Daniel Eran Dilger
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Apple’s iTunes Ringtones and the Complex World of Copyright Law

Apple Ringtones and Copyright Law
Daniel Eran Dilger
While I’m no huge fan of the “all singing, all dancing” mobiles that announce every incoming call by belting out a section of a song–particularly since they tend to use songs that I don’t want stuck in my mind for the next hour–ringtones are extremely popular and a big money business, so they’re not going away anytime soon.

The latest version of iTunes now allows users to select from a half million songs in the iTunes Store that can be “upgraded” from a regular 99 cent track to a ringtone by paying another 99 cents to carve out a user-defined, 30 second clip as a ringtone that can be synced to the iPhone.

Suddenly, everyone who was cool with Verizon Wireless charging $2.50 and up for individual ringtones came out of the woodwork to castigate Apple for selling ringtones as a 99 cent upgrade, and only for songs it sold within iTunes; by default, you can’t make a ringtone from songs ripped from your own CDs using iTunes.

Of course, you actually can do this by changing the filetype of the song and assigning it a metadata tag, but Apple doesn’t tell you this, and doesn’t really want users to exploit this because it will send it back into negotiations with the labels again.

iPhone Ringtones – What Did iTunes 7.4.1 really do? – gryphondwb
Ring My Bell: The New Yorker

The Ringtone Circus.
Remember that Apple appeared poised to deliver a ringtone sync function in iTunes back in January, but then pulled the feature and later backed away further by adding new legalese to the iTunes terms of service that excluded downloads from being used as ringtones.

Clearly, the record companies jumped on ringtones as a whole of stack of potential profits that could not be allowed to go without remuneration. Apple makes very little from sales of music in iTunes; the vast majority of revenues are funneled back to the record companies, which then devise how to avoid paying their talent and keep as much as they can.

At stake are the complex copyright laws involving derivative works, performing rights, and reproduction rights. Apple’s iTunes breaks open a whole can of worms because it is changing the market for music and video.

Universal vs Apple in the iTunes Store Contracts

[Universal vs Apple in the iTunes Store Contracts]

The Complex World of Copyright.
Copyrights were designed to make sure that the creator of an original work would be compensated for copies, whether they be exact copies or derivative works based on their original. For example, a movie based on a play or a novel has to respect the copyrights held by the original work, because much of the value of that derivative work comes from the original.In the music industry, groups like ASCAP license performing rights of music created by composers, songwriters, lyricists, and music publishers.

Bands playing their music have to pay royalties, which are commonly split between the writer of the song and the author of its lyrics. In addition to live bands, any commercial playback of music also requires performing rights licensing. Music played during a TV show, over the radio, or even in a restaurant requires obtaining a license and paying fees.

Publishing music requires a different set of permissions referred to as mechanical rights. CD and record manufacturers pay music owners fees to create copies of a given work. When musicians perform and their work is captured as a “master recording,” the reuse of that work must be licensed under master use rights. There are also synchronization rights involved in incorporating a music recording into a film or video performance or a commercial, and grand rights for using recordings as part of a dramatic performance such as a musical, opera or ballet.

The music business is therefore based upon a series of complex legal relationships between writers, performers, distributors, and the groups that represent each of their rights and their legal obligations.

Consumers Left Mystified; Fair Use Left Undefined.
Outside of the complex world that funds artists and their work, the idea of paying a license to play or use a song in different contexts is hard to grasp. Laws to define protections for producers were worked out long ago to make sure artists would get paid, but the rights of consumers haven’t been so carefully defined.

Consumers’ rights are based on the general idea of “fair use,” which isn’t a right defined in law. Instead, its a general defense against claims of copyright infringement. If the recording industry were to sue an individual for copying music from their CDs onto their iPod, they would likely lose because the idea of fair use generally determines that consumers can use their own music in reasonable ways.

Unfortunately, fair use has not been upheld in clear court precedents or in law to the point where it can really be called a right. This leaves things enshrouded in a grey fog where consumers assume that anything they can do with “their music” is fine, while the music industry seeks to find new ways to sell its products.

Ask Not For Whom the Ring Tones.
Writing about Apple’s iTunes ringtones, John Gruber of the Daring Fireball cited Engadget, which reported that “the RIAA wanted to be able to distribute ringtones of its artists without having to pay them big money to do so (surprised?), and it won a decision last year before the Copyright Office saying that ringtones weren’t ‘derivative works,’ meaning they didn’t infringe on the copyright of the songwriter.”

Engadget, known for shooting from the hip rather than the brain, didn’t really understand whole story. From its report, Gruber concluded, “So if you have the right to play a song, you have the right to use it as a ringtone on your phone.”Gruber blamed a “complicated, confusing mess of a ringtone policy” on Apple, and suggested the company should have simply handed out tools to create ringtones from any users. Incidentally, that’s apparently what Apple was going to do back in January.

Derk Nek of Epplegacks explained that–unfortunately–what the RIAA actually won in the case cited by Engadget was instead the right to collect money for ringtones without distributing those fees to the artists they represent. There was no establishing that ringtones are not protected intellectual property, so the RIAA will continue collecting royalty fees, because distributing songs or portions of songs requires mechanical rights. Playing a ringtone might also–in the mind of the RIAA and the letter of the law–require performing rights.

[The Ringtones Racket – Daring Fireball]

Ringtone Performing Rights.
Nek added, “I produce porn for a smattering of online websites. In one of our scenes, a ‘talent agent’ gets a phone call on his cell saying the girl will be right up, and of course the scene continues as expected. We put this file online and no complaints… until we went to release it on DVD.

”With the internet if there’s a complaint, you simply pull the file like it never existed, or re-edit it like it never existed in it’s previous form. With a DVD there’s a hard copy that’s on retail shelves, which means a retailer, distributor, production company and owner of the content is liable. We were told the ringtone had to go because we didn’t have the rights to have to redistributed in our DVD release. Dumb, but understandable.

“The thing about studios, networks, and labels, is they’d like nothing better but to track every pair of eyes and ears that views or hears their content, and charge based on that rather than unit. They consider a ringtone, which could be heard in a crowded cafe, subway, or street corner, something that would be a public performance of the work, and thus feel they need to be compensated. Dumb, but the truth as far as I can deduce.”

[Letter to DF in regards to The Ringtone Racket article – Epplegacks]

Do You Have A License for that Ringtone?
In addition to carefully watching every performance in order to catch any playback of any bit of music that was not paid for with the appropriate license, music industry also monitors Apple to make sure it does not confer any suggestion that users might use the labels’ music in ways that might leave money on the table. When they saw that Apple might allow users to put songs on phones, they flipped a nut and sent in lawyers to iron out a contract covering iPhone ringtones.

Apple negotiated a far lower price than any other ringtone distributor, but the labels are worried that consumers might figure out how to create their own ringtones, just as they were able to figure out how to put music from CDs onto computers and MP3 players, a practice that got out of hand and resulted in more music being handed around for free than legally paid for.
 Itunes Store Images Ringtones Screen20070905
Nek added, “The iPhone is a hardware product which Apple derives substantial profits from, ringtones are something people want but the current state of copyright law in the states makes much more unfair than it should be.”

[Ringtones – Apple]

The Wrestling Between Apple and the Labels and Studios.

Nek also outlined another example of the distribution skirmish between Apple and its content producers: the fight over TV downloads from NBC/Universal.

“NBC just demanded of Apple that to get Heroes for the iTS, they’d need to buy two episodes of those shows no one downloads like Passions or Friday Night Lights. Apple says that this would force them to sell Heroes at $4.99 not because NBC wants that much for each episode, but because Apple isn’t in the business of losing money selling a popular show for $1.99 when they had to buy two very unpopular shows at $1.49 each on which they won’t make back their investment. So instead of going ahead and selling video files of less resolution than are available at no cost on torrent sites for that $4.99 price to keep them in the black, Apple told NBC to walk.

”NBC also expressed that they wanted Apple to crack down on their customer base who were walking around with devices full of stolen content, read: ‘iPods can play unprotected AAC and MP3, MPEG-4 and H.264 video files and we want you to switch to only DRM’d content so we know that every track and video file on those devices was paid for’. Again, Apple told them to walk. If all Apple was concerned with was profit, then they would’ve accepted the terms because it costs them nothing to keep files on the iTunes Store and a certain percentage would keep on buying TV Shows at the inflated price, which in turn would keep selling iPods and Apple TVs so people could view them. But Apple saw in these terms from NBC a very anti-consumer agenda, and made their stance on any such terms by NBC or other studios plain.

“For Apple to put a ringtone editor into iTunes and have it work with the user’s existing library would be in a consumers best interest definitely, but it would also be illegal as far as I understand the mickey mouse laws. Apple didn’t become number three in music sales by pursuing illegal business plans, they did it by offering a better product at a competitive price. They competed against piracy with the iTunes Music Store and won. They’re now competing against current mobile service providers ringtone products and are going to win.”

A Legal Problem Your Representatives Don’t Care About.
It is fortunate that it is in Apple’s own interests to defend the rights of consumer. The reality of copyright law isn’t going to go away however. Its complexity is seldom discussed in the simpleton arguments that suggest that the RIAA should vanish and “that artists” are somehow magically going earn a living without a complex system to funnel money back to them as their work is copied and performed, particularly when most music is traded around for free.

If the government had any interest in representing the rights of citizens as consumers, we’d have clear and fair consumer rights spelled out in law, and the music industry would have to respect them. Instead, the government is working for the industry, setting up a police state of criminal codes designed to enforce the anti-consumer laws already on the books.

It doesn’t help that they’re also distracted by efforts to legislate morality and criminalize free speech. Until citizens start to care about what their government is doing, these problems won’t be solved, and we’ll be stuck having to sweat copyright infringement when our mobiles ring. Of course, that should really be the least of our worries when our government is serving the moneyed interests of industry before the rights and protections of its citizens.

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