Format shifting, copyright and the cloud

by Jon_B in ,

The law is often accused of failing to keep up with the pace of technological change.

A case in point: "format shifting" (a technical term for copying a song which you own on CD into MP3 format to listen to on your iPod).

You may or may not know (or care) that this kind of format shifting is not permitted under English law. This is something which has been written about fairly widely (see for example this Telegraph article emotively entitled "Millions of iPod fans breaking law by copying CDs") with varying degrees of accuracy.

In real life this hasn't actually been much of an issue. This isn't an area where rights holders have been keen to take enforcement action (presumably because of the practical difficulties and the PR risks as much as anything else) so the illegal format shifting community (i.e. basically everyone) have carried on with business as usual.

However, format shifting is back in the news again following the recent publication of the Hargreaves Review on "intellectual property and growth", which recommends a change in the law to reflect the reality of how consumers use these copyright works and allow:-

"individuals to make copies for their own and immediate family's use on different media."

Hargreaves believes that this wouldn't have an economic impact on rights holders as they could factor in any loss in the price at which the goods are sold. This is a relevant consideration as it isn't true to say that format shifting has no economic effect. There is a loss of the opportunity to sell consumers the same works again in digital format.

We don't tend to recognise this because format shifting is so widely accepted, but if ripping music from CD were physically impossible (or illegal in a way which was actually enforced) then I would pay to have at least some of my music collection available in digital format and I suspect that so would many other people.

At this point, it is worth looking at what "breaking the law" and "illegal" actually mean in this context.

In reality you never own the song or movie on your nice shiny new CD or DVD at all. The copyright holder remains the owner of the copyright (or actually copyrights, but let's not confuse the issue!) and you are licensed to use it in certain ways.

If you take a look at CD or DVD box you will see something along the lines of a statement that the recording is licensed for private home use only, that all other rights are reserved and that:-

"Any unauthorised copying, editing [etc. etc.] of this work is strictly prohibited..."

The "copying" which is prohibited includes making a copy in a different format (including for personal use). There is no reason (at least in law) why this licence agreement couldn't add that:-

"You are permitted to make one or more copies of this CD in digital format for your own personal use or the use of your immediate family"

However, at the moment the rights holders are not prepared to make this concession.

Format shifting is actually a breach of the terms of this licence because at present the law doesn't override the specific licence terms imposed by rights holders to allow this type of copying for personal use in different formats.

This type of overriding provision wouldn't be unprecedented. Section 70 of the Copyright, Designs and Patents Act 1988 already contains a similar provision to permit "time-shifting" (recording broadcasts in a domestic setting to watch them at a more convenient time) and an extension of this to cover format shifting would be permissible under the terms of the EC Copyright Directive (provided that it is limited to private use and that rights holders are given fair compensation).

This is also not the first time this has been proposed. The [Gowers Review][Gowers] of intellectual property in 2006 made a similar recommendation and proposed that this should be introduced into law by 2008. Last seen somewhere in the vicinity of the long grass.

There are a couple of issues which jump out from the Hargreaves proposals:-

  1. If rights holders are meant to factor in the "cost" of format shifting in their prices (i.e. the cost of losing the opportunity to sell you an MP3 copy of a track you own on CD) how will this operate for works which have already been sold before this comes into force? The Gowers review recognised this and recommended that the exemption should only apply to works published after the exemption became law (and I think this is required in order to comply with the Copyright Directive anyway).

  2. What happens if, five years after the original format shifting, you decide to clear out your house by selling your CD collection on Music Magpie? Will the revised Copyright Act allow you to keep the format shifted copies, require you to delete them or will the original shifting become unauthorised?

Subject to this though, the proposals seem fairly sensible... although you could argue there are other areas in more pressing need of reform.

The trouble is that the proposals deal with format shifting as it has been done since the invention of the cassette recorder, but fails to address the way in which we will be doing it in the coming months and years.

The Hargreaves proposals are actually perfectly timed as there are developments afoot which will turn format shifting from a dry legal issue into a burning issue for rights holders and consumers.

Look at the marketing material for Amazon Cloud Player. This is a cloud music service which allows you to play MP3 files stored on Amazon's servers. Either music purchased from Amazon or music you upload from your personal library. This isn't just format shifting, but actually copying the music onto a server owned by a third party. You could call it "Cloud Shifting".

Apple are reportedly also looking to get into this market as heralded by Gizmodo and many, many others (it's hard to maintain the usual Apple level of secrecy when your plans require a patent application and several huge data centres).

The latest rumours (and this is still all they are) is that iCloud will scan your iTunes library and mirror it in the cloud (rather than you having to upload - or "format shift" your songs).

It is interesting to look at the legal side of this. Apple are reported by Bloomberg and others to be putting in place deals with record labels and publishers to allow their content to be used on the iCloud.

I haven't seen any detail of how these licence agreements will be structured, but my guess is that they will allow Apple to make songs available to users whose iTunes library (as scanned by Apple) shows they already own a copy of it. Presumably if your music isn't published by a label which Apple has an agreement with then it won't be available on the iCloud (in the same way as Beatles music wasn't available on iTunes until recently).

This seems to neatly sidestep the format shifting issue. However, there is one problem. If the iCloud is available for tunes other than those you have purchased from the iTunes store, then how will Apple or the labels know if you own a legitimate copy of the song in the first place or have ripped or downloaded it illegally?

It does seem like a typically "Apple" solution. One neat scan of your device to get you up and running on iCloud in seconds with no lengthy uploading process.

Amazon on the other hand have put themselves squarely in the format shifting camp. No deals with record labels here - you can simply upload copies of any DRM-free MP3 music to your Amazon Cloud Drive and play it with the Cloud Player.

Is this legal? There has been a lot written about this online (see for example this Crunchgear article) and there appears to be an argument that this is "fair use" under US copyright law... although I'm not qualified to comment on that.

In the UK it is difficult to see how uploading your tunes to a cloud service could be anything other than an infringement of copyright (which may well be why it appears the service is currently US-only).

Google have announced a similar service called Google Music which appears to take a similar approach to Amazon in terms of licensing (basically, don't bother).

Unsurprisingly it seems that the record labels hate the Amazoogle approach to this... there are plenty of bullish quotes flying around including from Sony who the Wall Street Journal quote as saying:-

"We are disappointed that the locker service that Amazon is proposing is unlicensed by Sony Music,"

The emergence of these cloud music services turns the debate about format shifting into a big-money issue. At the moment, the Amazon and Google approach doesn't seem to be permitted under UK copyright law, but a suitably wide format shifting provision (which covers "cloud shifting") could allow it.

If the Hargreaves review recommendations do make it into law we can expect to see some serious lobbying from rights holders to block this kind of "cloud shifting" and outraged protest from consumers who can't understand why they shouldn't be able to play music they have already paid for in any format they choose.

Whilst rights holders haven't tried to enforce the law against individual consumers who format shift, a large corporate hosting copyright material in the cloud on a wholesale basis is likely to see the "big guns" rolled out in fairly short order. The viability of these services in the UK is therefore likely to depend on a change in the law to allow format shifting.

Meanwhile Apple have side-stepped the issue entirely and should be free to launch their service in the UK (assuming their deals with the record labels aren't limited to the US).

The most ironic outcome would be if the Hargreaves review, having come along at a pivotal moment in the format shifting debate, were implemented without properly covering "cloud sharing"... leaving this to be dealt with again a few decades down the line!