Anti-trust looms over major labels legal blitz

Serial entrepreneur Michael Robertson is embroiled in a legal fight against the recording business – and not for the first time. His MP3Tunes locker service has raised the ire of EMI in a case that continues this week. But isn’t it weird, he asks, how the Big Four divvy up the litigation against music start-ups between them so neatly?

Robertson’s current fight is over a service that’s not too dissimilar to a feature of his MP3.com start-up, called MyMP3.com. That allowed users to make a digital copy of a CD they had legally purchased online. A court decided this wasn’t covered by fair use, and MP3.com lost the case against Universal, which later bought out the company.

This time, Robertson shot first: suing EMI in September. EMI counter-sued two months later. MP3tunes automatically syncs your iTunes or WMP collection online.

“They’re playing tough and mean and nasty,” he says. “There are five safe harbour provisions in the DMCA. The third one (512c) says that if you’re storing the file at the direction of the user, you’re exempt. That’s exactly what we do.”

On the other hand, 512c is what covers Google’s YouTube service – and Google has vowed to clean up the service from infringing material. But Robertson says there’s no sharing, in contrast to other services.

“You can’t play music out of a locker, and there’s no anonymous access or wink-wink nudge-nudge sharing where we look the other way. Xdrive – pick anyone – everyone has anonymous access where you can share it with the world.

“Here’s how I like to think about this. Our business is the delivery of the music. You have it at home and play it at work. The labels never thought about the delivery.

“The business we’re in, the distribution business, doesn’t have to be a threat. It could be a best friend to the retail side. We can be your best partner.”

All good points. I thought what the labels feared was what Robertson might do, once everyone had a digital locker. In that sense, it was like the book authors and publishers litigation against Google Books.

But Robertson has noticed something that we hadn’t noticed before.

Which is quite spooky.

“If you look at the lawsuits that are pending, they seem to be doing a very good job of divvying up the litigation. Warner is suing some, EMI are suing others – and I find that very curious. There’s not one where they’re suing the same company!”

Indeed not. Universal Music is going after Grouper, Warner Music is taking on Seeqpod, and EMI has sued MP3Tunes.

It’s odd, since the Big Four are acutely sensitive to anti-trust allegations – to the extent that they can’t co-ordinate anything positive.

So was he mulling a formal anti-trust complaint?

“I have never really thought about that,” he told us. “I’m not a government intervention kind of guy. I’d rather let the marketplace settle it out.”

We pointed out Scott McNealy is another instinctive libertarian – who nevertheless believed in anti-trust action. But he wouldn’t be drawn.
The new Microsoft of Music

Much of the litigation by the big record labels against internet companies is being settled with the majors taking an equity stake. Robertson noted how the new MySpace music operation was jointly-owned by the labels and News Corp.

“News Corp is creating another entity that’s a MS Music Inc. to the labels. But if you’re small you don’t have that option. We don’t have a Microsoft sugar daddy to lean, to bring 100 million customers to the door, or big name branding.”

Robertson was also sour on the prospect of major labels and network operators striking one-off deals – covenants not to sue – then walking away.

“If the companies get payment up front there’s no long-term alignment of interests – but that’s not what’s happening. There’s equity and it guarantees payment to the label, so they don’t need to care.”

He warned that if the case was lost, record companies would go after other services next.

“How many MP3 attachments are on GMail’s servers now? I’ll go out on a limb and say they have an equal number of MP3s on their servers right now. So… our case is an important one.”

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