Understanding SoundCloud's Copyright Woes

By Griffin Davis, Communications Intern

Earlier this month, Bloomberg reported that streaming music host SoundCloud was close to finalizing licensing deals with the three major labels. The deals would reportedly grant each label an ownership stake in SoundCloud of 3-5 percent in exchange for their agreement not to sue over copyright infringement on SoundCloud. Meanwhile, a mini-controversy has erupted over Soundcloud’s implementation of its copyright enforcement procedures, making it important to separate fact from fiction.

Soundcloud has grown in popularity in part because it allows anyone to easily upload music, from unknown bedroom producers to major label superstars, in an advertising-free environment. As with other user-generated-content platforms, users are asked to confirm that they have obtained whatever rights are necessary to post content. In practice though, not all users abide by the company’s instructions, or understand what does and does not constitute copyright infringement. For a while now, SoundCloud has taken some criticism for infringement occurring on its platform, and for its relatively relaxed attitude toward enforcement; it’s not difficult to find an avalanche of unauthorized remixes on Soundcloud, or DJ sets consisting of multiple third-party works, without any indication that the content is licensed. On the other hand, some observers have credited the formerly laissez-faire approach as a reason for the service’s popularity, particularly with remixers and DJs. But as any service grows, so too can legal risk associated with copyright infringement.

Avoiding that risk is likely a motivation for the rumored major label deals, but it’s also a reason why SoundCloud launched a content identification system back in 2011. This technology helps copyright owners efficently exercise control over the use of their works without having to manually police the service. The system was created in conjunction with audio fingerprinting firm Audible Magic, who recently announced a partnership with Vimeo. Remember that under the terms of the Digital Millennium Copyright Act (DMCA), Soundcloud is not obligated to monitor user generated content, but must respond swiftly to takedown notices, and must terminate the accounts of “repeat offenders.” Whether or not a rightsholder sends Soundcloud a DMCA notice for an infringing work depends on a number of factors. Some rightsholders may feel the promotional value justifies an uncompensated use in certain instances; others may not have the resources to monitor unauthorized uses, even with the help of Audible Magic.

While the introduction of SoundCloud’s content identification system—which is meant to be more accessible to independent artists than many other such solutions—is a generally a positive for copyright owners, it has recently come under criticism. The backlash has come in response to what appears to be a lack of transparency in SoundCloud’s “trusted sender program” with major label Universal Music Group. Earlier this month, an article was posted on Do Androids Dance? telling the story of a DJ named Mr. Brainz whose paid SoundCloud account had been terminated following multiple takedowns initiated by Universal. In a series of emails between the DJ and a SoundCloud representative, it is revealed that the Universal takedown notices were extremely vague, stating only that “unlicensed” Universal content had been used, but not which specific work; the SoundCloud rep was unable to provide any more details. (To be fair, it’s also clear that Mr. Brainz was fully aware that he didn’t have the rights to at least some of the music he was uploading, an unambiguous violation of Soundcloud’s terms of service.) 

This is not the only instance of confusing takedowns, and the issue has become quite polarizing. Complaints from DJs about the nonspecificity of the takedowns date back to 2011, but perhaps in light of the impending deals, this most recent round of complaints has taken a more conspiratorial bent. Some fear that SoundCloud has given Universal the ability to indiscriminately take down any content they disapprove of and assume a gatekeeper role, while others dismiss these occurrences as a non-issue.

As is often the case, the truth probably lies somewhere in the middle. As Billboard points out, claims that Universal has “backdoor access” to Soundcloud probably amount to a basic technical misunderstanding. The use of a “trusted sender” program, which is what allows Universal to issue takedowns directly, is an important DMCA compliance tool for user generated content services. This gives entities who send a large volume of notices a way to do so in bulk. Without such efficiency, services would be forced to process the large volume of complaints manually. That being said, effective copyright monitoring requires that all parties be highly transparent, and, in this case, Universal has been far from it. As a result, users who might be more than willing to comply with a copyright owner’s request can instead be penalized, leaving them angry and unaware of exactly what they’d allegedly done.

Certain reactions to the incident have been overblown. Some have asserted that Soundcloud’s upgraded copyright enforcement efforts amount to a betrayal of its artist-friendly image, but seems pretty silly to equate a service’s “artist-friendliness” with its willingness to turn a blind eye to copyright infringement. And while Mr Brainz may feel it’s unfair for his DJ sets to be taken down while Skrillex’s is left alone, in most cases, rightsholders are free to approve some uncompensated uses and disallow others; furthermore, it’s entirely possible that Skrillex’s DJ set was licensed.

But as a best practice, a takedown request should certainly include information about the specific work being infinged. Without this information, it’s impossible to send an adequate counternotice or demonstrate that a license has actually been obtained, let alone articulate a fair use claim. (The United States Patent and Trademark Office working group on DMCA notice and takedown implementation is in the process of crafting some voluntary best practices, and we’re hoping the above suggestion is something that can be adopted.)

And there are still some extremely important questions to ask with regard to those equity deals. If such arrangements result in an eventual windfall for major labels’ multinational corporate owners through an acquisition or IPO, will their rosters of artists share in those rewards? (If what we’ve seen with other services is any indication: probably not.) Will the independent labels and artists who’ve generated so much of Soundcloud’s valuation be offered a similar equity deal, or will they be treated as an afterthought?

SoundCloud provides an powerful platform for artists and labels to share their music with fans. Debates will likely continue about whether there might be ways to make licenses for remixes, samples, and DJ sets easier to obtain, but for now, as services work toward compliance, we agree with Hypebot’s Clyde Smith that all actions to protect rights should involve effective communication and equitable treatment. That’s the best way to protect the continued value of the platform and improve relationships between all parties.

Submitted by griffin on July 21, 2014 - 2:18pm

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