FAQ About RIAA Members' Lawsuit Against MP3.com

February 25, 2000

What is the RIAA action against MP3.com all about?

On behalf of its members, RIAA sued MP3.com because it launched a commercial, for-profit music service based on sound recordings that it does not own and has not licensed.

Was the suit to stop the use of MP3 technology?

No. The suit is against MP3.com, the company; not MP3, the technology. The two are very different. MP3.com does not own MP3 technology. The lawsuit is not about any particular format. MP3.com copied 45,000 copyrighted CDs onto computer servers. Whether the copies on the servers are in MP3 or any other format is irrelevant -- the suit is about the unauthorized copying and has little to do with technology at all. As for MP3 technology, RIAA and its members have no objection to the format itself. RIAA only has a problem with the illegal uses of the format to distribute copyrighted recordings without the permission of the artist or record company. To the extent that artists use MP3 technology to distribute their work - music that they own the rights to - that's great; in fact, it's a potent example of the ways in which the Internet can connect creators and fans and produce new opportunities for the distribution of music.

What are MP3.com's new services that are so problematic?

The new services are called Instant Listening and Beam-it, and are part of My.MP3.com. They are, according to MP3.com, designed to allow users to listen to their CDs anywhere they have a Net connection. With Instant Listening, when a user buys a CD from an online retailer partnered with MP3.com, that user can choose to have the album immediately put into his or her MP3.com locker for immediate listening. With Beam-it, when a user puts a copy of a CD into his or her ROM drive, MP3.com will put that album into that user's MP3.com locker. But, users are not actually copying their CDs into their MP3.com lockers. Instead, MP3.com is giving those users access to a digital music library of over 45,000 albums that MP3.com had previously created.

What's wrong with that?

In concept, Beam It and Instant Listening may be great ideas. However, MP3.com does not own the rights to most, if any, of those 45,000 albums, and it had no right to copy them into a digital music library without getting authority from the people who own the copyrights.

Was the suit motivated by RIAA animosity against MP3.com?

Not at all. MP3.com has been in business for years -- and the RIAA and its members have never objected to MP3.com?s business practices. Until recently, MP3.com had built its business based largely on lesser known artists not yet signed to major record company contracts. To the extent those artists had authorized their works to be used by MP3.com, RIAA was and is all for it. MP3.com?s founder and CEO, Michael Robertson, apparently grew concerned that he needed more. As he told The Industry Standard ?One of the complaints with MP3.com and it?s a warranted complaint, is that people say, ?You?re doing all these great things with music, but it?s not the music I like.? We need to have all the music ?? MP3.com?s answer was simply to go out and take music it doesn?t have any authority to use -- which the copyright laws do not allow it to do. That?s why RIAA on behalf of its members sued MP3.com. The RIAA, moreover, is not the only group who has been critical of what MP3.com has done in launching its new service. Other Internet businesses and record retailers, who respect the rights of copyright holders, have been seeking licenses for similar types of services. These companies rightly feel that MP3.com is competing unfairly by simply taking the music without seeking authority. Artists and managers have also objected to MP3.com?s use of their music, and even some of MP3.com?s own artists have questioned whether MP3.com should be able to offer their music for MP3.com?s services without first getting their permission.

What about consumers rights?

This is not a consumer rights issue. No one is saying that services like Instant Listening and Beam-it are not creative ideas, or that they should not be available to consumers. No one is saying what consumers should or should not be able to do with their own music CDs. The only issue in the lawsuit is the propriety of MP3.com?s having launched a commercial business with music it does not own and has not licensed. MP3.com is a multibillion dollar public company. It has stated that it intends to build its My.MP3.com service into a billion dollar business. MP3.com wants the most popular music available at its site so it can earn more from advertising. It wants to collect and sell detailed information about its users? music listening habits. And, it has made clear that, ultimately, it has every intention of charging users for the service. This is simply an issue of whether a for-profit business can use someone else?s property to start a business just because it?s technologically possible to do it.

Isn't this a ?fair use? and therefore permissible under the copyright laws?

The fair use doctrine allows someone to use copyrighted material without the owner?s consent under limited circumstances. The exact reproduction of thousands of copyrighted works in their entirety, all for a commercial, for-profit purpose, has never been excused as a fair use. Moreover, whether consumers could rely on the fair use doctrine to individually load their own CDs onto Internet servers for personal listening, under the law, is completely irrelevant. The law is clear that MP3.com cannot stand in the shoes of its users for purposes of any fair use defense. Consider the implications of what MP3.com has done: The Supreme Court has said that individual consumers may be permitted to tape television shows for viewing at different times. According to MP3.com?s theory, this entitles MP3.com to copy every television show that has ever been broadcast into a massive digital archive, and create a business allowing consumers access to any show, at any time, on demand, all in the name of ?consumer rights.? While such a business might be appealing from the consumer perspective, and this business model might ultimately emerge on the Internet, would it be fair for MP3.com to do this without seeking authority from the broadcasters or production companies that have invested billions of dollars producing or acquiring the rights to all of that programming? We don?t think so - and the law would not permit MP3.com to do it.

What is this about MP3.com suing the RIAA?

MP3.com filed a separate action in state court in San Diego against the RIAA and its CEO, Hilary Rosen, for defamation, slander and related legal theories because MP3.com feels RIAA has too harshly criticized MP3.com and what it has done. The claims are without merit, and are a transparent attempt on the part of MP3.com to silence criticism of its infringing tactics. It is ironic that a company founded on the principle of ?information wants to be free? would stoop to filing lawsuits to squelch free speech just because it disagrees with it. It?s also ironic because other than the new service, the RIAA has been generally positive about MP3.com. Indeed, RIAA has even held MP3.com out as a model in a recent press release, saying: ?Companies like UBL, IUMA, Farm Club and MP3.com prove that there are many creative ways to promote new artists online without infringing on the rights of artists and copyright owners.? The lawsuit against MP3.com is not a personal attack. It is a business dispute focused on the most fundamental of copyright principles.

What have RIAA members been doing to harness technological advances in digital music?

RIAA members have embraced new technologies that enable faster, easier, and wider distribution of music, from tapes to CDs to the Internet. RIAA members have thriving e-commerce sites, are implementing cutting-edge technology, and are actively involved in development of new business models. As demonstrated by public announcements coming out all the time, the music industry is clearly open to partnerships, joint ventures, and new distribution channels to bring music to consumers in new and exciting ways. What is going on with concerns over copyright issues in the Internet distribution of music is no different from what is going on in television, broadcasting, and publishing, where new technology and the rights of creative artists are intersecting.

What if someone is interested in offering a service like this but wants to do it without running afoul of laws -- what does he or she need to do?

Anyone who has an idea should talk to the copyright holder, just as he or she would in any other business. Record companies are very interested in deals with technology companies, and new partnerships are announced regularly.

Aren't we all just trying to make music as widely and easily available as possible?

Yes, in fact that is precisely what RIAA and its members are doing. For example, all of the major labels (Sony, EMI, BMG, Universal, and Warner) and most of the major independent labels (Matador, Roadrunner, Beggars Banquet, TVT) have offered and will continue to offer free promotional downloads of certain singles. They work with sites like Listen.com, ArtistDirect.com, Launch.com, GetMusic.com, Rioport.com, CDNow.com, and others to distribute these tracks as well as provide webcasts of live performances, contests, chats, and other events. They have even invested in some of these companies to further solidify relationships and foster mutual marketing and promotion opportunities. On the retail front, both EMI and Universal recently announced plans to sell music downloads online as early as Spring 2000. The major labels have also partnered with, and in some cases invested in, Internet music technology companies like MusicMaker, Intertrust, Liquid Audio, AT&T, Matsushita, and Spinner.com, to name a few. Our members are actively working with the new media community to find ways to deliver music to consumers quickly and conveniently, without sacrificing sound quality. However, like anyone else, the majority of artists, musicians, and other members of creative professions want to be compensated for their efforts -- and like anyone else who invests hard work and creativity, they have the fundamental right to decide which innovative business models they want to pursue and which they do not. The problem is that MP3.com didn?t even ask.

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The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members are the music labels that comprise the most vibrant record industry in the world. RIAA® members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.

In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAA® also certifies Gold®, Platinum®, Multi- Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.