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Google and Amazon cloud music nears judgment day

Clock ticks on MP3tunes.com case

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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.

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