange.

Third, as written, the bill calls for royalties collected and held for songwriters who cannot be located to be distributed on a market-share basis, mainly to the major publishers. Carnes says that it is naturally the independent and small publishers who are most likely to fall through the cracks in the new system, which he describes as “enshrining” a longstanding problem even in old systems whereby music creators are often not properly compensated through royalty-collection practices.

Meanwhile, despite Spotify’s prominent role in this narrative, the reality is that YouTube is the most-visited platform for music streaming, and that platform pays a songwriter about ten percent of what Spotify pays (think $24 for a million plays), when it pays at all.  Presumably, any number of tracks a listener will “discover” on YouTube will be unauthorized uploads by users and are, therefore, outside the system that compensates artists even the paltry tip-jar money they’re due.  I mention this by way of saying the market itself remains volatile and dynamic, and we should be no more surprised to see Spotify suffer a Pandora-like fall from grace than to see it retain its dominant position.

I am hopeful that issues raised by Rick Carnes can be addressed as the Music Modernization Act moves through the process so that thousands of songwriters, whose names you’ll never know, can begin to benefit from the future of the digital music marketplace—whatever that future may look like. The bill certainly represents the first significant legislative attempt to make streaming work for musicians, but it would be an unfortunate irony if the independent voices—the ones who first advocated the democratization of the internet—were the ultimate losers going forward.  And we, as listeners, would lose as well.  Meanwhile, kudos to independent voices like Blake Morgan just for reminding the tech geeks with so many dollar-signs in their heads that without the music, movies, TV shows, etc. nobody would give a damn about their bloody apps.

Image by TurboMotion