Judge Stanton ruled in favor of Viacom in some aspects of his decision and in favor of Youtube in others. In favor of Youtube, he denied Viacom access to Youtube’s search code, noting that it is a trade secret that cost Youtube thousands of man-hours to produce and that it will not help Viacom determine the extent to which Youtube is liable. This decision came after numerous programming experts testified that there is currently no search code in existence with the ability to distinguish between copyrighted and non-copyrighted works. Similarly, the judge denied Viacom access to the Video ID Program. The judge also denied Viacom’s request for access to all videos currently available on the Youtube servers. Viacom claimed this would help them determine how much knowledge Youtube had relating to infringing videos, but Youtube’s response that they have been entirely accommodating to Viacom’s requests was favored by the judge. The judge stated that there is “no compelling need…to justify the analysis of millions of pieces of information.” The judge similarly denied access to the Advertising Schema, stating that this was both a trade secret and not necessary information. However, the judge favored with Viacom in many aspects, in an attempt to allow them to research how much power Youtube has over infringing videos on its website. He mandated that Youtube produce information about all videos that have already been removed so as to determine the amount of copyright infringing videos that have been available in the past. Most interestingly, he allowed Viacom access to all information about who has viewed which videos and how many times they have been viewed. This includes IP addresses, screen names, and videos viewed for every user. Viacom states that this will allow them to know, proportionally, whether copyrighted videos are typically viewed more often or less often than non-copyrighted videos. The judge also allowed Viacom access to the Google Video Content database so as to allow Viacom to determine Youtube’s knowledge of infringing activity.
This decision is interesting because it details the opinions of a judge who has considered both Viacom and Youtube’s opinions. He allows Youtube to retain several of its valuable coding secrets, but makes large concessions to Viacom to allow them to determine Youtube’s knowledge of infringing material. The reason for this decision can likely be linked to the relatively young age of cases like this. The DMCA has only been active for 10 years and many aspects of website liability for users infringing on copyrights are still uncertain. By allowing Viacom access to Youtube video records, the court is essentially hoping that Viacom will either show that Youtube is guilty of indirect liability or that Youtube has no control over the infringement beyond its current efforts. Thus, the impact of this court decision will likely come from Viacom’s analysis of Youtube video information. In my paper, I plan to further examine the same topic: whether or not Youtube is completely free from liability for infringing material.
The Webcaster Settlement Act of 2008 was passed in September by the House and Senate. The act became law when it was signed by the President in November 2008. The bill provides time for agreements and negotiations to be made concerning the royalty rates for webcasters. The act amends section 114(f)(5) of title 17 of the United States Code. It allows for settlements to be entered into an 11 year period starting on January 1, 2005. This would nullify the Copyright Royalty Board decision of 2007. The bill also modifies the settlement deadline between webcasters and the receiving agent of the royalties. The new deadline is February 15, 2009. Although this act has no immediate impact on the royalty ruling, it is a step closer to reaching a final decision. The act also allows settlements to go into effect more easily. If any group reaches a settlement with SoundExchange before the February deadline, they can submit it to the Copyright Royalty Board and it will become effective.
The Webcaster Settlement Act is an important part of the research for my paper. It shows the progress being made regarding the royalty decision. The fact that this bill was signed by the President is evidence that the royalty ruling is a significant issue for the public. It demonstrates that there is some debate and doubt regarding the fairness of the royalties to the webcasters. This supports my argument that the Copyright Royalty Board’s decision is questionable and that there is a possibility for better models for determining royalty rates.
On July 29, 2008, Joe Kennedy, the President and Chief Executive Officer of Pandora Media, Inc., gave a testimony on “Music and Radio in the 21st Century: Assuring Fair Rates and Rules Across Platforms.” Pandora has become the largest internet radio service in the US with more than 15 million registered users. It is located in Oakland, California, and employs about 140 people. Pandora uses a unique music taxonomy known as the Music Genome Project, which aggregates songs with musical similarities. Pandora treats all artists equally and relies only on musical relevance to connect songs.
Kennedy testified on behalf of Pandora and the Digital Media Association. He urged a revision to the Copyright Act that would ensure fairness among all participants in the music industry. Kennedy’s testimony gave a description of the four main problems Pandora and other internet radio services currently face. The first is the matter of basic fairness in determining royalty rates. Kennedy strongly recommends the four factors standard test found in Section 801 of the Copyright Act, which has proven successful in the past. Kennedy emphasizes that internet radio services have the smallest of all radio revenue streams, but they are the ones who pay the highest royalties. Kennedy states, “There is no possible way that Pandora or our sophisticated investors would be a "willing buyer" of sound recording performance rights at a cost equaling nearly 70% of our revenue – because that royalty level is simply unsustainable and will bankrupt us and force the layoff of our 140 employees.”
The second problem Kennedy reports is consumer recording. SoundExchange and recording industries claim “streamripping” is an issue, although Kennedy states there is no evidence or justification for this. Pandora is a business aimed at programming and promoting music, and no additional technological fees should be made for this purpose. The third issue Kennedy brings up is resolving the confusion of “interactive service.” The definition of this term should allow programming based on the listener’s preference. Kennedy defends Pandora by explaining that listeners have no control over the song or artist that will be played, therefore they are not violating statutory law. The fourth point Kennedy discusses is the royalties on sound recordings reproductions. While typical radio stations require only one copy of the sound recording, webcasters need several copies in order to accommodate different technology services and access speeds. Kennedy remarks that internet radio services should not have to pay a fee for these copies, since they do not have any additional value.
Kennedy concludes his testimony with a last plea for the equalization of royalty standards. “…so that fair competition prevails and Pandora and other DiMA member companies can grow and realize the full potential that Internet radio offers.”
This testimony is an extremely useful source for my paper. It offers a complete description of the royalty issues Pandora is facing directly from the point of view of the president of Pandora. The four main points that Kennedy brings up are also key topics for my paper, since I am defending that the new royalty ruling is unfair. It was extremely interesting to read this direct testimony from Kennedy, and it will definitely help defend the argument of my paper.