Music industry

Commentary: how the music industry can learn from cable when it comes to ISPs and infringements

Given the current proliferation of Peacock, Amazon Prime Video, HBO Max, Hulu, Disney+, Apple TV+, Discovery+, Paramount+ and the torchbearer of streaming services Netflix, perhaps no truer words have be ever pronounced that ‘content is king’. Piracy, on the other hand, is older than printing.

Over the past two decades, the music industry and, more specifically, songwriters, producers and recording artists have lost the value of their efforts in the face of online piracy, while some access providers Internet (ISPs) can deliberately turn a blind eye to their pirate subscribers while profiting from subscriber monthly payments.

The legal precedent here is clear due to the four-year pitched battle between BMG and ISP provider Cox Communications that culminated in a ruling that ISPs can be held liable for breaching their subscribers. BMG Rights Management (US) LLC v Cox Communications Inc., 881 F.3d 293 (4th Cir. 2018). The record labels filed subsequent ISP lawsuits against Cox, Grande, Charter, RCN and Bright House to fight infringement. And now a collective of movie producers is suing Wide Open West, Grande and RCN.

Where am I going with this, and why did I reference film and TV content providers in my lead sentence, as opposed to music outlets like Spotify and Pandora? A business-to-business solution may be found between the music industry and the cable companies, with the latter paying the cable networks a monthly fee for each subscriber. For example, according to Broadcasting & Cable, “providers pay an average of $0.26 for each channel they offer customers,” while channels like ESPN command $4 per month.

But ISPs allow the works of songwriters, producers, and recording artists to be made available to ISP subscribers with bit torrent software. Unless we plan to revert to the old artist sponsorship system, rightsholders such as record labels and music publishers have an obligation to their content creators to ensure that artists are properly compensated. Broadband connections and anonymous VPNs associated with the availability of bit torrent software are not going away. And scorched-earth, high-stakes litigation isn’t going away. Indeed, a billion-dollar jury verdict against a popular ISP is currently on appeal.

An ISP might be better served by compensating rights holders such as record labels and music publishers for the right to use their catalogs on a monthly per subscriber basis. Some ISPs may then choose to pass the cost on to subscribers who exchange previously infringing music. A pledge not to sue here or a blanket license with an industry-standard “restricted works” schedule and a so-called “right to opt out” would allow some revenue to flow back to content creators and protection from liability to subscribers who trade through bit torrent software.

Obviously, these uses of music outside the mainstream would not devalue legitimately licensed music or replace more traditional musical outlets. Unlike YouTube, bit torrent files would not become the product. On the contrary, bit torrent files would remain ancillary to the main drivers of the music industry.

It’s only an idea, but it sounds better than hoping that the Digital Millennium Copyright Act’s current “safe harbor” protection is as broad and as cavernous as ISPs would like to believe.

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Keith Hauprich holds the highest position in business and legal affairs at BMG Rights Management (US) LLC in North America as General Counsel & Executive Vice President, Business & Legal Affairs. Hauprich has been a key driving force behind a few significant deals, partnerships and initiatives, particularly in film and television music publishing, digital licensing and copyright infringement issues. The opinions expressed here are those of the author alone.

This article appeared in Entertainment Law & Finance, your monthly source for real-world news and strategy from major players in entertainment law, contracts and intellectual property – a serious analysis of the issues and case law affecting your practice.