Record Labels Sue Napster's VC 594
zemkai writes "From the "wtf?!?" department... Universal Music Group and EMI are suing Hummer Winblad Ventures for contributing to copyright infringement due to that firm's investment in Napster... I'd like to put something witty here, but I'm just speechless."
This is really dirty politics (Score:5, Interesting)
"Who's Left?" (Score:2, Interesting)
CEO accountability for corporate actions? (Score:4, Interesting)
Shouldn't be surprising (Score:5, Interesting)
The **AA are at war. They are going to use every trick, every tool in the box to sew fear and uncertainty in all those who would act against their survival. The idea of course, is to put the fear of god into anybody who might finance a startup venture that would break their business model.
What would they have to prove... (Score:3, Interesting)
So, what does Universal have to prove? Isn't there some protection in place for VCs?
Free money (Score:5, Interesting)
So, in order to make the case work, they'll claim that they'd have made some imaginary number of money more (96 billion dollars?) because millions of people downloaded MP3s, therefore didn't buy albums as a result of it. So even though that money didn't materialize, they'll magically make money on it by claiming damages as a result of Napster.
That's pretty messed up. I worked for a company that made a product and sold a whopping $5,000 worth of it. (Gross, not net even.) A larger company came along and claimed we infringed on a patent. We didn't, but how do you convince a jury that? They used lawyer math to claim this company did one million dollars in damages. Uh right. Their revenue was consistent with both their predictions and on previous experience, and the company I worked for only made 5k.
Like I said, free money. I wish I had a suggestion as to how this whole system could be fixed to prevent this type of fraud.
What part of "Limited Liability"... (Score:5, Interesting)
The defining characteristic of a corporation, in America, is that its investors cannot be held liable for more than the amount of their investment.
In other words, suing the VCs for the actions of the company they invested in is SPECIFICALLY PROHIBITED. What's next? Someone finds a syringe in a Coke bottle, and lawyers sue every little old lady who owns shares in a mutual fund that invests in Coca-Cola stock?
Re:Why are you speechless? (Score:5, Interesting)
Tim
Standard practice (Score:2, Interesting)
My Business Law teacher used to tell us, "You sue everyone for everything all the time". They are trying to scare anyone who is or is thinking of becoming associated with Napster type applications. It's a common tactic to stop what you can't compete against.
As for the $150,000 per violation, lawyers routinely ask for the sky knowing that it will be amended. I was on a jury recently for a DWI lawsuit and the plaintiff's lawyer was asking for several hundred thousand. During deliberation, everyone discussed how it was unreasonable and would be much less. If this goes before a jury I expect them to be awarded very little, if anything.
You're correct..but.. (Score:3, Interesting)
Perhaps if investors could have been held liable we would not have seen Exxon Valdez or Bhopal.
Yes, this would slow the economy down quite a bit. Then again, I've never been one to agree with "economy uber-alles" anyway.
The new business model (Score:1, Interesting)
I don't think many people realize, but RIAA et al have a new business model.
They don't care about selling you music anymore, at least, not as much as before.. oh, they still complain, but that's part of the plan.
They make more billions on blank media tariffs, lawsuits, etcetera, than they will ever see if they actually have to sell a product online, in a manner that suits the users. They will in fact keep trying to make these ventures fail, JUST so that they can complain that piracy is rampant, which verifies (in the eyes of the courts) that their only course of action is to sue!
Make no mistake, they have not missed the boat by never adopting a reasonable online pay model that allows consumers to pay only for their favorite tracks. These will continue to be ridiculously priced simply to drive this new "business model".
If you ask me, it should be ILLEGAL to base a business on suing people and otherwise abusing the legal system for your own gain.
Re:You're correct..but.. (Score:2, Interesting)
"I'm sorry, sir, you can't write and sell software."
"Why not?"
"Because it could be used for terrorism. Come with me."
* * *
"I'm sorry, sir, you can't sell fast food."
"Why not?"
"Because it contributes to obesity. Come along."
* * *
"I'm sorry, sir, you can't sell pencils."
"Why not?"
"Because someone might get poked in the eye and we can't allow that. Come with us. We are the government. We're here to help."
* * *
Of course, they would reclassify obesity as bioterrorism, you see.
No, not the end of the stock market (Score:3, Interesting)
If you buy that, they can be held liable pretty easily for funding a criminal operation. There are a number of distinctions between this and limited liability: for one, shareholders of Exxon are investing in an oil business, and didn't make the decision to stick Alaska with the cleanup bill, for instance.
Re:Correction (Score:3, Interesting)
150 TRILLION in damages? Guiness Record? (Score:4, Interesting)
By the time of its close, Napster had contributed to billions of separate acts of copyright infringement, according to Monday's complaint. The record labels are seeking punitive damages of no less than $150,000 per violation of copyright, among other awards.
Assuming 1 billion violations * 150k$ = 150e12 bucks? Am I doing the math right here? Is this a Guiness World Record here or what...
and I thought that woman suing McDonalds was funny...
Right, wrong, irrelevent. What is, is.
Where is the causal connection established? (Score:4, Interesting)
The sales figures I have seen only indicate that sales are less than in the past. The causal connection made by this and other articles indicating that this reduction is a result of piracy is not entirely established. Record companies have blamed the Internet for their poor performance so many times that it has been accepted by many in the media as established fact.
There are many other possibilities to explain the sales reduction. Reduced interest in current, big name artists, increased interest in a splintered set of independent artists, the failure of the industry to adapt to new market formats (much as occurred when cassette tapes became popular), and the alienation of large parts of their customer base all come to mind as possible alternative explanations.
Many "old steel" industries are becoming frustrated that customers are not more like cattle. Tastes tend to change suddenly in ways that large companies have a hard time dealing with and it is easier to blame outside forces that to fix a difficult problem.
Perhaps their numbers won't be off for a fourth year if the recording industry drops its defensive stance and instead recognizes that the market has changed and that they need to adapt. At some point shareholders have to begin asking what else the industry is doing to increase revenue besides suing everyone.
Re:Jeez...next thing you know... (Score:3, Interesting)
Well, as someone who has been across the table from both VC's and reporters on numerous occasions, as well as being a strong believer in Occam's Razor, I assumed, assume, and will continue to assume that the "legal liabilty" assumption by HW is just plain wrong. VC contracts tend to go the exact opposite direction, up to and including the "if you get sued, we get our money back first!" type of term. Sorry, barring evidence / term sheets to the contrary, I'm not going to take one sub-clause in a news article as definitive of HW's legal liability.
Hummer Winblad are the people who are legally responsible for Napster. They're the ones to sue.
Like I said above, I doubt it... but for the sake of argument, I'll assume they did assume control of Napster. Guess what? Napster doesn't exist anymore! They went buh-bye! Chapter 7! Liquidation of assets for creditors! No more legal entity! See the problem here? This is kind of like suing the high-school sweetheart of the guy who murdered someone, AFTER the murderer has been executed!
-ZK
Re:This is really dirty politics (Score:2, Interesting)
Re:150 TRILLION in damages? Guiness Record? (Score:5, Interesting)
Oh, that's right... they stole them from us. Damn.
Wait a second here ... (Score:2, Interesting)
THREE HUNDRED TRILLION DOLLARS???
I know that they are seeking a minimum of $17,000,000,000, but are they nuts estimating that there have been billions of infringements and setting the cost of each infringement at $150,000? Am I simply misunderstanding this?
Want to know why record sales are down...? (Score:5, Interesting)
So why do record companies sell less records these days? It's not because of downloading. They're doing it to themselves.
-S
Re:150 TRILLION in damages? Guiness Record? (Score:3, Interesting)
"Fair use" *is* a "right", because "copyright" is a *privelege*.
Re:Enron? (Score:2, Interesting)
Remember, they were told at certain points they were in violation, and then the court proved that position valid. Apache is not in that situation.
Personally, I agree in general that you can't blame the maker of a tool. But Napster was a service! They put themselves in a central location where they could control this. Apache is just a tool, if apache.org starts hosting copyrighted material illegally, they would be exposing themselves regardless of what web server they chose to run it on.
HW knew this thing wasn't going to thrive as they hoped based on indy music and legal trading and sharing. That's pretty certain. From a money point of view, that possibility doesn't make sense. HW knew this more than anyone else involved! Fanning may have thought that new artists would rise up and fill the gap (sure!), and the client people might really think it's an extension of sharing, and some no doubt stayed legal -- MANY stayed ought-to-be-legal and ended up buying music they tried not to be moral but to suddenly want the disk and the liner notes.
But HW was in it for the money, period. And the money was all based on IP that does happen to belong to the members of the RIAA.
General logic... (Score:4, Interesting)
If they win, then the generic case if illegal music file sharing service has company X for funding then they can be sued will be viable.
The laws are "general" i.e. I doubt the laws that have (supposedly) been broken here mention the words "music sharing" at all.
The real danger is that everything that those laws apply to will be just as illegal.
Is anyone doubting that Microsoft (just an example) is breaking some competition laws (somewhere on the planet) ?
Well, if you buy Microsoft Stock, you are helping them to commit a crime ..
Are you ready to go to prison for that ?
Re:God given right to steal (Score:2, Interesting)
Re:Let me check my logic... (Score:2, Interesting)
Re:General logic... (Score:3, Interesting)