Record Industry: Limewire Could Owe $75 Trillion | Hacker News Reader

Record Industry: Limewire Could Owe $75 Trillion

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94 pointsnikhilpandit56 comments

Bad lawyering here: as an advocate, it is good to assert every valid legal position that makes sense for a case but it is always bad to cast your client's position in a light that holds it up to ridicule and mockery. When that happens, any valid claim that might exist gets caught in the downdraft caused by your bad judgment and the whole case is compromised.

I feel for the judges trying to apply 1976 statutory law to modern technology. The 1976 revamp of the Copyright Act was the last comprehensive one and its major purpose was to account for the effect (since the enactment of the 1909 Act then in effect) of motion pictures, sound recordings, radio and other then-modern forms of communication on IP laws. Common law is made by judges case-by-case and it is by nature slow and evolving, as is a parallel type of judge-made law based on case-by-case interpretation of old statutes. It is precisely the vacuum left by this case-by-case handling of an antiquated set of statutes that creates the problems today. What is needed is a comprehensive statutory enactment by Congress to bring these laws up to date and to make them fair. Even if that means keeping copyright under the rubric of "property" and defining wrongs in that area as "thefts," this can still be done fairly by defining sensible penalties that are commensurate with the scope of any wrong committed.

Of course, to do this, you need Congress to break free from the grip of lobbyists whose influence would inevitably distort the amending process. Good luck with that.

One thing this will shed light on though is how absurd the current laws are w/r to damages.

Being a businessperson I really don't understand the recording industry's strategy.

They know that their industry is under heavy disrpution and that their old income model is increasingly obsolete. Thus they need to innovate and find new sources of income, while milking their old sources for all they're worth. This much everyone agrees on, including the recording industry.

They have done no innovation, and I can't point to any serious attempts. They must have seen this coming but it took Apple and their Itunes to implement a system that actually worked. Before Itunes there was no easy legal way for me to download music. The recording industry did nothing. At the same time they're using their resources to alienate their customers as much as humanly possible by suing them and harrassing them at every turn. Not a day goes by where I don't see some kind of bad press for the industry, ranging from articles like this to takedown notices on youtube.

Go to the local mall and ask the cool kid who hangs out with the cool girls what he thinks of the recording industry. He'll tell you that they're bloodsucking maggots because he's seen the same articles and takedown notices that I have. And he'll tell you that there's noway he's giving them money, and that you shouldn't either. He's the opinion leader that all industries need to be friendly with.

A whole industry whose best idea of making money is to sue their customers needs to seriously rethink their strategic stance.

Their behavior may be rational if they believe that no new business model can work.

that's an excellent point that i hadn't considered. maybe they realize (correctly or incorrectly) that there's no way to sustain their business at the level to which they're accustomed, so they're just slash-and-burning the whole thing and taking the lumber to build new houses.

Interesting point, but I don't think that's what's happening. If it is then some people need to be fired.

Apple is raking in billions from itunes that could have gone to the recording industry.

The labels are already getting 70% of every sale; it's hard to imagine that getting 80-90% would save the industry.

It may also be rational if they aren't sure what new business model would work and figure it would be too expensive to find out themselves. Or they recognize other business models can work better, but they aren't in a strong position to capitalize on them so they take advantage of what they can while they still have some position of strength.

In 2009 I dated an actress (musical theatre) who was being approached by the recording industry to do an album. So I went to a lot of parties with Music execs and I'll tell you what they told me.

Their strategy IS to be the bad guy.

Ask any record exec over 35 and they'll tell you people have always hated record companies. Heck, the artists themselves bad mouth the record companies and always have (James Taylor wrote a whole song bashing record execs in the 70s: http://tinyurl.com/49greg6).

So the strategy is to use that. Let iTunes, Pandora, Mog and the rest be the good guys. While the recording industry uses the RIAA to punish anyone who dares pirate with fees outrageous enough to make $10 a month seem like a gift.

One thing record execs realize that most of the general public doesn't: They have an unregulated monopoly. For example the law treats hiphop music like it's all one product and so it's held to the law in that way. As long as there are multiple hiphop record labels there's no anti-trust issues. But that's B#llS#it. If you love Eminem than you want his music and that only comes from one label. And if that label can force you not to pirate than they'll get your money no matter how much you hate them.

Monopoly over what, exactly? A lot of my favorite music is not under the purview of the RIAA.

I'm not sure what Tom was referring to, but for example, SoundExchange (an RIAA spinoff) "is designated by the Librarian of Congress as the sole organization authorized to collect royalties paid by services making ephemeral phonorecords or digital audio transmissions of sound recordings, or both, under the statutory licenses set forth in 17 U.S.C. § 112 and 17 U.S.C. § 114"

http://en.wikipedia.org/wiki/SoundExchange

I think he means a monopoly over the output of any given artist, under the traditional system where artists sign restrictive multi-album contracts.

Okay, then that's not a monopoly, it's merely an onerous contract.

Copyright is the monopoly here. It's an exclusive right to control the distribution of a particular work. The onerous contract is what transfers the monopoly from the artist to the record company.

The problem is the cumulative power that the big four record companies wield, due to the sheer amount of rights they control. It allows then to arbitrarily dictate prices and conditions, because if you don't accept their terms, they can lock you out from their entire catalog. Since they have exclusive rights, no one can start a competing service with more favorable terms or a more economical business model. Which is why these four even have the ability to try to keep their pre-digital business model. If there was any real competition here (not saying I have an answer to how that would work), these companies would have been ground into dust ten years ago. Instead they have manage to either litigate away or drown in fees, any possible successor to their antiquated way of distributing music.

There are of course independent labels, free music, creative commons and so on, but that's competing distribution models for the artist, and offers no possibility for the consumer to "vote with his money". The only choice is to get a different album/song from a different artist, which doesn't make much sense to me. If I want to listen to "The Chronic" by Dr. Dre, I might also want to listen to "Illmatic" by Nas, but they're not interchangeable competing goods in a free market.

Not only have they alienated their customers the listeners, they have also taken the shift to digital as an opportunity to alienate their other customers--the artists. They somehow managed to work it so (unless they renegotiate contracts) digital downloads and streaming are an even WORSE deal for artists than CDs were (abysmal).

You owe the bank $10,000 and don't pay, you have a problem.

You owe the bank $10,000,000 and don't pay, the bank has a problem.

You owe the RIAA $75,000,000,000,000 and don't pay, who has the problem?

This seems like a great example of what I am sure will be an increasingly common problem as more and more laws are written by lobbyists. What do you do when they don't make any sense and were clearly never thought through?

It's so hard to be optimistic about the world in the face of this sort of thing, especially when there are instances of it everywhere you turn.

Agreed. It almost feels like we're being herded into indentured servitude. Share a song you like? That'll be $40MM please. "Can't pay? We have this hole we need dug... On Mars... I hear it's cold there."

Your analogy doesn't hold, because the first two are debts and the third is compensation for damages. You owe $75 trillion in illusory damages to a party, it's still you who has the problem. If we were talking real damages it might hold, but we're not talking real damages. And of course you can't pay $75 trillion, but you sure can be driven bankrupt.

I think that when you ask for more money than the GDP of the entire world you should be laughed out of court and then slapped with a punitive judgment for wasting the court's time and resources.

But that's just me.

The real story here is that the RIAA's claims finally got so ridiculous, the judge called bullshit and is suggesting a different way of calculating damages. Specifically, for the law that assigns a $ value per work infringed, he's suggesting interpreting that value as per distinct work infringed rather than per individual copy made.

The judge is a 'she'

http://en.wikipedia.org/wiki/Kimba_Wood

I was a young music fan who taped music because I loved music and had no money. I now buy lots of of music because I love music and have money.

I do not pirate music and I buy (or legally stream) TV and video. But I clearly remember and resent the late nineties and early 2000s when a CD was £15.99 in HMV or Tower (close to $30 in old money).

(I am also fairly convinced that there was price-fixing and monopolistic behaviour then)

Now we have a more open, fairer system for artists and consumers - yet rather than accept that they have been caught-out and the world has moved-on without them the record companies are lashing out at young music fans rather than nurturing and encouraging them.

If you ever needed a reminder of the greed of the recording industry here it is.

"(I am also fairly convinced that there was price-fixing and monopolistic behaviour then)"

There was a class action lawsuit in the US covering exactly that back in 2004 or so. I think I got about $7 from the settlement.

The Judge noted in her opinion about this that $75 Trillion is more money than has been printed since Thomas Edison invented the phonograph. Your first reaction may be to rail against the lawyers of the record industry, but realize they are just asking for the maximum allowed by federal law ($30,000 per infringement). Indeed, one might argue it is a lawyer's duty to seek the maximum amount of damages allowed, just as it is your accountant's job to arrange your taxes so you pay the minimum allowed by law. The real problem is the disconnect of the law itself with reality. I'm in no way endorsing the behavior of the record industry (imagine how well they'd be doing if they had bought Napster instead of suing it?). I'm merely seeking to point out the root of the problem. If the law was written more intelligently, dying industries wouldn't be able to get life support from the courts.

I think people are railing against their lobbying and fear-mongering which made such absurd amounts legally possible. That they made the tools, not that they're using them.

Judges don't have a problem with absurd penalties. US Judges routinely hand out multiple life sentences served consecutively. Or life sentences for victimless crimes.

It doesn't matter how the law was written take something simple that anyone could understand like the Interstate Commerce Clause. Now put it in front of the supreme court all of a sudden growing plants in your closet is interstate commerce. Even though the person had no intention of selling it, let alone out of state. The law will be contorted by those in power to serve exactly what they want to do.

Do the drug laws in this country need reform? Yes. Are the penalties for non-violent drug crimes particularly harsh? Sure. Is the entire system of law so contorted and corrupt that it's completely the control of "those in power" as you call them? I rather doubt it. Such an extraordinarily claim requires extraordinary evidence and you've provided none. You've simply waved your hands around and grumbled about how judges "routinely" hand out multiple life sentences, without including any proof, context, or analysis how this alleged fact supports your argument.

Clearly the angle you're approaching this issue from is that of marijuana legalization. Consider this: the fact that you are unable to have a rational view of our justice system is one reason why decriminalization/legalization is taking so damn long. Remember Prop 19? It is one of the most incompetent pieces of legislation I've ever read, mostly in part because of attitudes like yours that the justice system is completely broken and out to ruin the lives of every pot smoker in the US. A good summery of some of the more fundamental issues with Prop 19 here: http://news.ycombinator.com/item?id=1864578 and here: http://news.ycombinator.com/item?id=1865987. Point is that the justice system isn't the boogie man, and the thought that it was is what caused Prop 19 to be such garbage. I honestly have no idea where the idea comes from. Last time I checked weed was decriminalized in 12 states and many townships in the US. I'm not trying to convolute the main line of discussion here, but the subtext beneath your post needs to be addressed.

Finally, if you actually believe the rather macabre view of the justice system you're espousing, you should pack up and move out of the country. I for one couldn't live in a country with a justice system like the one you describe. There's a world of difference in believing the justice system in imperfect and in need of reform (my personal view) and your view which seems to be that it's completely broken.

Fiat justitia ruat caelum

No individual or group in the country has all the power. However, most of the power is split up among a minority of players and corruption and abuses of power run rampant.

Small scale: I know someone who did serious time because he picked up some drugs for a old friend who was trying to get a lighter sentence. This is someone who had never sold drugs, and stooped using a while ago. But transportation = distribution and "entrapment" does not count when the cops use a third party.

Large Scale: UBS whistleblower Bradley Birkenfeld is the only person to due time over a multi billion dollar tax fraud.

PS: Don't forget the recording industry is only worth 12 billion a year, yet protecting that tiny cash flow is worth more than pissing off all those pirates.

No law can fix stupidity, individual or corporate.

That's actually more than the Gross World Product...

The CIA Factbook cites the 2010 estimate for GDP at $74.48 trillion:

https://www.cia.gov/library/publications/the-world-factbook/...

Also of interest, another number close to this is the world's stock of broad money, at around $75.86 trillion. Because this is comprised of all money in circulation, plus the total quantity of money in money market funds, credit union deposits, and other liquid assets, the top end of what is being asked for is almost literally, all of the money in the world.

> the top end of what is being asked for is almost literally, all of the money in the world.

LOL, now THAT is awesome. The RIAA would be the perfect villain if they weren't so ridiculous.

I wish that's how the RIAA did the calculation.

Judge: "What are the damages?"

RIAA: "How much money is there in the world? We'll start with that. No, seriously."

may be RIAA is from the future ("Austin Powers")

If there's really that much value in free music then there's a heck of a case for making music a freely available public good.

The good news is that there is tons of legally free music available these days. The internet has let lots of hobbyists, some pretty darn good, publish music that would have otherwise languished in their home studios.

If there's really that much value in free music, then the judgement should be paid in electronic copies of songs, $30000 a pop.

Assuming the damages Limewire will have to pay total an astronomical amount, who on earth pays for it? Do the founders take on the debt for the rest of their lives or what?

I'm assuming that Limewire is an LLC, which means its debts (don't always) transfer to its principals. This would likely mean Limewire is liquidated and the plaintifs get dibs on whatever is made from that.

LimeWire is incorporated as an LLC but plaintiffs are trying to pierce the corporate veil and name the founder personally.

>plaintiffs are trying to pierce the corporate veil

They're also trying to get a $75T judgment. I'd suggest what they are seeking and a likely reality don't overlap much.

In this case, the court gave them exactly what they asked for:

"As a result of the actions and benefits described above, Lime Group and Gorton are liable for LW’s inducement of infringement. See Capitol Records, Inc., 218 F. Supp. 2d at 284-85; Blum v. Kline, 1988 WL 52916, *2 (S.D.N.Y. May 17, 1988) (finding that president of defendant corporation could be found liable for infringement because he “owns all of [the corporation’s] shares and is responsible for [its] daily activities.”)."

(full summary judgement here: http://www.scribd.com/doc/31272055/Arista-Records-Summary-Ju...)

Well that's mildly disappointing. I guess he'll have to declare bankruptcy.

I still think the judgement should be payable in mass emails of pictures of $20 bills.

This is the record industry's inflation adjusted Doctor Evil moment.

Roughly the same amount too.

Simple. Just dig out your checkbook, write out a check for $75,000,000,000,000, sign and date it, smile, and invite RIAA to take it to the bank and see what happens.

knowingly passing a bad check is a crime.

A bit modifying your idea, the Limewire LLC should just accept the 75T debt or even willingly accept another couple hundred T on top of it. Let it be round 1000T to cover any future violations.

Dr. Evil: "Here's the plan. We get the warhead, and we hold the world ransom for.....One MILLION DOLLARS!!"

No.2: "Ahem...Don't you think we should maybe ask for more than a million dollars?"

$75 Trillion..

Apparently the RIAA has figured out how to get blood from a stone?

Actually the judge is looking to help them by suggesting that their estimate is bullsh*t, since they are very unlikely to get $75 Trillion.

just curious here, but how much money has the record industry made since the beginning of time?

Not much with Limewire stealing $75t worth of music from them.

I think its high time that the RIAA should be referenced by its members rather than the face-less acronym.

Imagine how much it would hurt someone like Sony if each time a bad article, comment or story reached the masses it had the words representing Sony in the title.

The largest and most influential of the members of the RIAA are the "Big Four" that include:

    * EMI

    * Sony Music Entertainment

    * Universal Music Group

    * Warner Music Group

And rightly so; as far as these cases are concerned the RIAA is merely a PR instrument. The plaintiffs are the record labels, not the RIAA.

Do we really need any further evidence of the desperation and general incompetence of the entertainment industry.

Never have I seen an entire industry act so horribly wrong to technological advances as the music industry in the face of Internet.

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