Google and Amazon cloud music nears judgment day
Clock ticks on MP3tunes.com case
A David versus Goliath legal case that could affect new cloud music services from Google and Amazon is on the verge of a decision.
In August, a judge is expected to rule on EMI's four-year-old case against tiny music locker MPE3tunes.com and its founder for alleged copyright violation.
MP3tunes.com founder Michael Robertson has predicted not only that EMI will lose, but that when it does, other labels will have no choice but to become more reasonable in licensing music to clouds from Amazon, Google, and others.
An MP3tunes victory would also clarify who owns the music on a consumer's computer – the consumer or the labels – and whether consumers are allowed to upload and play their tunes on other PCs or devices without paying extra fees.
"The court's issue is: can you store personal media online, can you play it back, can you transcode it?" Robertson told The Register. "Those are core issues in our case, and they will be decided and I think we will win.
"They [EMI] started the clock four years ago with us and they can't play that for another five years - that's going to come to a head this summer, and when that comes to a head they are going to have lost and the law is clear."
The thesis behind EMI's entire argument is simple: you do not own the music you paid money for, you are simply renting it from EMI
MP3tunes.com is a music locker, a service that lets you upload and store your music to the web and tthen play your tunes on a PC or some other device. It has one million users.
The company is five years old and music lockers have been around for 11, but Google and Amazon - giants in their corners of the internet - are now getting into the game. Within the last two months, the two companies launched the Google Music beta and the Amazon Cloud Drive.
Apple, already huge in online music thanks to iTunes, is also expected to launch a locker at its Worldwide Developers Conference (WDC) next month in San Francisco, California.
But there's a big difference. Apple has reportedly  paid three of the four big labels to license their music, while Google and Amazon - like MP3tunes.com - have not signed licenses. Amazon reportedly surprised the labels with its launch, but Google was apparently in talks to pay the labels $100m befor they backed out  because of concern that Google search and YouTube often point to pirated music.
The labels are not happy, and they made it clear they could deploy lawyers. A Sony spokesperson told Reuters upon Amazon's launch. "We hope that they'll reach a new license deal, but we're keeping all of our legal options open," Sony said .
The labels aren't shy about deploying lawyers. EMI's case hit both MP3tunes and its sister site Sideload.com, both of which were founded by digital music veteran and tech entrepreneur Roberston . EMI claims (warning: PDF)  that MP3tunes.com has infringed its rights to the performance, reproduction, and redistribution of its works. For EMI, if you upload music that you ownjfrom your PC to a third-party service, you are illegally copying the material. Streaming or copying to a different PC are also seen as acts of illegal distribution.
EMI believes that you must either buy a copy of Lady Antibellum's Need You Now for every PC, iPod, or smartphone you want to play it on, or that you must pay EMI every time you play Need You Now on a new device. For EMI, you do not own the music you paid money for. You are simply renting it from EMI.
EMI's case also targets Robertson's Sideload.com, a music search engine that lets you stream music and store copies in your music locker. Using Sideload.com, you are doing nothing different to what you could do using Google search, in terms of looking for music available online and then saving or streaming it using the player on your PC, iPod, or smartphone.
Labels like Sony want music lockers and music services to take out a license that nails down download and play rights for the service provider or consumer.
Stalking Amazon and Google
Problem is, those licenses favor the labels rather than the service provider. They last only 18-months and require renewal, at the risk of losing access to the music catalogue, and they come with lots of reporting requirements.
It's not hard to see why Google's followed Amazon in going unlicensed. Android director of digital content for Jaime Rosenberg, lashed out at the labels  when Google announced the Music beta, saying their deal terms were "unreasonable and unsustainable."
Robertson believes Google and Amazon decided not to take a license because of the labels' onerous terms. He says it's impossible to make money under the record companies' licensing terms because they are so heavy.
EMI pounced on Robertson a year after MP3tunes.com launched without a license, and Robertson thinks the labels may wait to jump on Amazon and Google so that potential damages can accrue.
The labels have the option of pursing actual or statutory damages under US law. Actual damages must be proved, while statutory damages are more of an extrapolation based on a theory. They're a bigger target. Under US law, statutory damages run between $750 and $150,000 per infringement. All EMI must prove is that there was infringement, and then it can calculate the potential damages using the scale provided. The longer the labels hold off going after Amazon and Google, the bigger the hammer they have to hit them with.
But there could another big reason for not pouncing immediately: labels like Sony could be waiting to see what happens to EMI in the MP3tunes.com case.
Robertson says: "If we win, the judge is going to say: 'Hey, it's OK to do things if you are doing it this way. If we lose, it's going to mean he has an issue with one or more of the things we've done and the other guys in this space, the Googles and Amazons, will have to change what they do, or say: 'We don't do it like that, therefore it doesn't implicate us.'"
If MP3tunes.com does win, it will give the Googles and the Amazons the power to provide unlicensed lockers without the threat of legal action hanging over them. "The licensing log jam gets broken open, because it gives the unlicensed guys much more leverage," Robertson says if he wins the EMI case.
The YouTube defense
Robertson is confident of victory. His prime defense  is the Digital Millennium Copyright Act (DMCA), which provides a safe harbor for service providers from copyright actions on a number of grounds. In the case of infringement, service providers are covered if they did not know of the infringement, act "expeditiously" to remove or disable access to the material once made aware, or do not have the right or the ability to control the infringing activity.
MP3tunes says it promptly disabled access to 350 links of illegally posted music that EMI had pointed to, and that it offered to remove any other allegedly infringing links if EMI would identify them.
DMCA is a defense Google's YouTube has so far successfully used against Viacom on video uploads, and Google backed Robertson, proving there is a sense of common cause. The search giant filed an amicus brief  with the judge in January, saying EMI had conflated different arguments and that an EMI victory would stymie development of cloud services. Google says:
Rather than attack the activities of MP3Tunes users who copy lawfully acquired music to their personal online music lockers, Plaintiffs have instead focused on users who allegedly obtain music from infringing sources. One of the amici supporting Plaintiffs, however, conflates these two categories in its zeal to condemn MP3Tunes and its users. Were this imprudent conflation accepted by the Court, it would put both legitimate music fans and technology innovators in jeopardy, an outcome unnecessary to any decision in this case.
Robertson also argues that a service like MP3tunes.com is no different than sending over an web-based email service. Music files already live online as email attachments in Google's Gmail and Microsoft's Hotmail, he says, or in file storage and sharing services like Microsoft's SkyDrive.
Email, just like music
"How is that any different?" Robertson says, comparing Gmail, Hotmail, and Skydrive to the Amazon, Google and MP3tunes.com music lockers. "People are surprised when I tell them there's nothing in the law that says you can store files online as long as they're not music. There's noting in the law that says you can stream but you can't download."
A victory for Robertson, however, would not mean unfettered online music. It would protect MP3tunes.com, CloudDrive, and Music Beta as they are, but their owners will still rely on the labels for access to their catalogues if they want to expand the basic locker.
A music locker would be nicer if you didn't have to actually upload your the files on your machine. Music lockers – per se – are not very interesting. They're kind of like music museums. It's the services you build around them that are the future – like integrating with your online music purchases, building play lists, sharing, and merging features like web radio or Robertson's new venture: DAR.fm, a Tivo for radio to find, record, and playback web radio.
You will see new licensing because the record labels will say: "We have to do something here. We have a lot less leverage".
DAR.fm uses an open API that developers have already used to build players that bring the service to iPhone and iPad, Android, Windows Phone 7, webOS, Playstation, Wii, and video and music players from Roku, Lotitech, Squeezebox, Grace and AR Infinite.
Clearly, today's lockers are hoping that building a critical mass of customers who've uploaded their tunes would convince labels to play ball by offering more acceptable licensing terms. "Is it more cumbersome if the user has to upload all their songs? Yeah it is," Robertson says. "But I get to operate in every country, I don't have to agree to per use fees, song fees, report every single track, I don't have to have your advertising in our system."
If he wins, Roberson continues, you will see new licensing because the record labels will say: "We have to do something here. We have a lot less leverage". They will drop demands such as you can never download once your music is synched to the cloud, or you can us it in the US but not Canada, or you can't use it with more than one device, he says.
Licensing is important because it means access to the labels' catalogs – the real prize. If Apple does go ahead and launch a licensed service then it will be a step closer offering something that goes beyond the basic locker, which is likely to appeal to consumers and has an edge over Amazon, Google and MP3tunes.com.
A license agreement with the labels for Apple would mean it can potentially offer what's known as "scan and match"  to its locker. Under this service, the locker would buy the rights to stream a catalog of music, and then scan your computer to see which of those songs are present. The service would then assign you the right to stream those songs in the catalog that you already have and play them on different devices. Meanwhile, Apple could also combine the iTunes store with the locker.
Private music versus public video
Robertson was the first to go up against the labels with an unlicensed service. Four years after EMI shot back, we're waiting to see if the labels will target Amazon and Google with the same legal argument.
The MP3tunes.com case is not a jury trial. It's a case where arguments are presented to a judge who then delivers a summary judgment, and this will likely happen before August. The loser then has the right to appeal.
Robertson feels that with the DMCA and the precedent of services like Gmail, Hotmail, and SkyDrive where users are already uploading and storing their content, EMI will lose and that EMI and fellow labels will be forced to do business.
"If you are storing material at the direction of the user then you have copyright immunity – that's how YouTube won [against Viacom, who is appealing the earlier verdict]. If YouTube won storing videos that a revealed to anyone then storing music that's only available to the person who uploaded it is less of a legal question than YouTube's model," he says.
"They are going to lose," he repeats. "It's a question of when will they get reasonable in their licensing terms, and we we'll have to see." ®