Illegal downloads costing music industry $1m per day
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The music industry faces its “next Napster” from Internet sites that allow consumers to download novelty ring tones to their mobile phones, according to web monitoring company Envisional.

Record companies, stung by the impact of illegitimate music sites on singles sales, are concerned about the loss of income from unpaid royalties.

The ring tones can be found on a multitude of websites which charge up to $2 for each download. Revenue is passed to the network operator through a charge for the text message needed to transfer the ring tone to the handset, while the record company should receive a publishing royalty.

However, many sites are failing to pass on payments to the copyright owners.

Envisional, a software company that specialises in patrolling the Internet for abuse of its clients’ material, found more than 1,400 sites where musical tones were available. It found one site from which, over two months, more than 30,000 people downloaded a ring tone based on the theme tune to the Mission Impossible film.

Calculating that record companies should be entitled to a fee of a few pence for each tune downloaded, and several million were downloaded each month, the company warned that the cost to the record industry could amount to as much as $1 million dollars per day.

Envisional COO, Ben Coppin, said: “This is another Napster in the making. No-one can say what the true scale of the problem is.”

The Mechanical Copyright Protection Society, whose jurisdiction is limited to the UK, said mobile phone operators were applying for the necessary ring tone licences. Both Nokia and British Telecommunications confirmed they had applied for the correct licences. However, there were likely to be many sites outside Britain which had failed to seek licences for the ring tones they offered.

The society declined to estimate how many sites had been issued with licences. It said entrants to the market might be slow to understand the licence application process but were responsive when chased for payment.

Forrester analyst Korsten Schmidt, who has been investigating the ringtone phenomenon, says royalties are infrequently returned to the record companies who own the copyright to the tunes. The record companies are entitled to a fee of 7.5 US cents for every tune downloaded – meaning that, with hundreds of sites allowing hundreds of thousands of ringtones to be downloaded every day, the music industry is suffering massive losses due to copyright abuse.

Envisional found that the problem was largely created by teenagers downloading their favourite artists – Eminem, Limp Bizkit, Destiny’s Child and S Club 7 being the most popular – and 30somethings copying hits from the 1980’s. TV shows such as Big Brother and the A Team were also popular and there was a growing trend towards downloading specialist tunes such as those from Indian ‘Bollywood’ movies, and seasonal tunes (around Christmas, for example).

Clare Griffiths, a lawyer at intellectual property specialists Briffa, explained that the legal issues surrounding the practise of downloading ringtones were extremely complex – both for the site owners and the consumers. “Copyright in the music will be infringed by taking a ‘substantial part’ of a musical work. The most recognisable melody of a song, even if it is only 10 seconds out of 3 minutes, could be substantial copying.

“There is also a question of who may be liable for the infringement. It is the person doing the copying that is infringing. This will be the company/person putting the tunes on a website for download, but the act of downloading by individuals is also creating another copy on the person’s phone and so both could be liable. Individuals who key in the tunes for themselves are also making copies and so cannot evade liability this way. “

About Envisional
Envisional was founded to bridge the gap between the professional services industry and the technology driven expansion of the internet. Envisional is uniquely positioned to supply best of breed technology both through core technology development and partnerships to fulfil this growing need.


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