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An introduction of On- line Digital Music Piracy

By Stefany Hung on April, 20th,2010

Many paragraphes were directly from original articles. If you are interest , please go further to original articles to read more. Thank You.

My apologies, this article was an introduction & wrote for my personal research purpose only.

I am trying to incorporate more new development.

I. Introduction:

With the rapid –fire emergence of Digital Music file-sharing since 1999, music sales dramatically dropped. Revenues in 2003 were about $ 20 million. In 2007, revenues the manufacturers’ level for download music, both online and mobile was proximately $ 2.92 million[1].( See Music Industry Download Global Revolution: Markets, Forecasts, and Trends , by STIX Market Research, April 2008, Paragraph 3^rd)

High rate of Digital music piracy has seriously eroded the legitimate music market that leads to a situation where the recording industry has been unable to make reasonable profits. For some artists, they have been unable to sustain their living standard. There are a couple of examples (Brazil,France, Spanish, and China) as we outlined below that explain why piracy is killing the record industry.

Many governments around the world have moved forward to taking actions to rein Digital Music piracy through different approaches by making legislative changes (graduated response system), cooperating with IPR holders against digital piracy on enforcement, and providing a wide range of digital music services. Yet different and unified legislations, and policies, and legal systems in between different countries around the world have increased difficulties of IPRs enforcement against piracy cross boarders in particular when there is an issue on jurisdiction.

This thesis covers following 4 sections by which I would like to address this piracy issue from Asia perspective. And hopefully, I can give you an overview ofthe trend of legislations, policies, and court rulings on Digital Music piracy issue in Asia–pacific jurisdictions, and also the possible solutions that may be used against global digital piracy.

I). How does Internet Digital Piracy spoil legitimate music markets?

II). How court rule such high profile cases on Digital music privacy issue in Asia–pacific jurisdictions?

III) What are the current policies, legislations, enforcements of

Copyrights in Asia–pacific jurisdictions?

IV) What are the solutions against internet digital music piracy?

1) Anti-counterfeiting trade agreement.

2) Tracking site – decrypt & re-encrypt

3) International IP police and IP court.

II. Analysis:

I). How does Internet Digital Piracy spoil legitimate music markets?

In accordance with report by the International Federation of the Phonographic Industry (IFPI) in 2010 ( hereinafter is refereed to IFPI 2010 report) [2] (see Digital Music Report 2010) indicates that unauthorized services that make songs available to users for illegal file-sharing and other form of on-line piracy< known as Peer-to-Peer, Bit Torrent (BT) system, or deep links> have eroded legitimate music markets with a clear evidence that digital music market continues growing –with trade revenue up 12% to estimated US$ 4.2 billion in 2009, the overall sale of music fell by around 30 percent from 2004 to 2009. And this also leads to a situation where the recording industry was unable to make reasonable profits and artists cannot earn their livings. There are a couple of examples (Brazil, France, Spanish, and China) that explained why piracy is killing the record industry.

In IFPI 2010 report, Spain was found to have the highest rates of illegal file sharing in EU, sales of the top 50 artists fallen by an estimated 65% between 2004-2009; in France, a quarter of internet users population download illegally, which has seen album releases by local artists fall by 60% between 2003 and 2009; in Brazil sales plummeted, full priced major label album releases from the 5 music companies in 2008 were down 80% from their 2005 level. [3] ( IFPI publishes Digital Music Report 2010 )

In 2009, China's digital music market reached nearly 18 million RMB in trade value; however, only 5% of users consumed legitimate digital music via paid services. If copyright issue can be resolved, in accordance with the estimation above, the trade value of the Chinese digital music market would have reached 30 billion RMB (Investment Advisor in the release of "2010-2015 China's digital music market, Investment Analysis and Prediction of the report”[4]

Given the statistics above, we learn how Digital Piracy spoils legitimate markets. It is a signal of Global warning for music industry, isn’t?

II). How court rule such high profile cases on Digital music privacy issue in Asia–pacific jurisdiction?

Court rulings in Asia– pacific jurisdictions up to Feb 2010

The court rulings regarding Lawsuits against file-sharing services in Asia-Pacific Jurisdictions have generally followed the pattern of decisions in the United Statesjurisdiction, in favor of music groups, copyright holders. However, there are some recent cases in these regions, for example, Australia ( Feb 13th, 2010 –iiNet case[5]( Federal Court decision on iiNet vs. film and television studios by Austria Copyright council ), Japan (Oct. 2009 – Winny case [6] ( see Japanese court overturns Winny ruling, says file-sharing software is legal even if used for infringement,By Cory Doctorow) and new amendment of copyright law[7]( Japanese copyright law ), China (Jan 28^th, 2010- Baidu case) where the views on the illegality of file-sharing, in particular, ISP’s and developers’ of software liability, have diverged from their US counterparts. We are now here providing a chart of court rulings for high profile cases in Asia-Pacific Jurisdictions from 2003 to 2010. The judicial climate seems to have changed!

III). What are current policies, legislations, enforcements of copyrights in Asia–pacific jurisdiction?

Responding to such a crisis, governments are gradually moving towards legislation requiring ISPs to curb digital piracy. In 2009, Japan,South Korea and Taiwan amended their copyright related laws to enhance such protection of digital copyrights. Other governments, including the Singapore,India, UK, New Zealand, have proposed new laws for adoption in 2010[8]( Digital Music Report 2010 at p.3 ).

1) Japan

l On March 16^th, 2008, four major Japanese ISP organizations have agreed that they will work with copyright holders to track down copyright infringing file-sharers and disconnect them from the internet on March 16th,2008.[9] (Japanese ISPs Agree to Ban Pirates from the Internet,Written by enigmaxon March 15, 2008),

A Memorandum was signed by IMPALA Members who agreed on ISP’s cooperation on online piracy around the world.[10] ( A Memorandum was signed by IMPALA Members )

l Further, on June 12, 2009 Japan amended its copyright law to crack down on illegal download and this came into force Jan. 2010. Here is the content of amendment. [11] (Japanese copyright law )

1) DOWNLOADING illegal contents will be ILLEGAL

2) Search engine cache (and data backup cache, streaming cache) will be LEGAL after the bill is put into effect as there is no way search engine companies can get permission for each and every piece of content they index.

l Basically, in the Winny case, Japan high court overturned the district court ruling, concluding that the technical value of file-sharing of the software is neutral. The purpose (of supplying the software) was purely to verify the technology. Therefore, court discharged developers’ criminal charge, and according to Japan’s new law, search engine cache (and data backup cache, streaming cache) is LEGAL from January 2010. From the judgment and new law amended, it can be seen that Japanauthority’s opinions & attitudes on developers of technology, and ISP’s liability for those illegal distribution of copyrighted works via network is changing.

2) Australia

l In February 2008, Australiagovernment clarified its position stating that downloading material or files on a file-sharing network through P2P software will generally need permission of the copyright owner.[12] ( See Internet: copying & downloading material, by Australiacouncil information sheet, Feb 2008. )

l On February 26, 2008, Australia Considers ISP Policing of File-Sharing

Australia is now also pondering a "three strikes" devices that would make ISPs police the file-sharing habits of their customers.[13] ( Australia Considers ISP Policing of File-Sharing;Austrlia copyright law )

l On February 13, 2010, The Autralian Federal Court has found in favor of internet

service provider (ISP) iiNet Limited (iiNet) [14] (see Federal Court decision on iiNet vs. film
and television studios by Austria Copyright council ) in a matter brought against it by
several major film and television studios and also involving the Australian Federation
Against Copyright Theft (AFACT).

3) Taiwan

On 2010.02.10 Taiwan amended its copyright law[15] ( see 2010.02.10 Taiwan amended its copyright law) which imposes obligations on ISPs to monitor on-line illegal file-sharing and distribution through its network services. ISPs must also take immediate measures to combat on-line piracy. For example to give warning notice to alleged infringers upon receipt of infringement notification from copyright holders, and expeditiously remove or disable access to the allegedly infringing content or related information upon notification by a copyright holders, and also to give counter notification to right holders so that the allegers can solve the disputes or file lawsuit against the infringer in mandatory 10 days upon receipt of counter notification.

Taiwan‘s authority has aggressively collaborated with copyright holders against digital music piracy since 2006 after the Kuro & Ezpeer case were settled. As you can see from the chart, many infringers have been convicted for illegal file-sharing, uploading, downloading, reduplicating.

According to the 2009 IFPI report, Taiwan’s digital music industry pointed out that global music sales fell about 7% , but the digital music market are thriving for more than 25%, output up to 3.7 billion NTD in trade value. It cites the effective actions taken by the authorities, including the implementation of new laws and enforcement of copyrights, have lead to increased digital music sales.

4) South Korea

South Korea is another primary example where its government has contributed to improve the legal environment combined with a wide range of commercial digital music offering by its which apparently has increased its legitimate music sale and local investment.

Much the same as Taiwan,South Koreastarted improving it legal environment

in 2007 after Soribada and Bugs 2 cases which had been prosecuted successfully and defendants finally turned legitimate.

In 2008, South Korea adopted graduated response system to its new law which allows its authority to order ISPs to give warning notification and suspend an account following 3 warnings if continuous violations are found, and must disable infringing message or content from public to access. The new law was enacted in April 2009 and became effectively in July 2009, and this has raised awareness of public in protection of copyrighted music works and has had a significant deterrent effect.

Moreover, IFPI Digital Music Report 2010[16] (see IFPI publishes Digital Music Report 2010 ) pointed out that its music sales increased by 18%, with digital sales up by 32% on the same period in 2008. Digital sales grew by 53 percent in the first 9 months of 2009. CD sales also rose in 2009 for the first time in 5 years. Preliminary research by the South Korean government also indicated that local consumers are aware of new law. In an indicative survey based on 1,000 interviews, 45% said they were illegally downloading less content.

5) China

The rate of music piracies is apparent high in China.According to IFPI statistics show that physical music sales in China in recent years has been falling continuously, compared to the 2008 and 2007, sales fell 25 percent, down from 280 million to 214 million RMB. So far there are no data released for the year 2009, but the decrease in trade value is to be expected.

An official data released in 2005, China have warned more than 7000 illegal music sites. IFPI estimates that piracy of digital music inChina more than 90% by 2008;China's Internet users download illegal music files network number more than 7.3 billion. The legitimate music sites in China were less than 20 left.

On Sept 3^rd, 2005 Internet Society of China Copyright Alliance issued a "Chinese Internet copyright self-discipline Convention ", signed by 40 units to join the Convention.

It is a self-regulation in order to govern internet behaviors and promote the development and utilization of network information resources.

In December 2009, Chinagovernment shut down hundred of video and BitTorrent trackers sites, for operating without appropriating government license. [17] (see Will The Chinese BitTorrent Crackdown Boost Criminals? Written by enigmaxon December 15, 2009)

However, time will tell if such an aggressive crack down action will force customers back to illegal trade on piracy undertable or push them back to the arms of the legitimate vendors of music works. It is a question deserved to be asked and answered . Let’s just wait to see its development.

The Chinese authorities published proposed amendment to their current copyright legislation on February 26^th 2010 ("About modification The People's Republic of China Copyright Act" decision "the second amendment), and came into force from April 1, 2010. However, this new amendment includes two articles which do not explicitly impose liability on ISP to take measures upon receipt of infringement reporting. However, it said in article 4 “ The publication and dissemination of works shall be subject to the administration and supervision of the State”. This may give the power to authority to order IPSs to take action block internet piracy.[18] ( "About modification The People's Republic of China Copyright Act" decision "the second amendment)

6) Singapore

A report indicated that the record music marketplace in Singaporeis under serious stress. Sales of physical product ( CDs) is free fall, with revenues plummeting in Singaporeis almost 50% from 2004-2008 2010. Many labels, both international and local ,as well s the major international music publishers , have drastically cut block their Singaporeofficers, or ceased operations there altogether. The retail market has been decimated, and wholesale operations no longer exist in Singapore. See The Special 301:Singpore by International Intellectual property alliance ( IIAP) [19] See The Special 301:Singpore by International Intellectual property alliance ( IIAP)

Here is the suggestive actions which the Singaporegovernment should take in 2010 outlined in The Special 301: Singpore by International Intellectual property alliance ( IIAP)

• Enhance enforcement against end-use business software piracy, and fulfill its FTA obligations, by protecting informants, adopting a reasonable construction of the “wilfullness” requirement, and increasing potential criminal penalties.

• Fulfill its FTA obligations by bringing public prosecutions against significant instances of music piracy, both online and offline.

• Engage with ISPs to make responsible repeat infringer policies a regular feature of the landscape,

and otherwise to encourage cooperation with right holders to combat online piracy.

• Improve enforcement against imports of piratical music CDs.

• Adopt legislation specifically outlawing video cameras from Singaporecinemas.

7) India

The IIPA reports, which place Indiain a 'danger zone', significantly influence regional and international discourses on piracy. Interestingly, the IIPA in India has been very successful in regionalizing and nationalizing a global discourse. Thus, in the past few years, local industry associations in Indiain cinema, music and software have independently run highly emotional campaigns against piracy, reminiscent of IIPA's own campaigns.[20] (Enforcement of Anti-piracy Laws by the Indian Entertainment Industry by Siddharth Chadha in Blog— Jan 22, 2010 05:55 PM )

In its draft of amendment of copyright law, Section 65B “provides for the enforcement of RMIs allows attachment of civil or criminal liability towards violating persons below: Any person, who knowingly (ii) distributes, imports for distribution, broadcasts or communicates to the public , without authority , copies of any work, or performance knowing that electronic rights management information has been removed or altered without authority, shall be punishable with imprisonment which may extend to two years and shall also be liable to fine ”

Some people in a belief that this leaves room for impleading 3rd parties such as ISPs as a distributor, or broadcaster for example, by arguing that because the ISP knows that some piracy is being communicated through it, and therefore is under an obligation to find out exactly what and by whom. If this argument is sustainable, then a whole host of privacy issues on behalf of the consumers, and obligatory functions on behalf of ISPs immediately arise.

II) What are the solutions against internet digital music piracy ?

1) Anti-counterfeiting trade agreement

In a response to such a piracy crisis, many countries now are on the process of negotiating Anti-Counterfeiting Trade Agreement (ACTA), which is a legal framework aimed to against counterfeitgoods, genericmedicines, as well as "piracy over the Internet. It is proposed a plurilateral trade agreement for establishing international standards on intellectual-property-rightsenforcement throughout the participating countries. Since October 2007 as of tody, USA,European Commission, Switzerland, and Japan Australia, Canada, Jordan, Mexico, Morocco, New Zealand,Republic of Korea, Singapore, and United Arab Emirates have been joined ACTA’s negotition.

A document leaked to the public in 2008 includes a provision to force Internet Service Providers (ISPs) to provide information about suspected copyright infringers without a warrant. A March 2010 leak included the proposed text for this provision.^{[21] SEE} Anti-Counterfeiting Trade Agreement (ACTA)

2) Tracking site – decrypt& re-encrypt

Below Paragraphes were from "Patent application title: Digital Rights Protection in BitTorrent-like P2P Systems IPC8 Class: AH04L900FI / USPC Class: 713153 / "

For many people know that BitTorrent-like ( BT) P2P systems are scalable and efficient for internet content distribution. However, BT systems are mostly used for distributing non-copyrighted or pirated digital objects on the internet. Now existing Digital Rights management techniques are mainly based on a client –server model, and cannot be directly applied to peer-to –peer based BT systems.

To leverage the efficiency and the scalability of Bit Torrent (BT) systems for Internet content distribution, the present invention discloses enhancing BT peer-to-peer systems to enable digital rights management without infrastructure changes. The technique involves runtime re-encryption of each file piece, which may already be encrypted, before a peer uploads it to any other peer. To access the re-encrypted pieces, a tracker site generates decryption keys that are unique for each peer and for each file piece. While any user can take part in the content distribution, only legitimate users with the unique decryption keys can access the plaintext of the encrypted distributed content. [22]

Here we found person named “Xinwen Zhang” who have invented a new technology

“Digital Rights Protection in Bit Torrent-like P2P Systems” to detect such illegal file-sharing and now his invention has been filed to US PTO for patent registration under review.

Here is the diagram of this patent application. Here you can see how this

Works. (See Digital Rights Protection in BitTorrent-like P2P Systems - diagram,

schematic, and image 03)[23] Digital Rights Protection in BitTorrent-like P2P Systems -
diagram, schematic, and image 03

That is each file piece is headed with a unique serial number for a peer. When this peer (uploaded) uploads this piece to another peer (downloader), the head information of the downloader is provided by the tracker site and uploaded by the up loader. However, this requires the trusted behavior of each peer, and assumes that BT client software can recognize and update the head information. Such requirements are not realistic because a general peer cannot be trusted to behave in an expected manner. Thus, the unique challenge to enforce DRM in BT system lies in the conflict between security requirements and the open environment where a peer downloads different pieces from various sources.

3) International IP police and IP court.

As we have mentioned previously, various legislations, and policies, and legal systems in between different countries around the world have increased difficulties of IPRs enforcement against piracy, in particular, on the issue of jurisdiction. In my idea, is to establish a system of international anti-piracy police whose main task is to unite global police force aimed to against piracy cross borders. Also, an international Intellectual Property Court is highly suggestive if the issue of jurisdiction cannot be resolved ( for example, for illegal file- sharing hosting websites registered outside the territory of the location where the illegal file sharing computer servers are located.)

III. Conclusion

Education is an essential element in addressing piracy, but can only form part of the solution, alongside good commercial music services and well-enforced legislation.

---

[1] Music Industry Download Global Revolution: Markets, Forecasts, and Trends , by STIX Market Research, April 2008, Paragraph 3^rd.

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[2]. Digital Music Report 2010 at p.3 http://www.ifpi.org/content/library/DMR2010.pdf

[3] IFPI publishes Digital Music Report 2010 http://www.ifpi.org/content/section_resources/dmr2010.html

[4]互聯網平臺過於開放 線上音樂市場發展受限 ,2010年04月01日 14:50 來源：中國經濟網 中投顧問 文章末段

http://big5.ce.cn/gate/big5/finance.ce.cn/rolling/201004/01/t20100401_15668182.shtml

[5] Federal Court decision on iiNet vs. film and television studios by Austria Copyright council http://www.copyright.org.au/news/news_items/cases-news/2010-cases/roadshow-films-pty-ltd-v-iinet-limited

[6]Japanese court overturns Winny ruling, says file-sharing software is legal even if used for infringement,By Cory Doctorowhttp://boingboing.net/2009/10/08/japanese-court-overt.html

[7] Japanese copyright law http://www.cric.or.jp/cric_e/clj/cl4.html#cl4+S4; http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2009/03/11/1251916_6_1.pdf

[8] Digital Music Report 2010 at p.3 http://www.ifpi.org/content/library/DMR2010.pdf

[9] Japanese ISPs Agree to Ban Pirates from the Internet,Written by enigmaxon March 15, 2008, http://torrentfreak.com/japanese-isps-agree-to-ban-pirates-from-internet-080315/

[10] A Memorandum was signed by IMPALA Members http://www.bima.be/uploadfiles/Memo%20-%20ISP%20cooperation%20on%20online%20piracy%20around%20the%20world.pdf

In March 2008, four major Japanese ISP organisations agreed to work with copyright holders to track down copyright infringing file-sharers and disconnect them from the internet. The agreement, which is still under discussion, would see copyright holders tracking down file-sharers on the Internet using special detection software and then notifying ISPs of alleged infringers. ISPs would first send out emailed warnings, then block the Internet connection if action to cease the activity is not taken. For persistent breaches, the ISP would ultimately terminate the accounts of its subscribers.

[11]. Japanese copyright law http://www.cric.or.jp/cric_e/clj/cl4.html#cl4+S4; http://www.mext.go.jp/component/b_menu/other/__icsFiles/afieldfile/2009/03/11/1251916_6_1.pdf

[12] See Internet: copying & downloading material, by Australiacouncil information sheet, Feb 2008.

[13] Australia Considers ISP Policing of File-Sharing http://www.dmwmedia.com/news/2008/02/26/australia-considers-isp-policing-file-sharing;

Austrlia copyright law http://en.wikipedia.org/wiki/Internet_censorship_in_Australia

[14] Federal Court decision on iiNet vs. film and television studios by Austria Copyright council http://www.copyright.org.au/news/news_items/cases-news/2010-cases/roadshow-films-pty-ltd-v-iinet-limited

[15] 2010.02.10 Taiwan amended its copyright law http://www.tipo.gov.tw/ch/AllInOne_Show.aspx?path=1362&guid=a71977ea-6478-4e37-a46a-15497ba7c275&lang=zh-tw

[16] IFPI publishes Digital Music Report 2010 http://www.ifpi.org/content/section_resources/dmr2010.html

[17] Will The Chinese BitTorrent Crackdown Boost Criminals? Written by enigmaxon December 15,

2009 http://torrentfreak.com/will-the-chinese-bittorrent-crackdown-boost-criminals-091215/

[18] "About modification The People's Republic of China Copyright Act" decision "the second amendment http://www.fdi.gov.cn/pub/FDI_EN/Laws/GeneralLawsandRegulations/BasicLaws/P0201003: 10354970932477.pdf ; http://irs.iresearch.com.cn/Consulting/digital_music/DetailNews.asp?id=104812

[19] See The Special 301:Singpore by International Intellectual property alliance ( IIAP)http://www.iipa.com/rbc/2010/2010SPEC301SINGAPORE.pdf

[20] Info

Enforcement of Anti-piracy Laws by the Indian Entertainment Industry by Siddharth Chadha in Blog— Jan 22, 2010 05:55 PM

http://www.cis-india.org/advocacy/ipr/blog/piracy-and-enforcement

[21] Anti-Counterfeiting Trade Agreement (ACTA) http://en.wikipedia.org/wiki/Anti-Counterfeiting_Trade_Agreement#cite_note-ec-round3-24

[22] Patent application title: Digital Rights Protection in BitTorrent-like P2P Systems

IPC8 Class: AH04L900FI / USPC Class: 713153 / http://www.faqs.org/patents/app/20090210697#ixzz0ldOYOW8bhttp://www.faqs.org/patents/app/20090210697#ixzz0krzHfrkF

[23]Digital Rights Protection in BitTorrent-like P2P Systems - diagram,

schematic, and image 03 http://www.faqs.org/patents/imgfull/20090210697_03 ;

Patent application title: Digital Rights Protection in Bit Torrent-like P2P Systems: http://www.faqs.org/patents/app/20090210697#ixzz0krPyxVv0