Fighting The Freeloaders

Jeffri Cheong highlights the actions taken by copyright owners to curb illegal distribution of music on the Internet




Music that is made available online through peer to peer sharing services such as KaZaa, Limewire, BitTorrent, BitLord, UTorrent commonly consists of protected content in which the owners of that content have not consented to its availability and distribution. Music rights owners therefore lose revenue from their legitimate forms of distribution.


According to the International Federation of the Phonographic Industry, around 40 billion music files were illicitly shared last year. The magnitude of the problem is put in proper perspective by the fact that the United States' economy loses approximately US$12.5 billion in total output annually as a consequence of global and US based piracy of sound recordings. Making available music in this nature is a violation of copyright laws in most jurisdictions, including Malaysia.


This article summarises the various measures music rights owners around the world have taken in an attempt to curb the infringement of the rights in their works.




Directly suing individuals involved in piracy is the action favoured in the United States of America. In Elektra and others v Denise Barker, Denise Barker was sued by The RIAA (representatives of the record companies) for making available 611 songs downloaded off KaZaa stored in her shared folder.  She was ordered to pay US$6,050 in damages.


In July 2008, the first criminal conviction was handed down to a 26 year old for involvement with the BitTorrent site Elite Torrents which participated in the distribution of films before their official release. In this case, the offender was the administrator of the Elite Torrent site and also worked to recruit other members with high speed internet connections to facilitate the sharing of files. He was sentenced to 18 months imprisonment and a US$20,000 fine.


Peer to peer networks such as Napster, Aimster and KaZaa have also been subjected to litigation in the United States. In Germany, the Hamburg Appeal Court decided that Rapidshare had violated copyright law by offering hosting capacities to users to upload infringing content.  The rationale was that Rapidshare did not take sufficient steps to prevent uploading of infringing content.


In June 2009, Jammie Thomas-Rasset, a single mother from Minnesota was ordered by a jury to pay US$1.92 million for illegally downloading 24 songs using the KaZaa peer-to-peer file sharing network, a whopping US$80,000 per song.


Although the RIAA has successfully sued thousands of illegal downloaders on behalf of music copyright owners and have secured settlements that usually range between US$3,000 to US$5,000, the effectiveness of taking action against each illegal downloader or the P2P networks is questionable as illegal downloading remains rampant and the networks seem to resurrect after they are successfully shut down.




In the United Kingdom, the approach is slightly different. Pressure is placed on Internet Service Providers (ISPs) to take steps to address online music piracy, making them more responsible. The view is that ISPs can play more effective roles in combating this issue as they control access to the sole conduit in which this infringing activity takes place.


The Copyright and Related Rights Regulations 2003 of the United Kingdom inserted a new Section 97A into the Copyright Designs and Patents Act 1988 which gives the High Court power to grant injunctions against ISPs where there is actual knowledge of a third party using its services to commit copyright infringement.


In December 2008, representatives of music owners and ISPs in the United Kingdom entered into a joint memorandum of understanding to reduce unlawful file sharing. The ISPs involved include BSkyB, BT, Carphone Warehouse, Orange, Tiscali and Virgin Media. As a result of this understanding, ISPs have to take the following steps against their subscribers who are using their accounts unlawfully:


(1) Send notifications to users warning them of the illegality in their online activities;

(2) Send notifications to 100 subscribers per week;

(3) Decide on various forms of mechanisms to deal with infringers, including terminating their subscriptions or prosecuting them.


These measures may have negative financial consequences for ISPs as the termination or suspension of their subscribers' accounts will reduce the revenue of ISPs.


Currently, France is discussing a bill which allows suspending suspected file sharers from using the internet. Similarly the British Government has recommended in its Green Paper that it “will not hesitate to legislate in this area if required.”




Internet based business platforms offering tools to help musicians distribute their music online are gaining popularity. Online business models and communication service providers are finding new ways to strike deals with record labels.


Subscription based services such as Rhapsody and Napster or pay per tune services such as iTunes enable rights owners and record companies to receive royalties from downloaded music. Qtrax “P2P” service allows for free downloads but revenue from advertising goes to labels.


These platforms may be defective for a number of reasons including never truly allowing listeners to own the music and incompatibility due to Digital Rights Management (DRM) issues. For example, tracks downloaded from Napster cannot be played on an iPod as the iPod only supports certain formats. However there is a growing trend towards non-DRM music, resulting in increased inter-operability.


Malaysia’s Gua Music, a subsidiary of Media Prima, allows consumers to download music at a fee of up to RM5 per song. From a musician’s perspective, the revenue will eventually come from endorsement deals or live performances once they gain popularity.


Musicians understand that if they want to market themselves on the internet to reach a broader fan base, they would still require the experience and resources of major music labels. It is evident that Malaysian companies, record labels and musicians are already riding the online distribution wave.


In October 2007 Radiohead released their album “In Rainbows” over the internet inviting consumers to pay what they wanted for the album.


Featured Artists Coalition (FACT) which includes Robbie Williams, Radiohead and Kaiser Chiefs, formed a collective voice to stand up for their interests, in particular ensuring they are made a party to new deals that are struck. The Coalition advocates fair compensation for musicians after special deals between labels and technology companies are entered into.


In a music conference in Cannes early this year, it was reported that ISPs and mobile phone companies are offering unlimited free access to millions of songs. As payment has been factored into the cost of a new mobile phone or a broadband internet access contract, the cost to consumers is disguised. Variations include requiring subscribers to pay a nominal monthly license fee for access to legally downloadable music from any source, even peer to peer networks.


“Comes with Music” is an unlimited music downloading service recently launched in Britain by Nokia. The service allows users to download as many songs as they want when they buy certain Nokia phones. The “Comes with Music” service has been expanded to Australia, Singapore and Malaysia early this year.


The new business models adopted by music copyright owners have helped the legal online music sector grow to US$3.7 billion in trade value in 2008, a growth of about 25% from the preceding year.


In June 2009, UK’s Virgin Media and Vivendi SA’s Universal Music Group jumped on the new gravy train by announcing plans to launch a digital music subscription service in Britain later this year which would allow broadband customers unlimited downloadable and streaming access to Universal’s music catalogue, for a monthly subscription fee. Broadband customers can play the music on any MP3 compatible device.




If Malaysia, as a rapidly emerging economy in the Asia-Pacific, wants to keep with the trends, ISPs, mobile phone distributors, communication and network service providers, music labels and musicians must innovate flexibly and develop a sound understanding of the fluctuating legal landscape in this industry.


For the network and communication service and goods providers, they need to come up with broadband and telecommunication packages which can differentiate them in an increasingly competitive marketplace while taking into consideration the rights of copyright owners.


For ISPs in Malaysia, it may be prudent to counter-check meeting the strong consumer demands for increased bandwidth and high internet speeds with the reality that ISPs in other jurisdictions are being held responsible for facilitating infringing activities.


For the music labels and musicians, unconventional profit sharing and business platforms which utilise the internet as a distribution platform while addressing the need to protect intellectual property rights are to be given more thought.



JEFFRI CHEONG SIU-KONG ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )


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