Early this summer it was rumored that Universal Music Group and Sony Music were preparing to file lawsuits against SoundCloud, the popular Swedish music-streaming service (based in Berlin) that over the past eight years has helped tons of budding musicians advance their careers. SoundCloud only streams user-uploaded music, which in large part is made up of original compositions from smaller artists. The problem is that a lot of these artists are DJs who use non-original, copyrighted music in their mixes, and, naturally, do not pay for the privilege.
The threat of litigation comes amid SoundCloud’s recent announcement that it intends to offer a paid subscription service. Until last year, SoundCloud has operated without music licenses. A subscription service would force SoundCloud to obtain licenses from labels or label groups so that the copyright owners can get their fair share of the profits. SoundCloud has struck licensing deals with Warner Music and Merlin (an agency representing small record companies), and it is rumored that a deal with Universal is soon to come to fruition, but Sony is reluctant to make a deal. As a result, Sony pulled all of its copyrighted material from the site.
Litigation in the US may be unlikely because SoundCloud is willing to work out licensing agreements with record companies and to remove allegedly infringing material at the copyright owner’s request. Online hosts of user-submitted material enjoy the protections of the DMCA (Digital Millennium Copyright Act) “safe harbor” provisions (17 U.S.C. § 512). Safe harbor protects websites that host user-submitted content by withholding the imposition of liability for infringing material posted by a user and not the site itself, and absolving the site of fault if they remove allegedly infringing material at the request of the copyright owner.
Over in the UK, however, the harbors are not so safe. PRS for Music has already initiated suit against SoundCloud. The music rights organization claims that it has been trying to negotiate a licensing agreement with SoundCloud for five years, and that enough is enough. PRS alleges that it informed SoundCloud of some 4,500 songs that, in the absence of a licensing agreement between the two, were infringing PRS copyrights. SoundCloud removed 250 of those works, which certainly did not satisfy PRS.
As in the US, the UK’s E-Commerce Regulations do not impose a requirement that a website host monitor all of its content, but if and when the host of a website “gains awareness” of any unlawful activity, it must “act expeditiously” to remove or disable the content. Thus, UK web hosts do not always enjoy the same shoulder-shrugging privileges that the DMCA allows in the absence of a takedown notice. PRS does not know why SoundCloud only removed a fraction of the 4,500 works, and feels that SoundCloud is hampering the streaming world by refusing to pay licensing fees to the organization. The fact that SoundCloud was able to come to an agreement with other large music providers, and that SoundCloud has been trying to negotiate with PRS for five years, however, suggests that SoundCloud is not the only party to blame in this situation.
The PRS-SoundCloud ordeal brings to light many interesting issues and implications about the inconsistency between US copyright law and copyright law abroad. Do the differences in the copyright laws of the several countries make it easier to work out licensing agreements in one country rather than another? Would a world-wide uniform copyright scheme advance global creativity? With the various problems that copyright presents in the digital age, is it more desirable to try for a global copyright scheme?
By Brian Unger
