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FTC vs. music companies

Yesterday’s Yomiuri Online has an excellent article on the Fair Trade Commission’s raids on 10 music and chaku-uta (=ringtunes) distributors, including Sony Music Entertainment, Avex and Label Mobile.

The short story: KDDI launched its chaku-uta service in December 2002; soon Vodaphone and DoCoMo followed and started manufacturing mobile phones supporting (DRM protected) chaku-uta downloads. This move was followed by the launch of several alternative chaku-uta sites, Label Mobile (which is created by Japan’s major record labels and has 80% of the market) being one of them. Japan’s FTC now suspects the record labels to obstruct fair competition in the chaku-uta marketplace, by refusing to license songs to chaku-uta providers other than their own Label Mobile business.

The FTC suspects the five companies colluded to create a situation where the most popular songs were available for chaku-uta download only from Label Mobile’s Web site to maintain their high market share, the sources said.

It is interesting to note (and the Yomiuri article does this in an excellent way) that this strategy was not possible with the earlier ringtone or chaku-mero downloads. Chaku-mero, which are actually covers of popular songs (chaku-uta are closer to remixes of those songs), only involve copyright. Paying a fixed fee to JASRAC allows chaku-mero distributors to create a chaku-mero version of a popular song.

Chaku-uta on the other hand also involve neighboring rights (cfr. the remixing aspect) and thus the permission of the respective record company is required. This obviously places the record industry in a strong position – songs were only sometimes licensed to smaller chaku-uta providers and always to Label Mobile. Hence the FTC’s action.

To be continued.

JASRAC & co. link copyright management consolidation plans to term extension

For the last half year or so, Japanese rights groups have been pushing for a 20 year extension of the current life+50y protection term of copyrighted works (previous coverage: 1, 2, 3). In September, the Daily Yomiuri reported that a committee of the Internal Affairs and Communications Ministry was looking into a registration system to facilitate the online distribution of previously aired television programs, while also suggesting the protection term for copyrighted works should be extended.

In the meantime, a couple of months have passed—JASRAC has sent its Notice & Takedown request to YouTube and requested it to proactively check for copyright infringements before uploaded content appears online… And last week, CNET Japan reported that JASRAC is now also pushing for a centralized “portal site” for rights information, so as to easily identify the author(s) of a work and facilitate licensing. In addition, there are plans to streamline the currently cumbersome procedures for creating derivatives of works of which the author is unknown.

Facilitating licensing procedures sounds like a good idea (*), but JASRAC and other rights groups want something in exchange: 20 years of extra protection. The rights groups point out that’s a fair deal (translated quote from CNET): “This is not just a call for an extension of the copyright protection term, but the goal is a situation where you can easily get a license for a work, and use it immediately.”

It doesn’t need to be said that a 20 year copyright extension goes against the very goal of the copyright system, but there are also other serious problems with the deal that is proposed here:

  1. There is no guarantee that this database or portal site is ever going to be realized. A term extension is law, while the promise of a consolidated copyright system completely depends on the will and participation of various rights groups.
  2. Although JASRAC and the other rights groups project easy licensing of copyright works, there is nothing that prevents them from not granting licenses to interested parties. Actually, if we look at how the music labels have systematically denied licenses to chaku-uta distributors other than their own Label Mobile venture, I’m far from optimistic.
  3. The biggest problem however is that the portal site and term extension plans are being represented as a give-and-take operation, while it is actually a common-sense-and-take one. Making licensing procedures more flexible and open should simply be a sound business move in an increasingly turbulent content market. The conservative and opaque Japanese content biz however sees this as a monopoly-undermining and thus very scary development — so scary, that they demand a compensation in the form of 20 years extra protection…

To be continued.

(*) … although it further solidifies JASRAC’s first-ask-then-upload mantra, and sidesteps possibly more productive collective blanket licensing scenarios.

Doing mobile music business in Japan

Until recently, Japanese record companies were mere onlookers to the mobile music market. The chaku-mero (ringtones) phenomenon was booming, and the music industry didn’t see any direct profit from it. The many chaku-mero distributors only had to clear their catalog’s copyrights by paying a fee to JASRAC and they were set; as the creation of ringtones doesn’t involve any remixing of original sound fragments, neighboring rights were left untouched, keeping the record companies out of the game (more info). All that changed in the last two years. The Japanese record industry’s recipe for turning the tide:

  1. Agree with a couple of big labels that chaku-uta are the next big thing; as chaku-uta are 30 second remixes of popular songs, neighboring rights (and thus the music labels) are part of the game.
  2. Create a central chaku-uta distribution service (Label Mobile), which offers chaku-uta of the labels involved.
  3. Convince mobile phone makers and carriers to jump on the chaku-uta bandwagon so that their devices:
    • support chaku-uta‘s (uncommon) audio format (amc, later 3g2 & 3gp)
    • support the restrictive DRM chaku-uta are wrapped in
  4. Use the power deriving from your neighboring rights: deny all licensing requests from (potential) chaku-uta distributors other than Label Mobile without giving a clear reason.
  5. Get your offices raided by the Japanese Fair Trade Commission (JFTC).
  6. (In the meantime: introduce chaku-uta full, highly priced, DRMed mobile music downloads for next-generation handsets)
  7. Get an order of the JFTC to “[s]top the practice of refusing licenses to companies other than Label Mobile.”
  8. Reject the JFTC’s warning.
  9. ???

(via MocoNews)