Is China Ready to Hold Accountable Infringers of Foreign Copyrights?

China's Ministry of Culture ("MoC") implemented on August 26, 2009 new regulations for online music. In what might be the first in a series of MoC rule changes, online music ventures are now required to obtain MoC approval in order to legally distribute imported online music products in China, including audiovisual files and mobile distributions.

Such new regulations may impact China's 338 million Internet users, as well as search engine and music services in China, including Sohu's SoGou, Alibaba/Yahoo! China, Google and Baidu, which was described in IFPI's 2009 Digital Music Report as "the biggest single violator of music copyrights and by far the greatest obstacle to legitimate digital commerce in China."

Barron's Tech Trader Daily blogger Eric Savitz says analysts disagree on the impact of China's new set of rules on "deep-linking" search engines such as Baidu. Savitz and other bloggers such as Caitlin Cimpanu of Softpedia cite Pali Research analyst Tian Hou's blog report that music searches represent 80% of Baidu’s traffic. Therefore, the new regulations may obligate Baidu to drastically change its business practices by linking only to licensed music services.

On the other hand, Savitz observed:

"UBS analyst Wenlin Ly... says Baidu believes the worst case scenario would be to remove the MP3 search button from its main page ... [and] MP3 search is now under 10% of query traffic."

The true Baidu music search traffic figures may fall between Hou and Ly's estimates. Leena Rao of Tech Crunch reported:

"According to comScore, Baidu had 145 million unique visitors in July of 2009 worldwide (with more than 95 percent of those coming from Asia), while its MP3 search engine attracted 47 million uniques, which is only 32 percent but still significant. For July, Baidu was ranking fifth amongst most visited search engines worldwide, behind Google, Yahoo, Bing and Ask.com."

Whatever the figures, music search and "deep links" compelled Baidu to become a licensed online music service when it obtained from the MoC a newly required "Internet culture license," according to spolkspeople for both the MOC (see the JLM Pacific Epoch blog) and Baidu (see the Wall Street Journal).

We must wait to see whether search engines such as Baidu comply voluntarily with other new MoC regulations, and whether China enforces such regulations in 2010. As The Wall Street Journal pointed out, the MoC is not responsible for enforcing copyright protection.

In the meantime, I endeavored to analyze Google's English translation of the MoC's Chinese language document dated September 4, 2009. [Is there an English language statement from the MoC of which I have failed to locate a copy?] According to my haphazard analysis of the Google-translated MoC document, online music services - including Baidu's deep linking service - must:

(a) Subject content to MoC "Internet Literary Review" with the goal of "purifying the online music market in China" by "strengthening the ban on obscenity, pornography, violence, superstition, and undermining national customs and other harmful social morality music"

(b) Submit "signed import contracts (agreements)" for MoC verification of compliance with "strict requirements" (e.g., "the authorization period of imported network music should be more than one year"). Such contracts which are not directly signed by Mainland China businesses are invalid.

(c) Deem online music from Hong Kong China, Macao Special Administrative Region and Taiwan to be imported

(d) Submit for MOC review by December 31, 2009 imported music that was previously distributed online in China

The MoC is now ambitiously obliged to review during the next four months untold multitudes of content including lyric translations for hundreds of thousands of songs, as well as license agreements and other documents. Is this possible? As one who analyzes music licenses professionally, I suspect China may underestimate the tasks at hand: censoring content and vetting worldwide copyright ownership and license agreements. Therefore, the process will continue well beyond 2010 and/or it will be unthorough.

In addition to announcing the new regulations described above, the MoC saught to:

1. Further clarify the definition of "online music" as:
   (a) "music products" that are "not material entities..." and are "...digitally transmitted through the information network..." which includes "...the Internet, mobile communications network, the fixed communications network can be achieved via a variety of interactive, real-time communication, sharing of common information network."
   
   (b) including "not only the usual sense of the songs, music and other forms of digital music products, but also ... the content of the performance of music accompanied by images of the MV [music videos], Flash and so on."
   


2. Set forth innovative and clear review procedures and requirements
   
   (a) The MoC introduced an online music registration system through which online music ventures may request MoC approvals
   
   (b) The MoC offers a "rapid 'review of access' system" to provide expedited 3-day approvals in certain cases
   
   (c) The MoC has adopted certain procedures to eliminate duplicate reviews of music content
   
   
3. Clarify the responsibilities of online music ventures:
   (a) "The enterprise must establish a system of self-examination"
   
   [As an auditor, I caution the MoC against relying solely on music service ventures like Baidu to comply voluntarily with MoC regulations.]
   
   (b) "Users [who]... upload their own innovations of the network and performing music is not" subject to content review... "Domestic online music business units, especially in providing Internet users create their own compilation and performing services such as online music upload business units should be strictly in accordance with 'Interim Provisions on Administration of Internet Culture,' the provisions of Article XVII of the online music content to enhance the review, ensure that the provision of the legality of online music content." [sic]

This leaves me with dozens of questions, such as:

• How do you think China's new rules will change the music market?
• Will reportedly legal Chinese music services like Orca Digital and Google's Top100.cn become profitable?
• Will Google China increase its search market share dramatically?
• Will foreign territorries such as Hong Kong, Taiwan and the USA collect billions of dollars in copyright royalty payments from China?
• Will Baidu and other reported purveyors of unlicensed music find a way around the new regulations?
• If you are a music copyright holder, have you any deals directly with China?
• Does anyone disagree with this on grounds of censorship?
• Is this a "tax" or "disincentive" for music services to import music?
• Will fewer regulations stimulate demand for domestic Chinese music?
• What is popular in China's music markets?

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

How to Copyright a Song

James in Indiana asks:

"What is the best way to copyright your songs? My band is going to do a live streaming web show and I'm leery of playing original material over the web without it being copyrighted."

James, your composition is already "copyrighted" if you have recorded it. According to US copyright law, a song (i.e., a "work") is created when it is "fixed." That means, when you transcribe your song on paper or record it for playback, you automatically own the copyright to that work. You may print the circle-c copyright symbol on any copies of your compositon at this point.

However, in order to protect your copyright, I recommend that you register your copyright with the Library of Congress ("LOC") using one of the following methods:

• Electronic registration ($35 per work): Register and upload a copy of your work electronically at https://eco.copyright.gov/eService_enu/ (see a list of acceptable file formats here)
• Complete Form CO on your personal computer, print it out, and mail it along with a $45 check or money order and your deposit (i.e., one copy of your unpublished work or two copies of your published work). (Form CO is here, instructions are here, and a FAQ is here)
• Complete the old hardcopy Form PA, and mail it along with a $45 check or money order and your deposit. The LOC is phasing out these paper forms, so Form PA not accessible on the Copyright Office website; however, you may request that the LOC send you a copy of Form PA by postal mail here.

By the way, you can register your sound recordings too (use Form SR instead of Form PA and a circle-P symbol), the copyright to which is separate from the underlying composition, which is an important distinction to understand.

Certain attorneys have suggested as a money-saving strategy collective registeration of multiple works as a single work. Any registration is better than nothing, but I advise against it for a number of reasons. Most importantly, databases of works and ownership information are key. If you do not register each individual work with the Library of Congress, I am concerned that in the future, users of your song may not be able to find it in the LOC databases if it is listed under the title of a collection of works. If a user cannot find the work, it won't find its owner and your work may be deemed an "orphan work," which may entitle such users to make and distribute copies of your work without a license and not pay you until you can prove that the work is yours. Further, you may not be entitled to damages. Therefore, for maximum copyright protection, I suggest you register each work individually. However, this is just my opinion.

There is an easier and cheaper method to protect your copyright than LOC registration, but it won't offer you the same level of protection that a LOC registration offers: The so-called "Poor Man's Copyright," whereby you mail yourself a copy of your song and save the unopened envelope with the post office's date stamp intact to prove the date of the copyright. The Poor Man's Copyright is better than doing nothing (it can help prove you are innocent if someone accuses you of plagiarism), but there are at least two big problems with this method:

1. If you have not properly registered your copyright with the Library of Congress, you will not be entitled to damages.
2. As I mentioned above, I believe detailed databases of works and ownership information will be used in the future more than ever. If you do not register your work with the Library of Congress, users of your work may not be able to find its owner and your work may be deemed an "orphan work," which may entitle such users to make and distribute copies of your work without a license and not pay you until you can prove that the work is yours. Therefore, register your copyrights with the Library of Congress!

That said, even if you do everything right, it costs a lot of money to go after an infringer. The best thing musicians have going for them is their prolific creativity and the knowledge that individuals and entities may infringe on your copyright, but that won't stop you from creating something better in the future. Don't let the reality of infringement and scam artists keep you from making - and sharing - great music!

Next time maybe I will post about streaming royalties, since a lot of independent musicians like James are making their music publicly available this way.

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.