SAN FRANCISCO, February 16, 2011 — Jon Irwin, music subscription service Rhapsody’s president, said Tuesday that Apple’s new plan to partake of almost a third of app companies’ subscription revenues is “economically untenable.”
Irwin wasn’t the only person who voiced his concerns Tuesday. An editorial in Billboard said that the move could potentially devastate the online music subscription music business, and an online digital music veteran called the approach flat out “wrong.”
Apple unveiled a new service Tuesday that will allow consumers to subscribe to digital media services, rather than simply to pay once for an app.
The catch: Apple wants 30% of subscription app developers’ revenues. App developers would also not be allowed to charge more for subscriptions on Apple’s platform than for subscriptions sold elsewhere on the web. And they wouldn’t be allowed to provide a link on their Apple Apps to enable subscribers to buy access on the web.
Irwin responded to Apple’s new policy in a press statement:
“An Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable.
The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.
We will continue to allow consumers to sign up atwww.rhapsody.com from a smartphone or any other Internet access point, including the Safari browser on the iPhone and iPad.
In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development.”
Businesses already struggle to make money — or even to get up and running at all — on the web with music services because of the onerous and complicated licensing process.
A 30% cut of revenues would just make the business unsustainable, many industry insiders noted Tuesday. Music prices are just going to have to rise across the board, or app makers are going to have to migrate to other platforms.
“Rhapsody, which charges $10 a month for unlimited access to a library of $10 million songs, already pays 60% f its revenue to license the music from record labels and publishers,” Alex Pham reported in the Los Angeles Times.
“If you take away 30% of that, it leaves them with 10% to pay for the bandwidth, employees, marketing, everything,” digital music industry veteran and former EMI VP of New Media Ted Cohen told Pham. “Apple is taking a business that’s already operating on thin margins and driving it deep into the red. It’s wrong.”
And Antony Bruno, music industry trade paper Billboard’s executive director of digital content and mobile programming, wrote that Apple’s move “could have a devastating affect on the fledgling music subscription market.”
Though subscribers are free to subscribe through their computers and on the web, he notes that mobile music app providers say that up to half of their subscribers sign up through their iPhone apps.
And he quotes an anonymous music executive who says that the music labels are going to have to absorb the costs, or there won’t be any music apps at all.
“Otherwise nobody is going to be able to have an app. The margins that all of us make are smaller than 30%. We can’t lose money every time somebody signs up. It’s impossible. Everyone’s going to have to raise their prices,” said the insider.
Bruno wonders whether the move is a deliberately anti-competitive one from Apple, which is planning more extensive music offerings of its own in coming months.
“This seems like just the beginning of the debate,” he concludes. “It’s likely at least one lawsuit will come from a publisher (either in print or from a music service) contesting Apple’s right to dictate how they price their subscription. Or perhaps a regulatory agency either here or in Europe will step in. But it’s certainly going to be an issue to watch closely in the months ahead.”
Public Knowledge Celebrates 20 Years of Helping Congress Get a Clue on Digital Rights
February 27, 2021 – The non-profit advocacy group Public Knowledge celebrated its twentieth anniversary year in a Monday event revolving around the issues that the group has made its hallmark: Copyright, open standards and other digital rights issues.
Group Founder Gigi Sohn, now a Benton Institute for Broadband and Society senior fellow and public advocate, said that through her professional relationship with Laurie Racine, now president of Racine Strategy, that she became “appointed and anointed” to help start the interest group.
Together with David Bollier, who also had worked on public interest projects in broadcast media with Sohn, and is now director of Reinventing the Commons program at the Schumacher Center for a New Economics, the two cofounded a small and scrappy Public Knowledge that has become a non-profit powerhouse.
The secret sauce? Timing, which couldn’t have been better, said Sohn. Being given free office space at DuPont Circle at the New America Foundation by Steve Clemmons and the late Ted Halstead, then head of the foundation, was instrumental in Public Knowledge’s launch.
The cofounders met with major challenges, Sohn and others said. The nationwide tragedy of September 11, 2001, occurred weeks after its official founding. The group continued their advocacy of what was then more commonly known as “open source,” a related grandparent to the new “net neutrality” of today, she said.
In the aftermath of September 11, a bill by the late Sen. Ernest “Fritz” Hollings, D-S.C., demonstrated a bid by large copyright interest to force technology companies to effectively be the copyright police. Additional copyright maximalist measures we launched almost every month, she said.
Public Knowledge grew into something larger than was probably imagined by the three co-founders. Still, they shared setbacks and losses that accompanied their successes and wins.
“We would form alliances with anybody, which meant that sometimes we sided with internet service providers [on issues like copyright] and sometimes we were against them [on issues like telecom],” said Sohn. An ingredient in the interest group’s success was its desire to work with everyone.
Congress didn’t have a clue on digital rights
What drove the trio together was a shared view that “Congress had no vision for the future of the internet,” explained Sohn.
Much of our early work was spend explaining how digitation works to Congress, she said. The 2000s were a time of great activity and massive growth in the digital industry and lawmakers at the Hill were not acquainted well with screens, computers, and the internet. They took on the role of explaining to members of Congress what the interests of their constituents were when it came to digitization.
Public Knowledge helped popularize digital issues and by “walking [digital information] across the street to [Capitol Hill] at the time created an operational reality with digitization,” said Bollier.
Racine remarked about the influence Linux software maker Red Hat had during its 2002 initial public offering. She said the founders of Red Hat pushed open source beyond a business model and into a philosophy in ways that hadn’t been done before.
During the early days of Public Knowledge, all sorts of legacy tech was being rolled out. Apple’s iTunes, Windows XP, and the first Xbox launched. Nokia and Sony were the leaders in cellphones at the time, augmenting the rise of technology in the coming digital age.
Racine said consumers needed someone in Washington who could represent their interests amid the new software and hardware and embrace the idea of open source technologies for the future.
Also speaking at the event was Public Knowledge CEO Chris Lewis, who said Public Knowledge was at the forefront of new technology issues as it was already holding 3D printing symposiums before Congress, something totally unfamiliar at the time.
U.S. and EU Privacy and Intellectual Property Landscape Complicate Data Use Requirements
February 7, 2021 – Differences in the intellectual property and privacy landscape between Europe and the United States account are among the forces complicating the regulatory landscape around commercial data, partners at Covington’s Second Annual Technology Forum said on January 27.
Further, because intellectual property laws do not provide robust protection for databases, organizations are increasingly relying on contracts that define rights and restrictions to protect their data.
When learning how to best to handle data, companies need to know what sources it is coming from, said Lee Tiedrich, a partner at Covington. Knowing the type of data is quite important, he said, since data comes in many forms. For example, open or proprietary data should be handled differently than user contributions and scraped data that comes off of public websites.
Differences between U.S. and European intellectual property laws also factor into database protection. Clients need to know how to source data properly because they want to protect their rights to their data and reduce their liability risks, Tiedrich said.
There is no sui generis database protection in the U.S., a term which means databases do not have strong legal protections. This is not unusual as intellectual property laws in the U.S. typically do not provide protection for databases, said Tiedrich.
From a EU legal perspective, there may be some form of IP protection in data but that does not eliminate privacy requirements applying to that data, said Freddie Argent, a partner at Covington.
The panelists also discussed key terms of contracts for data licensors. Data licensors need to employ best practices, have standardized terms, and apply consistency across deals, said Adrian Perry, partner at Covington. Terms of service and privacy policies require clarity with the licensee acknowledging and accepting it, Perry added.
In Google v. Oracle, Supreme Court Hears Landmark Fair Use Case on Software Copyright
October 12, 2020 – The Supreme Court on Wednesday publicly struggled with the copyrightability of software in a uniquely contested case between Google and Oracle, the outcome of which could play a significant role in the future of software development in the United States.
The oral arguments were the culmination of a battle that started 10 years ago, when tech company Oracle accused Google of illegally copying its code. Oracle owns the copyright to the Java application programming interface that Google utilized to establish a new mobile operating system.
The company has sued Google for more than $9 billion in damages.
Yet Google claimed a “fair use” defense to its copying. Google copied less than 1 percent of the Java code. Even though the law generally treats computer programs as copyrightable, Google’s attorney before the Supreme Court, Thomas Goldstein, said that by adapting Oracle’s code to serve a different purpose, Google’s use was “transformational,” and entitled to fair use protections.
Goldstein said that this form of unlicensed copying is completely standard in software, and saves developers time and lowers barriers to innovation.
He referenced a famous Supreme Court precedent about public domain works, Baker v. Selden, which in 1880 declared that once information is published to the public, the public has a right to use it.
“Google had the right to do this,” said Goldstein.
Still, Oracle attorney Joshua Rosenkranz asserted that the Java code is an expressive work eligible for copyright protections. Rosenkranz further argued that Google’s use of the code was not transformational.
Justice Sonia Sotomayor appeared to suggest that jurors in the lower court case properly found Google’s use to be transformational because it took the APIs from a desktop environment to smartphones.
“Interfaces have been reused for decades,” said Goldstein. Google had to reuse Oracle’s code to respond to interoperability demands.
“It has always been the understanding that this purely functional, non-creative code that is essentially the glue that keeps computer programs together could be reused, and it would upend that world to rule the other way,” he said.
Supreme Court observers said that the high court appeared leaning toward upholding the 2016 jury verdict vindicating Google’s fair use defense.
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