Art and Invention Ripped Away - Media Rights Technologies Demands That Congress Protect Intellectual Property in The Internet Radio Equality Act

Art and Invention Ripped Away - Media Rights Technologies Demands That Congress Protect Intellectual Property in The Internet Radio Equality Act

SANTA CRUZ, Calif., April 30 /PRNewswire/ -- The following is being issued by Hank Risan, CEO of Media Rights Technologies:

At the dawn of the new millennium, The Museum of Musical Instruments (www.themomi.org) was launched by Bianca Soros, historian and writer, and myself to share the richness and diversity of American artistic expression. Our museum (MoMI) was the first to create virtual interactive exhibitions like The Private Life of Mark Twain where you could actually see and hear Mark Twain's 1835 Martin guitar playing Old Susannah for Noah Adams on NPR's All Things Considered. We then collaborated with The Smithsonian Institution and the Library of Congress to produce Bound for Glory: The Life and Times of Woody Guthrie. Other exhibitions with the Museum of Modern Art, New York and The Museum of Fine Arts, Boston document the history and music of artists like Les Paul, Elvis Presley, Marilyn Monroe, Miles Davis, Eric Clapton, The Rolling Stones, and Prince. The MoMI became one of the most popular web destinations, with over 30 million hits a day and 4.5 million unique weekly users learning about American popular culture.

(Photo:

http://www.newscom.com/cgi-bin/prnh/20070430/SFM086 )

In the summer of 2001, The MoMI was hit with a cease-and-desist letter from the RIAA for copyright infringement, alleging damages of $150 million to their members. Upon further investigation it was discovered that Microsoft had circumvented The MoMI's copy protection, exposing hidden music files in an "upgrade" to the Windows Media Player, turning secure MoMI performances into downloads. We notified the RIAA of the circumvention and immediately removed the music from our exhibitions. Subsequently, the RIAA took no action against the MoMI.

Soon after, Bianca and I formed Media Rights Technologies (MRT) and assembled a talented team of hardware and software engineers, as well as experts on intellectual property. Our goal was to solve the core Stream Ripping problem in digital media and to limit the copyright infringement liability of content distributors and educational institutions. In 2004, we launched BlueBeat.com, which allowed the Recording Industry to test our X1 Secure Recording Control prototype. By 2006, BlueBeat was granted the first global webcasting license, which included an anti-Stream Ripping provision, from the Phonographic Performance Limited (PPL) in London, so that BlueBeat could further test secure webcasting, even in China. We also launched a popular Mark Twain MySpace profile (www.myspace.com/69088237) which demonstrates how media can be enjoyed and traded in a fully DMCA-compliant manner.

In 2001, Cary Sherman, President of the RIAA, shared with me his prediction that the Stream Ripping of performance-based content would significantly impact digital entertainment revenues. Cary was right: according to recent MRT studies, Stream Rippers are growing at the rate of well over 15 million units per month, with over 250 million user downloads in the last few years, costing the entertainment industry $20 to $50 billion annually. The problem has now eclipsed P2P file sharing as the #1 form of digital piracy.

There are now over 250 different brands of Stream Rippers which support Vista. Microsoft has even built into the Vista OS a native ripper, called Sound Recorder, which will deaggregate performance-based streams of unlimited duration and convert them into unprotected WMA downloads, easily uploaded onto Zune players. This year, Microsoft's Q1 profit surged 65 percent to $4.93 billion, boosted by sales of Vista, while the Recording Industry's profits have plummeted.

The MRT X1 Recording Control solution has been proven by the RIAA and IFPI to be effective against Stream Ripping, and has been designed for rapid deployment on a RAND basis. RIAA executive Vice President and General Counsel Steven Marks comments, "We do see stream ripping as harmful to the music industry. It's an issue we've brought to the attention of Webcasters, but so far, nothing has been done about it, even though there are technical solutions that do exist. We've encouraged Internet radio companies to speak with MRT because, from what we've seen, it certainly looks like a technical solution."

If the Internet Radio Equality Act is to pass, it must include an anti-Stream Ripping provision.

On March 1, 2007, the Copyright Royalty Board (CRB) issued rates for Internet broadcasting covering a period from 2006 to 2010. The CRB rates represent a 30 percent increase per year in royalties retroactive to 2006. The "per performance" rates also include a $500 minimum fee per channel.

The basis for the rate hikes was primarily a result of the webcasting community failing to adopt content control technology that would maintain the integrity of the streamed performance. Currently every webcaster, except for BlueBeat.com, allows consumers to Stream Rip entire webcasts, enabling the deaggregation copyrighted content, turning every performance into an acquisition.

According to Copyright Attorney David Oxenford, who represented small webcasters in the CRB hearings, "Essentially, SoundExchange argued that Internet Radio confers little promotional benefit to most performers, and that there was a large risk of 'Stream Ripping' which would result in lessened sales of CDs and legal downloads."

SoundExchange and the Recording Industry argued correctly that their content was vulnerable to copying and redistribution by consumers. This is because webcasters like Clear Channel and Yahoo have failed to provide adequate protection for their copyrighted content, instead using unprotected media solutions created by Adobe, Microsoft, Real Networks and Apple.

The CRB ruling widens the gap between royalties paid by Internet radio versus Satellite, Cable and Terrestrial radio stations. Before March 1, 2007, Internet radio was already paying royalties greater than 50 percent over those of Satellite radio, while Terrestrial radio pays no performance royalties.

It is clear from the CRB decision that content providers distributing unprotected digital music shall pay the highest royalty rate.

On the non-licensed webcaster MySpace, The Fray, a popular band signed by Sony, tallies 48 million interactive performances of their content and 0 downloads. Rendered by the unprotected Adobe Flash Player, each of those performances can be Stream Ripped. At the iTunes store, Fairplay protection can be easily stripped away, creating unprotected MP3s with the click of a Stream Ripper "record" button. At Pandora, every one of their millions of user-created playlists can be copied and deaggregated by Stream Rippers. The resulting royalty-free files from these examples are being transferred to an iPod or any other MP3 player.

Recently, Secretary of Commerce Carlos Gutierrez and renowned UCLA Professor Richard Walter publicly discussed the catastrophic effect Stream Ripping has on America's Gross National Product and the balance of trade. The MRT solution protects these precious assets while limiting the copyright infringement liability of digital service providers and academic institutions.

The message is clear and simple: if webcasting royalty rates are to be equalized with Satellite or Digital FM broadcasts by passage of The Internet Radio Equality Act, Stream Ripping protection provisions must be added to the Bill before the CRB rates go into effect May 15, 2007.

Media Contacts: Leslie Kallen, 818.906.2785, leslie@lesliekallen.com
Quake Cox, Media Rights Technologies
831.426.4412, quake@mediarightstech.com

Photo: NewsCom:

http://www.newscom.com/cgi-bin/prnh/20070430/SFM086
AP Archive:

http://photoarchive.ap.org/
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Source: Media Rights Technologies

CONTACT: Leslie Kallen, +1-818-906-2785, leslie@lesliekallen.com; or
Quake Cox of Media Rights Technologies, +1-831-426-4412,
quake@mediarightstech.com

Web site:

http://www.mediarightstech.com/

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