Opinion: On ringtones and copyrights

If there’s been more bluster about anything other than Apple’s $200 iPhone price cut, it’s about the new support in iTunes 7.4 for purchasing ringtones from the iTunes Store. Apple’s implementation of ringtones is significantly more advanced, less expensive, and more flexible than that provided by virtually any other phone maker or cellular carrier. This, of course, is why everyone hates it with the white-hot passion normally reserved for members of an opposing political party.

David Pogue explains all the fun in his New York Times blog: “Pop song ringtones from T-Mobile and Sprint cost $2.50 apiece; from Verizon, $3. You don’t get to customize them, choose the start and end points, adjust the looping, and so on. Incredibly, after 90 days, every Sprint ringtone dies, and you have to pay another $2.50 if you want to keep it. Verizon’s last only a year. Three bucks for a 30-second snippet that lasts a year—when you can buy the entire song online for $1 and own it forever? What am I missing here? How is a 30-second, time-limited excerpt worth three times as much as the full work forever? Does this not enter the heads of the people who are paying $5 billion a year?”

What Pogue is missing is that purchasing a ringtone is often the only way to put a musical ring on your cell phone; many phones and carriers do not allow you to manually upload ringtones to their phones, so you have to purchase the ringtone even if you already “own” a copy of the song on CD or from a digital music store.

Apple’s model, at least on the surface, looks much better. If the tune you like is licensable as a ringtone, it shows up with a new “bell” icon in iTunes 7.4 and in the iTunes Store. Click on the bell icon to open the new iTunes ringtone editor, after you accept the new iTunes Store terms of service (more on that later). You then get a simple waveform editor in the bottom of the main iTunes window, allowing you to select up to 30 seconds of the song with fade in, fade out, and looping of your selected region (with gaps between the loops from 0.5 seconds to 5.0 seconds).

When you like what you hear, click “Buy” and you’ve spent 99 cents on the version you just made. It then synchronizes to your iPhone as a ringtone. You must also own the entire tune from iTunes first, so the complete cost is $1.98—half to buy the song and half to turn it into a ringtone. The ringtone is yours forever, but the new iTunes Store terms of service require that you can only sync an iPhone with a ringtone to one computer, and that attempting to sync it to another computer will erase your ringtones and replace them with any ringtones on the syncing computer.

Note that the terms allow you to put purchased iTunes music and videos that aren’t ringtones on “up to five Apple-authorized devices” at once, and allow you to store purchases from up to five iTunes accounts on a single device. Not so with ringtones. The terms also require that ringtones be used “only … as a musical ‘ringer’ in connection with phone calls,” and prohibit you from burning them to audio CDs or DVDs.

Why is this so horrible, since it seems demonstrably and easily superior to any other ringtone service offered today? Other cell phones are not tied to music players like iTunes—there’s no way to get music onto the phone except by the cell phone’s preferred method. (There are some exceptions, of course, but not as many as there ought to be.) Since the iPhone is also “the best iPod Apple ever made,” according to Steve Jobs, it already has your tunes on it.

People naturally wonder why they have to pay an additional 99 cents to play a snippet of a song they already own. What’s more, iTunes 7.4 only allows creating ringtones from songs purchased from the iTunes Store that have the “bell” icon. You can’t make ringtones from music you purchased on CD or in other formats (perhaps as MP3 files direct from the artist). If a song you own on CD is licensable as a ringtone, you must purchase the song again from the iTunes Store for 99 cents, then pay another additional 99 cents to turn part of it into a ringtone. This seems somewhat unfair.

It is unfair, but not for any of the reasons we’ve seen bandied about.

The copyright problem

Copyright is a legal construct designed to secure the ability of creative individuals to profit from their works. In general, you control what you create. If you’ve written a book, someone else can’t copy and sell it without your permission, or your grant of the right to copy your work. (See how simple that language is?) There are exceptions, though, and that’s where all the fun begins.

Fair use is a legal doctrine that, as Wikipedia nicely puts it, “allows limited use of copyrighted material without requiring permission from the rights holders, such as use for scholarship or review.” In essence, fair use allows you to use portions of a copyrighted work for valid purposes like criticism or parody, especially if you use only a small portion of it, and your use does not reduce the value of the copyrighted work.

The trick to remember here is that “fair use” is a legal doctrine and defense, not a specific part of copyright law. “Fair use” exists in the United States because the First Amendment to the US Constitution mandates that Congress shall pass no law abridging the freedom of speech. Copyright, by its very nature, abridges the freedom of speech—you’re not free to take the Macworld iPhone Superguide and give it to friends or resell it, for example. “Fair use,” however, ensures that you can quote parts of the Macworld iPhone Superguide in reviews or criticism. It does this by serving as a defense against those claims in court.

This means that “fair use” is a flexible principle, interpreted by individual courts on a case-by-case basis. There’s no section of copyright law or the US Code that says what is and is not “fair use.” It’s more like Justice Potter Stewart’s definition of pornography, another exception under the First Amendment: “I know it when I see it.”

The first argument against the ringtone business is that using a section of a song you already own must be “fair use.” Perhaps it is; to our knowledge, this has never been litigated because no one has ever been sued for copyright infringement for playing a ringtone. It’s similar to the established idea that it’s “fair use” to rip the audio from CDs you own to put digital copies on your computer and on your iPod: you bought the music, and you should be able to listen to it how and where you wish.

But it’s important to remember that the record labels fought against that blanket interpretation as well, as well as why they’d want to do so. If you want to listen to a CD in your CD player, or on your computer, or in your car, you’re free to do that. You’re not, however, free to purchase the CD once and listen to it simultaneously in all three places. Under copyright law throughout the history of recorded music, those who want to listen to the same music in multiple places at once must purchase multiple copies of the recording. You can rip the CD and listen to the music in iTunes, but technically, you’re not allowed to listen to it in iTunes while your spouse listens to the original CD in the car. You’re not allowed to make copies for every family member, or for your friends.

Apple’s original licenses for the iPod and the iTunes Store made sense to the record labels because chances are pretty good you won’t be listening to purchased music in iTunes and on the iPod at the same time. The one-way sync between iTunes and iPod helped the record labels feel that people wouldn’t be using iPods as shuttles for “stolen music,” and the licensing for purchased tracks makes clear how many devices are authorized to play each track you’ve purchased. That’s all figured into the pricing of tracks at the iTunes Store and in other parts of Apple’s contracts with the recording labels.

Remember, don’t shoot the messenger here, but: A ringtone is a separate digital phonorecording, as defined by the copyright law. A ringtone is not a small set of instructions that says “play this tune from this point to that point” that refers back to your original purchased music file. It is a duplicate of the audio data from that file, downloaded to you from the iTunes Store, and therefore a separate delivery of a recorded song. It is, quite literally, a copy of part of the song, a new file containing copyrighted audio data that sits in the Ringtones folder in your iTunes music library and on your iPhone.

The iTunes Store terms of service do not and did not allow you to make free copies of purchased music. In the best case scenario, making a copy of a purchased track to use as a ringtone would be an additional use of one of your five “Apple-authorized devices” under the iTunes Store terms of service. Since the current iPhone design requires you to own the original song and a separate ringtone file in each of two places (in your iTunes library and on the iPhone), that would be four of your five allowed uses right there. You could then use the song on one more computer, but maybe not on another iPhone or iPod, without purchasing it again anyway.

Yes, this sucks, but it’s the law. When Apple delivers a new copy of a song to you, it incurs an obligation to the record company, which in turn incurs a royalty obligation to the artist, composer, lyricist, and any others who own the rights to the song. Unless the record companies have negotiated a special deal with the artists, those obligations do not vanish because they’re delivering only your chosen 30 seconds of the song instead of the full performance.

A ringtone is a copy of a protected work, and making that copy is only allowable as the copyright holder licenses it.

The compulsory license

We can already hear people complaining, “But the RIAA got the government to agree that ringtones aren’t protected by copyright so they wouldn’t have to pay the composers! It’s fair use! It’s just a giant scam to make more money! Engadget said so !” Well, yes, Engadget did say so, and it is a giant racket to make more money, but it has nothing to do with the RIAA’s arguments in the case cited.

The compulsory license is another exception to copyright law in the United States, as outlined in 17 USC §115. Enacted by Congress almost a century ago to address problems with (we are not making this up) player piano reels, the compulsory license requires those who hold copyright to a “nondramatic musical work” to license it to anyone who wants to make a recording of that musical work, if and only if “his or her primary purpose in making phonorecords is to distribute them to the public for private use, including by means of a digital phonorecord delivery.”

This is essentially the “cover band” rule—if you want to record someone else’s song, you’re free to do so as long as you pay the royalty rates as outlined by the Copyright Office at the time of the recording. You don’t have the automatic right to perform the musical work in public performance, or to sell recordings for commercial use (such as background music or for use in a film or other public presentation), but you can record a song for sale to ordinary people for their private use. This leads to the strange situation that your garage band can get automatic (though not “free”) permission to record almost any song you want, and still not be able to perform it in public without a separate license.

Congress enacted this license in the early 20th century to protect against a vast music monopoly—in the heyday of Tin Pan Alley, there was a fear that giant music publishers could purchase the rights to almost every song and then prohibit anyone from making player piano rolls of their own performances of them. It was later extended to sound recordings, and in the 1990s, digital recordings such as MP3 and AAC files.

To protect the rights of the composers and lyricists, the compulsory license leaves exclusive control of a song in the hands of its creators until it has been recorded for sale. That is, composers and lyricists (or their agents who hold their copyrights) get to choose who first records their work. Once it’s been recorded and made available for sale anywhere in the United States, though, anyone else is free to cover the song under the compulsory license by paying standard, statutory royalties.

In the Memorandum Opinion from the Registrar of Copyrights as touted by Engadget, the RIAA asked the government to determine that ringtones are deliveries of digital phonorecords as defined by 17 USC §115 and therefore subject to the compulsory license. That is, the RIAA wanted a clear ruling that by distributing ringtones of a popular song performance, they were essentially delivering either a recording or a “cover” of that recording, triggering the statutory royalty rate under the definitions of 17 USC §115. While this would mean that the RIAA would have to pay composers and lyricists the standard cover rate (if no other rate had been negotiated), it also meant that ringtones were simple “covers” that must be licensed on request—the copyright holders would not be allowed to withhold permission or demand higher royalty rates than the statute allowed.

In opposition, several music publishers and songwriters opposed the idea, saying that ringtones were not “covers” of existing songs. They were, instead, derivative works of copyrighted songs, treated separately under the copyright law and not subject to the compulsory license. The opposition, called “Copyright Owners” in the decision, said that ringtones required the “creative spark” that made them into something new, not just an excerpt of the original recording, making them new works that (by law) belonged to the Copyright Owners and requiring separate copyright licensing. The RIAA opposed this notion because it would mean they’d have to negotiate separately with music publishers for the rights to record a song and for the right to use part of it as a ringtone.

The decision itself is a hoot, especially near the end of its 34 pages, and is worth reading if you’re at all interested in this stuff. Rarely do you find official legal rulings with passages like, “Likewise, Copyright Owners note that in Beyonce’s mastertone ‘Let Me Cater 2 You,’ the ringtone contains a portion of the song, with an extra line added at the end: ‘What’s up, this is Beyonce from Destiny’s Child and this call is for you.’” Similarly, you almost never hear the RIAA arguing that it’s just “common sense” to let people play their music in public.

Although the Copyright Office realizes that some ringtones may be changed enough from original recordings to qualify as new works, in general, it ruled that ringtones clipped from existing recordings are not “derivative works” as defined by copyright law, either as new works or as “arrangements.” They are instead simply digital recordings, and as such, are subject to the same compulsory license as all digital recordings.

This means that companies with a compulsory license to distribute recordings of a song can also distribute ringtones extracted from that recording—under the terms of the compulsory license. They still owe the standard, statutory royalty to the composers or other copyright holders on the song for each ringtone sold, just as they do for each copy of the full song that they sell. They just don’t have to negotiate additional fees, or face the prospect that the copyright holders will withhold rights pending exorbitant royalties.

You can peek behind the curtain just a little bit by looking at the FAQ page from TuneCore, a company that takes a flat fee for putting digital music to which you own the copyright onto online stores such as the iTunes Store, Napster, eMusic, Rhapsody, MusicNet, GroupieTunes, and others, both in the United States and internationally. TuneCore swears up, down, and sideways that it does not keep even the tiniest percentage of the royalties from any online store, instead taking a flat fee per year and per album to get your tunes listed. As part of this, TuneCore discloses the royalty rates paid to artists on the various systems.

As widely reported, the iTunes Store pays 70 cents per track, and $7 per album of 11 or more tracks in their entirety. There are some currency conversion issues for iTunes international stores, but that’s basically the model. Rhapsody pays 65 cents per track for subscriber downloads and 70 cents per track for non-subscribers; Napster pays about 65 cents per track; eMusic pays based on a complicated formula determined by revenues in the month, and so on. Seventy cents per track is about average for most of the stores.

As of this writing, GroupieTunes is the only store listed with royalties paid for ringtones. The site charges $2.49 or more per ringtone, and the artist gets—the same royalty rate as before, 71 cents per track. That’s for AT&T and Cingular ringtones, at least. T-Mobile and Sprint/NEXTEL ringtones only provide the artist with 54 cents per track. However, GroupieTunes says that if it sells a ringtone for more than $2.49, the fee paid will increase proportionally to the increase in price. If they sell a ringtone at twice normal price, the artist gets twice the normal royalty, or up to $1.42 for a $4.98 sale.

What this tells us

First, it’s no wonder the record labels and cell phone companies are protecting ringtones with every bit of anti-competitive force they can muster: they pay the same royalty to songwriters and copyright holders, deliver smaller amounts of data, and collect anywhere from 250 percent to 500 percent of the price of a normal song sale. It’s a huge racket.

Nonetheless, each delivery of a ringtone is a delivery of a copyrighted song, and incurs the standard (or, if there is one, the negotiated) royalty for the copyright holders. While copyright holders are free to waive those fees if they choose, the compulsory license does not require them to do so. Unless they do, the record companies owe them money for each ringtone delivered. That means Apple owes the record companies money, and therefore you owe Apple money. The compulsory license does not absolve you of this.

Is it “fair use” to create a ringtone from a song you already own the rights to play? Maybe. You’re extremely unlikely to get prosecuted for it. In the copyright decision mentioned above, the RIAA explicitly argued that a ringtone is not a “public performance” of a song and does not incur any additional royalties, just as playing your tunes on a boom box or through a car window is not a “public performance.” The Registrar of Copyrights concurred.

It is still a separate copy of the song, though, and might trigger technical issues if your ringtone played while the full song was playing via iTunes, or on the original CD. Yes, this is nitpicking, but the abbreviation for “nitpicking” is “RIAA.” This is the same organization that has repeatedly and successfully argued in court that making a copyrighted recording available via file sharing is exactly the same thing as distributing it to hundreds of thousands of people, whether anyone actually copies the song or not.

Given that courts have ruled that using a file-sharing program is the same thing as distributing a song, it’s hard to blast Apple for being conservative in disallowing iTunes 7.4 from making copies of existing material for use as ringtones. There is also the further issue that while record labels can distribute ringtones under the compulsory license, many of them had already entered into separate ringtone licensing agreements with copyright holders, and those agreements remain valid until they expire. Those agreements likely also incur royalties for distribution of ringtones, and require the recording labels’ distribution partners to agree to the same terms.

It’s theoretically and technically possible for a ringtone system to simply use a portion of an existing licensed file, much like a QuickTime reference movie points back to digital media in other files, but such a system would surely earn the ire of record companies and songwriters, each feeling that someone was trying to cheat them out of a royalty for a new use of their work. Apple does not want to get on the bad side of the recording companies or the songwriters. We are not psychic, and therefore cannot say with certainty that Apple’s contracts with the record labels prohibit the company from making it easy to create ringtones from media whose license is not certain (that is, anything other than iTunes purchases), but it wouldn’t surprise us a bit.

If you want to go for it on your own—such as to make ringtones from recordings to which you own the rights—then you can use a free tool like Rogue Amoeba’s MakeiPhoneRingtone 1.2 to convert any AAC file into a ringtone—if you’re a little bit behind in your iTunes versions. This is implementation-dependent—the hacker known as Cleverboy discovered how the iPhone currently stores and uses ringtones, and that led to a way to make them without the iTunes Store. Rogue Amoeba’s free tool simply automates the process—but that method breaks with iTunes 7.4.2, including removing all ringtones made with that process from your iPhone. On the commercial side, there’s Ambrosia Software’s iToner 1.0.1, a $15 application that worked before iTunes 7.4 and purchased ringtones, and even works with purchased music. It continues to work with iTunes 7.4.2, and Ambrosia promises it will continue to work with future iPhone updates, too.

You’re unlikely to be prosecuted for using copyrighted material as a ringtone, but it’s clear that the people who own the copyrights have a vested interest in the sale of ringtones and will not rest easy if they think people are “stealing” them. This sits in opposition to the general Internet consensus on copyright, which is, roughly paraphrased, “Copyright is burdensome and overwhelming, and almost everything should be available inexpensively or as fair use, except the stuff that I or my friends created, because it’s totally bogus when other people rip off my tunes or Web site designs or graphics for use without my permission.”

As with most issues of intellectual property, it’s not reducible to black and white.

Excerpted with permission and updated from the September 15 issue of MDJ, published by MacJournals.com. Copyright 2007, GCSF Incorporated. For a free trial to MWJ, visit www.macjournals.com.

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