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Music Media

Cringely Proposes a Music Sharing Alternative 730

WEFUNK writes "The I, Cringely 'Pulpit' column at PBS presents an interesting idea for a new business model to take on the RIAA. He suggests that a publicly traded company could legally and profitably buy a single copy of each record which could then be freely copied and listened to by its shareholders under fair use. His 'Snapster' (Son of Napster) proposal is essentially a digital music co-op that would let shareholders/consumers bring copyrighted material into a quasi-public domain. While fair use and the public domain continue to be lost in our courts and congresses, maybe the capital markets will offer an alternative." While a neat idea, it's doubtful that it'll ever be implemented. Still, it's a good read.
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Cringely Proposes a Music Sharing Alternative

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  • one word: my.mp3.com (Score:5, Informative)

    by interiot ( 50685 ) on Thursday July 24, 2003 @09:44PM (#6528314) Homepage
    Didn't my.mp3.com get in trouble even though they owned one CD of all the albums they were electronically distributing? And the judge still declared that illegal...
  • by modecx ( 130548 ) on Thursday July 24, 2003 @09:47PM (#6528338)
    Right. But the people they distributed to were not shareholders of the company. That's the point here.

    It's a funny idea, but ultimately it's a silly one. It's the surest cause for the legislators to take away fair use, or change it so it's not so fair.
  • Say WHAT? (Score:3, Informative)

    by binaryDigit ( 557647 ) on Thursday July 24, 2003 @09:48PM (#6528346)
    How can this even come close to working? If the corp purchases the cd, the corp, which is considered an entity in and of itself, is bound by the copyright. The shareholders of that corp have absolutely no rights to the cd's at all (except maybe at liquidation time). Just like having shares in IBM doesn't mean I can take advantage of ANY of their assets. This idea, while an interesting fancy, is just that.
  • Re:It's been done (Score:1, Informative)

    by pestilence4hr ( 652767 ) on Thursday July 24, 2003 @09:58PM (#6528409)
    It's called a "library".

    You can't legally copy entire works from the library, you can only use the original and return it. But nice try.

    If you are in need of confirmation of this, try going into a music library and, in front of the clerk, photocopy a symphony. I guarantee you will be stopped.
  • Not Fair Use (Score:5, Informative)

    by Laur ( 673497 ) on Thursday July 24, 2003 @09:58PM (#6528415)
    I'm surpirsed he said that his lawyer friends found no problem with this. From the earlier /. interview with the DOJ IP Lawyers, Question #7:

    The doctrine of fair use was originally adopted by judges ruling in early copyright cases. Ultimately, Congress incorporated the doctrine into the Copyright Act of 1976, where fair use is now codified at Section 107 of Title 17 of the U.S. Code. In creating section 107, Congress listed four factors to be considered in determining whether a use is fair or not:

    (1) the purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes;

    (2) the nature of the copyrighted work;

    (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

    (4) the effect of the use upon the potential market for or value of the copyrighted work.

    These factors are essentially the same factors that had been used over the years by judges, and Congress's stated intent was to preserve the fair use doctrine as it had evolved. However, as many courts have pointed out over the years, whether something constitutes fair use is very fact-specific. It is difficult to craft a clear, bright-line rule that explains which particular uses of a work are fair use and which are infringement. In short, the exact parameters of fair use are often determined based on the facts of specific cases.

    Just from a quick look Cringely's idea, while novel, seems to violate several of the 4 criteria. This would be copyright infringement for comercial gain on a massive scale. No way any judge would believe that this falls under the intent of fair use.

  • by hankaholic ( 32239 ) on Thursday July 24, 2003 @10:14PM (#6528511)
    This is also available at http://www.tr0n.com/~chet/culture_ownership.html [tr0n.com]. I'd like to retain all copyright, at least until somebody actually expresses enough interest in doing something with it to let me know ;-)
  • Re:Best Article Ever (Score:5, Informative)

    by shepd ( 155729 ) <slashdot@org.gmail@com> on Thursday July 24, 2003 @10:22PM (#6528560) Homepage Journal
    >You can't just decide to do it, there are significant capitalization requirements, to say nothing of the money the bankers will want for doing the work for you.

    Your ignorance is equally breathtaking.

    Cost to incorporate (where I live): $403.30
    Cost to put your corporation on a penny stock [fool.com] market: Minimal (free? I'm not sure).
    Amount of bookeeping required: Almost none, short of dealing with taxes. ZERO SEC requires, that's for sure.

    You think such a corporation has to be Nasdaq listed or something? At best you might need to hire 1 accountant to get going. Big deal.

    By the way, I'm incorporated. Want to buy shares? Well, I'm not selling right now, but the effort required by me is none. The only thing I'd have to send you is a paper saying how much stock you've bought, and get the accountant to record your purchase in the books. I never have to speak with you again, if I didn't want to. Total cost to me? About $0.10 if you include the price of the toilet paper your stock would be printed on along with the accountant's fee (assuming he enters everything in all together when closing the books at the end of the year, like with my corporation).

    Here's a few examples [allpennystocks.com] that might be helpful to you. How many of them do you think are going to give out shareholder's packages every year? 2... maybe 3?
  • Re:Missing the point (Score:5, Informative)

    by leviramsey ( 248057 ) on Thursday July 24, 2003 @10:31PM (#6528623) Journal

    Ownership is not transitive (at least in this sense). The assets of the corporation and the assets of the shareholders are separate (though the shares of the corporation are assets of the shareholders). Part of the definition of a corporation is that it is a separate entity from its shareholders.

  • Re:It's been done (Score:3, Informative)

    by kfg ( 145172 ) on Thursday July 24, 2003 @10:35PM (#6528651)
    There's another reason. Libraries taken in total buy a lot of books and magazines. In some genres library sales actually constitute the majority.

    Large publishing houses have a real love/hate relationship with libraries, on the one hand marketing to them heavily and on the other wishing they'd dry up and blow away.

    Small publishers love the shit out of them, some of them making a living doing nothing but marketing to libraries.

    KFG
  • Re:Best Article Ever (Score:4, Informative)

    by Anonymous Coward on Thursday July 24, 2003 @10:39PM (#6528669)
    Apologies for the US-centric response (this is all about US law obviously...)

    "Snapster is built on the legal concept of Fair Use, which allows people who purchase records, tapes, and CDs to make copies for backup and for moving the content to other media", says Cringely.

    Baloney! That is not at all what Fair Use is. I am not sure what "lawyer friends" he spoke to, but if he bothered to read any of the Fair Use links on his own page, he might have thought twice about publishing this article. Fair use is what I did in the previous paragraph, quoting Cringely for purposes of criticism. It's always about partial copying of a work, and only for very specific enumerated purposes that are listed in the US copyright law (Title 17). Please see the actual law at http://www.copyright.gov/title17/92chap1.html#107 [copyright.gov] if you don't believe me. It's quite an easy read. It discusses what is an infringement, and then lists exceptions, one of which is Fair Use (which is not the process Cringely describes).

    Also, I believe media shifting is an entirely different topic. I am not sure where this exception to copyright infringement comes from (IANAL, but I don't see it in title 17. Can anybody post references to the legality of media shifting?). But the one thing I do know is that all the cases I have heard of it being legal have one thing in common: the use does not increase the number of copies being accessed simultaneously. When you make a backup of your media, you're not watching/listening to it at the same time as the original, or letting a friend do so.

  • by mindstrm ( 20013 ) on Thursday July 24, 2003 @10:58PM (#6528780)
    Because the principals of a corporation DO have some liability for it's actions. The board, the executive officers, have some liability for the actions of the company.

    You can't just form a corporation with you as the sole director and owner, and escape liability, or taxes.

    In a typical company, the corporate officers, and the board of directors, ARE responsible for what happens, and have a fair deal of personal liability for what the company does. Their assetts are not the company's, true, and if it's merely a matter of the company going bankrupt, they will be okay.. but in many places, if the company dodges taxes, it WILL be taken out of the director's pockets, and if the directors instruct the company to do something illegal... they can be held accountable.

    A corporation exists sort of like another person, but not entirely.

  • by jbottero ( 585319 ) on Thursday July 24, 2003 @11:17PM (#6528884)
    Music "in the public domain" is not the question here. We are talking about *copyrighted* music. More power to the indies, the bands that want the people to hear their music, and it would be good for *them* if you bought a CD or 7 inch or whatever, so they can go on playing.

    RAII is talking about a different animal, the pro, commercial music maker. They have a "product". You want it? Pay for it. I don't expect to be able to walk into a 7-11 and snatch a bottle of Coke and tell them "Soda must be FREE! WooHoo!"

    Unless Coke puts a GNU/GPL on the bottle, I guess I'll just have to pony up the buck and a half...
  • Re:Best Article Ever (Score:5, Informative)

    by the_quark ( 101253 ) * on Thursday July 24, 2003 @11:37PM (#6529038) Homepage
    I think mp3.com's idea was a good one. I was head of technology for EMusic, and I had the exact same idea before they announced theirs. Thankfully, our legal counsel was better than theirs (or more listened to by us) and he said, "What, are you insanse? As soon as you make the copies, you've broken the law!" It makes sense to the tech mind from an outcome perspective. Ironically the service itself seems to meet the fair use tests I describe above - it doesn't replace a sale, since we know you have it. Unfortunately, it's very clearly against the law. As soon as mp3.com announced their service I knew it was the end of their company as a seperate entity.

    As I understand the mp3.com situation - and EMusic got bought by Vivendi and our tech got merged with theirs, so I've been down there a number of times and talked to a lot of people involved, and read the court decisions, etc. - what they got in trouble for was making the initial copy needed to compress the CDs to mp3 format. That's it.

    The logic of the court is, basically, whatever mp3.com is doing is by definition for profit. If you're doing something for profit, it's by definition not fair use. The point of copyright law is to ensure that, if you make money off copying a copyrighted work, the copyright owner gets paid.

    So, while it would be perfectly legal for you as an individual to copy those CDs, compress them and stream them to yourself, because mp3.com did it for you for their own profit, it's clear copyright violation.

    It is exactly the same way that you can photocopy a book yourself in your home and it's fair use, but if you pay Kinko's to do it for you it's a copyright violation. On the surface it seems the same and it seems fair that you be able to pay Kinko's to save you the effort and investment of a photocopier, but the whole point of copyright law is that Kinko's can't copy works without paying the copyright owner.

    People can rail against this as being cretinous, but I don't see how the current idea of copyright can continue without the law being like this. If you think copyright should exist at all (leaving aside questions like the lunacy of the DMCA's anti-circumvention provisions), then I don't see how the law could be any other than this and still work.

    Obviously not everyone thinks there should be copyright, at all, but that's a different issue entirely.
  • Re:Why make a copy? (Score:5, Informative)

    by the_quark ( 101253 ) * on Friday July 25, 2003 @12:40AM (#6529383) Homepage
    I think your networked idea still results in a copy (as the bits transfer from them to you). When companies mount CDs over LAN drives, it's either software they have a site or large license to, or it's done internally and the piracy isn't noticed by anyone. A company that got big enough at this to matter would be noticed and subject to strict legal scruitiny, so I think you should stay away from that approach.

    Which leaves us "renting" the CD through the mail. Ever wonder why you never see CD rental places in the US? Why there's not a "nettunz" to go with "netflix?" It's because they're illegal [cornell.edu]. According to USC Title 17, Section 109, "Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord":
    ..[U]nless authorized by the owners of copyright in the sound recording... the owner of a particular phonorecord... may [not], for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord... by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.


    The edits are necessary for clarity because this section also has a lot of cumbersome language about software; go read the original if you doubt my interpretation. Why can actual libraries get away with it? Because the next sentence says, "Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution."

    So, could you set up a nonprofit corporation to do this? I guess so, although it'd face all the normal challenges a nonprofit does in trying to find the money to build its collection. And, your strongly implied personal copy before return would itself be illegal. If it were used pretty much only for this purpose, and got big enough, I bet the RIAA would try to claim that the nonprofit should know there's monkey business going on and try to shut it down. Whether they could would be up to the courts.
  • Re:Best Article Ever (Score:3, Informative)

    by the_quark ( 101253 ) * on Friday July 25, 2003 @02:59AM (#6529898) Homepage
    Spooling down to the customer is not caching, it's copying. Even if you could design a system that read the CDs and held them in RAM permanantly and that met the legal definition of transient (which I doubt), your first download would be a copy and you've run afoul of copyright law, again. If you're "just" streaming, see the relevant section of the law on streaming.

    The closest thing US law has to a "library copy" for music is that nonprofits are allowed to lend music. For-profit companies are not. The cost of the music is the same. If you wish to negotiate a custom license from the copyright owner to allow sending it to all your shareholders, you may, of course, do that, but you can do that now and it doesn't take any novel ideas, just a fat wallet.
  • TOTN (Score:1, Informative)

    by Anonymous Coward on Friday July 25, 2003 @04:50AM (#6530186)
    Cringely made this great documentary called "Triumph of the Nerds." If you haven't already seen it, get it on DVD its very interesting and entertaining. Even though its quite old now, it still has relevance in today's computer world. It would be cool if he did a follow up documentary.
  • by gad_zuki! ( 70830 ) * on Friday July 25, 2003 @05:41AM (#6530313)
    >You can't just form a corporation with you as the sole director and owner, and escape liability, or taxes.

    You're correct, but you can escape A LOT of liability and you can pick and choose what assets go where. Also, there's a lot more flexibility in tax law with corporations than there is with individuals. Essentially, if the income you make goes back into the corporation as capital (that could be a new MP3 player) its a business expense.
  • Re:Best Article Ever (Score:4, Informative)

    by troyboy ( 9890 ) on Friday July 25, 2003 @10:22AM (#6531652)
    I agree that Cringely's fair use analysis is incorrect. A corporation's ownership of a work does not give rise to the ability to make unlimited copies for use by the corporation. For example, in American Geophysical Union v. Texaco, Inc., 60 F.3d 913 (2d Cir. 1995), the Court of Appeals for the Second Circuit held that it was not fair use for a company to make copies of a journal article for reference by company scientists. The court held that Texaco would have to either get a special license or otherwise purchase a copy for each employee. Why would the shareholders of Snapster have any additional rights to make unlimited copies?
  • Re:Red Cent (Score:2, Informative)

    by daBum ( 191224 ) <yermie AT hotmail DOT com> on Friday July 25, 2003 @10:31AM (#6531765) Homepage
    According to the "Origin of Phrases" page [aol.com]:

    One red cent

    Meaning: A single symbolic penny.
    Example: I refuse to pay even one red cent for the work until you complete the whole job.
    Origin: The "Red" refers to both the color of a penny (one cent) and the image that used to be on the penny, an American Indian head. Redskin is a slang term used for American Indians.
    Before today's Lincoln penny was the Indian Head penny.

    The Indian Head penny was first issued in 1859 and looks just like that as issued in 1908 (before the Lincoln Cent). The only difference was that those from 1859-1864 were of a different copper-nickel alloy while 1864 started the common bronze, which was used until 1982. (You didn't know it changed then, did you?)

    The copper-nickel alloy has a reddish tint, which turns redder with time and skin oil.

    Before the Indian Head penny was the "Buzzard Cent", as the One Cent coins in 1856-1858 were called. The flying eagle on the coin was damned as an ugly bird and it wasn't popular.

    However, it was the first "small cent" using about the same size as our penny today. In the half century before this, One Cent coins were about the size of today's Half Dollar! (of course they were also worth something then)

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