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Digital media battle heading to Congress


(IDG) -- Digital media companies pleaded their case on intellectual property rights to the federal government, setting the stage for congressional hearings about the issue next year.

While Internet companies and the entertainment industry faced off in Washington, the Recording Industry Association of America created an alliance, dubbed SoundExchange, that includes an array of recording companies aiming to collect royalties on music streamed via the Web.

In Washington, the U.S. Copyright Office and the National Telecommunications and Information Administration hosted the hearing, where representatives of the entertainment industry and digital media companies testified about ways in which various pieces of the 2-year-old Digital Millennium Copyright Act (DMCA) should apply to the Internet. The federal agencies will report their findings to Congress, which then will consider changes to the copyright law.

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At issue are questions such as whether or not users can make copies of downloaded content, whether or not they can resell or share the content, or even whether or not they can make backup copies to protect against losing the media after a system crash. Also, copyright holders want royalties for temporary "RAM buffer" copies of media, which are often created during streaming.

"Current licensing practices already impose substantial costs and administrative burdens upon these [digital media] companies, and it would be untenable and unfair to require them to shoulder additional costs with respect to these buffer copies," Alex Alben, vice president of government affairs at Seattle-based RealNetworks, said in testimony prepared for the hearing.

The Internet community, represented by vendors and organizations such as the Digital Media Association (DiMA), argue that mainstream media companies treat downloaded media as though it is leased software, meaning users can be charged over and over for the same song. Instead, they argue, once a user has paid for and downloaded a song, they can do with it what they want without paying again. "For e-commerce to flourish, consumers must be assured that digitally downloaded purchases convey at least the same flexibility and value as physical media, including the right to resell, lend, or give away media products," testified Jonathan Potter, DiMA's executive director.

The entertainment industry contends that copyright holders are not being fairly compensated for their work, and argue that changes to the law that digital media companies are seeking would be unfair. "There is no question that the exploitation of works will increasingly be through the creation of digital temporary copies, as opposed to the creation of permanent copies," said Emery Simon, a representative of the Business Software Alliance, based in Washington.

SoundExchange, located at, includes more than 2,000 record labels and 270 record companies, including BMG, EMI, Sony Music Group, Universal Music Group, Warner Music Group, and Rounder. The organization will collect royalties from Internet music distributors via voluntary agreements, and turn them over to the record companies and artists.

"Our systems and data staff process millions of unique performances a year, our membership and royalty departments ensure both our members and nonmembers receive the most accurate payment, while our licensing professionals work to make the process of receiving a performance license as easy as possible," the Washington-based SoundExchange's Web page states.

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National Telecommunications and Information Administration
Recording Industry Association of America
U.S. Copyright Office

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