Jon Robins looks at how law firms are helping the music industry protect its digital rights in the face of illegal downloading


Over the past few weeks there have been a number of striking signs of a music industry struggling to come to terms with the digital age. First there were the shockwaves felt when international chart-toppers Radiohead made their latest opus, ‘In Rainbows’, exclusively available to download via their website at whatever price fans chose to pay. It was reported that the average price paid was £2.90.



Then the powers-that-be on both sides of the Atlantic renewed a clampdown on alleged illegal downloaders. In the US, the Recording Industry Association of America prosecuted a 30-year-old single mother, Jammie Thomas, who allegedly had 24 songs available for illegal download. A jury found she should pay $9,250 per song, including the prophetically titled ‘Rhythm is Gonna Get You’ by Gloria Estefan. In the UK, police arrested a man in a dawn raid on a Teesside home to crack a suspected international music piracy website called OiNK. In a simultaneous raid, Dutch police shut down the servers in Amsterdam used by the invitation-only file-sharing music site, which is reckoned to have a worldwide membership of 180,000 people.



The UK music industry has taken a softly, softly approach to policing the file-sharing epidemic since 2004, when the BPI, which represents the UK’s recorded music industry, began 150 legal actions, most of which settled for about £2,000. This compares with the gung-ho approach of the Americans, where more than 20,000 lawsuits have been brought in the past four years.



‘The UK has generally favoured education, and the primary motive in taking cases against individuals over here has been just that,’ explains Simon Baggs, a music and litigation partner with Cheltenham-based media specialists Wiggin. He advises the BPI in relation to online-enforcement rights for the UK recording industry and was involved in the OiNK case.



‘Our approach has been about raising profile as a result of the cases in the hope that people, under the threat of being sued, would change their behaviour,’ he explains.



Was the recent raid significant? ‘Yes,’ he says. ‘It sends out a clear message to those involved in closed network file-sharing sites using bit torrent [a way of allegedly downloading illegally] that the powers of enforcement will be bought to bear upon them, including criminal sanction.’



OiNK was the largest pre-release site in the world, which is why it was targeted, explains the BPI’s head of communications Matt Phillips. ‘Industry action against file-sharers is one part of the picture,’ he says, adding that a programme of consumer education, stricter enforcement by government, new business models and more robust action by Internet service providers (ISPs) are all essential. As for more action, he says: ‘We’re not going to outline a timetable for future BPI actions.’



OiNK’s founder has been quoted in the press as arguing that his site was no different from well-known search engines that direct people to other sites where they can download music. Such music was not available on OiNK itself and he was quoted as saying: ‘I am not making any OiNK users break the law. People don’t pay to use the site.’



The US has created a problem for itself, says Kim Walker, head of intellectual property at Pinsent Masons, in relation to its non-discriminatory ‘arresting grannies’ enforcement policy. ‘The UK has learned lessons from the publicity in the US,’ he says.



Nonetheless, illicit downloading is a huge problem for the music industry. According to research by the International Federation of the Phonographic Industry and analyst Jupiter Research, only one in 20 downloads is actually paid for. The legal and technical mechanism that the industry has created to protect legitimate online rights has been digital rights management (DRM). DRM software is embedded in digital music files to restrict the consumer’s ability to copy a track, transfer it to other computers or MP3 players, or the length of time they have to listen to it.



John Enser, head of music at media firm Olswang, says: ‘The problem with DRM is that it’s consumer-unfriendly, and all these solutions and the technologies require you to become more of a geek as a result of using them. If something is user-friendly, easy to use and intuitive, then it’s likely to be introduced in a DRM-free way.’



Duncan Calow, a partner at UK/US firm DLA Piper, says: ‘The music industry is troubled, partly as a result of the fact it was late coming to the online market with authorised music. It has always been done on the basis that DRM would be the way that the distribution of digital media would play out. The market, not least players such as Apple’s iTunes, have put a lot of pressure on that model and online sales haven’t been increasing fast enough to cover the fall in CD sales.’ It is reckoned that at least 80% of online music sales are via iTunes, which has DRM preventing users playing their music on anything other than an iPod.



However, there has been much speculation that the days of DRM are numbered. In recent months, there has been a split in the industry’s ranks, with EMI the first of the big companies to announce that it would be quitting DRM. Universal followed suit. In February, Steve Jobs, Apple’s chief executive, published an open letter arguing that the time had come to abandon DRM on music distributed online via outlets such as the iTunes store.



‘Imagine a world,’ he wrote, ‘where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat.’



Mr Calow notes that Mr Job’s comments coincided with Apple falling foul of the Norwegian consumer regulator over iTunes’ own notoriously protectionist DRM. ‘The Apple boss might well have wanted to muddy the waters a bit, but that interoperability issue is crucial,’ he argues. ‘DRM only got the support of governments and regulators in the first place on the basis that the content and technology industries would develop open standards.



‘Yet so far, experience suggests that, with a host of vendors ready to promote competing proprietary solutions, open standards initiatives struggle to sustain market momentum.’ As he points out, the music-loving public has not helped. Apple launched iTunes and ‘we consumers promptly went out and bought up iPods until Apple had transformed the market’.



‘The music industry appreciates that the public generally recoils from DRM,’ says Alexander Ross, a music and technology lawyer in Wiggin’s non-contentious practice. ‘Nonetheless, it must be able to protect its core product.’ One online music store, eMusic, does offer its music DRM-free. It has attracted many of the indie labels and 300,000 subscribers Europe-wide. ‘It is totally DRM-free and that’s precisely the reason that the majors won’t licence it at the moment,’ Mr Ross explains. ‘Independent labels have always had a battle and, in the old days, they saw it as a battle for shelf space, literally racking in the shop. The muscle of the Universals of this world meant simply that the majors got greater shelf length. A route to market was always their struggle and so when the prospect of DRM-free music became available, they almost all welcomed it.’



Last December, the government published a major review of intellectual property by the former editor of the Financial Times, Andrew Gowers. Mr Walker says that Mr Gowers was ‘pretty critical of DRM and the effect it was having, not just on protecting rights-holders’ rights but also in terms of fixing the market’.



‘If you buy something on iTunes, then it ought to be made clear to you as a buyer that you can’t play that on [for example] a Creative MP3 player,’ Mr Walker says. ‘He was also critical of DRM “trumping” copyright law, insofar as Parliament saying as a matter of public policy that consumers should have access to content for certain fair-dealing purposes.’ One recommendation was to allow consumers limited private copying rights to shift from one format to another (called format shifting). Consumers have been happily copying CDs on to computers to play on MP3 players such as iPods, although doing so is illegal.



More worrying is the illegal downloading activity which appears to be entrenched among the new generation of music fans. That was the finding of Olswang’s digital music survey. Mr Enser reports that 43% of consumers said that they downloaded unauthorised music from file-sharing sites. ‘Unsurprisingly, the demographic is weighted very heavily towards younger people, and 57% of 13 to 17-year-olds and 53% of 18 to 24-year-olds admit to downloading illegal music.’ The figures jumped up last year, although he reckons that a spate of enforcement activity in 2005 ‘had a deterrent effect’.



Mr Baggs argues that the industry will have greater expectations of ISPs to police web users, not least following the recent ruling in Belgium, where a local ISP, Scarlet (formerly part of Tiscali), was given six months to begin filtering out infringing peer-to-peer content on its network using Audible Magic technology. ‘It is a system with a very large database that can, through fingerprint technology, track particular recordings that are being exchanged,’ Mr Baggs explains. ‘Whether it is effective is a question of whether or not the ISP then stops them.’



Mr Enser argues that the judgment ‘opens the door for content owners to demand that ISPs implement filtering solutions’. He adds: ‘The judgment might finally lead to ISPs and rights-holders collaborating in order to develop a technological solution that meets the requirements of both sides.’



Jon Robins is a freelance journalist