New Battle Against Piracy

The issue of piracy and illegal downloads has been a huge problem since the early days of the internet. The ease with which music tracks can be streamed and downloaded illegally has meant that countless web users evade paying for albums.

The topic of illegal downloads has caused something of a rift in the music consuming community. Many listeners believe that music should be freely disseminated, especially since bands make most of their money from touring anyway. Supporters of illegal downloading claim that record label ‘fat cat’ bosses have earned enough money in the past and do not deserve to profit any more. Some music fans believe that they shouldn’t have to fork out for MP3s of certain albums when they already own the CD or vinyl versions.

The furore surrounding piracy has led to many bands releasing their albums free through newspapers, or allowing fans to pay whatever they see fit, as Radiohead did with In Rainbows in 2007. Of the decision, band member Jonny Greenwood said “"It was an experiment that felt worth trying...[and] it's fun to make people stop for a few seconds and think about what music is worth.”

However, not all bands are so willing to bow to the pressure. Some, along with many fans, believe that they should receive due payment for their work, and that piracy is a breach of intellectual property. The heavy metal band Metallica famously brought a law suit against former illegal download side Napster (which has since become a legitimate company) after they discovered that their entire catalogue was available for free download.

For as long as piracy has been happening, the music industry, government bodies and internet service providers have been keen to clamp down on illegal downloaders. Most recently, six of the UK’s biggest net providers have come to an agreement with the music industry. Negotiated by the government, the deal has been taken up by BT, Orange, Virgin, Tiscali, Carphone Warehouse and BskyB and may mean that persistent file sharers’ broadband connection will be slowed or even terminated. The government plans to send hundreds of thousands of letters to net users they suspect are downloading illegally.

It is a welcome move for the British Phonographic Industry which regulates the music business. Previously the BPI has called for a ‘three strikes’ system whereby persistent offenders would have their internet connections terminated, but many net firms have resisted the suggestions. Following recent developments, BPI’s chief executive Geoff Taylor has said “All of the major ISPs in the UK now recognise they have a responsibility to deal with illegal file-sharers on their network.”

He went on to remark that “The focus is on people sharing files illegally… Musicians need to be paid like everyone else.”

In a similar vein, chief executive of British Music Rights, Feargal Sharkey, said that the developments are “a first step, and a very big step, in what we all acknowledge is going to be quite a long process.”

So with new legislations coming into play, this may be the end of the line for illegal downloading and file sharing. Only time will tell how far-reaching the implications will be for those who persistently break the law.

Justin Drummond,

Chief Executive - Media Corporation plc

Online Shopping

It is no surprise to anyone that online shopping is increasing year by year. However it is interesting to see just how comfortable consumers are becoming with net shopping. Where previously online shopping was limited to certain sites and certain consumers, today the online boom means that most retail outlets also sell online. It is predicted that by 2012 the internet will make up 15% of the retail industry’s market share. This is estimated to be worth £45 billion.   Even with the credit crunch biting, it seems that online shopping is not slowing down, but steadily increasing. A survey run by IMRG and Capgemini says that this year alone UK shoppers have spent 17 pence of every pound on the internet. This is an impressive growth of 38% on last year. This will come as no surprise when we consider that while retail spending on the high street was markedly lower in Christmas 2007, online there was £15.2 billion spent in the three months between October and December. This is a 50% increase on spend at Christmas 2006 and that was an increase of 50% on spent at Christmas 2005 (figures also from IMRG). This stunning growth, even during the credit crunch, is holding online retailers in good stead.  This increased confidence in online shopping is a reflection of changing attitudes towards the internet. Security is constantly improving and standardising and users are more savvy about how to shop safely.   As retailers innovate online, consumers are becoming more comfortable with how to shop on the net. Many users now feel that online shopping is more convenient than high street shopping. As Mike Petevinos, head of retail consulting at Capgemini, said in an interview with the BBC: “Convenience has a sharper edge in a world of soaring fuel prices and the ability to research and make more informed choices in a time of heightened price sensitivity is a key advantage of the online channel.”  I It is great news to online retailers that the EU is proposing new rules to make it easier for consumers to shop online within Europe. The proposal intends to outline a more consistent approach to online retail, from consumer rights to standard practices. This will cover things like cooling off periods and guarantees to help open up online retail between countries across Europe. EU Consumer Commissioner Meglena Kuneva is proposing a broad range of practises that should help consumers shop online, including a crackdown on hidden charges (particularly by cheap airlines) as well as cutting costs of telecommunications using broadband such as text messages and downloads.  So while the gloom of recession has made it tough for the high street, it is good news to hear that online retail is holding its course and growth. With the standardisation of retail practises and the growing consumer confidence in online shopping, it seems like the internet is staying on course.

Justin Drummond,

Chief Executive - Media Corporation plc

eBay’s victory spells good news for internet commerce. So, they’ve won the battle, but will they win the war?

Tiffany’s were not best pleased this week after losing their court battle with online auctioneer eBay.  A court ruled that eBay were not, in fact, liable for the sale of counterfeit jewellery from the jewellery maker on their site.  Thus, it would seem that the retailing giant has won the battle against the brand protectionists, but with internet law so fragmented will it eventually win the war? The decision to award the case to eBay followed a four year long trial.  After this laborious process, in which it was concluded that “Companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites”, it leaves internet law in rather a fragmented state. Whilst the US District Judge, Richard Sullivan made this ruling, he did offer strong sympathy with Tiffany’s claim.  To this end, within his 66-page judgement, he stated, “The court is not unsympathetic to Tiffany and other rights owners who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the Internet.” (Source: www.boston.com) Tiffany’s are understandably disappointed with the decision.  A spokesman for them, Mark Aaron said, “We are shocked and deeply disappointed in the district court’s erroneous reading of the law.”  To them, the case has been viewed in the wrong way by the legal system and they cannot believe how this has come about, especially going on the fact that a previous ruling has recently swung the other way. Just last month, a court ruling in France ordered that eBay pay $63.6 million to LVMH Moet Hennessy Louis Vuitton SA, over claims the site didn’t do enough to block the sale of fakes.  They also commanded eBay to stop all sales of LVMH perfumes on its French site.  This seems to depict a clear indeterminacy between countries on a global issue.  Europe certainly seems to be taking a more protectionist view. Another French court stated last month, in relation to a case filed by Hermes International, that eBay is a partner to its vendors and must take more action to ban counterfeits.  Last year, in a case brought by Rolex group, Germany’s highest court declared the same. This issue seems to centre on whether eBay want to affiliate themselves with commerce for the common people or luxury brands like LVMH and Tiffany’s.  eBay’s argument is that the matter of counterfeit goods is a red herring.  Luxury brands, according to eBay, are more concerned with keeping a tight leash on circulation of their goods than in keeping fakes off eBay’s website.  They contend that a more open marketplace is vital for dynamic Internet commerce. Indeed, internet analysts are tending to agree with this view, predicting that should the decision have gone the other way, this would have resulted in the foreclosure of an entire class of eCommerce. At present, the war over brand protection could go either way as it seems that the US and Europe are willing to battle it out.  The issue is far from over and it may well be consumers who will triumph by independently stipulating authentication of goods online.  After all, the customer is always right.

Justin Drummond,

Chief Executive - Media Corporation plc

Viacom vs YouTube

This week there has been much talk of the Viacom vs YouTube case currently in court in the U.S. and with good reason. The case could well be a landmark for online industries and users both and has a reach far beyond the United States.

The database that Google, as owners of YouTube, have been asked to hand over to Viacom contains the IP addresses, login details and viewing history of every YouTube user. Since these are not distinguished by country, users from all over the world will be affected by this decision.
Viacom, whose interest in protecting their copyright comes from owning two media powerhouses- Paramount and MTV, brought the case to court for the first time over a year ago in March 2007. At the time it claimed that YouTube had a staggering 160,000 unauthorised clips on the site, with 1.5 billion views. With figures like these Viacom’s concern with the loss of viewership is understandable.

However, it is interesting to note that in a statement made in response to the lawsuit YouTube made this comment: "It's unfortunate that Viacom will no longer be able to benefit from YouTube's passionate audience, which has helped to promote many of Viacom's shows."

This oblique reference brings an important point to the debate, because there can be an argument that the accessibility, particularly internationally, and the community popularity of some TV shows on YouTube actually add to their popularity on network television.

The case will have further reach than just Google, because of its threat to the privacy of individual users. Although the court has instituted a contempt clause that means that Viacom cannot use any of the information in the database for anything other than proving the case against Google, if successful, it will set a precedent that many people find may have disturbing implications on both individual privacy and internet communications.

There have been calls for several years now for Google to better protect the privacy of its users both in its search and on YouTube. Privacy expert Simon Davies is quoted by the BBC as saying that ‘the chickens have come home to roost for Google’ after years of groups campaigning them to mask IP addresses.

Those of us in online industries will watch closely as this case unfolds, because one way or the other it will help define the murky parameters of online content and intellectual copyright.

How Will New Domain Name Rulings Affect the Net?

With recent rulings governing domain names, a whole new spectrum of website names has been thrown open to businesses. But what exactly has happened, and how will this impact brands and the internet as a whole?

Not-for-profit organisation ICANN (Internet Corporation for Assigned Names and Numbers), which supervises website naming, recently accepted a proposal which will let companies buy a range of new top-level domain names ending in a variety of suffixes. This will come into play in the second quarter of 2009 and will allow companies to employ specific domain names such as .ebay and .amazon instead of the customary geographical suffixes like .co.uk.

ICAAN’s chief executive Paul Twomey remarked “It’s a massive increase in the ‘real estate’ of the internet.

However, the new ruling may prove thorny for companies, as they will have to register all possible variables of their brand-specific suffix. Jonathan Robinson, CEO of domain management company NetNames, said “While it is clear the internet domain name structure needs to evolve, the vote in favour of opening up top-level domains leads to complex questions for marketers and trademark owners.” He rightly warns that an increase in domain names will encourage a rise in “speculative activity”.

But fears of cyber squatting will be allayed in part by the fact that the new domain names will come with a hefty price tag. They are predicted to cost between $1500,000 and $500,000. As well as prohibiting squatters from buying up multiple domains, this will enable ICAAN to gain back the $20 million they will spend on implementing the ruling.

ICAAN also hopes to deter domain tasting, a tactic used by site prospectors to test the viability and money-making potential of a domain by registering and placing pay-per-click adverts on it. If the domain looks as if it won’t make money, registrars cancel their subscription within the five day trial period without losing money.

There is the danger of brands floundering under a wash of domain names, as web users become confused by the plethora of names that they have to remember to access the site they are looking for. In this way, it is Google who stands to benefit most from the ruling. With numerous URL possibilities for locating the domain they are seeking, users will most likely run a Google search instead of remembering and typing in individual URLs.

And what is to say that brands will even want a raft of name-specific URLs in their stable? Many of the most successful web brands go by catchy titles which have little to do with their purpose (Amazon) or made up names (Dopplr, Flickr). It seems that this ruling threatens to cause more trouble than it is worth as companies will be railroaded into buying up costly web real estate simply to protect their brand from cyber squatters. Having said that, there is a clause in the ruling that states that new domain names ‘must not infringe the existing legal rights of others’. This is cheering, as long as it doesn’t mean costly and time-consuming court battles between companies and individuals looking to cash in on their brand.

The ethics of the internet may also come under scrutiny if domain names ending in contentious words such as ‘nazi’ or ‘jihad’ are requested. Clause 6 of the ICAAN ruling decrees that names ‘must not be contrary to generally accepted legal normal relating to morality and public order’, but what is to say that freedom of speech and expression won’t win the day in individual cases?

As with everything related to change, there are fears that can only be dispelled by time. The implications of this ruling are impossible to predict, but detractors shouldn’t be too quick to condemn the ICAAN until the effects of their decision are manifest.

 Justin Drummond,

Chief Executive - Media Corporation plc